[Congressional Record Volume 141, Number 141 (Tuesday, September 12, 1995)]
[House]
[Pages H8740-H8776]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  RESTRICTIONS ON PROMOTION BY GOVERNMENT OF USE OF EMPLOYEE BENEFIT 
               PLANS OF ECONOMICALLY TARGETED INVESTMENTS

  The SPEAKER pro tempore. Pursuant to House Resolution 215 and rule 
XXIII, the Chair declares the House in the Committee of the Whole on 
the State of the Union for the consideration of the bill, H.R. 1594.

                              {time}  1316


                     in the committee of the whole

  Accordingly the House resolved itself into the Committee of the Whole 
House on the State of the Union for the consideration of the bill (H.R. 
1594) to place restrictions on the promotion by the Department of Labor 
and other Federal agencies and instrumentalities of economically 
targeted investments in connection with employee benefit plans, with 
Mr. Emerson in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Illinois [Mr. Fawell] and the 
gentleman from California [Mr. Martinez] will each be recognized for 1 
hour.
  The Chair recognizes the gentleman from Illinois [Mr. Fawell].
  Mr. FAWELL. Mr. Chairman, I yield 5 minutes to the gentleman from 
Pennsylvania [Mr. Goodling], chairman of the Committee on Economic and 
Educational Opportunities.
  (Mr. GOODLING asked and was given permission to revise and extend his 
remarks.)
  Mr. GOODLING. Mr. Chairman, I thank the subcommittee chairman for 
yielding time to me. The gentleman from Illinois [Mr. Fawell] probably 
has forgotten more about ERISA than the rest of us in the Chamber know 
collectively about it.
  Mr. Chairman, as we open the debate on H.R. 1594, which was ordered 
reported in a bipartisan vote by the Committee on Economic and 
Educational Opportunities on July 20, let me make very clear what is at 
stake and what the bill does and does not do.
  At stake is whether the Department of Labor will continue to act as 
the Nation's pension watchdog, to ensure the safety of the $3.5 
trillion backing the pensions and employee benefits of America's 
workers and private pensioners. Or, will the Department's role as 
guardian of those pension assets be undermined by this administration's 
actions to promote particular investments--investments that may
 be both risky and tainted by conflict of interest.

  Economically targeted investments, or ETI's, is the euphemism used to 
describe these investments in Interpretative Bulletin 91-1 issued by 
the Department last June. The interpretive bulletin is but one element 
of the administration's many-pronged approach to promote particular 
investments within this ETI classification.
  This bill is an attempt to protect workers and their pensions from 
the overzealous and misguided promotion of ETI's. First, the bill 
renders the interpretive bulletin null and void and declares that the 
landmark Federal pension law known as ERISA is to be interpreted and 
enforced without regard to it. The Secretary of Labor is also 
prohibited from issuing any other rule, regulation, or interpretive 
bulletin which promotes or otherwise encourages ETI's as a specified 
class of investments.
  Second, the Department of Labor is directed to terminate the $1.2 
million taxpayer financed clearinghouse through which the Department 
intends to promote particular ETI's. Further, the bill prohibits any 
agency from abusing the powers by establishing a future clearinghouse 
or database which lists particular ETI's.
  Third, the bill states that it is the sense of the Congress that it 
is inappropriate for the Department of Labor, as the principal enforcer 
of ERISA's fiduciary standards, to take any action to promote or 
otherwise encourage economically targeted investments.
  The bill takes us back to where we stood before the Clinton 
administration issued the bulletin and maintains the fiduciary 
standards under ERISA which have stood the test of time over the 21 
years since its enactment, and which are not in need of repair.
  By issuing the bulletin, the Department calls into question the 
framework within which employee benefit plan fiduciaries make their 
investment decisions. While the interpretive bulletin includes the 
gratuitous statement that ``the fiduciary standards applicable to ETI's 
are no different than the standards applicable to plan investments 
generally'', the real purpose of the bulletin is the promotion of 
investments that ``may require a longer time to generate significant 
investment returns, may be less liquid and may not have as much readily 
available information on their risks and returns as other asset 
categories.''
  Could a better definition of a relatively risk investment be 
constructed? It is precisely this more risky type of investment that 
the Department cloaks in its broader and ambiguous definition of an 
ETI. In fact, it is unclear exactly what an ETI is under the 
Department's own interpretation. For example, in response to committee 
questions, the Assistant Secretary for Pension and Welfare Benefits 
stated that ``the bulletin defines ETI's in terms of the process by 
which an investment is chosen * * * [even though] there is no specific 
process * * * necessary to trigger the `selection criteria'.'' In 
addition, the Assistant Secretary stated that ``ETIs are defined in 
terms of the reasons for which they are chosen,'' even though 
fiduciaries ``may not articulate that collateral benefits were a reason 
for selecting'' such investments. These contradictory and confusing 
statements are reason enough for rendering the interpretive bulletin 
null and void.
  The bulletin's definition that ETIs are ``investments selected for 
the economic benefits they create * * *'' raises another question as to 
the intended scope of this new rule. Arguably, every investment can be 
asserted to create an economic benefit, since that is the very nature 
of investment capital. Indeed, if ETI's do not include all investments 
then which ones?
  Clearly, they include the less liquid and more risky ones mentioned 
in the bulletin. Incredibly, it is these more risky investments that 
the Department now considers worthy of special promotion.
  Furthermore, the public expression by Department officials that 
certain ETI's need to be encouraged seems to be based on the premise, 
disputed by the Congressional Budget Office, that the market does not 
work. Apparently, the administration believes pension managers are not 
investing an optimal amount of pensioners' money in ETI's. Those who 
are retired and those who will retire. But what is optimal, or enough? 
The various actions taken by the administration in this area has 
created confusion within the investment community and the general 
public. The Department has even had to deny that the Clinton 
administration intends to mandate that private pensions invest a 
certain percentage of their assets in ETI's. The millions of pension 
investors and private pensioners deserve better from the Nation's 
pension watchdog. By voiding the interpretive bulletin, the bill 
removes a serious element of confusion and reinforces the preeminence 
of the time-tested fiduciary standards under ERISA.
  If the interpretive bulletin is a somewhat subtle means to promote 
ETI's, the Department of Labor's creation of a so-called ETI 
clearinghouse is much more direct. The Department, as Secretary of 
Labor Robert Reich has testified, fully intends to showcase ETI's for 
both public and private plan investment purposes. Here the Department 
has clearly deviated from its role as the chief enforcers of ERISA's 
prudence, exclusive
 benefit, and other fiduciary standards to become the chief promoter 
and apologist for social investments selected by a securities firm 
handpicked by the Department's chief ERISA enforcement officer. What 
are pensioners and the public supposed to conclude about such conduct 
by the administration?

  Would it not be safe to assume that the Department would run into at 
least the appearance of conflict by instigating and funding a 
clearinghouse listing specific ETI transactions? Is it not also 
foreseeable that a plan which invested in an ETI listed by the 
clearinghouse might raise as a defense the argument that the Department 
had endorsed the investment notwithstanding any disclaimer to the 
contrary by the clearinghouse? Finally, might not the clearinghouse 
operators be influenced to list particular investments based on the 
fees paid 

[[Page H 8741]]
by a participating financial intermediary? Of course, the answer in 
each case is ``yes''. The most troubling aspect, however, is that 
Department officials were aware of these red flags, which were raised 
by the ERISA Advisory Council before the beginning of the promotion 
campaign, yet they ignored them in their desire to showcase and promote 
ETI's.
  Will the ETI's listed by the clearinghouse be prudent and appropriate 
investments for particular plans? The Department has responded to our 
committee that the clearinghouse is not intended to function as a 
guarantor of the fiduciary suitability of an investment, even though it 
is the responsibility of the clearinghouse to develop criteria and 
methods for evaluating particular investments. We have asked the 
administration for their criteria, but both the Congress and pension 
investors remain in the dark. What is the criteria and what special 
interests will benefit?
  Understandably the investing public remains confused. As a result, 
departmental officials have already been forced to take steps to inform 
the public that investments listed by the clearinghouse will not have 
prior approval by the Department.
  The bill before us is the perfect antidote to this source of public 
confusion and scandal in-the-making. The bill terminates the 
clearinghouse and prevents this or any future administration from 
resurrecting any similarly imprudent device. According to CBO, the 
taxpayer also comes out ahead by over one-half of a million dollars.
  Clearly, the Department's actions involving ETI's are not a model for 
reinventing government. Taxpayer funds can be better spent on 
protecting pensioners' assets by enforcing ERISA, rather than on ETI 
speechmaking, promotion tours, and clearinghouses.
  When the time comes, I urge my colleagues to vote for the passage of 
the bill unamended. By voting ``yes'', you will be saying that the 
ERISA fiduciary standards which have served to well protect our 
Nation's pensioners for over 20 years should continue without the 
interference of misguided interpretive bulletins, clearinghouses, and 
other promotions of ETI's.
  On the other hand, if you vote ``no'', let it be understood that in 
the name of ``Big Government Knows Best'' you will allow the Clinton 
administration and future administrations to transform the ``Nation's 
Pension Watchdog'' into a lapdog and huckster for special interests and 
the latest politically targeted investment. In this case, pensioners 
will suffer, the capital markets will be undermined, and the entire 
voluntary private pension system will be put at risk.
  I urge you to vote ``yes'' on the passage of H.R. 1594 to ensure the 
continuance of a sound private pension system which is free from 
political interference.
  I would ask Members to vote for this legislation unamended.
  Mr. MARTINEZ. Mr. Chairman, I yield 5 minutes to the gentleman from 
Missouri [Mr. Clay], the ranking member of the Committee on Economic 
and Educational Opportunities.
  Mr. CLAY. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, I rise in opposition to this so-called Pension 
Protection Act. It has nothing to do with retirement protection, but 
rather attempts to address a nonexistent problem.
  If this bill were a movie, the committee substitute, the original 
Saxton bill, and the hysteria generated by the Republican leadership 
about economically targeted investments, would be a comedy, featuring 
dumb, dumber, and dumb-agoguery--cousins of the famous three stooges.
  This whole effort to eliminate ETI's is driven by pure, unadulterated 
demagoguery. It is a solution in search of a problem. More than that, 
if a problem did exist, it would be the worst possible solution. This 
bill would create enormous and completely unnecessary havoc in Federal 
pension policy.
  By now you may have read the ``Dear Colleague'' circulated by my 
committee colleagues, Representatives Bill Goodling and Harris Fawell. 
It reminded me of what communicating must have been like in the Tower 
of Babel. Many of their groundless, incoherent charges will be repeated 
here today.
  I am sure you had no idea that the Nation's pensions were in such 
grave jeopardy!
  Without offering any shred of evidence, they accuse the Clinton 
administration of all sorts of dishonest, deceitful behavior, including 
trying to use private pensions to fund ``its liberal social agenda.''
  My colleagues throw around terms like ``social investing'' and 
``politically targeted investments'' without ever saying that they are 
or offering a single example of either involving private pension plan 
investments.
  Their Dear Colleague letter reflects a lack of knowledge of what 
ETI's are and what the Labor Department policy has been for 15 years.
  In addition, the bill's sponsor presents a study showing, with 
breathtaking precision, that the administration's ETI policy will cost 
the typical pensioner $43,298--not $43,297 and not $43,299, but 
$43,298. Fantastic. And you would have thought that ``the finest CPA's 
money can buy'' would have gotten the figure to an even $44,000.
  Mr. Chairman, clearly, there is more to this bill than Republican 
concerns about ETI's. Labor Department policy prohibits the wild-eyed, 
irresponsible so-called social investing that has our Republican 
colleagues hyperventilating. If they are really concerned about the 
safety of the Nation's pensions, why have they just voted to slash the 
budget of the Nation's pension watchdog, the Labor Department's Pension 
and Welfare Benefits Administration.
  Mr. Chairman, all the Labor Department has ruled is to permit private 
pension funds to make investments that produce benefits to American 
communities as long as the interests of the pension beneficiaries come 
first and risk and return are not sacrificed.
  The Labor Department's only sin was in interpreting the pension law 
consistent with past Republican administrations.
  H.R. 1594 is dangerous public policy. The chilling effect created by 
this bill could effectively stop pension funds from considering the 
collateral benefits of investments.
  This bill is a complete waste of the House's time.
  It's dumb. Passage by this body would be dumber. Vote ``No'' on H.R. 
1594.
  Mr. FAWELL. Mr. Chairman, I yield myself 7 minutes.
  (Mr. FAWELL asked and was given permission to revise and extend his 
remarks.)
  Mr. FAWELL. Mr. Chairman, for the past 20 years, the Employment 
Retirement Income Security Act, known, as ERISA, has protected the 
financial security of America's retirees, and during that time the 
Department of Labor has served as a guardian of ERISA's private pension 
investment standards, and that is known as the prudent man rule. Now, 
however, the Department has, in my view, threatened to abdicate its 
role as the Nation's pension watchdog by promoting and, indeed, hyping 
a peculiar and particular class of investments called economically 
targeted investments, or ETI's.
  ETI's are investments in an array of socially beneficial projects, 
such as low-income housing construction, for instance, rather than 
those selected exclusively to provide a financially sound return for 
pensioners, as required under the prudent man rule.

                              {time}  1330

  In June 1994, as has been indicated, the Department issued what was 
called an interpretive bulletin which just plain promotes pension plan 
investment in these ETI's. Under this new policy, and it is that in my 
view, advanced by this bulletin, private pension plans may seek out an 
investment specifically for the benefits it creates for persons other 
than the plan's participants and beneficiaries.
  Current pension law, on the other hand, mandates that private pension 
plans should invest and manage their assets for the exclusive benefit 
of the participants, the pensioners and their beneficiaries.
  Thus, the Department, by contrast, would emphasize and promote and 
hype social programs and projects instead of protecting the best 
interests of the pensioners, as we see it.
  In addition, in September 1994, the Department awarded the contract 
to Hamilton Security Advisory Services to come up with a clearinghouse. 
This clearinghouse obviously, because it will collect information and 
also promote ETI's, will become and can become an instrument for 
promoting and pressuring plans to invest in certain investments that 
are
 promoted and, of course, favored by the department. No mandates here, 
but the message is pretty clear from the regulator.

  Moreover, the list of approved investment that the clearinghouse will 
produce will include imprudent investments, since the department has 
imposed no requirement that a project be 

[[Page H 8742]]
a prudent investment under the ERISA law before it is placed upon the 
list.
  At the Employer-Employee Relations Subcommittee's June 15 hearing, 
David Ball, Assistant Secretary of Labor for Pension and Welfare 
Benefits Administration under President Bush, testified, and I quote:

       It has been the Department's longstanding position that 
     nonfinancial factors or incidental benefits cannot be allowed 
     to take precedence, and I want to emphasize that word, 
     precedence over providing retirement income to participants 
     and beneficiaries.

  That is not to say that there are not incidental benefits, obviously, 
in any particular investment. ``The department, however, has strayed 
from this position, and by means of the Interpretive Bulletin and the 
clearinghouse is putting,'' and these are Mr. Ball's words, 
``inappropriate pressure on investment managers and subjecting them to 
political and social demands to invest in economically targeted 
investments.''
  H.R. 1594, as amended and reported by the committee, basically says 
three things:
  First, it is inappropriate for the department, as the principal 
enforcer of private pension investment standards, to promote and hawk 
and hype special classes of investments. That is not your business.
  Second, the bulletin is made null and void, not other bulletins, not 
other regs, but that bulletin.
  Third, the legislation specifically prohibits the department from 
operating a special clearinghouse for ETI's. Thus, this bill, the 
Saxton bill, simply states that private pension investment law under 
ERISA should return to what it was before the ill-advised bulletin of 
June 1994 and the clearinghouse were foisted upon the employee benefits 
community. It is based, I believe, upon the obvious, if there is an 
economically targeted investment and it can be just as sound an 
investment as other private pension investments, which the department 
contends, then special promoting of ETI's by the department is not 
necessary, since the market will obviously direct
 investment capital to the ETI's without governmental cheerleading if 
they meet the standards of ERISA. You do not have to go out there and 
hype it up.

       The department concedes in the bulletin that investments in 
     ETI's require a longer time to generate significant 
     investment returns, are less liquid, and require more 
     expertise to evaluate. In short, ETI's are a more risky 
     investment.

  Others will speak to that.
  Why, then, is the department straying so from its proper role as an 
investment watchdog and regulator and instead becoming a promoter? 
Because, like Willy Sutton, they know private pension funds are where 
the money is, and having the regulators promote ETI's is one way for 
politicians to get their hands on private pension funds to support 
social programs. But they overlook the fact that the $3.5 trillion of 
private pension funds in America is not the Government's money. It is 
retirement money of American's workers. It is marked in trust for their 
golden years. They are not tax funds, nor are we dealing with Social 
Security contributions of employers and employees, which, 
unfortunately, have long ago been hog-tied by Congress to be invested 
only in Government bonds.
  It is not like Social Security, where we have to invest everything in 
Government bonds, which is lunacy. No, private pension funds are 
voluntarily contributed across America by employers and employees in 
various sums under many different pension plans out of a lifetime of 
hard-earned wages, and the last thing America's private pension funds 
need is social tinkering by the bureaucrats at the Department of Labor. 
Government should be told in no uncertain terms, ``Keep your hands off 
private pensions,'' and that is precisely what the Saxton bill does.
  Mr. MARTINEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I rise in total opposition to this unnecessary bill--
which is both an intrusion into the duty of the Department of Labor to 
provide guidance under the Employee Retirement Income Security Act and 
a blatant attempt to manage the investment policies of America's 
pension plans.
  The level of paranoia evidenced by the flurry of ``Dear Colleagues'' 
and so-called economic updates issued by the bill's author is 
unprecedented. The Secretary of Labor sent out an interpretive bulletin 
because the Advisory Committee appointed by President Bush advised him 
to do so. Presidents Reagan and Bush supported economically targeted 
investments, both in public statements and in administrative actions 
that relaxed rules that were barriers to pension programs taking 
advantage of these investments.
  Yet, the leadership has attacked this issue on the basis that 
agencies should not advocate.
  Every agency should advocate for the policies set by the President 
and the Congress, and for what they believe to be in the best interests 
of the public.
  Just as the Surgeon General should champion the ideas of safe sex and 
prevention of drug abuse, the Department of Labor is supposed to 
advocate for jobs and job creation. This is their responsibility and 
their duty.
  Nobody objected when agency secretaries of Presidents Bush and Reagan 
advocated the interests of their agencies.
  Maybe because those agency secretaries advocated for one segment of 
society, political insiders, that it was deemed appropriate.
  But, now that President Clinton's appointees are advocating for the 
other segment of society, some of our friends on the other side of the 
aisle do not like it.
  Whether good or bad, some in this House are seeking to derail any 
proposals advocated by the administration--even those that have been 
advocated by the Republicans who served during the 1980's. This is 
politics, pure and simple, and spiteful politics at that.
  This does nothing to advance the interests of those we were elected 
to serve--rather it gets in the way of what is best for our people, and 
economically targeted investments can be if the prudent-made rule 
governs. And the bulletin makes that abundantly clear.
  Economically targeted investments are good investments, if they are 
made in strict accord with the interpretive bulletin issued by 
Secretary Reich.
  Because the investment manager must first find that the risk and 
return of the E.T.I. are at least equal to that of an alternative 
investment, the interests of the beneficiaries of the pension plan, are 
fully protected.
  The prudent-man rule still governs--all that is addressed by this 
bulletin, is an acknowledgment of the law that the Labor Department has 
consistently held since the enactment of ERISA in 1974.
  The investment manager can, if she or he so chooses, invest in a 
vehicle that will help the community--through better infrastructure, 
more housing, or more jobs.
  What kinds of investments are we talking about?
  Well, the definition of economically targeted investments, as found 
in this bill, ``Is an investment that is selected for the economic 
benefit it creates, in addition to the investment return to the 
employee benefit plan investors.'' I want to reiterate that the 
economic benefit is in addition to the investment return to the 
employee benefit plan.
  Clearly, the Labor Department is confirming something that is has 
always held--from the administration of Gerald Ford, when the ERISA law 
was signed, to the present day. There is a two-step process involved 
here.
  First, the investment risk and return must be assessed.
  Once it has been determined that the risk and probable return are 
equal to that probable for alternative investments, investment managers 
may consider the economic benefits of one investment as well as the 
other.
  The proponents of this bill say that ETI's are inherently bad 
investments. If that is so, then they would not fulfill the primary 
requirement of the interpretive bulletin--that the risk return be at 
least equal to an alternative investment, and no investment manager 
would select an investment that clearly violated the prudent-man rule 
embodied in the law.
  I believe, as my fried from Illinois has said, that we should let the 
market roar and stay out of the way of investment managers.
  If they act prudently under the law, they will not choose bad 
investments. But, if their analysis is that two alternatives carry the 
same risk and would reap an equal return, then they should 

[[Page H 8743]]
be the ones who determine whether or not to consider the collateral 
benefits offered by a particular strategy. That is not the province of 
the Congress.
  But, under this bill, that is exactly what the proponents would have 
us do--interfere in the market and in the investment strategies of 
people who know what they are doing. Let me give you an example.
  In California, a public pension plan has consistently earned its 
beneficiaries an investment return of 19 percent or more, and has been 
responsible for the creation of over 3,000 new housing units since 
1992. A major international union has, for more than 30 years, operated 
a public-private partnership creating over 5,500 construction trades 
jobs and over 15,000 jobs in all industries, while financing the 
construction of 35,000 residential units and 3.2 million square feet of 
commercial real estate.
  Over the next 5 years, it is expected that this pension trust, 
working with the Federal Government and local partners, will create an 
additional 12,000 housing units in 30 cities across the country.
  In all of this activity, the rate of return to the beneficiaries has 
been at least equal to the general performance of the market.
  A northeastern State's public retirement system, investing through a 
semi-public venture, has provided over $17.7 million in investment in 
55 companies, creating over 5,000 jobs, receiving an average rate of 
return of 16 percent.
  All of this while generating nearly $10 million in additional tax 
revenues for the State.
  Now, I don't know about you, but these sound like good investments to 
me--the kind that we should be encouraging--yet, some of our friends in 
this Congress are proposing interference with this process, simply 
because they believe there will be some mad rush by pension investors 
to gamble pension funds; untrue. Prudence will still govern. That 
doesn't change with the bulletin.
  This bill would counteract and interfere with the decisions of the 
knowledgeable and conservative--let me repeat--the knowledgeable and 
conservative--investment advisors who run these pension plans and who 
made the investment decisions that gave those excellent results that I 
just cited.
  I have contended since its introduction that this legislation is a 
solution looking for a problem. I see no reason why anyone should 
support it, except as lemmings they would follow their leader.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FAWELL. Mr. Chairman, I yield 6 minutes to the gentleman from New 
Jersey, Mr. Jim Saxton, who has been a real tiger and who has seen the 
problems which are before us.
  Mr. SAXTON. Mr. Chairman, let me first commend the gentleman for his 
tireless efforts in bringing this bill to the floor. It is certainly 
something worthy of debate today. Let me say at the outset that while I 
certainly acknowledge and respect the differences we have in terms of 
the differences with our Democrat friends on this issue, this debate is 
certainly one that is worthy of taking place, and certainly is not, as 
one of the previous speakers mentioned, a waste of time.
  This debate is about workers' savings, workers' savings for their 
retirement years. It is about $3.5 trillion in savings that more than 
36 million American workers put aside each day in the hope that it will 
be there, in the belief it will be there when they retire. That 36 
million, I might remind the gentleman from the other side of the aisle, 
there are 80,000 of those 36 million in each of our districts, and they 
are counting on us to do the right thing. It is about factory workers, 
factory workers who sit in the lunchroom each day and talk about their 
plans for retirement and their retirement fund.

                              {time}  1345

  It is about a clerk in a department store who goes home and talks 
with his or her spouse in the evening about what they are going to do 
when they retire and about their retirement fund. It is about the 
parcel delivery person who works hard all day and hustles around town 
in that little brown truck, and goes home at night to think about what 
he or she is going to do with his or her retirement fund when the time 
comes.
  And it is about the Clinton administration's plans to enter into an 
investment scheme which will severely erode the pension funds of these 
people. They are our friends and our constituents, and we have a duty 
here today to vote to protect their pension funds.
  A waste of time? I do not think so. As a matter of fact, I think it 
would be a good use of time for Secretary Reich to write each of my 
80,000 worker constituents a letter and say, ``We have put into place 
policy that could cost your pension fund as much as, yes, $43,200-some-
odd dollars,'' whatever the number is. I think that would be a good use 
of time for Secretary Reich to do that.
  They call it, here in Washington, DC, ETI's. That is a fancy beltway 
term. It means the use of
 Americans' retirement savings to make some risky social investments, 
causing pension funds to fail or earn less. We do not claim they earn 
less. Your Secretary of the Treasury claims they earn less.

  As a matter of fact, Alicia Munnell from the Department of the 
Treasury says that pension funds that invest in ETI's historically 
earned 2 percent less than pension funds that have not invested in 
these risky social investments. That means, according to our 
calculations, based on her assumptions and her figures, that over 10 
years these pension funds would lose $90 billion and over 20 years $520 
billion, and over 30 years $2.2 trillion in losses. Tell the factory 
worker, tell the clerk in the department store, tell the folks that 
hustle around delivering parcels that this is what it means to their 
pension funds.
  On an individual basis, look what it means to the individual as we 
project into the out years. We see a real gap, a difference between 
what they would have earned on their returns if they had been invested 
correctly and what they will if they are invested under Secretary 
Reich's plan.
  Yes, at the end of 30 years the worker who is now 35 years old and 
retires when he is 65 years old would have $43,000-plus less, a loss, 
in his pension fund or her pension fund because of this foolishness 
that is being carried out by the Clinton administration and the 
Secretary of the Treasury. Experience proves that the Clinton 
administration is on the wrong track, and I believe that we should 
stand together to look at some of those experiences as to why this is 
wrong.
  For example, the Kansas Public Employees Retirement System, known as 
KPERS, has lost over $390 million in that State due to social 
investing. KPERS lost $65 million in one investment alone, the Home 
Savings Association. When that company went bankrupt, due to political 
pressure KPERS went further and invested an additional $8 million in a 
local company, Christopher Steel. That company is now abandoned and the 
investment is a complete loss.
  Similar disasters have been seen all over the country, including in 
States like Connecticut, Alaska, Missouri, and Minnesota, and others 
that we could go on and name. In Arkansas in 1985 President Clinton 
signed into law language which said this: ``The State of Arkansas shall 
seek to invest not less than 5 percent nor more than 10 percent of 
their portfolio in socially related investments.''
  This was a target that was intended to mandate the investment of 
these funds, not to permit it. As I say to my friends on the other side 
of the aisle, ERISA clearly states that pension funds must be invested 
solely and exclusively for the exclusive purpose of providing benefits 
to the participants and the beneficiaries. It says nothing about social 
investments.
  This is precisely why ERISA does not say fiduciaries must make 
decisions primarily. It does not say primarily in the interest or 
almost entirely to provide benefits for participants and beneficiaries. 
It says solely and exclusively. I am at a loss to know what parts of 
the words ``solely and exclusively'' the Clinton Labor Department does 
not understand.
  Mr. MARTINEZ. Mr. Chairman, I yield 3 minutes to the gentleman from 
Texas, Mr. Gene Green.
  (Mr. GENE GREEN of Texas asked and was given permission to revise and 
extend his remarks.)

[[Page H 8744]]

  Mr. GENE GREEN of Texas. Mr. Chairman, I thank my colleague on the 
committee for yielding me some time.
  Mr. Chairman, I rise in opposition to H.R. 1594. I would like to ask 
the gentleman from New Jersey [Mr. Saxton] some questions.
  This bill comes at a time whose time has not come. The bill attacks 
something that is not existent. It is a straw man--or a straw person in 
inside-the-Beltway language--that is created by the Joint Economic 
Committee and talks about force. In fact, I just got this report today 
that in its conclusion it says by forcing pension fund managers.
  Nowhere in the Department of Labor do they force pension fund 
managers to do anything. This bill was created to create a political 
issue and nothing else. H.R. 1594 repeals an Interpretive Bulletin that 
pension managers consider collateral benefits where the risk and return 
otherwise meet the prudent standard.
  Last year the Department of Labor issued Interpretive Bulletin 94-1 
stating that it was permissible for a pension fund to invest in 
economically targeted investments under limited conditions. This 
bulletin made it clear that a pension fund may consider ETI's only if 
the risk adjusted return was comparable to alternative investments. The 
pension fund could not invest in ETI's if the return were less or the 
risk greater than comparable alternatives. There is absolutely no force 
and no mandates in ETI's. That is what makes this committee report from 
the Joint Economic Committee not worth the paper it is printed on. If 
an investment meets the prudent standard, what is wrong with using 
American pension fund assets to invest in America and in American jobs?
  This bulletin goes back to the Reagan administration. It is not 
something that President Clinton has created. The Department of Labor's 
position on ETI's is not new. Interpretive Bulletin 94-1 simply 
restates the Department's position for over 20 years spanning both 
Republican and Democratic administrations. In fact, the recommendation 
to issue the interpretive bulletin on ETI's was originally proposed by 
the ERISA Advisory Council, appointed by President Bush's 
administration.
  In a letter to Congressman Saxton, Ronald D. Watson, a member and 
later chairman of the ERISA Advisory Council, states:

       The conclusion that ETI's can have a place in pension 
     portfolios was reached by a cautious and instinctively 
     conservative group of advisers under a Republican 
     administration. It is being promoted by a Democratic 
     administration which happens to agree with the conclusions.

  The effects of H.R. 1594 would be devastating on pension managers. It 
clearly discourages and may effectively forbid consideration of 
collateral benefits by U.S. pension managers. To avoid potential 
liability, pension plans would be reluctant to invest in American 
investments that have collateral benefits, even though they may have 
competitive risk adjusted returns and otherwise meet the standards of 
ERISA. The result would be increased pension plan investments in 
foreign investments that is already increasing.
  In addition, this bill is one-sided, saying the Department of Labor 
must not encourage or promote ETI's. The bill is obviously an attempt 
to silence the Department of Labor. We need to make if they are going 
to be silenced on everything instead of just one thing.
  Let us put partisan politics aside. It is irresponsible for Congress 
to discourage investment in America. I would rather them build housing 
in the United States than build housing overseas at the comparable 
investment.
  Mr. FAWELL. Mr. Chairman, I yield 4 minutes to the gentlewoman from 
Kansas [Mrs. Meyers].
  Mrs. MEYERS of Kansas. Mr. Chairman, I rise in support of H.R. 1594, 
and I hope we pass this legislation today. We need to protect our 
American workers' pension funds, and that is exactly what this bill 
does.
  Right now American workers have more than $3.5 trillion in private 
pension funds, and some view these savings as one way to fund various 
Government-favored programs. This kind of thinking led to disaster for 
a number of pension plans in the 1980's.
  In my State of Kansas, the Kansas Public Employees Retirement System, 
known as KPERS, suffered gigantic losses resulting from an ill-fated 
program launched in the name of economic development in 1985. Back then 
some Kansas officials thought pension fund assets would be an ideal 
source of funds for stimulating economic development--the same notion 
currently being promoted by the administration and the Department of 
Labor. The idea caught on, and as a result, KPERS loaned $467 million 
to more than 100 companies from its cash assets in a direct placement 
loan program aimed at stimulating the Kansas economy.
  The investments made in the 1980's by KPERS would now be labeled as 
``economically targeted'' and would probably get on the Labor 
Department's new clearinghouse list. This is why I believe we must stop 
the administration's efforts to impose a socially motivated criteria in 
deciding where to invest pension funds.
  The loans made by KPERS to stimulate economic development have 
resulted in losses of more than $138 million, which has been written 
off, and total losses could reach $260 million, the estimated loss in 
1991 when the Kansas Legislature began an investigation of these 
investments. KPERS is still involved in lawsuits as a result of the 
huge losses suffered by the pension funds in their attempt to direct 
investment to economic development. I do not want to see this happen 
across the country, and we must pass this bill to ensure that pension 
fund managers will continue their prudent investment practices.
  The irony here is that under current law, pension fund investment 
managers can already invest in anything which they believe will provide 
a good return to beneficiaries. Referred to as the ``prudent man 
rule,'' current law requires that pension fund managers act with ``the 
care, skill, prudence, and diligence * * * that a prudent man acting in 
a like capacity and familiar with such matters would use * * *''.
  If a good investment opportunity presents itself, a pension fund 
manager can commit funds to it. If it is a prudent investment which is 
likely to produce a good return for pension beneficiaries, a fund 
manager can invest in it now--without any direction by the Department 
of Labor or the White House.
  Based on our Kansas experience, the action by the Clinton 
administration to direct pension funds to ``economically targeted 
investments'' is unwise at best. This legislation simply erases the 
administration's ability to direct pension fund investments. It does 
not discourage pension fund manager's from making investments in 
housing, infrastructure, or any other entity which is likely to benefit 
plan participants. But it does not encourage them either.
  Current law has served us well in this area. History has shown that 
we begin to lose pension dollars, or experience diminished returns, 
when we try to make ``politically correct'' investments with our 
American worker's money. Support 1594.
  Let us protect our Nation's pension funds. Support this legislation.
                              {time}  1400

  Mr. MARTINEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I just want to take this minute to read something to 
the Members here and for the public's general consumption. I want to 
read something that was said by the President at a public meeting.

       One of the values we are tying hardest to save in this 
     country is self-reliance, taking care of our own. And what 
     better example could there be than 15 building and 
     construction trade unions taking one-half billion dollars of 
     their hard-earned pension funds and investing that money to 
     create more jobs for workers? This country will owe you all a 
     debt of gratitude, and with initiatives like yours, we can 
     rebuild America.

  That was President Reagan before the Building Trades Association.
  Mr. MARTINEZ. Mr. Chairman, I yield 3 minutes to the gentleman from 
North Dakota [Mr. Pomeroy].
  Mr. POMEROY. Mr. Chairman, as a Member of this body, all too often, I 
have seen debates involve pressing problems and yet no real solutions, 
no meaningful answers. I am dumbfounded at this debate today, because 
we are dealing with no meaningful problem, and certainly just a sham of 
a solution.
  Mr. Chairman, I have 3 minutes left, and I would yield to any Member 
of the 

[[Page H 8745]]
majority side in support of this bill that can show me in the 
interpretive bulletin where the language is that would diminish in any 
way, in any way, once scintilla, one little bit, the standards of risk 
or standards of return that would jeopardize the pension funds in the 
way that have been outlined.
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. POMEROY. I yield to the gentleman from Illinois.
  Mr. FAWELL. Mr. Chairman, now that the gentleman has asked, the 
definition of ETI's, which is the first time to my knowledge that ETI's 
have ever been legally defined in any of the regulations or in the law, 
states: Are defined as investments selected for economic benefits they 
create, in addition to investment return to the employee benefit 
investor.
  Now, what my colleagues are doing here is hyping something that is 
not a part of the prudent man rule at all. That is, investments returns 
aside from those that will come to the participants and to the 
beneficiaries of the trust.
  I do not mean to say that there cannot be incidental benefits to any 
investment, but you do not spend millions of dollars, as the DOL is 
concerned, coming up with a new definition and going out and hyping and 
promoting it and hawking it.
  Mr. POMEROY. Reclaiming my time, I want to respond to the gentleman 
before my time lapses. I respect you and your work in ERISA, but I 
believe your answer is dead wrong.
  First, the standards of risk and return; the prudent person standards 
must be met before any other collateral considerations can be 
considered. And far from being a new standard, the interpretive 
bulletin is merely an attempt to codify what had been individually 
granted advisory opinions over the past 15 years tracking 
administrations of both parties.
  Mr. Chairman, the gentleman from Illinois [Mr. Fawell] cannot show 
where in the text of the interpretive bulletin the standards have been 
relaxed. I used to serve on an investment board for the State of North 
Dakota. This is material I have worked with and that is why I resent so 
strongly the misinterpretations and mischaracter- izations of the 
investment bulletin.
  I will vote with my colleagues on the other side of the aisle this 
afternoon, as I sit here and listen to the debate, if they can show me 
where in the text we are doing anything relative to the prudent person 
standards, the guardians of risk and return, that has been pointed out. 
It cannot be done. This is nothing but legislation regarding a made-up 
problem.
  Mr. FAWELL. Mr. Chairman, yield myself 30 seconds.
  Mr. Chairman, referring to the interpretive bulletin, which to my 
knowledge was the very first time that there was an official 
interpretation of the prudent man rule, they take sections 403 and 404 
and they say: Here, we are going to interpret that. And they interpret 
the ETI to mean that the very first thing that an investor ought to do 
is to look for the socially correct or politically correct investments.
  Mr. Chairman, that is a new and novel policy; and then to spend 
millions of dollars to go out and hawk and hype that. That is not a 
watchdog, that is a courier.
  Mr. MARTINEZ. Mr. Chairman, I yield 5 minutes to the gentleman from 
Ohio [Mr. Traficant].
  (Mr. TRAFICANT asked and was given permission to revise and extend 
his remarks.)
  Mr. TRAFICANT. Mr. Chairman, out of the approximate 4.6 trillion 
dollars' worth of U.S. pension funds to be invested, a maximum, they 
stretch at $30 billion, has been placed toward these ETI's; less than 1 
percent.
  The current law states that pension plans cannot invest in these 
ETI's if, No. 1, the return is less, or No. 2, the risk is greater than 
other investment alternatives. So the law is clear.
  Second of all, Ronald Reagan made a statement. He said, ``It is time 
to get Government back to the old-fashioned way.'' He said, ``Let 
private money rebuild America; not the taxpayers.''
  Ronald Reagan is further quoted as having stated exactly that 
Government money need not be invested in areas where private money can 
find a home and make a profit. And pension plan investment, where it 
can return profit to those in that pension, should be encouraged.
  Mr. Chairman, I have listened to the debate and I think I have looked 
at many of the conservative issues that come out of this Congress. I 
have an amendment for this bill. The amendment is right to the point. 
America needs at least 4 million housing units to satisfy the needs of 
America's housing. All investment plans in housing are averaging 
anywhere from 15 to 30 percent greater than the yield of their 
expectations.
  The Traficant amendment says: Nothing in this act shall be construed 
as prohibiting the Department of Labor from issuing advisory opinions 
regarding the legality of investments in the construction or renovation 
of affordable housing units.
  I think we are going too far here if we, in fact, send out a signal 
that someone could be in violation of ERISA if they call and someone in 
the Department of Labor gives them information about housing. This 
makes no sense to me.
  The Traficant amendment ensures there will be first-time home buyer 
homes available. I am not talking about financing the mortgages, taking 
a risk on the finance side of it. I am talking about making the 
investment in housing opportunities for American people.
  What are we basically saying to this major marketplace in America, 
construction jobs? Hey, go ahead and build the condominium in Mexico. 
There is a real shot for you. Go over to Europe and the new
 European economy and make investments over there.

  The California Public Employee Retirement System funneled $375 
million into the construction of over 3,000 homes. Their return is 20 
percent. New York City Employees Retirement System invested in the 
construction of 15,000 affordable housing units; return, 30 percent. 
AFL-CIO's Housing Investment Trust pools the funds of more than $1.1 
billion from 380 pension plans. The trust would rank first or second in 
America in its return if it were a publicly traded fixed-income fund.
  Employees all over America, their money helping not only their 
employees and the pensioners, but also those who still pay into those 
pension funds from the active work force.
  I do not understand the hype, but let me say this: I think I know 
where the leadership is coming from on the other side and it makes 
sense to ensure that private pension plans are not endangered by social 
service types of agendas.
  But when you have a legitimate American need and private money can 
serve that need, on the same risk factor that is existing now, let me 
say this to the other side. Ronald Reagan made sense on this issue. If 
the smart application of pension money in America can be used to 
rebuild America, while stabilizing pension plans, any Congress that 
challenges that concept, in my opinion, is not progressive but takes us 
a step back.
  Mr. Chairman, I am not going to argue all of these issues. The 
Traficant amendment will be very straightforward. If someone calls the 
Department of Labor, they will be able to give an advisory opinion on 
housing.
  Mr. FAWELL. Mr. Chairman, I yield 4 minutes to the gentleman from 
California [Mr. Cox].
  Mr. COX of California. Mr. Chairman, I want quickly to agree with the 
gentleman from Ohio [Mr. Traficant] on the other side of the aisle. It 
is true. Ronald Reagan did make sense on this issue. I worked for 
Ronald Reagan in the White House and I know very well that no one 
believed more passionately in the free enterprise system and the 
private sector than did Ronald Reagan.
  Ronald Reagan, unlike Robert Reich, understood the difference between 
government and free enterprise. Ronald Reagan did not have much 
difficulty answering the question, ``Should the Government direct 
private pension funds in their investments?'' The answer, of course, is 
no.
  Private pension funds represent at least $3.5 trillion in assets in 
America today. That is more than double the entire Federal budget. A 
lot of people would like to get their hands on this money for political 
purposes.
  In 1988, Jesse Jackson put it in his Presidential campaign platform. 
He 
 
[[Page H 8746]]

wanted to have the Federal Government help with the investment of 
private pension funds by helping to steer them into politically correct 
investments.
  Mr. Chairman, at a time when we are trying to reduce the size and 
scope of Federal Government, the liberal big spenders are obviously 
beside themselves. Where are they going to get the money they need to 
control life in America? What better place than private pension funds? 
There is so much money there, after all. It is double the amount than 
we have got in the whole Federal budget.
  The whole idea behind ETI's, [Economically Targeted Investments] is 
that investments can be made with social goals, not economic goals in 
mind. That is the purpose of Robert Reich's infamous Bulletin 94-1 
issued last year carrying out the campaign platform of Jesse Jackson in 
1988.
  It affects pension plans of all kinds, union pension funds, company 
pension plans, any private pension plan.
  What it does is stand the law on its head. Let me quote from ERISA, 
the existing law that protects our private pension investments.
  ERISA says pension fund managers must act, ``solely in the interest 
of participants and beneficiaries.'' That is what the law says. 
``Solely in the interest of participants and beneficiaries.''
  ``The exclusive purpose of providing benefits to participants and 
their beneficiaries.'' That is how pension fund managers must invest. 
``With the exclusive purpose of providing benefits to participants and 
their beneficiaries.''
  If one is trying to channel money to politically correct causes, is 
that not violating the law, the taking into account of another 
criterion? What Robert Reich has said in his bulletin is we can take 
something else into account.
  All else being equal, he says fallaciously, you can take into account 
the social utility of the investments. Who determines this? Not the 
marketplace any longer. That is what Ronald Reagan thought should 
happen. The marketplace would determine what is a socially useful 
investment.
  No, instead Robert Reich will help you determine this by putting 
together a list. And the Labor Department, at taxpayer expense, is 
going to have a list of Economically Targeted Investments. That is 
where we are going to encourage private pension money to go.
  There is no element of coercion in this when the Federal Government 
investments your taxpayer money in a whole system of putting together a 
list of politically correct investments, and then puts out an order 
directing people to pay more attention to this issue, as Investors 
Business Daily told us Robert Reich did 1 month after issuing Bulletin 
94-1? Of course not.
  Stealing the hard-earned after-tax savings of working Americans for 
social experiments is taxation. Unfair and unwarranted taxation to be 
sure, but another tax grab.
  Mr. Chairman, ETI stands for an ``Extra Tax on Individuals.'' Let us 
not permit it.
  Mr. MARTINEZ. Mr. Chairman, I yield 3 minutes to the gentleman from 
Ohio [Mr. Sawyer], my colleague on the committee.
  Mr. SAWYER. Mr. Chairman, I appreciate the opportunity to rise today 
in strong opposition to this measure. Quite literally, as the gentleman 
from North Dakota [Mr. Pomeroy] mentioned, this bill is a solution 
desperately thrashing about in search of a problem.
  Mr. Chairman, there are problems we face with retirements. As a 
Nation we face a tremendous challenge, that of planning for the 
retirement of the post-war generation that has come to be known as the 
Baby Boomers. Ensuring the soundness of pension funds is a critical 
component of that effort.
  Mr. Chairman, I am among the very first, at the leading edge of that 
population cohort and I recognize that a fundamental problem is that 
the boom generation is one that can broadly be characterized as one 
that has simply not learned to save.
  As an age cohort, many have instead spent much of their disposal 
income elevating a notion of a minimal standard of living through 
current consumption, while simultaneously limiting their ability to 
secure it into the future.
  We agree, all of us, that it has been important to encourage working 
Americans to save for their retirement and to encourage employers to 
set up sound and reliable retirement systems that will be liquid when 
they are needed, that include matching employer contributions.

                              {time}  1415

  Unfortunately, this bill does absolutely nothing to elevate that goal 
or either goal. In fact, this bill potentially puts into question a 
wide range of existing pension plan benefits. This bill would repeal a 
Department of Labor interpretive bulletin, ordered by the Bush 
administration Labor Department in response to private sector inquiry. 
The bulletin simply clarifies past interpretations of the ERISA Act 
with respect to many kinds of investments, including those which may 
add ancillary benefits to the broader economy.
  In essence, the bulletin does not make any new rulings nor does it 
advocate for pension plan investment in ETI's or any other kind of 
specific investment. However, by repealing the bulletin, we leave the 
potential vacuum of ambiguity and potential confusion regarding pension 
plan investments and past rulings which may risk unnecessary 
litigation. All this uncertainty undermines the ability of pension plan 
managers to make the best investments for future retiress.
  More importantly, what we really should be doing is debating 
realistic strategies for ensuring the stability of and encouraging 
participation in sound pension plans. I am eager to work toward that 
goal.
  Unfortunately, the bill does nothing along those lines. I would ask 
my colleagues on the other side if they would find it important to 
encourage that the fiduciary standards applicable to the ETI's be no 
different than the standards applicable to plan investments generally. 
If they, in fact, would agree with that, then they cannot disagree with 
the fundamental content of this ruling, which, in fact, calls upon 
investors to do precisely that. It is the same standards only with 
greater clarity that we have been working with for a long time, and I 
urge my colleagues to vote against it so that we can more on to the 
addressing real challenges of preparing for the next century.
  Mr. FAWELL. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman 
from Michigan [Mr. Knollenberg].
  Mr. KNOLLENBERG. Mr. Chairman, I rise in strong support of H.R. 1594, 
the Pension Protection Act of 1995. Let me start out by commending the 
gentleman from New Jersey [Mr. Saxton] for his work on this important 
bill.
  The reason we are here today is because President Clinton's 
Department of Labor has abdicated its responsibility as the Nation's 
pension watchdog. Last June, Secretary Reich issued an interpretative 
bulletin that allows pension managers to invest private pension funds 
in risky social ventures. He likes to call them ETI's, or economically 
targeted investments. I prefer to call them PTI's--politically targeted 
investments.
  ETI's are chosen for the social benefits they generate to third 
parties instead of their safety and financial return to pensioners. 
Simply put, ETI's are nothing more than a code word for pork barrel 
projects in urban areas.
  Secretary Reich has argued that his interpretative bulletin was 
needed to clarify the intent of ERISA because of confusion in the 
pension investment community. In reality, the intent of ERISA's 
investment standards have been understood by pension managers for over 
20 years. They are very simple and very clear: When investing private 
pension funds, a pension manager's sole responsibility is to focus on 
the interest of his plan's participants and beneficiaries. Pension 
managers have avoided ETI's, it is because they are bad investments--
not because they were confused by ERISA.
  If ETI's were sound, pension managers would invest in them regardless 
of their so-called social benefits. It's that simple. Secretary Reich's 
promotion of ETI's leads me to the conclusion that either the Clinton 
administration doesn't believe in the free market, or it understands 
that these investments are too risky and ERISA's standards must be 
altered. If these investments were prudent investments, the free 
market, the pension managers, would already be there.
  The President's advisors know that ETI's are risky. In fact, Alicia 
Munnel, 

[[Page H 8747]]
a current Assistant Secretary of the Treasury in the Clinton 
administration, their economist at Federal Reserve Bank, Boston, stated 
in 1983 that ETI's earn between 2 and 5 percent less than traditional 
pension fund investments. Now that may not sound like a big difference, 
but the numbers add up over time. For example, if just 5 percent of the 
Nation's private pension funds are invested in ETI's, pensioners would 
lose $90 billion in retirement income over 10 years, $520 billion in 20 
years, and $2.3 trillion in 30 years. This translates into over $43,000 
in direct losses to the average pensioner. I don't know about you, but 
I sure would be upset if the manager of my private pension decided to 
follow the lead of President Clinton.
  Given the track record of ETI's, an interesting question comes to 
mind, why is the Clinton administration promoting these high-risk 
social investments? The answer is simple. Finding revenue for the 
President's social agenda is obviously more important to the Department 
of Labor than protecting the retirement income of millions of 
Americans. This is outrageous.
  The Clinton administration's pension grab reminds me of the story of 
Willy Sutton. Willy Sutton, a famous bank robber when asked why do you 
rob banks, responded, ``because that's
 where the money is.'' Faced with a Republican Congress committed to 
balancing the budget, President Clinton knows that he can't get money 
for his pie-in-the-sky-liberal programs, so he is going where the money 
is--private pension funds. Promoting ETIs may be good politics for a 
President who needs the support of big labor and inner city mayors to 
win reelection, but it's bad public policy.

  This scheme has been tried before and the results have been 
devastating. Confronted with the need to cut spending and balance their 
budgets, several States have tapped into the pension funds of State 
employees to finance development projects. For example, the State of 
Connecticut invested $25 million worth of State pension funds in Colt 
Manufacturing. Just 3 years later, Colt filed for bankruptcy and the 
State's pensioners saw their hopes of profit vanish. It is unlikely 
that they will ever see their money again. This is not the government's 
money at stake, it is the retirement funds of American workers.
  H.R. 1594 stops the Clinton administration's stealth attack on 
private pensions. Under this bill, fiduciaries will still be able to 
invest in ETIs, as long as these investments are safe and generate good 
returns. BUt they won't have legal cover for bad investments that were 
made at the bequest of labor bosses and inner city politicians.
  The promotion of ETIs is nothing less than embodying political 
correctness as public policy. It is simply wrong for the Congress to do 
anything other than reaffirm the commitment of pension managers to seek 
the highest possible return on the investment of the retirement income 
of American workers and pensioners. To do any less would seriously 
undermine the confidence in pension investors. We cannot and should not 
give a green light to the irresponsible allocation of the finances of 
retirees. To do so would be a breach of our fiduciary responsibility to 
the American people.
   Mr. Chairman, I urge my colleagues to support H.R. 1594 and stop the 
Clinton administration's pension grab before it is too late.
  Do not compare pension assets with entrepreneurial capital.
  Mr. MARTINEZ. Mr. Chairman, I yield 6 minutes to my colleague, the 
gentleman from New York [Mr. Owens], a member of the Committee on 
Economic and Educational Opportunities.
  (Mr. OWENS asked and was given permission to revise and extend his 
remarks.)
  Mr. OWENS. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. MARTINEZ. Mr. Chairman, will the gentleman yield?
  Mr. OWENS. I yield to the gentleman from California.
  Mr. MARTINEZ. Mr. Chairman, in response to the last speaker, the 
President is not going to make a decision on that investment. The 
Department of Labor is not going to make a decision on that investment. 
The investors will make the decision on that investment. The managers, 
the fiduciary managers, will make that decision, and they will do it 
based on the prudent man rule.
  This is just a smokescreen, trying to make out that there is some big 
plot by the President to capture somebody's money and invest it in a 
foolish scheme. That is the farthest thing from the truth.
  The interpretive bulletin makes that very clear.
  Mr. OWENS. Mr. Chairman, I rise in strong opposition to this 
legislation.
  There is a lesson in democracy which the taxpayers and the voters 
should look closely at here. Democracy is a deliberative, long-term 
process. You start with a great communicator like Ronald Reagan. Nobody 
is confused about what Ronald Reagan meant when he said pension funds 
should be invested in America to make jobs for people in America. He 
was talking particularly about the construction industry people, but 
there are numerous other situations where pension funds invested in 
America make jobs for Americans. They also create other benefits for 
Americans. At the same time, they are subject to the same standards as 
any other investments.
  Over and over again, every document produced by the Federal 
Government, by Secretary Reich, everything says assuming everything 
else is equal, you must make certain first of all the standards are 
met. We have on the one hand Ronald Reagan initiating the idea, picked 
up by a number of other people, including Jesse Jackson. That does not 
make it any more radical if Ronald Reagan said it first. Certainly, it 
is respectable and acceptable. George Bush goes further
 and creates a clearinghouse. He institutionalizes it a few steps 
further. Secretary Reich is only carrying it further and putting out a 
booklet that helps clarify a few things.

  We have this deliberative process on the one hand, and on the other 
hand you have hysteria and panic being generated by a wolfpack that 
needs a rabbit to chase, and they have invented this one for reasons I 
am not quite certain of. But I suspect those reasons are to create an 
investment environment which is safe for some truly risky investments, 
for some overseas investments which are more risky and do not bear 
benefits for Americans.
  What happened in the savings-and-loan situation? Americans are out of 
at least $250 billion. The taxpayers have had to cough up at least $250 
billion, and that is a conservative estimate, as a result of 
investments made by the savings-and-loan industry. Where were these 
people who are now generating this hysteria? Were any of these 
investments made by the savings-and-loans associations which resulted 
in $250 billion worth of losses to the American people? Where they 
ETI's?
  If you find 1 percent for ETI's, I assure you you will have to do a 
lot of miraculous searching. Most of them were usual marketplace 
investments, applying the usual standards, no economically targeted 
investments. There is a target for the wolfpack to go chase.
  You know, the hysteria of their argument sort of rises up from the 
page. You know, you can feel the sweat and saliva. Goebbels would be 
very proud of the kind of hysteria generated by the written statements 
made about this menace to America of economically targeted investments. 
Where were they when the real menace was there via the savings-and-
loans' waste that has led to $250 billion in losses of American 
taxpayer's money? Where were they when that was happening?
  In an effort to create an issue where none exists, these Republican 
supporters of this measure are stretching the truth, to say the least.
  One particularly bad example of this is a letter the gentleman from 
New Jersey [Mr. Saxton] sent in May to a number of corporate chief 
executives. The letter is fully of inflammatory language and baseless 
allegations. The full letter appears in the minority views. I urge that 
all my colleagues take a look at 
 that letter. The letter says more about what is going on here than 
most of what we will hear on the floor today.

  The Council of Institutional Investors wrote the rhetoric in the 
letter of the gentleman from New Jersey [Mr. Saxton], ``Smacks of the 
pension equivalent of McCarthy era scare tactics.'' I agree. The 
letter, of course, repeats the big lie ETI's are unduly risky or pose a 
threat to fiscal safety, never mind ERISA has always provided that, 

[[Page H 8748]]
in order to be permissible under the law, ETI's must be prudent 
investments in terms of risk and return.
  IB-94 reaffirms the Department of Labor's longstanding position that 
ETI's are only permissible if they provide the plan with a competitive 
risk-adjusted rate of return.
  In his letter, the gentleman from New Jersey [Mr. Saxton] also 
claims, without any support, ``A number of companies and pension 
investors have felt subtle pressure from the Administration,'' to 
invest in ETI's.
  In addition, the letter includes specious charges the Department of 
Labor engaged in ``coercive behavior, intimidation and other nefarious 
schemes.'' The letter even refers to a Clinton quota roof. One of the 
most egregious falsehoods is the alleged plan of the Clinton 
administration to establish ``compulsory ETI quotas.'' It is important 
to reiterate that IB-94-1 does not mandate ETI's nor does it in any way 
authorize investments in ETI's at a concessionary rate.
  In fact, the Clinton administration is on record in opposition to 
mandated ETI's, including testimony before this committee and testimony 
before Vice Chairman Saxton's Joint Economic Committee.
  More recently, in another irresponsible attempt to unnecessarily 
frighten the current and future pensioners, the so-called economists at 
the Joint Economic Committee have concocted an incredible scenario 
about the potential impact of pension funds on ETI's. They issued a 
report claiming the Labor Department ETI investments possibly will cost 
pensioners $43,000 over 30 years. No self-respecting mathematician, 
sophomore with arithmetic, would accept those assumptions made in that 
report.
  Mr. FAWELL. Mr. Chairman, I yield 4 minutes to the gentleman from 
Rockford, IL [Mr. Manzullo].
  Mr. MANZULLO. Mr. Chairman, I thank my good friend, and he is my good 
friend, the vice chairman of the Joint Economic Committee, the 
gentleman from New Jersey [Mr. Saxton], for his tremendous work on this 
timely and important legislation.
  Mr. SAXTON. Mr. Chairman, will the gentleman yield?
  Mr. MANZULLO. I yield to the gentleman from New Jersey.
  Mr. SAXTON. I just want to state for the record the previous speaker 
was in error in stating that George Bush, when he was President, 
created a clearinghouse for the purposes of promoting economically 
targeted investments. The fact of the matter is he did not. It was 
created pursuant to the election of Bill Clinton and the appointment of 
Robert Reich, and never under the Bush administration.
  Mr. MANZULLO. Mr. Chairman, the Clinton administration is trying to 
allow $3.7 trillion in pension money to be used for risky investments 
as opposed to sound investments. This means the hard-earned pension 
money deposited by present and future pensioners is going to be used by 
politicians to fund pet projects that are very risky.
  The Clinton administration wants American workers to bankroll its 
liberal social agenda. It is risky social investing by any other name, 
and whenever it has been tried before, it has delivered consistently 
substandard returns.
  The American workers are being asked to exchange investments in blue 
chips for poker chips and thus jeopardize their entire retirement.
                              {time}  1430

  Just take a look at the ETI track record in the public pension 
system. In 1993 the State of Connecticut lost $25 million from pension 
funds in risky investments. The Kansas public employees retirement 
system tried to use its funds for ETI's. It lost hundreds of millions 
of dollars so far. In Pennsylvania $70 million in public school 
employees' and State employees' retirement funds were sunk into an 
instate Volkswagen plant which lost 57 percent of its value in 14 
years. In Missouri an ETI adventure, and it is an adventure, lost $5 
million in retirement savings, and in the State of Arkansas, where 
President Clinton in 1985 signed a bill with a quota that between 5 and 
10 percent of all pension funds must go on to ETI's, the Arkansas State 
auditor, Julia Hughes Jones, openly defied the Governor and said these 
are risky ventures, risky ventures indeed, building a sorority house on 
a campus with money that belongs to the teachers and the public workers 
of the State of Arkansas.
  Mr. Chairman, the investment opportunities in this country are guided 
by something called sound and prudent investment, not a Federal crap 
game, and that is exactly what the President is trying to do. He is 
trying to find all kinds of moneys, wherever they are, and put our 
American workers' pensions, our future pensions, at risk.
  Now, if we are not trying to change the standard by our bill, if we 
are simply saying, ``Use the prudent-man rule,'' then the Democrats, 
our colleagues, should agree with this bill, they should vote yes for 
it, because this bill simply says under all circumstances whatsoever 
the prudent-man rule of investing will be done, and, therefore, we need 
a clear and definitive statement, we need legislation that protects the 
American workers in this country, that says once and for all our 
dollars will be invested only in sound, prudent investments and not in 
gambling investments.
  Mr. MARTINEZ. Mr. Chairman, I yield for 4 minutes to the gentlewoman 
from Connecticut [Ms. DeLauro].
  Ms. DeLAURO. Mr. Chairman, I rise in strong opposition to this 
unnecessary and ill-conceived bill. We face serious issues regarding 
national retirement policy. But today, we are not considering ways to 
strengthen private pensions or how to ensure a secure retirement for 
our Nation's seniors. Instead, we are wasting time and energy on a bill 
to address a problem that does not exist.
  Investment by pension fund managers in Economically Targeted 
Investments, or ETI's, is not the problem. This bill is a smokescreen. 
It is simply a way for Republican Members, quite frankly, to divert 
attention away from the real issues facing seniors, like Republican 
plans to make $270 billion in cuts to Medicare, and it is not going to 
work.
  Much attention has been focused on the Labor Department's 
interpretive bulletin issued in June 1994. This bulletin sought to 
answer a question asked for over 15 years by many pension fund 
managers.
  These fund managers asked if they could consider factors in addition, 
I repeat in addition to the return to the plan when choosing among 
alternative investments. The Labor Department answered as it always 
has: pension fund investments must be based on the return to the plan. 
Only if the returns of different investments are comparable can fund 
managers give weight to other factors. So that investment, first, must 
pass muster; risk and return characteristics are first and foremost. 
The Labor Department's interpretive bulletin simply clarifies this 
policy in response to questions from pension fund managers. It does 
not, I repeat it does not, require investment in ETI's.
  The bill before us today is a needless attack on ETIs. But that is 
not all. It is much worse. It would prohibit the Labor Department from 
even providing information about ETIs. It is a gag rule. The Department 
would not even be permitted to answer questions from well-intentioned 
pension fund managers seeking to comply with the law.
  What will a fund manager do if he or she might be subject to a 
lawsuit for considering an investment's additional economic benefits 
and cannot consult the Labor Department in any way? That fund manager 
will steer funds away from many of the investments our country most 
needs to make--investments in our infrastructure, in our cities, and to 
provide badly-needed jobs.
  Worse, this bill encourages pension plan managers to invest in 
foreign countries instead of the United States. It defies common sense 
to advocate policies that make it easier for pension plans to invest in 
Europe over America. Already, American pension funds are seeking to 
increase foreign investments.
  Mr. Chairman, this bill amounts to a full employment plan for pension 
lawyers, that is what it is about. This Congress should be encouraging 
small business start ups, and investments in infrastructure and 
considering ways to make our senior's retirements more secure. This 
bill will do none of those things and amounts to a diversionary tactic 
to distract the American people 

[[Page H 8749]]
from the hundreds of billions of dollars in Medicare cuts proposed by 
the Republicans, I urge its defeat.
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
Delaware [Mr. Castle], the former Governor of the State of Delaware.
  Mr. CASTLE. Mr. Chairman, I thank the gentleman from Illinois [Mr. 
Fawell], whose knowledge about ERISA is indeed encyclopedic, for 
yielding this time to me, and the gentleman from New Jersey, who 
sponsored this piece of legislation, and my feelings may not be as 
strong as some in this room, but I have a real-life experience that I 
would just like to relate to my colleagues.
  I rise in very strong support of H.R. 1594 because our Nation's 
retirees' and our senior citizens' hard-earned pensions must not and 
cannot be jeopardized by the Department of Labor's promotion of 
riskier, politically targeted investments that do not take into account 
our Nation's laws governing the safety of our retirees' pension 
investments.
  Now I probably did not know a lot about this issue, and, when I 
became Governor in 1985 of the State of Delaware, I received a call 
from Mr. Ernst Danneman, who had heard word that I was sort of 
interested in economically targeted investments, and I was. I had it in 
my mind that we could help with mortgages to the poor, that we could 
help keep jobs in the State of Delaware, that there were a number of 
things that we could perhaps do if we were able to use
 some of that money, and clearly it was a source of money at a time 
when we did not have a lot, and he came into my office, and he said, 
``Mike, I'm not a politician,'' and it turns out he is a registered 
declined, does not give to political campaigns, never been involved in 
politics at all. He has run a business, and he ran our pension board. 
He was the man who was the head of the Board of Pension Trustees in the 
State of Delaware. And he said:

       I've heard what you are thinking about in economically 
     targeted investments, and I want to tell you it is absolutely 
     wrong. It is the most difficult job in the world to manage 
     pension funds correctly, to compete with other managed funds 
     out there, to be able to return the top dollar to the 
     individuals who should benefit from the top dollar, which is 
     the retirees and the employees that will one day be the 
     retirees.

  He said, ``You should not consider this under any circumstance,'' and 
he proved to me by showing examples that there are States and there are 
corporations which have tried to do this and it has not worked 
particularly well.
  I took that to task, and for 8 years we never thought about it at 
all. We let our Board of Pension Trustees run our pension plan. We had, 
I think, two of those years the highest return of any public pension 
plan in the entire United States of America, all because we allowed 
these individuals to do it, and that money did regenerate into our 
economy because of course our retirees and eventually those who were to 
retire were able to receive funds.
  So, it worked extraordinarily well. It was a lesson well learned.
  I called Mr. Danneman yesterday--I had not spoken to him in probably 
over a year or two--to talk to him about this saying I would like to 
present this story on the floor, and he said, ``Mike, absolutely,'' and 
he said a couple of things. He said, ``One, the Board of Pension 
Trustees--and it doesn't make any difference if it is private or 
public, I might add--has a fiduciary duty to return as much money as 
possible.'' Then he said, ``Investing dollars is a single-minded 
effort. You can't cure the world's problems on the side.'' I think that 
is a very weighty statement. He pointed out the social investing does 
not do as well, and I realize that this has it in some protection such 
as a prudent-man rule, and we are supported to be able to return an 
investment, but even in the private sector there can be pressure from a 
chairman who has a wrong concept, pressure from a board that has a 
wrong concept, perhaps somebody will read about what the Department of 
Labor is doing, and I really honestly believe that we should do 
everything in our power to keep the Department of Labor and Government 
out of our pension plans and let them run it correctly.
  Mr. MARTINEZ. Mr. Chairman, I yield 5 minutes, 30 seconds to the 
gentleman from Montana [Mr. Williams], a member of the Committee on 
Economic and Educational Opportunities, and I ask him to yield to the 
gentleman from North Dakota [Mr. Pomeroy] for 30 seconds.
  Mr. WILLIAMS. Mr. Chairman, I yield to the gentleman from North 
Dakota [Mr. Pomeroy].
  Mr. POMEREOY. Mr. Chairman, ever so briefly, from the I.B. issue let 
me read to my colleagues:
  The fiduciary standards applicable to ETI's are no different than the 
standards applicable to planned investments generally.
  I agree with everything the gentleman from Delaware just said about 
the importance, the critical nature, of fiduciary standards. It is just 
absolutely incorrect to characterize the I.B. as changing this 
fiduciary standard. It is not there.
  Mr. WILLIAMS. Mr. Chairman, my colleagues, I was chairman of this 
subcommittee for a number of years in the House, so I recall with some 
precision the history of ETI's, economically targeted investments.
  I remember that former President Ronald Reagan advocated the changes. 
He, in fact, actually advocated regulations that facilitated the use of 
ETI's, and I believe the entirety of the former President's statement 
has been made by someone who preceded me, so I do not want to restate 
the former President's entire position, but let me just remind my 
colleagues of this: Former President Reagan, in adocating regulations 
to create these ETI's, said this:

       We have over in the Labor Department made some good 
     definite changes in regulations. Those changes are going to 
     free up billions of dollars in pension funds that can now be 
     invested in home mortgages.

  President Reagan's Labor Secretary back then, a fellow named Raymond 
Donovan, said, and I am quoting,

       I tried to emphasize the importance of increased 
     investments in home mortgages. More mortgage money and thus 
     more construction, more jobs, a healthier economy; those are 
     the goals of this administration that will benefit this 
     country greatly in the months ahead.

  And then later, following President Reagan, came good former 
President George Bush, and George Bush's Labor Secretary, as my 
colleagues will recall, was Elizabeth Dole, Secretary Dole, and she 
wrote to then Housing Secretary Jack Kemp that the Labor Department has 
worked with the building and construction trade unions to structure a 
program that allowed investment in housing construction, and under the 
Bush administration those investments with pension funds were 
encouraged.
  Now along comes our next President, and he has suggested economically 
targeted investments through his Labor Secretary, Robert Reich. But now 
we have a new Congress, and a new Congress, if I may say, with an 
ideological bent to the far right, and so they are noticing that Labor 
Secretary Reich in a fairly recent speech said we are not only going to 
have these ETI's, as we have had them in the past, but we really ought 
to be trying to do some economic good in inner cities, Indian 
reservations, other places in this country that are not only 
economically in trouble, but, because they have economic despair, they 
are socially in trouble.

                              {time}  1445

  It was that hint from Secretary Reich that perhaps we ought to worry 
about people who have social difficulties that seems to have triggered 
this new Congress with their ideological bent to try to stop these 
ETI's, because now they say oh, they are not economically targeted 
investments, they are socially targeted investments.
  Nothing, since I have been in this House this year, so unmasks the 
new ideological fervor of the new majority than this bill. This bill is 
making a mountain out of a molehill. This bill is really a gnat buzzing 
around a nonproblem. But, when you are so definitely ideological as to 
rise up on your hind legs and resist any indication whatsoever that 
money might be used in a way that might help society take care of some 
of its social ills as well as its economic ills, then this type of a 
bill is the result. It is either that, or this new Congress is trying 
to embarrass the Clinton administration, a Democratic administration 
that is simply following the policies that were put in place, 
correctly, by two previous Republican administrations. Or, maybe the 
new majority is just trying to change the subject, which seems lately 

[[Page H 8750]]
to have fallen on Medicare and the cuts that come in Medicare.
  So, Mr. Chairman, we are spending an entire day in this busy time of 
the year on a bill discussing whether or not the Clinton administration 
is trying to invest money in a way that will improve not only the 
economic climate in America, but the social climate as well.
  Mr. FAWELL. Mr. Chairman, I yield 30 seconds to the gentleman from 
New Jersey [Mr. Saxton].
  Mr. SAXTON. Mr. Chairman, I would just point out very quickly that as 
the last speaker indicated, ETI's have been around for quite some time 
in the context of an investor, a pension fund manager coming to the 
Department of Labor during the Bush or Clinton administration and 
requesting an advisory opinion on an ETI. What is different in this 
administration is that $1 million has been spent to create a group to 
promote ETI's; people have traveled around the country making speeches 
promoting ETI's, and in fact, people who are here to regulate pension 
funds and pension fund managers have knocked on people's doors and said 
gee, we think as regulators it would be a great idea for you to do 
ETI's. That, Mr. Chairman, is very, very different.
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
Colorado [Mr. Hefley].
  Mr. HEFLEY. Mr. Chairman, I would just like to respond also to my 
friend from Montana [Mr. Williams] for just a moment. The gentleman 
acted like with the advent of the new Congress that ideology just was 
born in this House of Representatives. I might point out to him that 
the previous Congress was run by the ideological left, and I might say 
the ideological far left. So I am sure that any change that has 
occurred in this Congress must make him feel like we have moved to the 
far right.
  I hope we have moved to the right. I hope we are not where we were a 
year ago. I do not think maybe we are as far out of step with the 
American public as his statements would seem to indicate.
  Mr. Chairman, I have listened to the debate so far, and I have heard 
the numbers and the studies used, but I think the real issue here is 
this: The Clinton administration is not getting the money they want for 
their social welfare agenda. so they are attempting to force investors, 
in this case pension fund investors, to do the job. The American people 
are tired of writing checks for big government programs and projects 
that do not work.
  The desire of the Republican-controlled 104th Congress to give the 
American people a balanced budget has significantly cut and will 
significantly cut, I hope, the funding for many of the Clinton 
administration's welfare state programs. This bill simply prohibits the 
Department of Labor or any other Federal agency from encouraging 
private pension funds from investing their recipients' hard-earned 
retirement moneys into investments that produce benefits for the larger 
community as the goal, even if it might be unwise investment policy. 
Who decides what the community benefits are? The taxpayers, or some 
bureaucrat down at the Labor Department?
  Mr. Chairman, this is Socialism 101. This whole concept flies in the 
face of the mandate set by the American people last November that they 
do not want big government interfering in decisions that are none of 
big government's business. If this legislation is not enacted, we are 
essentially missing the point. We want pension fund investors to make 
money for their funds. This is the first criteria. I urge a yes vote on 
H.R. 1594.
  Mr. MARTINEZ. Mr. Chairman, I yield 6 minutes to the gentleman from 
New York [Mr. Engel], my colleague from the committee.
  Mr. WILLIAMS. Mr. Chairman, will the gentleman yield?
  Mr. ENGEL. I yield to the gentleman from Montana.
  Mr. WILLIAMS. Mr. Chairman, I thank the gentleman.
  Mr. Chairman, I just want to respond to my friends and colleagues on 
the other side. If you have any doubt about the ideological fervor that 
is driving this legislation, listen to the words: Welfare state, and: 
The last Congress was the ideological left. I mean, come on. This is 
laughable. Only the ideological right would think that the last 
Congress, which could not pass Endangered Species, could not pass Clean 
Water, and passed the Clinton budget by one mere vote, was on the 
ideological left. It is clearly the far right that is driving a bill 
like this. This bill is utter, absolute nonsense, and is propelled by 
the far right.
  Mr. ENGEL. Mr. Chairman, reclaiming my time, let me just say that our 
colleague from the other side of the aisle referred to those of us who 
oppose this legislation as being in favor of Socialism 101. Let me say 
that I think what we are hearing from much of the other side of the 
aisle, frankly, is Mean Spiritedness 101.
  Mr. Chairman, we have been hearing this all Congress and I am sorry 
to say that this just seems to be part of the pattern on the Committee 
on Economic and Educational Opportunities. We have seen an anti-working 
people, anti-labor agenda from day one, from the start of this new 
Congress, from eliminating the word ``Labor'' from the old Committee on 
Education and Labor to refusing to consider a hike in the minimum wage, 
talking in fact about eliminating the minimum wage, talking about 
eliminating Davis-Bacon to protect working people, giving them a 
prevailing wage that has been in effect 60 years, was put in by 
Republicans 60 years ago, and now this new Congress wants to eliminate 
it.
  They want to eliminate OSHA protections for working people in this 
country to make sure that American workers have safety in the 
workplace. They want to eliminate those regulations. We just passed 
legislation slashing the National Labor Relations Board, which monitors 
unfair labor practices. They want to eliminate that. So this does not 
surprise me. This is a pattern on the Republican side of being against 
working men and women of America, quite frankly.
  While I have a lot of affection for some of the individuals who are 
sincerely pushing this bill, I think they are dead wrong on this bill. 
This so-called Pension protection Act is a contradiction in terms. It 
certainly does not protect pensions and it is bad legislation, and it 
would wreak havoc in Federal pension policy.
  H.R. 1594 is a partisan bill. It is in search of a problem, and I 
think it should be soundly defeated. I do not know what it is. Perhaps 
it is an effort by our friends on the other side of the aisle to 
provide cover for their efforts to slash Medicare, but they have seized 
an opportunity to accuse the Clinton administration of an alleged 
pension grab. As far as I am concerned, they are baseless efforts. It 
is sad, and it is an upsetting departure from the bipartisanship that 
has traditionally prevailed on pension issues.
  The collateral benefits of ETI's play a key role in stimulating local 
economic growth and stability and help to strengthen communities. 
Through ETI's, jobs are created, affordable housing is built for low 
and moderate income families, and infrastructure is modernized. ETI's 
benefit society without adversely affecting the rates of risk and 
return of private pension plans.
  Now this policy, as has been mentioned by many of our colleagues, has 
enjoyed nearly unanimous support since the Reagan administration. The 
Labor Department under the Bush administration stated that ETI's, which 
target the local economy, are beneficial and should be preserved. So 
you have the Reagan administration supporting this, the Bush 
administration supporting this, and now that the Clinton administration 
supports it, some of our friends on the other side of the aisle see a 
golden opportunity to bash the President.
  This is a continuation of policies that have prevailed on both 
Democratic and Republican administrations. So as far as I am concerned, 
it is a continuation, an it ought to be continued, because it is 
beneficial. Now, some of my friends want to turn back this progress and 
instead create chaos in the pension community.
  This bill would only lead to confusion in the law and excess money 
spent on needless litigation rather than benefits. Responsible pension 
fund managers who make sound investments with apparently forbidden 
collateral benefits could now be liable if this bill passes.
  The fear of litigation would also make it safer for a pension manager 
to select investments in foreign countries 

[[Page H 8751]]
rather than in the United States. The percentage of foreign investments 
by U.S. pension funds has steadily increased over the last 6 years. If 
this trend continues, more American jobs will be lost. This bill will 
result in pension fund managers choosing foreign investments instead of 
domestic investments. Domestic investments create American jobs, and we 
would avoid any implication that the collateral benefits of the 
investment were even considered.
  At a time when we should be creating jobs and improving the standards 
of the American workers, our Republican friends have decided to engage 
in pure politics in the consideration of this bill. Accusing the 
administration of stealing pension funds from workers is not only 
false, it is downright irresponsible.
  It is obvious from the introduction of this that our friends on the 
other side of the aisle are far more concerned with bashing Democrats 
and the President than promoting policy that is beneficial. The 
Secretary of Labor has stated that this bill would have a significant 
adverse effect on America's private sector funds, investments that are 
critical to the retirement income security of workers and retirees. So 
I do not think we ought to threaten private pension funds.
  Instead of focusing on the security, health and welfare of working 
Americans, our friends have decided to eliminate ETI's, cut Medicare, 
cut education and training programs in order to play politics.
  Mr. Chairman, I urge defeat of the so-called Pension Protection Act 
so that we can truly help the American worker.
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
Texas [Mr. Stockman].
  Mr. STOCKMAN. Mr. Chairman, in ``Alice in Wonderland'' they say it is 
curiouser and curiouser. Our friends on the other side are saying $3.5 
trillion is a gnat. Yes, I confess, I am a conservative. I think $3 
trillion is a lot of money.
  Somehow, I think stealing it from working people is wrong. That is 
what it is. They stole everything out of the Social Security, and now 
they are wanting to steal it out of another big pie. They see this $3.5 
trillion. We have a social agenda, and we are going to use this money 
for our purposes. That is exactly what it is; it is stealing people's 
money. Nothing, nothing else matters in this Congress but to steal 
money.
  This is people's pension money. Keep your hands off of people's 
retirement, keep your hands off the pension.

                              {time}  1500

  Mr. MARTINEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, nobody is stealing anybody's money. Like I said before, 
the investment managers are going to make those decisions. They are 
going to make them in consultation with other people that have the 
expertise to know what they are doing. They have been doing it all 
along. This is rhetoric being tossed around on the floor here to create 
the illusion that Clinton is doing something wrong. The administration 
is doing what they should do, and the Department of Labor is doing what 
they should do.
  Mr. Chairman, I yield 4 minutes to the gentlewoman from California 
[Ms. Woolsey].
  Ms. WOOLSEY. Mr. Chairman, H.R. 1594 is a totally unnecessary bill.
  Can someone tell me how does this bill protect pensions? Not by 
providing funds for the Department of Labor's pension and welfare 
benefits administration, that's for sure. In fact, this bill cuts funds 
for this office, which does protect workers' pensions against 
underfunding and fraud.
  You may hear that this bill protects pensions by prohibiting the 
Department of Labor from promoting economically targeted investments, 
or ETI's. But how do ETI's place pensions at risk?
  After all, we already have a law on the books, the Employment 
Retirement Income Security Act, better known as ERISA, that requires 
pension plan investors to act solely in the interest of their 
beneficiaries when making investment decisions. So if a pension fund 
does choose to invest in an ETI, it must put the financial interests of 
the pension beneficiaries first.
  And, I ask, what's wrong with investing American workers' money in 
America's infrastructure; America's jobs; and America's economy. Since 
when is America a bad investment?
  If this bill passes something very real will happen. Pension funds 
that have invested in local economic growth and in our communities will 
begin investing overseas. Because H.R. 1594 prohibits the Department of 
Labor from providing information on ETI's, and rescinds the bulletin 
which provides guidelines on ETI investments, it will be safer for 
pension funds to invest overseas, where there will be absolutely no 
confusion about the legality of the investment.
  Every day, Mr. Chairman, American workers invest their time and 
skills for a better America. ETI's give them another opportunity to 
invest in this Nation. ETI's are safe American investments. Let's not 
pass H.R. 1594 and send American workers' pension funds overseas.
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
Arizona [Mr. Salmon].
  Mr. SALMON. Mr. Chairman, today we will be voting on the future of 
$3\1/2\ trillion in private pension money that will finance the 
retirement of millions of working Americans.
  Pension funds have been protected from politics and pet projects 
since 1974 when fund managers were bound by law to look only at the 
economic return on their clients' investments. However, Secretary Reich 
and the Clinton administration now have other plans for this money.
  The Clinton administration believes that it has found a way to divert 
a chunk of pension money into social projects that the American people 
would not support or fund with taxpayer dollars. They are doing this by 
allowing and encouraging fund managers to put their investor dollars 
into economically targeted investments--investments that are targeted 
solely for their social agenda.
  Aside from being liberal social engineering, this scheme might sound 
reasonable, right? Well, what Secretary Reich is not telling the 
American people who depend on pensions, is that these ETI's are far 
riskier than traditional investments, and that the administration 
policy is a clear violation of the spirit of the laws set up to protect 
America's private pension system.
  Pork-barrel spending on liberal social projects is bad enough in 
today's tough budgetary times. But, to do it behind the backs of the 
American people, with the money they have saved for their own future is 
just plain wrong.
  We have an opportunity today to stop this raid of private pension 
funds, and to protect the retirement future of our Nation's workers.
  I commend the gentleman from New Jersey [Mr. Saxton] for his 
leadership on this issue, I strongly support H.R. 1594, and urge 
passage of this important bill.
  Mr. MARTINEZ. Mr. Chairman, I yield 4 minutes to the gentleman from 
Illinois [Mr. Gutierrez].
  Mr. GUTIERREZ. Mr. Chairman, I rise today in strong opposition to 
this bill.
  But, this bill does one good thing.
  This one piece of legislation shows bluntly and blatantly where this 
country is heading under the Gingrich Republicans.
  Some people say that there is no difference between the Republicans 
and Democrats. Well, these pages of legislation show that there is a 
huge gulf between the two parties.
  And, the Republicans wish to create an even bigger gulf between 
Americans of different economic means.
  Look at this bill.
  They talk about targeted investments--and cite examples like public 
housing.
  They define these as ``investments that are selected for the economic 
benefits they create'' and--these are their words--``may be more 
accurately described as politically targeted investments.''
  You want to talk about targeted investments?
  Fine. But, let me ask you:
  What do you think happened last week during debate on the B-2 bomber?
  The vote on the B-2 had as much to do with local jobs and economies 
as it did with national defense. 

[[Page H 8752]]

  I even received a letter from something called the B-2 Industrial 
Base Team. They weren't concerned with just the defense-related merits 
of the B-2. They talked about the economic benefits. They wrote that 
the ``conclusion of the (B-2) will have a severe impact on our industry 
in (your district)'', it would mean ``the loss of high technology 
jobs.''
  Now, there are many decent Members on both sides of the aisle who 
voted for the B-2, and may have done so for these kinds of economic 
reasons. And that's their right.
  But, if you voted to continue the B-2, and if you are planning to 
vote to cancel ETI's, please realize that the economic benefits of the 
B-2 are the same kind of collateral effects that you think is so 
terrible when it occurs in the form of public housing or public 
infrastructure.
  Let's not forget the fact that today we are talking about private 
pension plans--not public money.
  And a time when public money is clearly drying up--isn't this all the 
more reason to give average Americans the chance to fight crime, to 
educate our children, to house and feed our families if they so choose? 
I believe it is.
  Furthermore, I am deeply upset by the tone of the rhetoric 
surrounding this bill, and the suggestion that every time the Federal 
Government sends a dollar outside of D.C., it ends up on the streets of 
our inner-cities.
  I've seen lots of streets in my community in Chicago. And they aren't 
exactly paved with gold. In some cases, they aren't even paved.
  So, where does the money go?
  Let's pick--oh, completely at random--Cobb County, GA for instance.
  Now, part of Cobb County lies in the 6th District of Georgia, a 
district that is represented by Congressman Newt Gingrich.
  And while the Speaker and his troops rally against these kinds of 
targeted investments, guess how many dollars are targeted to flow into 
Cobb County--already one of the Nation's wealthiest counties?
  Well, in one recent fiscal year, close to $3\1/2\ billion in 
federally funded projects.
  So if you want to talk about targeted investments, the Speaker better 
draw a big bull's-eye around his district as well.
  Finally, I am glad we are debating this bill because it shows that 
the Republicans never had a Contract With America. Nope. They had a 
contract with some of America.
  They had a contract with the part of America that can afford to dole 
out the campaign contributions to make sure Government works for them, 
while other Americans confront gangs and drug dealers in the lobbies of 
their public housing complexes.
  As this bill proves, the Gingrich Republicans not only take the pork 
and the perks for their districts, they send the pain and poverty 
somewhere else.
  That is what this bill is all about.
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
North Carolina [Mr. Ballenger].
  Mr. BALLENGER. Mr. Chairman, I thank Mr. Fawell, chairman of the 
subcommittee of jurisdiction, for yielding time to me and would also 
like to express to him my appreciation and that of my constituents for 
all of his hard work on pension issues.
  In my opinion, this issue is fairly simple. The Federal Government 
should not engage in the business of encouraging a specific type of 
investment which jeopardizes pensions of Americans. Economically 
targeted investments, or ETI's are social investments in which the 
social good or benefit of the investment is considered more important 
than the financial benefit created for the pension participant. In 
other words, the Clinton administration wants to risk the retirement 
funds of workers to promote its own liberal social agenda. H.R. 1594 
would void this practice. If one is concerned about the security of 
America's retirees, this investment principle is unacceptable.
  As we know, the Employee Retirement Income Security Act [ERISA] is 
the statute which protects the investment interests of retirees. Under 
the act, the Department of Labor is to act as the guardian of pensions. 
ERISA requires that private pension funds be invested for the sole 
financial benefit of plan participants and beneficiaries. The 
Department, through its promotion of ETI's, strays from the fiduciary 
standards mandated through ERISA and abdicates its role as the entity 
charged with private pension guardianship.
  This debate is not about the worth of social investing; it's about 
the failure of the Clinton administration to execute its duty and 
responsibility under the law to protect the retirement funds of 
millions of Americans. Investments are never a sure thing; however, 
social investing offers, traditionally, a higher risk with lower 
returns.
  It's already a well-known fact that Americans do not save adequately 
for retirement. This fact has been confirmed by recent articles in 
several well-respected financial journals. Why, then, should we permit 
the Clinton administration to compound the problem by undermining the 
investments of those Americans who have put money away for retirement? 
There is $3.5 trillion invested in private pension plans in the United 
States. When Americans set money aside for retirement, the least they 
should be able to expect is that the pension managers will follow ERISA 
fiduciary standards and make wise investments with financial 
performance as the sole criterion. We must ensure that this trust is 
not misplaced.
  I urge all of my colleagues to support H.R. 1594, legislation aimed 
at protecting America's private pensions by prohibiting the Department 
of Labor from promoting economically targeted investments. Join me in 
rescuing the retirement fund of all Americans from the politically 
correct, but financially destructive designs of Bill Clinton and Robert 
Reich. After all, can you claim to stand for the American worker and at 
the same time advocate a risky investment strategy that undermines his 
or her retirement funds?
  Mr. FAWELL. Mr. Chairman, I yield 3 minutes to the gentleman from 
Florida [Mr. Weldon], a Congressman and also a doctor.
  Mr. WELDON of Florida. Mr. Chairman, I thank the subcommittee Chair 
for recognizing me, and I thank him for the opportunity to speak out on 
this issue.
  Mr. Chairman, I went home to my district in August, like most of us 
did, and, hopefully like most of us, I very much enjoyed going back 
home. I not only enjoyed going back home to enjoy the beautiful beaches 
and weather of the space coast area of Florida, as well as the 
environment there, but I also very much enjoyed going back so I called 
hear from my constituents as to what I need to be doing up here in 
Washington. Indeed, I frequently find that I get some very, very good 
advice and very good input when I go back home, and this time was no 
exception.
  I went up to Kennedy Space Center to speak to the employees up there 
who have concerns about what is going to be happening in the future 
with NASA and what are the job prospects there. But I had a very, very 
pleasant surprise when I was up there at Kennedy. I was at the Orbital 
Processing Facility, the place where they take those shuttles and get 
them ready for the next flight.
  There are a lot of union employees there at the OFF, and I got some 
questions about the NASA budget
 and what is going to be happening in the future. But I also got a lot 
of questions from those union guys about Economically Targeted 
Investments, how they did not want their union pension funds being 
exploited for political purposes by the Clinton administration. They 
had a lot of concern about their hard-earned dollars being protected.

  I was very much pleased to be able to say that the gentleman from 
Illinois [Mr. Fawell], the subcommittee Chair, has a piece of 
legislation that will protect their hard-earned dollars, to make sure 
that when they are ready to retire, that the money is there for them, 
and that those funds have not been siphoned off for political purposes; 
that their hard-earned money has not been invested by the quiche-
Chardonnay liberal crowd into what they think is the best thing to be 
done with their money, but that their money has been invested in the 
place where it should be, a place where their hard-earned dollars will 
be protected for the future of themselves and their families.
  Therefore, I rise in very, very strong support of this piece of 
legislation.

[[Page H 8753]]


                              {time}  1515

  Mr. MARTINEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  I keep hearing over and over again, the words force, forced use of 
this money. I keep hearing that these pension plans that one of my 
colleagues from the other side related to have had such a dismal 
failure. But the instances he was citing were all State pension plans 
that are not covered or subject to ERISA, which are null and void as 
far as this debate is concerned, but he used it anyway.
  It seems to me that over and over again they are convincing 
themselves and have convinced themselves of something that just is not 
so. If we look at the interpretive bulletin, and as I related to it in 
the committee meeting when this bill was being heard in committee, and 
read portions of the bill over and over again or the interpretive 
bulletin that is, where the fiduciary responsibility is not deleted, 
where the prudent man rule is consistent in the interpretive bulletin 
about that fiduciary relationship. I guess the hangup comes when some 
people read something and interpret it so literally, that they do not 
understand the realities of life.
  An example, Mr. Chairman: Shall discharge his duty with respect to 
the plan solely in the interest of participants and beneficiaries. That 
is all well and good for the person that is managing. That has not 
changed at all. That person managing will still have to do that. But 
the thing that is overlooked here is the fact there is no investment 
made by anybody that does not have beneficial return to both parties, 
the person receiving and the person investing.
  There is no investment that has ever been made by any of these 
pension funds that has not materialized a benefit to the person that 
used that pension fund, whether to create jobs or to bring a return or 
to lower a bond rating of a particular factory, which was done in one 
instance, and collateral investments have been made and have proved to 
be very successful as long as the managers are allowed to do their job.
  This bill will not. What it will give rise to is anybody that wants 
to disagree with any investment made by those particular managers, it 
will give rise to a suit brought about by somebody disgruntled about 
the kind of investment they will make. The encouraging of investments 
is a wonderful thing to be done because some people that are making 
these investments maybe have not thought of some types of investments 
that would return them even a greater return than what they have been 
used to investing in, and that should be a great boon to the people 
depending on this money for their pensions and the return on the money 
that is invested for their pensions. I think if Social Security had 
done this a long time ago, we would give a better return to the 
beneficiaries of Social Security, but it has not.
  Mr. GENE GREEN of Texas. Mr. Chairman, will the gentleman yield?
  Mr. MARTINEZ. I yield to the gentleman from Texas.
  Mr. GENE GREEN of Texas. Mr. Chairman, I just heard the earlier 
speaker talk about the quiche and chardonnay crowd. Mr. Chairman, and 
my colleague from California, I represent the beer and barbecue crowd, 
and they are concerned about their pensions.
  I want to get this straight because I have heard today about how they 
are concerned about the pensions of those working folks. These are the 
same folks that are cutting job training, they want to abolish the 
minimum wage, they want to cut education funding, and now they are 
going to encourage pension plans to invest overseas so they will 
transfer those jobs overseas; is that correct?
  Mr. MARTINEZ. Mr. Chairman, I would say that is correct.
  Mr. GENE GREEN of Texas. Lord help us, I hope they do not get to 
privatize the space program; they will be building it in Taiwan.
  Mr. MARTINEZ. Mr. Chairman, reclaiming my time, that is exactly what 
has happened. The pension fund money is being invested overseas rather 
than creating jobs here. Somebody on the other side of the water is 
getting the benefit of those jobs where we and our people, in such dire 
circumstances, should be getting the benefit of it.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FAWELL. Mr. Chairman, I yield myself such time as I may consume 
to attempt to, perhaps, reply to some of the, I think, rather 
outlandish comments that are now being made.
  This legislation has in no way altered the basic ERISA law. And it 
certainly, insofar as domestic investments are concerned or foreign 
investments are concerned, absolutely no change has been made 
whatsoever. I think that is so very important to point out.
  Mr. Chairman, I would also like to point out that the Committee on 
Investment of Employee Benefit Assets, and these are the professionals 
who are out there in the field, in fact, the entities that are a part 
of this particular committee represent 164 corporate pension plan 
sponsors totaling close to $1 trillion. They support his legislation.
  Why do responsible people, and I think we are basically responsible 
people, why are we supporting this? It does not take a rocket scientist 
to understand this legislation. It simply is saying to the Clinton 
administration that you should stop, because you have an obligation of 
trust as the watchdog for proper investments, you should stop
 hyping and promoting building clearinghouses, which has never been 
done before, at a cost of millions of dollars, and doing everything 
possible short of mandating. Of course, they are not about to do that, 
they are smart enough not to; but, obviously, that is down the line. 
The President did it in Arkansas, put a quota. He will not put a quota 
here. But, look, why should we have all this hyping, all this promoting 
for a certain class of investments?

  Now, Mr. Chairman, it has been mentioned many times with ETI's that 
they have not been called that in the past. They were never defined 
until the Clinton administration came along and defined them. 
Obviously, individuals, whether it is Mr. Reagan who was talking about 
a specific housing mode of investment, or others will make those kinds 
of queries. But never before has the Department of Labor gone out and 
said we are going to take a special class of investments and we are 
going to push them. We will try to convince the people who make these 
decisions, the fiduciaries and the managers of these plans.
  We are the regulators. We walk into their office and say, how many 
ETI's do you have? Now, that is the fox guarding the chicken coop. They 
are supposed to be the watchdog, they are not supposed to be out there 
hyping.
  Mr. Chairman, I suppose one could say we could have a clearinghouse 
showing junk bonds that could really sell. That is a nice special class 
of investment. One can make a lot of money in junk bonds, but most 
managers of pension plans do not invest in junk bonds. Why? Because 
there is the prudent man rule that has made it very, very clear that it 
is a sound conservative determination that they must make, and their 
sole purpose is to protect. And it goes back to common law, English 
law, that you protect the trust. The trustee's job is to protect the 
beneficiaries of the trust, whoever they may be, the worker, the 
pensioner or their children. And nobody is going to come in there and 
try to fiddle and tinker with it, and we have social tinkering now at a 
mass scale. That is the difference.
  Mr. Reagan never suggested that. Mr. Kemp never suggested that. Mr. 
Reich suggested that, he is from Harvard and his elite views. And he 
was smart enough to know you cannot just push it across with a mandate. 
But, as I said in my opening comments, this is like Willie Sutton; they 
know where the money is. There is $3.5 trillion. Most public pensions 
are not in very good condition. Look at all your States, your teacher 
pension funds and so forth and so on. Thank goodness we were smart 
enough in Congress to have a thrift pension that basically is under the 
same kinds of requirements as in ERISA.
  Now, maybe we should volunteer to have our pensions utilized for 
socially correct or politically correct investments, but that is what 
we are talking about here. We are simply suggesting that we should go 
back to the status quo. We do not need a clearinghouse run by some 
private entity that is in the securities business, basically, to 

[[Page H 8754]]
try to peddle the concept of economically targeted investments. It just 
is not necessary. That is going way out.
  When the interpretive bulletin came out in June of last year, people 
looked at it and gulped. For the first time, at least as far as I know, 
legally speaking, it was written what an economically targeted 
investment actually is. And I have read that definition, and right away 
it says investments selected for economic benefits they create in 
addition to what goes to the beneficiaries. Hey, what are we
 centering on? What are we interested in? We are interested in those 
economic benefits that we can get for third parties.

  Now, Mr. Chairman, I agree with the gentleman from California that 
there is not an investment ever made that there are not incidental 
benefits. But we do not make an investment for the incidental benefits, 
and that is what the Department of Labor is doing. And I do not think 
we would want to let them do that when we think of our trust. If that 
is some right wing conservative nutty idea, then I plead guilty. But I 
think we should look long and hard at what has been done here and 
hopefully not spend too much time criticizing on ideologies. I think it 
is a good sound provision.
  I think what the gentleman from New Jersey [Mr. Saxton] has done, has 
nipped in the bud the concepts that Mr. Reich wants to inflict upon the 
laboring people of this country. I know that Government's record is 
lousy, lousy, lousy when we look at the Social Security fund. And the 
rule is what, from Congress on high. We say we can only invest for 
instance in Government bonds. What type of a pension plan is that? What 
type of a fiduciary would say that? Only Congress would say that. How 
we are going to let Congress start monkeying around.
  Mr. Chairman, I reserve the balance of my time.
  Mr. MARTINEZ. Mr. Chairman, yield myself the balance of my time.
  Mr. Chairman, let me try to sum up here.
  If we read the interpretive bulletin, it says those requirements of 
the prudent man rule shall prevail. The interpretive bulletin has not 
changed in law, contrary to what the gentleman from Illinois [Mr. 
Fawell] says. What he just reiterated a minute ago about ridiculous 
statements, there is nothing more ridiculous than saying that all the 
pension investors agree with this bill. The Pension Rights Center is a 
group representing millions of pension beneficiaries with over $1 
trillion in assets, and they oppose H.R. 1594. More than that, Mr. 
Saxton was written a letter by the Council of Institutional Investors 
in which the first paragraph, describing $800 billion on behalf of 
beneficiaries, was a very polite paragraph. But they get down to the 
nitty-gritty of it in the important paragraph, and it says, 
unfortunately, we believe H.R. 1594 may unwittingly create precisely 
the kind of encroachments on ERISA's critical investment standards it 
is thought to prevent by creating exactly the kind of political 
pressure you indicate is inappropriate.
  The legislation imposes special constraints on some types of 
investments not politically favored by supporters of the bill.

                              {time}  1530

  Mr. FAWELL. Mr. Chairman, yield 4\1/2\ minutes to the esteemed 
gentleman from New Jersey [Mr. Saxton], the basic creator of this 
legislation.
  Mr. SAXTON. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  First let me say that the gentleman from Texas, Mr. Steve Stockman, 
has been a tremendous help on this bill. His name should have appeared 
as a cosponsor, and did not through some oversight. But I want to thank 
him and make known that he has been a tremendous help on the bill.
  Let me just say, Mr. Chairman, that this bill does three things: It 
negates the interpretive bulletin that has been talked about so much 
here today; it does away with the clearinghouse that was created by the 
Clinton-Reich effort; and it stops other Federal spending on efforts to 
move forward with this flawed concept. In other words, it returns the 
situation to the status that it enjoyed exactly during the Bush and 
Reagan administrations. Nothing has been changed with the law, nothing 
has been changed with the administration. It just rolls back what was 
done by Secretary Reich and President Clinton.
  We have heard a lot about issues that have very little to do with 
this bill today. We have heard about the flow of capital to foreign 
countries, which we will talk a little bit more about later. We have 
heard about political motives. We have heard about cutting job training 
and other programs. My goodness, we even heard about the B-2. These 
issues have little, if anything, to do with the substance of what this 
administration has done.
  There are two issues that are of importance in this entire debate. 
One is, what does it do to the rate of return on investments made with 
private pension moneys, the moneys of America's workers? The rate of 
return is something we all need to pay a great deal of attention to. It 
is our responsibility, if the overwhelming weight of evidence shows 
clearly that the rate of return significantly diminished in those 
pension funds that engage in ETI's.
  Alicia Munnell, who is with the Department of Labor and has been 
nominated to be a member of the Council of Economic Advisers in the 
administration, concludes that a 2-percentage point difference will be 
felt by pension funds that invest in ETI's. Olivia Mitchell of the 
Wharton School concludes exactly the same thing. Some academics that 
dealt in the world of finance, Mar & Nofziger-Lowe, conclude that as 
much as 210 basis points or 2.1 percent less in returns can be expected 
in ETI's, so there is no debate, in my opinion at least, about the 
effect in investing in these socially risk investments.
  The other issue is whether or not this increases risk. I think it was 
best summed up in a recent article in Business Week by Alina Burgh, 
President Clinton's top pension regulator, when she admitted ``The 
ambitious nature of this project is difficult because it is a radical 
notion.''
  It is a radical notion, as it is pursued by this administration. That 
is why I think, without exception, Members of this House should vote to 
say, ``Stop and look at this situation, roll back the interpretive 
bulletin.'' The pension community backs our bill. The Committee of 
Investment and Employee Benefits Assets, people who know and deal in 
these issues every day, and which represents 164 corporate pension plan 
sponsors who are responsible for investing and management of $900 
million in ERISA-governed pension assets on behalf of 12 million 
participants, back this bill.
  The Association of Private Pension Funds and Welfare Plans, the 
APPWP, say, ``We share Representative Saxton's opinion and yours''--
this is addressed to Mr. Fawell--``that ERISA's fiduciary standards 
will not be interpreted in a manner that will allow the value of 
benefits of plan participants and beneficiaries to be jeopardized.''
  We do not want to jeopardize other people's money. They have saved it 
for their retirement: The factory worker, the clerk in the department 
store, the person that delivers parcels. All these folks are concerned, 
and we should be as well. Vote to support this bill.
  Mr. STARK. Mr. Chairman, I believe most people on both sides of the 
aisle know why we are spending the time of the House on this issue. 
This is nothing more than a cynical maneuver by the Republicans to give 
themselves some cover with the elderly for the massive cuts they are 
planning to make in Medicare and Medicaid.
  We have heard the Republicans charge that the Clinton administration 
is raiding private pensions to fund the liberal social welfare programs 
that were rejected by the voters last November. And we have heard how 
the valiant Republicans are going to come charging in on their white 
horses to slay this misty Clinton dragon by passing H.R. 1594 and 
rescue the fair elderly from this dreadful attack on their pensions.
  But we all know what is really going on. The Republicans are, as we 
speak, making plans for massive cuts in Medicare and Medicaid that will 
cause extensive harm to millions of senior citizens, both in their 
pocketbooks and in the quality of their health care.
  Let me tell you a little bit about what the Republicans have in store 
for the elderly. The House Republicans' budget resolution would require 
us to cut $270 billion out of the Medicare program over the next 7 
years. This is a huge cut--the program would be 25 percent smaller in 
2002 under this plan than it would be under current law.
  What this means for the elderly is that Medicare premiums and 
deductibles will go up, 

[[Page H 8755]]
while benefits will go down. The Republican cuts will reduce seniors' 
access to health care and require new co-payments for services such as 
lab tests, home health care, and skilled nursing facilities.
  On average, Social Security recipients will pay $3,500 more out of 
their own pockets for medical care over the next 7 years if the 
Republican Medicare proposals are passed. In the year 2002 alone, 
average costs for each senior will rise by $1,060. Seniors in my area 
of California would pay $1,466 more on average for health care by 
2002--or a total increase of $4,783 over the next 7 years.
  Seniors on Medicare have an average income of about $18,000 apiece--
how can they possible pay more than $1,000 more per person for their 
medical care? About 83 percent of Medicare benefits go to seniors with 
income below $25,000. Medicare cuts of the size proposed represent a 
massive tax hike on middle and lower income seniors.
  Lower-income seniors, especially those fortunate enough to need 
extended nursing home care, will be hit again by the additional huge 
cuts proposed in the Medicaid program. Almost two-thirds of Medicaid 
spending goes to senior citizens, largely for seniors in nursing homes 
who have already used up their own resources to pay for medical care. 
Turning Medicaid into a block grant program, as some Republicans have 
proposed, and cutting it by as much as $182 billion over the next 7 
years will make it impossible to continue current levels of support for 
low-income seniors--at a time when needs will be rising dramatically 
because of Medicare cuts. A costly extended illness can happen to 
anyone--and these cuts would remove the Medicaid safety net for seniors 
who need extended nursing care.
  We still don't have the full details of the Republicans' plans to cut 
Medicaid and Medicare. The proposals we've seen so far don't generate 
enough savings to meet their budget targets, but they are bad enough. 
For example, in the Supplementary Medical Insurance (Part B) part of 
Medicare--which is financially sound and does not require cuts to 
maintain its solvency--the Republicans may be planning to double the 
deductible that Medicare patients have to pay before Medicare 
reimburses them for their doctors' bills. And then after doubling the 
deductible, they plan to index it--just to make sure it goes up every 
year thereafter. At the same time, the Republicans plan to increase the 
premiums that Medicare enrollees must pay. And if that isn't enough, 
they may also want to make patients pay a higher share of costs of 
laboratory services, home health care services, and skilled nursing 
facilities.
  And so the bottom line is, Medicare patients will be paying more up 
front for their coverage, and when they get sick and actually use 
medical services they'll pay more for that too. And if they use up all 
their resources and still need nursing home care, the Medicaid program 
will no longer be there to provide a safety net.
  Now you understand why the Republicans need some protection, some way 
of conjuring seniors into believing that the Republicans are protecting 
their retirements, even as they eviscerate the Medicare and Medicaid 
programs. Today's charade is part of that effort.
  The Republican bill under consideration focuses on a minor Labor 
Department regulation which lets pension fund managers consider 
ancillary benefits when making investment decisions. These are known as 
Economically Targeted Investments, or ETI's.
  For decades, there has been strong bi-partisan support for requiring 
pension funds to seek the best possible financial returns for the sake 
of their beneficiaries. The Employee Retirement Income Security Act 
[ERISA] imposes that fiduciary duty on managers on the Nation's private 
pension plan assets of $4.5 trillion.
  Early on, however, pension managers raised the question whether, in 
choosing between two investments with equally promising financial 
prospects, they could favor the investment with collateral benefits to 
their group or community, such as whether an investment creates jobs in 
the local community or stimulates small business development or even 
whether to pass up an investment because the money would go abroad. In 
a series of letters to pension funds seeking clarification on this 
issue, the Department of Labor made two points. First, investments 
failing to make competitive returns could not be chosen. But, second, 
among investments with competitive returns, pension managers would not 
violate their fiduciary responsibility by giving consideration to 
collateral benefits.
  This interpretation of ERISA is nonpartisan. It originated more than 
20 years ago and has been endorsed by the Carter, Reagan, Bush and 
Clinton administrations. However, it was not widely known, even among 
pension professionals, since it only existed in a series of individual 
letters. Following a recommendation by the Bush administration's 
outside advisors on ERISA, the Labor Department put out an interpretive 
bulletin last year which restated the guidelines issued not only by 
Democratic administrations but also by the Reagan and Bush 
administrations.
  In response, the Republicans began accusing the Clinton 
administration of plotting to hijack America's pension assets to fund 
its liberal social agenda. As time has passed, their claims have grown 
wilder. Last week, Congressman Saxton, the chief sponsor of H.R. 1594, 
issued a preposterous study. First, it claims that the interpretive 
bulletins issued June 23, 1994 was a stealthy response to the 
Republican takeover of Congress in January 1995.
  No less absurdly, it claims that ETI's would reduce pension assets by 
an average of $43,000 per beneficiary over a 30-year span. That phony 
calculation comes from, first, assuming the pension funds consistently 
sacrifice 2 percent a year in financial returns on ETI's, blatantly 
against the law; and second, that pension funds will grown 12 percent 
per year for 30 years reaching $2,075,000 per recipient. Because of 
ETI's, there would be only $2,032,000 apiece.
  In fact, just as in health care and Social Security, the Clinton 
administration is working to defend the elderly:
  The policy to permit economically targeted investments does not cost 
the elderly one red cent in pension benefits, since the rules require 
that the risks and returns of ETI's must be the same as for other 
investments.
  The current interpretation of the law is identical to the policy 
adopted under previous Presidents, including both President Reagan and 
President Bush.
  The ERISA rules require that all investments have competitive rates 
of return and risk but only permit the additional consideration of 
collateral benefits.
  The legislation proposed by Vice Chairman Saxton is not just a 
solution in search of a nonproblem, it is pernicious. It would create a 
thought police for pension fund managers. In effect, the Saxton bill 
says to fund managers: ``Don't let us catch you considering anything in 
your investment decision that may benefit your country or your fellow 
citizens. If we catch you thinking about anything but the fund's bottom 
line, you're in trouble.''
  What else does the vice chairman's bill say to pension managers?
  It says you can protect yourself by putting your funds in Wall Street 
but don't even think about putting them in a small business in your own 
community.
  It says you can invest in a multinational firm that plans to close 
factories and ship jobs abroad, but don't even think about investing in 
an American company to help create jobs here.
  It says you can invest in a foreign company that will compete with 
the United States but don't even think about using your funds to help 
an American company compete.
  It is ironic that Representative Saxton would sponsor a bill to 
eviscerate the ETI regulations when his own State of New Jersey has two 
very effective ETI programs.
  In New Jersey, the State Investment Council directs the investment of 
about $34 billion of assets for the State public employees pension 
funds. The following is a statement of the council's policy:

       The Council has determined that investing for the benefit 
     of fund beneficiaries need not exclude investments in New 
     Jersey or those which advance other social goals. In 1984 the 
     Council codified a list of Social Investment rules for the 
     State Division of Investment that includes reviewing all 
     reasonable investment proposals presented by New Jersey 
     corporations and giving preference to New Jersey investments 
     if other terms are equal.

  Is the vice chairman going to go back to New Jersey this weekend and 
demand that the State pension funds be prohibited from giving 
preference to New Jersey investments if other terms are equal?
  There is another program the council initiated in 1986:

       Under the program, the Division determines a market rate 
     for mortgages once a month and creates an open window to buy 
     identical New Jersey mortgages from banks at this rate. In 
     fiscal year 1992, one million dollars of New Jersey mortgages 
     were purchased. The open window can prevent temporary capital 
     gaps from developing if New Jersey suffers a temporary 
     shortage of secondary mortgage funds.

  Is the vice chairman going to go home this weekend and demand that 
the State pension funds stop buying New Jersey mortgages and only 
purchase mortgages from other States?
  Mr. Speaker, in summary, there is no truth, not even a kernel, to the 
Republican charges--the ERISA rules are very clear that ETI's are 
permissible only when they do not involve any sacrifice of return to 
plan beneficiaries. The interpretive bulletin on ETI's is no threat to 
private pension funds--Ronald Reagan didn't think so when he was 
President and nonpartisan experts do not think so today.
  But the Republicans, who are desperate for any cover to protect 
themselves from the growing wrath of the seniors, have latched on to 
this bulletin and have shamelessly invented whatever distortion 
necessary to create an 

[[Page H 8756]]
imaginary threat to private pension plans--a wispy dragon which they 
will slay by passing H.R. 1594.
  Responsible Members of Congress should have no part of this charade. 
If the Republicans want to make billions of dollars in cuts in Medicare 
and Medicaid, they should do it in the open without diversions or 
smokescreens and they should accept the responsibility. I urge you to 
vote against H.R. 1594.
  Mr. PETRI. Mr. Chairman, I rise in support of this legislation to 
defend our Nation's pension plans from the liberal social agenda of the 
Clinton administration.
  With the Republicans in control of the Congress, the Clinton 
administration has had a difficult time funding its liberal programs.
  As a way around this, the President's Department of Labor has been 
encouraging pension fund managers to invest in politically correct 
projects.
  In effect, the President is using America's savings as his own piggy 
bank, and in doing so, he is putting his political goals ahead of 
protecting our Nation's pensioners.
  This policy puts $3.8 trillion of private pension plan assets at 
risk.
  Should we have Government bureaucrats picking which investments are 
better than others?
  I don't think so.
  This bill is intended to put an end to this backdoor money grab.
  However, there is a related but equally important issue.
  Pension plans now contain more than half of our economy's investment 
capital.
  Since fund managers have a responsibility to invest their holdings 
prudently, they tend to be extremely risk-adverse and invest only in 
large, well established companies.
  With their fiduciary responsibilities in mind, fund managers are 
understandably reluctant to invest in growth companies and venture 
markets.
  These markets are comprised to small companies, whose success is 
vital to our Nation's economy.
  While these markets are riskier, their rate of return generally out 
performs other investments.
  However, as a result of risk-averse fund management, I doubt that 
there will be enough capital channeled to these economically important 
investments.
  We have to try to enable fund managers with fiduciary 
responsibilities to invest a portion of their assets in these riskier 
ventures.
  There should be ways to do this while safeguarding our Nation's 
pension plans.
  Of course, this is different than investing in ETI's.
  Investments in venture markets are focused on economic benefits, 
while ETI's are focused on social and political goals.
  Mr. PACKARD. Mr. Chairman, today we take up economically targeted 
investments [ETI's]. Those who support ETI's represent they are safe, 
prudent ways to encourage investments in low-income housing, 
infrastructure, and business.
  However, nothing could be further from the truth. ETI's are simply a 
backdoor for the Clinton administration to finance liberal social 
programs, and for the Department of Labor to sneak around laws that 
direct pension fund managers to invest solely for the financial benefit 
of plan participants.
  This pursuit of ETI's is frightening. It is dangerous to the security 
of private pension savings. The overriding concern for pension 
investors must be fiscal soundness not liberal, social programs that 
could cost a 35-year-old worker $43,298 in pension income by the time 
he or she retires at the age of 65.
  Mr. Speaker, as a cosponsor of H.R. 1594, I strongly urge all of my 
colleagues to support this measure, restoring law and fiscal 
responsibility within the Department of Labor.
  The CHAIRMAN. All time for general debate has expired.
  The committee amendment in the nature of a substitute printed in the 
bill shall be considered under the 5-minute rule by sections, and 
pursuant to the rule, each section shall be considered as having been 
read.
  Pursuant to the order of the House of today, the Chairman of the 
Committee of the Whole may postpone until a time during further 
consideration in the Committee of the Whole a request for a recorded 
vote on any amendment made in order by the resolution. The Chairman of 
the Committee of the Whole may reduce to not less than 5 minutes the 
time for voting by electronic device on any postponed question that 
immediately follows another vote by electronic device without 
intervening business, provided that the time for voting by electronic 
device on the first in any series of questions shall not be less than 
15 minutes.
  The Clerk will designate section 1.
  The text of section 1 is as follows:

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SENSE OF THE CONGRESS.

       It is the sense of the Congress that it is inappropriate 
     for the Department of Labor, as the principal enforcer of 
     fiduciary standards in connection with employee pension 
     benefit plans and employee welfare benefit plans (as defined 
     in paragraphs (1) and (2) of section 3 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1002 (1), 
     (2))), to take any action to promote or otherwise encourage 
     economically targeted investments.

  Mr. FAWELL. Mr. Chairman, I ask unanimous consent that the remainder 
of the committee amendment in the nature of a substitute be printed in 
the Record and open to amendment at any point.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Illinois?
  There was no objection.
  The text of the remainder of the committee amendment in the nature of 
a substitute is as follows:

     SEC. 2. PROHIBITIONS ON DEPARTMENT OF LABOR REGARDING 
                   ECONOMICALLY TARGETED INVESTMENTS.

       (a) In General.--Interpretive Bulletin 94-1, issued by the 
     Secretary of Labor on June 23, 1994 (59 Fed. Reg. 32606; 29 
     C.F.R. 2509.94-1), is null and void and shall have no force 
     or effect. The provisions of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1001 et seq.) shall be 
     interpreted and enforced without regard to such Interpretive 
     Bulletin.
       (b) Restrictions on Department of Labor Regulations.--The 
     Secretary of Labor may not issue any rule, regulation, or 
     interpretive bulletin which promotes or otherwise encourages 
     economically targeted investments as a specified class of 
     investments.
       (c) Restrictions of Activities of the Department of 
     Labor.--No officer or employee of the Department of Labor may 
     travel, lecture, or otherwise expend resources available to 
     such Department for the purpose of promoting, directly or 
     indirectly, economically targeted investments.
       (d) Economically Targeted Investment Defined.--For purposes 
     of this section, the term ``economically targeted 
     investment'' has the meaning given such term in Interpretive 
     Bulletin 94-1, as issued by the Secretary of Labor on June 
     23, 1994 (59 Fed. Reg. 32606; 29 C.F.R. 2509.94-1).

     SEC. 3. PROHIBITION ON FEDERAL AGENCIES AGAINST ESTABLISHING 
                   OR MAINTAINING ANY CLEARINGHOUSE OR OTHER 
                   DATABASE RELATING TO ECONOMICALLY TARGETED 
                   INVESTMENTS.

       (a) In General.--Part 5 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1131 et seq.) is amended by adding at the end the following 
     new section:


 ``prohibition on federal agencies against establishing or maintaining 
 any clearinghouse or other database relating to economically targeted 
                              investments

       ``Sec. 516. (a) In General.--No agency or instrumentality 
     of the Federal Government may establish or maintain, or 
     contract with (or otherwise provide assistance to) any other 
     party to establish or maintain, any clearinghouse, database, 
     or other listing--
       ``(1) for the purpose of making available to employee 
     benefit plans information on economically targeted 
     investments,
       ``(2) for the purpose of encouraging, or providing 
     assistance to, employee benefit plans or any other party 
     related to an employee benefit plan to undertake or evaluate 
     economically targeted investments, or
       ``(3) for the purpose of identifying economically targeted 
     investments with respect to which such agency or 
     instrumentality will withhold from undertaking enforcement 
     actions relating to employee benefit plans under any 
     otherwise applicable authority of such agency or 
     instrumentality.
       ``(b) Economically Targeted Investment Defined.--For 
     purposes of this section, the term `economically targeted 
     investment' has the meaning given such term in Interpretive 
     Bulletin 94-1, as issued by the Secretary on June 23, 1994 
     (59 Fed. Reg. 32606; 29 C.F.R. 2509.94-1).''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act is amended by inserting at the end of the items 
     relating to part 5 of subtitle B of title I the following new 
     item:

``Sec. 516. Prohibition on Federal agencies against establishing or 
              maintaining any clearinghouse or other database relating 
              to economically targeted investments.''.
     SEC. 4. TERMINATION OF CONTRACTS.

       The head of each agency and instrumentality of the 
     Government of the United States shall immediately take such 
     actions as are necessary and appropriate to terminate any 
     contract or other arrangement entered into by such agency or 
     instrumentality which is in violation of the requirements of 
     the provisions of this Act or the amendments made thereby.

     SEC. 5. EFFECTIVE DATE.

       The preceding provisions of this Act (and the amendments 
     made thereby) shall take effect on the date of the enactment 
     of this Act.
  The CHAIRMAN. Are there amendments to the bill?


              Amendment Offered by Mr. GENE GREEN of Texas

  Mr. GENE GREEN of Texas. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:


[[Page H 8757]]

       Amendment offered by Mr. Gene Green of Texas: Insert after 
     section 4 the following new section (redesignating section 5 
     as section 6):

     SEC. 5. PROTECTION OF DOMESTIC INVESTMENTS.

       Nothing in this Act shall be construed as prohibiting the 
     investment by an employee benefit plan (within the meaning of 
     paragraph (3) of section 3 of the Employee Retirement Income 
     Security Act of 1974) in domestic investments, as 
     distinguished from foreign investments.

  Mr. GENE GREEN of Texas. Mr. Chairman, as we heard earlier in the 
debate on H.R. 1594, this is a bill that is unneeded, because there 
have been no mandates, but this amendment, if we are going to pass an 
unneeded bill, would make sure for those investment managers that it is 
clarified.
  The amendment that we are considering seeks to accomplish one simple 
action. This amendment ensures that domestic investments are not 
prohibited under H.R. 1594. It ensures that American pension managers 
will not be afraid to invest in America and in American jobs. The 
amendment was read and it is in the Record, so all we are saying is 
that nothing in this amendment shall be construed as prohibiting the 
investment by an employee benefit plan in domestic investments, as 
distinguished from foreign investments.
  Mr. Chairman, I am vested in a private pension plan. I am sure when I 
am 65 it is not going to provide as much as I would like, but I am one 
of those people who invested in it. And I do not want them to take 
chances with my money. I want to make sure they maximize the investment 
so I have as much as I can when I am 65.
  However, I also want to make sure and I want them to have the 
encouragement to invest in the United States, instead of going 
overseas. My concern in this bill, if given a choice with the same 
risk, if this bill passes, someone who is a prudent investment manager 
may say, ``I can get 15 percent in building houses somewhere overseas 
and maybe 15 percent in the city of Houston,'' they will go overseas 
because of the restrictions of this bill. I want to make sure that that 
is not the question. I want them to build those houses in Houston, TX, 
or Cleveland, OH, or anywhere else if the risk is the same as going 
overseas. That is why we need to adopt this amendment.
  H.R. 1594 repeals an interpretive bulletin that says that pension 
managers may consider collateral benefits where the risk and return 
otherwise meet the prudent standard. In doing so, H.R. 1594 clearly 
discourages and may effectively forbid the consideration of collateral 
benefits by U.S. fund managers.
  In fact, this bill, if read the way it could be interpreted, could 
ban pension fund investments in mortgage pools, such as those 
guaranteed by the
 Federal National Mortgage Association, holding the trustees legally 
liable if they authorize such investments, so we would hope they would 
encourage investments in mortgages in the United States.

  To avoid that potential liability, pension plans may be reluctant to 
invest in these American investments that have collateral benefits. 
Everything has a collateral benefit, Mr. Chairman. When the State of 
Connecticut, and I notice the other side did not mention that, invested 
in a firearms industry, because that is a major job producer in 
Connecticut, I am glad they did; but I notice in their talking and 
discussing about it, they did not talk about that investment. They 
talked about some other investments that did not pan out.
  I wish I could say that every investment all of us individually or as 
fund managers invested in was good. Some pay a higher percentage 
because they have a higher risk. That is what we want, is to take a 
little higher risk, but for higher benefits for those of us who are the 
ones who are going to benefit from it.
  For 20 years pension fund managers have been building up solid 
portfolios in these economically targeted investments that diversify 
their holdings and provide a competitive rate of return. They create 
those jobs locally and incur no unusual investment risk. My amendment 
provides once and for all that nothing in H.R. 1594 prohibits that 
employee benefit plan from investing domestically.
  As it is, pension plans have been increasingly investing overseas, 
and as Members will see from this chart, U.S. pension funds are 
increasing from 3.7 percent in 1989 to 8 percent in 1994. It is 
projected to go to 12 percent foreign investment in 1999.
  What I do not want us to do is to encourage that by passing this 
bill. That is roughly $800 billion of our money that is being invested 
overseas when it could be invested here at the same rate of return. Let 
us make it clear, if this bill is enacted, a pension fund manager, 
faced with two choices of equivalent investment, one in the United 
States and one abroad, the safe course would be to invest abroad, 
because of 1594. Let us correct that by passing this amendment.
  The failure of this amendment today would only encourage litigation, 
cost more for those of us who are vested in these pension plans, and 
call into question whether we are going to invest in creating American 
jobs in our country. This bill would throw a legal shadow over a 
decision to invest in a hometown or State, but would not affect a 
pension fund if it is doing the same thing in foreign securities or 
foreign countries. It is irresponsible for this Congress to talk about 
Social Security when Social Security cannot invest in anything but 
Government bonds.
  If we want to do it, let the majority come up and say ``We are going 
to do that,'' but let us invest our pension fund in our country at a 
competitive rate. Let us keep American investment here at home. Let us 
vote yes to create more jobs, and vote for the Green amendment.
  Mr. FAWELL. Mr. Chairman, I rise in opposition to the amendment.
  Mr. Chairman, I feel like President Reagan when he said, ``Now, there 
you go again.'' There is absolutely nothing in this legislation that 
proscribes collateral benefits one bit. There is nothing in this bill 
that prevents pension plans from investing domestically or in foreign 
investments, nothing whatsoever. ETI's are still left standing, 
assuming, of course, as the folks on the other side of the aisle have 
consistently said, that the prudent man rule lives. Certainly the 
prudent man rule does live.
  There is only one question that is ever asked of an investment under 
the prudent man rule and under the ERISA laws. That is, is that 
something that is a solid investment for the people who are the 
beneficiaries of that trust fund? A lot of housing, for instance, 
programs are quite acceptable, obviously, under ERISA. The whole 
concept of this fantastically successful program, which has raised $3.5 
trillion for the workers of America, is that the Federal Government is 
not micromanaging and dictating where the investments have to go.
  This legislation obviously, coming along somehow heralding and 
trumpeting the fact that collateral benefits are something that are in 
some way proscribed, says ``Well, we are going to have to amend the 
prudent man rule. We are going to have to start now having Congress 
mandate where the investments will go.''
  There is not a person here who is not, of course, deeply in favor of 
investments from pension plans all over America going into domestic 
investments, and obviously, that is occurring. That is where most of 
them go, obviously. However, is there any one of us who is going to 
say, ``You cannot invest globally?'' Do we want to start saying, ``We 
are going to direct you,'' the fiduciaries, ``where you are going to 
invest?'' If we just give a little bit of thought about that, I do not 
think any one of us wants to believe that that is what we would want to 
do.

                              {time}  1545

  Remember, this bill simply is putting us back to where we have always 
been in America, but without that clearinghouse and without the 
interpretive bulletin of June 1994. Otherwise, it is exactly the same 
with the proscription in this bill that says to the Department of 
Labor, do not go out hyping and promoting in regard to a special class 
of investments called ETI's. It makes it very, very clear that you can 
have advisory opinions about specific investments. If someone wants to 
write to the Department of Labor and ask in their opinion is this a 
good investment, the Department of Labor can give that opinion.
  But this is an absolutely unnecessary amendment and it can only do 
harm, 

[[Page H 8758]]
because here it comes, folks, the avalanche of people in Congress who 
know how best to direct the fiduciaries of America as to where their 
funds shall go. We will unfurl the flag that we are doing it for 
domestic purposes because of the fact that I suppose some evil people 
sneak out a global investment. Heavens, how terrible that would be.
  This amendment is an absolutely terrible one. We just have not given 
the thought to it that we should. In effect, you are amending the 
prudent man rule.
  Obviously that should not be done.
  Mr. TRAFICANT. Mr. Chairman, I move to strike the last word.
  Mr. Chairman, we are talking about perception here. Does the Congress 
of the United States want the perception to exist that we want to make 
sure, if you look at the words, that nothing in this bill shall be 
construed to prohibit pension plans from investing in domestic as 
opposed to foreign investments? That is the substance of the Green 
amendment. It makes no significant change in the ultimate goals of the 
legislative initiative.
  But do we want the American investment community thinking, my God, if 
we are going to make a call to the Department of Labor, we could be in 
some way violating the law, and we better be careful about trying to 
develop some understanding about the legal consequences of, in fact, 
investing these pension funds in America?
  We are talking about perception. To me, this is unbelievable. ERISA, 
as consistently interpreted by Department of Labor and the courts, 
allows pension plans to consider the collateral economic benefits of a 
potential investment, provided that potential investment has a 
comparable risk-adjusted return to other potential investments and is 
otherwise consistent.
  This bill, then, would call into question the ability of pension 
plans to consider collateral benefits. As a result, pension plans may 
be reluctant to invest in domestic investments that have collateral 
domestic economic benefits, even though they may have competitive risk-
adjusted returns that otherwise meet standards of ERISA.
  In any regard, the result because of perception could be increased 
pension plan investment in foreign investments. Is that the goal we are 
after here?
  I am not an attorney. All I know is this: U.S. pension plan funds 
increased from 3.7 percent in 1989 overseas to 8 percent in 1994. They 
are projected to hit over 12 percent in 1999. What is the goal of 
America's private pension plan money here?
  Is the Congress of the United States saying we do not want the 
perception that you can invest in domestic activities even though the 
risk is no greater? The Green amendment does not in fact turn back the 
clock on your legislation.
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. TRAFICANT. I am not going to yield at this point.
  I have listened to this entire debate. I do not take offense with the 
sponsor of the legislation. I think anybody that is trying to ensure 
that we do not have a social program agenda with private pension plans, 
that makes sense to me, but we are beginning to debate perceptions and 
we are going to start chasing the American pension plan dollars 
overseas. It has increased fourfold over the last 5 years.
  My God, here we are cutting money in this country. We are saying we 
cannot be the parent for all, we cannot provide all the money in 
America, and I am agreeing with some of that conservative logic. But 
what I do not agree with is where the private sector should be 
incentivized to invest in markets in America where their chances of 
success are fair and reasonable. That leveraged incentivized sort of 
government programming makes sense to me.
  To oppose this Green amendment is simply like saying, ``Look, we take 
a tarnished look at what the Democrats are trying to do to this bill.'' 
The Democrats are going to oppose your bill. Democrats believe if it is 
not broke, do not fix it.
  Now, maybe there is some people in the Department of Labor who are 
going too far, and maybe there will be some social agenda over there 
that does not meet what the approval of decent investments, but let me 
tell you something. When you look at the savings and loan debacle, you 
were not looking at economically targeted investment types of abuse, 
you were looking at the money abuse of those pension funds. They were 
putting them in their friends' accounts. They were swinging with the 
money.
  Now what do I know? I am just a sheriff, in my former public life 
here, and all I am saying is, look, any perception that will lend to 
more offshore investment of America's pension funds to me is a no-
brainer here. You should be accepting the Green amendment and should 
not be arguing it.
  The CHAIRMAN pro tempore (Mr. McInnis). The time of the gentleman 
from Ohio [Mr. Traficant] has expired.
  (By unanimous consent, Mr. Traficant was allowed to proceed for 1 
additional minute.)
  Mr. TRAFICANT. Mr. Chairman, I am glad to yield to the gentleman from 
Illinois [Mr. Fawell], the distinguished subcommittee chair whom I 
respect very much, if he still wants to engage me in some debate here.
  Mr. FAWELL. Mr. Chairman, I only wanted to point out that all of 
those industrial figures to which the gentleman made reference to, of 
course, that all has occurred and it has got nothing to do with this 
legislation.
  Second, I want to emphasize the fact that there is no prohibition in 
our legislation as to collateral benefits. That is to say, an 
investment is not deemed to be violative of the prudent man rule just 
because there are some incidental benefits that come from an 
investment. Indeed, every investment does have that. All that the 
prudent man rule says is that you shall concentrate upon the very first 
order of business.
  The CHAIRMAN pro tempore. The time of the gentleman from Ohio [Mr. 
Traficant] has again expired.
  (By unanimous consent, Mr. Traficant was allowed to proceed for 2 
additional minutes.)
  Mr. TRAFICANT. Mr. Chairman, I would like to respond to that.
  Mr. FAWELL. If the gentleman would yield further, all we are trying 
to do is change that emphasis. We are not changing the substantive law. 
And once we start getting into the point of suggesting that, for 
instance, investments in infrastructure, nothing herein contained 
should be deemed to make that illegal, then the implication is, the 
negative implication is that others, for instance, do not rate as high 
and the implication also is that you do not even have to follow the 
prudent man rule in order to be able to have a domestic----
  Mr. TRAFICANT. Reclaiming my time so I can respond a little bit. I 
have great admiration and respect for the gentleman from Illinois [Mr. 
Fawell].
  I do not think you on the House floor want to in any way promote 
pension funds going overseas. I know you do not want to do that. I am 
concerned about the perception that is what is coming out of the 
Congress of the United States of America. Unless you disagree with 
this, and unless I need a shrink on this legislation, I want to just 
ask a question: Is in fact the sponsor, the gentleman from Texas, Mr. 
Gene Green, saying that all he wants to do is ensure that this bill 
does prohibit pension plans from investing in domestic as opposed to 
foreign? That is the substance of this amendment. We are making it into 
something other than what it really is.
  I do not want anybody to frivolously and flippantly mess around with 
my pension account or my constituents'. But, by God, when there is a 
reasonable investment with the same collateral risk and rewards in 
America, I do want the U.S. pension plans to find the domestic market, 
period. I will say that on the floor.
  Here is what I am saying to the gentleman. We are projecting in the 
next 5 years to exactly triple U.S. pension plan investment overseas. 
Is that what the Members of the Congress of the United States want? I 
am beginning to believe it is, because I cannot see jobs, I cannot see 
investment, I see 4 million housing units, rental units needed, people 
trying to find first-time homes, and we are going to give the 
perception, stay away from domestic investment. And if you call 
Department of Labor, watch you do not get in trouble. Beam me up.
  Mr. SAXTON. Mr. Chairman, I move to strike the requisite number of 
words.

[[Page H 8759]]

  Mr. Chairman, I would say to the subcommittee chairman, the gentleman 
from Illinois [Mr. Fawell], do not be so distraught over this amendment 
because whether it passes or not, it has no effect, because the bill 
does not do what the proponents claim that the perception is.
  I would just like to make the observation that the opponents of this 
bill are very clearly anxious to avoid the key issue, the 
underperformance of ETI's. That is what this bill is all about, and 
this amendment has nothing whatsoever to do with the issues that are of 
concern to those of us who have worked so hard for a year to get this 
bill in the place that it is today.
  All of the amendments from the other side, those to come, seem 
destined to distract attention away from the fact that ETI assets offer 
lower yields and more risk. That is what this is all about. The bill 
has nothing whatsoever to do with foreign investment or domestic 
investment.
  Would anybody who is watching this debate think that those of us on 
this side of the aisle would be foolish enough to restrict domestic 
investment? Do they think that you would be foolish enough to read the 
language and really think that is true? It is fallacious, and your 
amendment is fallacious, as well, and you know it.
  Frankly, I am a little bit surprised that we are having this debate 
here today. Let me talk a little bit about how fallacious your 
amendment is. The amendment starts with the assumption that an ETI 
investment and alternative investments offer exactly, that is your 
words, the same risk-adjusted return.
  I would suspect that you would agree with me that at some point you 
cannot determine what is exactly the same rate of return and exactly 
the same risk. The Nobel laureate James M. Buchanan, in his book ``Cost 
and Choices,'' makes that very point. There is no such thing in the 
world of economics as exactly the same rate of return and exactly the 
same risk, so this amendment on its face begins with an assumption that 
is not possible, according to the learned James Buchanan.
  I would also point out that your argument is fallacious for another 
reason, and that is that the charts we have before us talk about the 
outflow of capital beginning in 1989 and continuing into years beyond 
1995. Why, this bill was not even thought of until 1994. Yet beginning 
in 1989, 5 full years earlier than the bill was conceived, you claim 
that somehow the perception was created 5 years before the bill was 
conceived that made all this happen.
  Mr. Chairman, it is an attempt to confuse. This amendment has nothing 
to do whatsoever with the main issues that we are talking about here 
today, the protection of the rate of return and the minimization of 
risk in private pension plans.
                              {time}  1600

  I would make one other point, and that is that as I look at these 
charts, 1989 and 1990 were certainly watershed years. We had the 
largest tax increase that year in the history of our country. Then we 
had another one that trumped it in 1993, making it more difficult to do 
business in this country, making it more difficult, with the votes of 
all of my colleagues over there, to make a profit in this country.
  My, it is not strange that pension fund managers would invest off 
shore. Is it not strange? So I say to the gentleman on the other side 
of the aisle, he is not fooling anyone. This has nothing to do with the 
substance of the bill. The bill does not speak to this in any way. The 
bill does not restrict domestic investment in any way. No one would be 
foolish enough to advance such a notion, except perhaps the author of 
this amendment.
  So I guess I would plead with the gentleman from the other side of 
the aisle, please, let us get on with the business of the day. If the 
gentleman wants to talk about whether or not the rate of return in 
ETI's is less, it is 2 percent less or 3 percent less or whatever it 
is, or how much it hurts private pension plans, that is fine. We can 
talk about that. That is what this bill is about.
  Or if the gentleman wants to talk about how much additional risk is 
created by virtue of investing in socially motivated risky investments, 
we can talk about that.
  Mr. Chairman, this amendment has nothing to do with the substance of 
this bill whatsoever. It is an attempt, and I think a poorly disguised 
attempt, to cloud the issue.
  Ms. VELAZQUEZ. Mr. Chairman, I move to strike the requisite number of 
words.
  I rise in strong support of the Green amendment to H.R. 1594.
  This amendment simply states that nothing in this bill will prevent 
pension plan funds from investing in domestic ventures. Frankly, I 
can't see why anyone would oppose an amendment that simply reaffirms 
our commitment to job creation in this country.
  Our country is quickly becoming a two-class society, and the No. 1 
cause of this, is the lack of job creation. As companies in our 
communities close down and relocate in search of lower wages,
 what will take their place? At best we are replacing these good-paying 
blue collar jobs with minimum-wage, part-time positions. We are just 
not creating enough good-paying jobs in the United States. Every effort 
must be made to encourage economic growth in our struggling communities 
across this country. Mr. Green's amendment simply wants to make sure 
that we continue this commitment.

  How can my colleagues expect districts like mine, which are in 
desperate need of a viable economic base, to develop good paying jobs 
if we are not willing to make a minimal commitment to domestic 
investment. If we continue to favor investment abroad over investment 
in our country because of cheap labor and lower costs, communities like 
mine will slide further down the list of priorities, receiving less and 
less. As domestic investment dwindles, pension funds will use their 
limited resources more and more in the suburbs, and will continue to 
shortchange our cities.
  In my own district there is potential for growth through a variety of 
business opportunities. But if we are not willing to encourage domestic 
investments, we may be sacrificing the next Microsoft or Motorola, 
before it even gets started.
  I call on my colleagues to support this amendment. What type of 
message would we be sending to investors across this country if we are 
not willing to adopt a simple amendment that encourages domestic 
investment. I yield back the balance of my time.
  Mr. GENE GREEN of Texas. Mr. Chairman, will the gentlewoman yield?
  Ms. VELAZQUEZ. I yield to the gentleman from Texas.
  Mr. GENE GREEN of Texas. Mr. Chairman, let me address some of the 
concerns that the gentlewoman from New York [Ms. Velazquez] has raised 
and the other side has raised.
  Mr. Chairman, they talk about the amendment, but let me read it for 
the Members of the House who may not be on the floor who are watching 
this.

       Nothing in this Act shall be construed as prohibiting the 
     investment by an employee benefit plan, within the meaning of 
     paragraph 3 of the ERISA, in domestic investments as 
     distinguished for foreign investments.

  I do not understand why they are so worked up in opposing it, unless 
that is their concern. Granted, they are stretching to pass this bill. 
They are stretching to say that people invested foreign because of the 
1990 tax bill. I did not read their lips in 1990, and I hope I did not 
this year. But by stretching to oppose this amendment, by using that, 
all we are saying is that when you are comparing apples to apples, let 
us do it domestically. That is all this amendment asks for.
  Mr. Chairman, my colleagues can come up with any other 
interpretation. Frankly, I do not understand why they are opposing the 
amendment, but I appreciate the support of the gentlewoman from New 
York [Ms. Velazquez].
  Mr. GOODLING. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, now we are seeing one of those tragedies unveiled on 
the floor of the House that happens so many times. If my colleagues 
want to hoodwink the American public, if they want to confuse the 
American public, if they want to confuse their fellow colleagues, just 
say that we are going to send money overseas or we are going to invest 
overseas or we are going to send 

[[Page H 8760]]
business overseas, and everybody and their brother in the country will 
rise up in righteous indignation.
  Mr. Chairman, the fact is that this bill has nothing to do whatsoever 
with whether any more investment is sent overseas is or is not sent 
overseas. It has nothing to do with that whatsoever.
  A socially poor investment overseas is just as bad as a socially 
risky investment in the United States, and particularly when we are 
talking about somebody else's money. We are not talking about our 
money. We are talking about Federal Government money. We are talking 
about a retiree's money. We are talking about the money of someone who 
is going to retire.
  Mr. Chairman, let us not confuse the issue with somehow or other 
believing that this legislation will increase or decrease any 
investment overseas. It has nothing to do with that.
  Mr. CLAY. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, the sponsor of the bill indicated that the purpose of 
this legislation is concerned with underperformance of ETIs. The 
majority cited in their report that they were concerned about higher 
risk and lower return from social investing by public pension funds.
  The GAO has said that the risk for social investment, if that is what 
we want to refer to it as, for ETI's, is no greater than the risk for 
other investments. We have got to keep in mind, it is very important 
for us to note, that the public pension funds that they are referring 
to are not required to take the substantial protections that we require 
of the private pension funds under ERISA. So that is no argument as to 
why we should do anything with ETI, and especially to encourage 
investments in overseas places.
  Mr. Chairman, I support this very important clarifying amendment that 
is offered by the gentleman from Texas, Mr. Gene Green. This amendment 
will ensure that the bill will not further the already startling trend 
of overseas investments of our U.S. pension funds.
  Why are we affirmatively discouraging investments in America? ERISA, 
as consistently interpreted by the Department of Labor and the courts, 
allows pension plan managers to consider the collateral economic 
benefits of a potential investment, provided, first, that the potential 
investment has a comparable risk-adjusted return to other potential 
investments, and second, that it is otherwise consistent with the 
standards of ERISA.
  This is all that the Labor Department's interpretative bulletin says. 
Nonetheless, the original version of H.R. 1594 effectively forbids any 
consideration of collateral benefits. The Fawell substitutes before us 
now only modestly improves its predecessor and it calls into serious 
question the ability of pension to consider collateral benefits. The 
partisan hysteria surrendering the bill only adds to its chilling 
effect.
  Mr. Chairman, as a result of this bill, pension plan managers would 
be very reluctant to make investments that bear collateral domestic 
benefits. To placate the underlying spirit of this cynical and partisan 
bill, the so-called prudent man likely will avoid otherwise attractive 
and lawful domestic investments like the plague. Any prudent man 
reading this legislation knows that pension managers will direct 
greater investment overseas, in turn, endangering more American jobs.
  Mr. Chairman, I urge my colleagues to support the Green amendment.
  Mr. KNOLLENBERG. Mr. Chairman, I move to strike the requisite number 
of words.
  Mr. SAXTON. Mr. Chairman, will the gentleman yield?
  Mr. KNOLLENBERG. I yield to the gentleman from New Jersey.
  Mr. SAXTON. Mr. Chairman, I would like to address this matter of the 
GAO report that the previous speaker alluded to. As everyone knows, 
there are dozens of examples of ETI's that can be studied and reported 
on. The GAO happened to select the seven best ETI's that were available 
for them to report on.
  Even given the dismal record of ETI's, it is conceivable that in a 
few cases that there can be five cases which can be expected to match 
market returns, and that was the case with the seven examples that were 
studied.
  When the remainder of ETI's are studied, the performance of ETI's is 
not so rosy, and the pattern we have been talking about all afternoon 
comes right back. Returns are down and risk is up. Because of the 
limited data set, the GAO report even acknowledges and they say this in 
their report: ``These results cannot be generalized to other pension 
plans.''
  Mr. Chairman, I thank the gentleman for yielding.
  Mr. KNOLLENBERG. Mr. Chairman, I yield back the balance of my time.
  Mr. BROWN of Ohio. Mr. Chairman, I move to strike the requisite 
number of words.
  Mr. Chairman, I rise in strong support of the Green amendment and in 
strong support of American jobs. Let me understand this bill the way 
that it is written now. Pension funds collected from American workers 
are often invested in American corporations doing business abroad or 
foreign corporations in other countries.
  These pension dollars, these pension fund dollars, are attracted to 
low wages in other countries, are attracted oftentimes to weak 
environmental laws in other countries and nonexistent worker safety 
laws in those countries.
  These dollars taken from American workers are invested in these 
companies, American or foreign companies, doing business abroad because 
they see great profits in these businesses doing business in Mexico, or 
doing business in Taiwan, or doing business in low-wage countries.
  Mr. Chairman, the problem with that is that the end of that, the 
complete circle, is that those companies, often American companies 
doing business in other countries, manufacturing in other countries, 
those businesses then taken those same jobs from American workers.
  I have money taken out of my wages into a pension; that money is 
invested in another country, often an American business or foreign 
business; that comes back and takes my job away.
  Some pension fund managers, as the gentleman from Texas [Mr. Gene 
Green] asserts, would like to consider that issue; that if we are going 
to invest in pension funds around the world, that that money not come 
back and steal American jobs. I do not know how in this Chamber my 
friends on the other side of the aisle can explain to American workers 
that we sent their money overseas so that it could come back and take 
our jobs.
  The interesting thing, I have heard my friends on the other side of 
the aisle, many of them, not so much the ones in this debate, rail 
about the evils of NAFTA, which I agreed with them on; the evils of 
GATT, the evils of extending NAFTA to Chile; the evils of the Mexican 
bail out. They were right about that.
  Now they want to allow these pension dollars to go abroad and be 
invested in companies doing business in countries where they do not pay 
very much, where they have weakened environmental laws and nonexistent 
labor laws and it comes back and steals Americans jobs.
  You cannot have it both ways. If you think those trade agreements are 
bad, as most of them have been, they you do not want our pension 
dollars subsidizing jobs in other countries so they can come back and 
take our jobs as American workers.
  I say to my colleagues to go back to their district this weekend and 
explain to them, if they vote ``no'' on the Green amendment, and 
explain to them how they said go ahead and invest my pension dollars in 
enterprises in other lands that turned around and took my job.
  Mr. Chairman, I do not think that my colleagues want do to that. I 
ask for a ``yes'' vote on the Green amendment.
  Mr. GENE GREEN of Texas. Mr. Chairman, will the gentleman yield?
  Mr. BROWN of Ohio. I yield to the gentleman from Texas.
  Mr. GENE GREEN of Texas. Mr. Chairman, we talked about the concern 
about investing overseas and the opposition to the amendment. I have a 
hard time figuring out why they will not just accept it.
                              {time}  1615

  But granted, investment overseas would cause, in this amendment, if 
we do not take this amendment, it may increase it.
  Let me talk about, in the National Journal in June of this year, they 


[[Page H 8761]]
talked about the challenge to pension fund trustees, and let me just 
quote, ``The congressional Republicans, by turning ETI's into an 
ideological issue, are casting a chill over pension fund investments 
that could strengthen the homegrown economies of the States, cities and 
towns the pensioners grew up in and, indeed, that they continue to 
depend on for their broader, long-term security''.
  Mr. BROWN of Ohio. Pensions, under the gentleman's amendment, pension 
fund managers are going to be able to have leeway to make these 
decisions? Correct?
  Mr. GENE GREEN of Texas. We are not changing that by this amendment. 
I am concerned the whole bill may cause pension fund managers to say, 
``We do not want to invest in riskier investment in inner-city 
Cleveland or inner-city Houston, but we can invest in inner-city 
Lebanon. Maybe we ought to build housing in Lebanon, not inner-city 
Houston, because we can get a greater return over there.'' I do not 
want to scare those pension fund managers off from U.S. investments by 
this bill. I am concerned by seeing some of the letters that raise 
concerns about this bill.
  Again, the article was in the National Journal saying just what the 
gentleman's argument was. We have workers here who pay into a pension. 
We do not want any mandates on ETI's, and I would be up here like a lot 
of Members opposing it if they said, ``No, we want you to put it back 
into the inner-city investments that are shaky.'' If those investments 
pay a decent rate of return for their risk, then why should they not?
  Mr. MARTINEZ. Mr. Chairman, I move to strike the requisite number of 
words.
  (Mr. MARTINEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. MARTINEZ. Mr. Chairman, I guess what it really boils down to is 
some of my friends on the other side of the aisle prefer foreign 
investments with these pension funds rather than investments here in 
America.
  I heard earlier the idea hoodwink, and social.
  I guess they have a problem with social. It must translate to them as 
communism anytime you try to do some social good in our country. But as 
far as hoodwinking, they are the ones trying to hoodwink the American 
people.
  The fact is the investments have been going overseas and abroad in 
recent years simply because people are afraid to make those kinds of 
decisions of investments here because of some run-in with the Federal 
Government and the ERISA, but let me tell you the other side has taken 
a twist on an old song that used to go something like this, for those 
of you that are old enough to remember it, ``Eliminate the negative, 
accentuate the positive.'' What they have done is elaborate he negative 
as to not accentuate the positive.
  Let me give you an example of the collateral kind of investment that 
was made in a company that you all are very well aware of here in the 
United States. A pension plan purchased a block of stock in a 
corporation, thereby increased its cash flow and its cash position, and 
the equity in that company, and that allowed the company to borrow 
funds at a lower rate so they could expand the factory and create more 
jobs. You wonder who that company was? That was General Motors, and 
what is good enough for General Motors is good enough for America, I 
have always said, and good enough for me.
  When you talk about, and continue to be talked about on the other 
side, about investing in underperforming investments, let me tell you 
now, even with the interpretive bulletin, even with the law as it is 
now, that would be breaking the law if they did it knowingly. The 
trouble with any investment you make, you never know how it is going to 
turn out. You investigate it and hope it will do the best it possibly 
can for the beneficiaries. Something can always go wrong.
  Wake up and open your eyes. We are living in a depressed economy in 
this country. There are places in this country right now that are 
living in depression-like conditions. These places need relief. They 
need investment here in the United States that will return profit here 
in the United States, not send it abroad.
  Mr. GENE GREEN of Texas. Mr. Chairman, will the gentleman yield?
  Mr. MARTINEZ. I yield to the gentleman from Texas.
  Mr. GENE GREEN of Texas. Mr. Chairman, I thank my colleague, the 
gentleman from California, not only for his leadership on this bill, 
but also for yielding to me, and again for the benefit of the Members, 
let me again read the amendment for the Members who have not had a 
chance to look at it: ``Nothing in this act shall be construed as 
prohibiting the investment by employee benefit plans within the meaning 
of paragraph 3 of section 3 of the ERISA in domestic investments as 
distinguished from foreign investments.''
  Let me also go to read the infamous, I guess, 94.1 interpretive 
bulletin: The fiduciary standards applicable to ETI's are no different 
than the applicable to plan investments generally. ``Therefore, if the 
above requirements are met, the selection of the ETI or the engaging in 
an investment course of action intended to result in the selection of 
an ETI will not violate it.'' We are talking about the same investment 
standards, and again, for the people, who are trying to pass this bill, 
Mr. Chairman, to say that they are not encouraging overseas 
investments, again, why should they not accept the amendment if they 
are more concerned about investing again in Lebanon, PA, than in 
Lebanon, the country?
  Mr. DORNAN. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman and my colleagues, this argument that overseas pension 
investment is going to drain capital from the United States reflects, I 
believe, a fundamental lack of understanding about economics. In fact, 
in 1994, the last year for which we have pension data, the net flow of 
capital into the United States amounted to about $150 billion.
  It is very misleading to argue that the international investments of 
pension funds drain capital from the United States when the facts show 
a large capital inflow to our U.S. economy. The pension data cited 
creates the impression that capital is being drained from the United 
States when the official data clearly shows the big picture is one of a 
net investment in the United States.
  Mr. SAXTON. Mr. Chairman, will the gentleman yield?
  Mr. DORNAN. I yield to the gentleman from New Jersey.
  Mr. SAXTON. Mr. Chairman, I would like to thank the gentleman from 
California for bringing up this very important point. As a matter of 
fact, as the gentleman from California well knows, this publication, 
called ``Economic Indicators,'' which is put out by the Council of 
Economic Advisors, who, incidentally, are appointed by the President, 
and prepared for the Joint Economic Committee, verifies that exact 
fact. As a matter of fact, it is kind of interesting to look at the 
history, and these charts give just the opposite impression.
  This year, as the gentleman pointed out, $151 billion more in capital 
flowed into this country from pension funds and other sources than 
flowed out, $150 billion net income to us.
  Let me just go back and give you some perspective on this. In 1990, 
it was $92 billion more flowed into the country than out; in 1991, it 
was down to $7 billion more flowed in than flowed out; and then we 
began to rebuild the next year, it was $61 billion; the next year, $99 
billion; and this year, $150 billion more came across our borders, 
coming in, than went out.
  Again, the proponents of these charts for this amendment are once 
again trying to confuse this situation by saying more capital, and 
these charts certainly give the impression that you are saying more 
capital is flowing out than flowing in; quite the opposite is, in fact, 
the case.
  Mrs. MINK of Hawaii. Mr. Chairman, I move to strike the requisite 
number of words.
  Mr. GENE GREEN of Texas. Mr. Chairman, will the gentlewoman yield?
  Mrs. MINK of Hawaii. I yield to the gentleman from Texas.
  Mr. GENE GREEN of Texas. To my colleague from Hawaii, I thank the 
gentlewoman for yielding.
  The issue just came up, and I am glad it was brought up, concerning 
the 

[[Page H 8762]]
amount of investment in our country as compared to the amount of 
outflow in investment. I share the concern.
  The United States is the greatest country in the world to invest in, 
and that is why people will come here. But why should we discourage our 
own investment managers or pension managers to go overseas?
  We might want to consider, it was announced today or yesterday, the 
investment in the Rockefeller Center by some foreign nationals who are 
now deciding it was not such a great investment, but I agree, we have a 
great investment climate here. Why should we not have American workers 
creating their own American jobs instead of encouraging, by not 
adopting this amendment, what may be happening in this bill?
  Again, I urge an ``aye'' vote on the Green amendment.
  Mrs. MINK of Hawaii. Mr. Chairman, reclaiming my time, I would like 
to say that there is such a disparity in the arguments that have been 
made on the legislation that is pending, and for that reason I rise in 
strong support of the Green amendment, with the hope that it will 
clarify some of the arguments that have been made with respect to this 
bill. I rise in strong opposition to H.R. 1594, because I think it 
erroneously interprets the bulletin that is referred to as 94-1.
  The supporters of this legislation contend that the bulletin IB-94-1 
that the Labor Department issued promotes these economically targeted 
investments at the expense of the pension beneficiaries, and as the 
gentleman from Texas [Mr. Gene Green] said, with the possible 
interpretation that the moneys could go to foreign investments rather 
than investing in the future of our own country. The interpretive 
bulletin issued by the Labor Department says nothing of the kind. It 
does not change the fiduciary responsibility one iota, and therefore it 
seems to me that this legislation is entirely unwarranted and 
unnecessary. The interpretive bulletin put out by the Labor Department 
does not change the primary fiduciary
 responsibility, which is to assure the safety of the investments of 
these pension funds.

  What it does say is that in looking toward the investments that are 
permitted, that the trustees and so forth who are making these 
decisions ought to consider the additional benefit that could be 
accrued to communities if investments were placed in the communities 
with reference to housing projects and projects of that kind.
  Further, contrary to what has been said on the floor this afternoon 
by the supporters of this legislation, the Labor Department bulletin 
94-1 does not supplant ERISA at all. The bulletin does not put the goal 
of promoting and encouraging the application of ERISA to these 
economically targeted investments above the fiduciary's first 
commitment to the participants and the beneficiaries of the benefit 
plan.
  So it seems to me that the bulletin has to be looked at in the 
context in which it exists over previous administrations and over this 
administration, and I believe you will see that it fully complies with 
the intent and the spirit an the letter of the law as expressed in 
ERISA. Fundamentally, what this disagreement seems to be between the 
Republicans and the Democrats on our side is whether these pension 
funds should be invested at all in projects that are located in our 
communities that could upgrade the infrastructure, meet some of the 
pressing needs of various aspects of our communities, and in that 
context, the Green amendment is vital, and it should be adopted, 
because what it says is that in the investments that are made of our 
pension funds, we ought to pay attention to the needs of this country, 
of the domestic needs of this country, and in doing so I believe it 
also goes to the heart of our objection to this pending legislation, 
and that is to negate the importance of economically targeted 
investments which have an ancillary social benefit to our communities.
  These investments that are being made in our communities are 
economically targeted and without any jeopardy whatsoever to the 
employees, to the pension plans, to their annuities, and afford no 
additional risk. So it seems to me we are debating a piece of 
legislation here that makes an egregious accusation against this 
administration, nullifies the policies of two previous administrations 
and does tremendous social harm and disadvantage to our local 
communities.
  For that reason, I support the Green amendment and urge that H.R. 
1594 be defeated.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Texas, Mr. Gene Green.
  The question was taken; and the Chairman announced that the noes 
appeared to have it.
                             recorded vote

  Mr. GENE GREEN of Texas. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were ayes 192, 
noes 217, not voting 25, as follows:

                             [Roll No. 649]

                               AYES--192

     Abercrombie
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Duncan
     Edwards
     Engel
     Ensign
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Filner
     Flake
     Foglietta
     Forbes
     Fox
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Geren
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hamilton
     Harman
     Hastings (FL)
     Hayes
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kingston
     Kleczka
     Klink
     LaFalce
     Levin
     Lewis (GA)
     Lincoln
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Montgomery
     Murtha
     Nadler
     Neal
     Neumann
     Ney
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Riggs
     Rivers
     Roemer
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Skelton
     Slaughter
     Smith (NJ)
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Tauzin
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Towns
     Traficant
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Weldon (PA)
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NOES--217

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Dickey
     Doolittle
     Dornan
     Dreier
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Fowler
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Moorhead
     Moran
     Morella
     Myers
     Myrick
     Nethercutt
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pombo
     Porter
     Portman
     Pryce

[[Page H 8763]]

     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Roberts
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weller
     White
     Whitfield
     Wicker
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--25

     Ackerman
     Buyer
     Coburn
     de la Garza
     Durbin
     Fields (LA)
     Ford
     Furse
     Hall (OH)
     Jefferson
     Lantos
     Lipinski
     McDermott
     Menendez
     Moakley
     Mollohan
     Parker
     Reynolds
     Rush
     Sisisky
     Torricelli
     Tucker
     Waldholtz
     Williams
     Wolf

                              {time}  1651

  Mr. STOCKMAN and Mr. MANZULLO changed their vote from ``aye'' to 
``no.''
  Mr. KINGSTON and Mr. MURTHA changed their vote from ``no'' to 
``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
              amendment offered by mr. payne of new jersey

  Mr. PAYNE of New Jersey. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Payne of New Jersey: Insert after 
     section 4 the following new section (redesignating section 5 
     as section 6):

     SEC. 5. PROTECTION OF INVESTMENTS IN INFRASTRUCTURE 
                   IMPROVEMENTS

       Nothing in this Act shall be construed as prohibiting the 
     investment by an employee benefit plan (within the meaning of 
     paragraph (3) of section 3 of the Employee Retirement Income 
     Security Act of 1974) in infrastructure improvements.

  Mr. PAYNE of New Jersey. Mr. Chairman, I have an amendment at the 
desk. Mr. Chairman, today we are here to target the working people in 
this country again, this time in the ability of the pension funds to 
make investments that take collateral benefits into consideration when 
plan fiduciaries are making investment decisions with pension 
contributions.
  Economically targeted investments are any investments or assets that 
earn competitive risk-adjusted rates of return while also producing 
collateral benefits such as infrastructure revitalization, economic 
development, and job creation. To be sure, these components are 
integrally linked, because when there are jobs available, more money 
circulates back into the economy and stimulates economic growth.
  My amendment simply states that employee benefit plans cannot be 
prohibited from considering infrastructure improvement and 
revitalization as part of their investment decisions.
  I have sat here on many occasions this session listening to many of 
my colleagues talk about getting Government out of the lives of the 
people and today we are sitting here considering a bill that would 
immobilize the investment decisions of many pension plans. We also hear 
on one hand proclamations from the majority that individuals must be 
more personally responsible, but then on the other hand we remove the 
incentives that promote personal responsibility like job creation, and 
that's what 1594 does.
  My amendment today would free the hands of plan fiduciaries because 
they would be allowed to consider infrastructure improvement as part of 
their decisionmaking process.
  By providing billions of dollars for investment in American companies 
and infrastructure, ETI's serves as an economic catalyst while still 
offering competitive investment returns to pension plan participants 
and retirees.
  Since I know everyone here is interested in the long-term economic 
health of our Nation and its retirement system, I urge my colleagues to 
support my amendment.
                              {time}  1700

  Mr. SAXTON. Mr. Chairman, I rise in opposition to the amendment.
  Mr. Chairman, I would just like once again to make the observation 
that the opponents of this bill seem to be very anxious to avoid the 
key issue, and that issue is the underperformance of economically 
targeted investments. All of the amendments from the other side seem 
designed to distract attention away from the fact that ETI assets offer 
lower yields and more risk than normal investments. Thus, ETI's are 
especially inappropriate for pension investment.
  Once again, I believe the amendment of my friend from New Jersey [Mr. 
Payne] is totally unnecessary. There is nothing whatsoever in the bill 
that prohibits or in any way inhibits pension fund managers from 
investing their funds for the purposes stated in the gentleman's 
amendment. Therefore, I think the amendment is unnecessary and I 
believe intended to cloud the issue.
  To the issue of ETI's and their underperformance, I would point once 
again to four studies done to demonstrate this quite conclusively. The 
first one was done by Alicia Munnell, an employee of the Department of 
Labor nominated to the Council of Economic Advisors by the President, 
who concludes in a study and report that she has done that there is a 
differential of about a negative two points, 2 percentage points in the 
rate of return, on ETI's. Olivia Mitchell of the Wharton School comes 
to exactly the same conclusion, that ETI's underperform by about 2 
percentage points. Marr, Nofsinger, and Low has a study showing it is 
worse than that, that ETI's underperform by 2.1 percent.
  So in the interest of moving this process forward, and in the 
interest of protecting the rates of return for private pension 
participants and in the interest of keeping risk low, I would suggest 
that this amendment is unnecessary and that all Members should vote no.
  Mr. MARTINEZ. Mr. Chairman, I rise in support of the Payne amendment.
   Mr. Chairman, I will not take 5 minutes. I will try to be very brief 
because it is the same old thing. Collateral benefits, if you took the 
strictest interpretation of the fiduciary relationship, a pension 
manager would not be able to invest in collateral investments.
  Under this law, it puts even a greater cloud to that kind of 
investment, not necessarily abroad, but here. The fact is that these 
are good investments. I cited earlier the case of GM. That was a 
collateral investment that returned not only to the company itself, but 
benefit to the employees of that company and especially those that it 
created jobs for, and it created certainly a great benefit to the 
beneficiaries of the pension fund.
  That had to be approved by the Department of Labor and was approved 
by the Department of Labor, and not under Clinton's administration. But 
you keep bringing up this idea that somehow or another the Clinton 
administration is doing something different than what previous 
administrations have done, and therefore a need for this.
  I think there are two things that have the other side hung up. The 
word ``social,'' social programs, that somehow some of them equate to 
something nefarious or something that is not good, because it equates 
to socialism or something else, because it benefits somebody in a 
depressed neighborhood or such. That is the farthest thing from the 
truth.
  The other thing is this idea of the fiduciary relationship or 
fiduciary responsibility that says the funds must be invested only for 
the benefit of the pension fund or the beneficiaries of that pension 
fund. If you really think about that for an instance, that is just 
taking it a little bit too literally. The fact is there is no 
investment made anywhere, anyplace, that somebody who is receiving the 
benefit of that investment does not receive a benefit, sometimes very 
great benefits, as in the case of GM.
  I think the Payne amendment, trying to protect those kinds of 
collateral economic investments, is a very good one that is necessary 
to continue the kinds of work that have been successful, not the 
examples of the ones that have been unsuccessful. So many of the 
instances where they have been unsuccessful, the people actually 
violated the law in doing it, and still the law was there to try to 
protect against it and it did not. There is nothing in life that is so 
guaranteed that there is not going to be something that goes wrong once 
in a while. But you take a few instances and elaborate that to the 
greatest extent you possibly can to make the case you wanted to make 
for 

[[Page H 8764]]
something totally unjustified, and in this case this is the case with 
this bill. I recommend the acceptance of the Payne amendment. At least 
it makes the bill a little more practical in regard to collateral 
investments.
  Mr. PAYNE of New Jersey. Mr. Chairman, will the gentleman yield?
  Mr. MARTINEZ. I yield to the gentleman from New Jersey.
  Mr. PAYNE of New Jersey. Mr. Chairman, the gentleman is absolutely 
right. The plan fiduciaries cannot even consider the investment also 
unless all things are equal. That is what makes this so scary. 1594 
leaves a lot of ambiguity about the ability of plan fiduciaries to make 
these kinds of investments. I only seek to clarify, so that 
infrastructure improvements can be considered. ETIs are still subject 
to the prudent man standard as they have always been. So I would urge 
once again that my colleagues support this amendment.
  Mr. GOODLING. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, first of all I want to emphasize again the bill does 
not prohibit pension plans investment in ETIs of any kind. So it does 
not matter what it is. The bill does not prevent you from investing in 
those ETIs.
  However, if you accept this amendment, then you create a negative 
implication for all other ETIs that we do not mention in the law. So 
every other ETI not mentioned in the law then becomes suspect. So if we 
are going to effectively prohibit any promotion of ETIs, either 
directly or by inference, then the bill cannot include specific 
reference to any particular type of plan investment.
  The bill does not change the legal status of ETIs, so pension plans 
can continue to invest in infrastructure improvements if they want to, 
but it surely is inappropriate for Congress to be passing judgment on 
any particular type of pension plan investment. ERISA clearly and 
properly leaves it to the plan manager and the fiduciaries to determine 
whether an investment is prudent for that plan.
  So let us not have a negative impact on ETIs simply because we single 
one out. Let us make very sure that we do not get in the business of 
determining as a Congress what are good or what are bad investments. 
That is up to the manager, as I indicated, and the fiduciaries, to 
determine, not us.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from New Jersey [Mr. Payne].
  The amendment was rejected.


                   Amendment Offered by Mr. TRAFICANT

  Mr. TRAFICANT. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Traficant: Page 6, insert after 
     line 2 the following (and redesignate section 5 as section 6 
     accordingly):

     SEC. 5. AUTHORITY OF DEPARTMENT OF LABOR WITH RESPECT TO 
                   INVESTMENTS IN THE CONSTRUCTION OR RENOVATION 
                   OF AFFORDABLE HOUSING UNITS.

       Nothing in this Act (or the amendments made thereby) shall 
     be construed as prohibiting the Department of Labor from 
     issuing advisory opinions regarding the legality of 
     investments in the construction or renovation of affordable 
     housing units.

  Mr. TRAFICANT. Mr. Chairman, I am not standing on the floor today 
saying the Republicans want to ship pension plan investment overseas, 
nor am I standing on the floor today saying that the Republicans want 
to send jobs overseas. These previous amendments talked about specific 
activities, such as nothing in the bill shall be construed as 
prohibiting pension plans from investment in infrastructure 
improvements.
  The Traficant amendment does not in fact deal with a provision of the 
bill that would prohibit pension plan investment in housing. But I 
would like to have the attention of the other side of the aisle. My 
amendment deals with an advisory opinion on housing being given to 
someone who may invest or want to invest in the housing in the United 
States of America.
  Let me say this: We need 4 million rental units minimum just to meet 
demand. I am not talking simply about low income housing here. I am 
talking about affordable housing, first-time home buyers. And the 
Traficant amendment says nothing in this act shall be construed as 
prohibiting the Department of Labor from issuing advisory opinions.
  It does not say that investors have to invest in
   American housing or not. But it says nothing in the bill shall be 
construed as prohibiting the Department of Labor from interacting with 
a reasonable concern from some pension account who may want to invest 
in American housing.

  Now, look, that is a significant difference here. I voted to roll 
back regulations in this country that have overburdened our economy and 
shipped jobs overseas. I think we have gone too far when a dog urinates 
in a parking lot and that it is deemed a wetland. But mine does not 
deal with the issue of investing in housing; it does deal with who has 
more information than the Department of Labor on, in fact, American 
domestic housing needs?
  If a pension plan out there wants to make an investment in housing, 
in a development in Dallas, in a condominium for senior citizens in 
Colorado, and they want information, nothing in this bill should be 
construed as in fact prohibiting the Department of Labor from giving 
them an opinion relative to that concern.
  This is a reasonable amendment here, unless the Congress of the 
United States is saying look, do not worry about housing, the Congress 
of the United States and taxpayers are going to take care of housing. I 
am talking about a specific need. I am talking about an advisory 
opinion. I am not talking about a limitation that the bill speaks to on 
housing.
  My amendment is not ill-intended. I do not think that we can afford 
to have fiduciaries guessing if they will get sued each time they are 
interested in investing in constructing housing in this country.
  This is a reasonable amendment, and let me say this: The California 
Public Employees Retirement System funneled $375 million into 
construction of 32 first-time home buyer homes. The yields have already 
exceeded 20 percent return more than originally anticipated. The New 
York City Employees Retirement System invested in the construction of 
15,000 affordable housing units. It is enjoying a return nearly 30 
percent higher than its fixed income portfolio.
  Housing investment trusts of AFL-CIO, $1.1 billion from 380 pension 
plans. If this trust was in fact publicly traded as a fixed income 
fund, it would rank as either No. 1 or No. 2 in the United States of 
America.
  Folks, the taxpayer cannot afford all this housing. Mine deals with 
an advisory opinion to take some of the nebulous gray area out of some 
investment planner who would in fact call the Department of Labor 
seeking information.
  Now, I think this is a reasonable amendment. It does not require a 
whole lot of animosity here or fanfare.
  Mr. Chairman, I would ask for this reasonable amendment to be 
approved.
  Mr. SAXTON. Mr. Chairman, I move to strike the last word.
  Mr. Chairman, I would just make the observation that the opponents of 
the bill seem to be very anxious to avoid the key issue, the 
underperformance of ETIs. All of the amendments from the other side 
seem to be destined to distract attention away from the fact that ETI 
assets offer lower yields and more risk than normal investments; thus, 
ETIs are especially inappropriate for pension fund investments.
  The bill as it stands does not in any way prohibit the Department of 
Labor from issuing advisory opinions.

                              {time}  1715

  Nor does it prohibit the Department of Labor, nor did it discourage 
domestic investment, nor did it encourage foreign investment, nor does 
it do any of the other things that these amendments purport that it 
does. This is just an attempt to divert attention away from the key 
issues. Those are the underperformance of ETIs and the additional risks 
posed by ETIs. I ask all Members to vote against this amendment.
  Mr. FAWELL. Mr. Chairman, I move to strike the last word in 
opposition to the amendment.
  If I can have the attention of my good friend from Ohio, I know that 
there is no better man in this Congress when he jumps on an issue to 
articulate his views. I think it is important 

[[Page H 8765]]
that we make it clear that in the report language there is a statement 
that I think addresses precisely the point that the gentleman is 
understandably bringing forth. That is, and I quote: Nothing in the 
bill is intended to affect the ability of the DOL to issue advisory 
opinions, information letters, typical releases, prohibited transaction 
exemptions, or other pronouncements interpreting and applying ERISA 
fiduciary responsibility rules--and this is the important part--to 
particular factual situations or exempting specific transactions from 
the prohibited transaction provisions.
  We did not want it understood that when we were objecting to a 
specification of a broad class of investments, which is what ETI's are, 
that this did not mean that when someone, as for instance Jack Kemp, 
when he made the request to Secretary Dole for a specific advisory 
opinion, that is quite possible. We have made it, I think, very, very 
clear in the report language that it is possible. I would hope on that 
basis the gentleman would withdraw his amendment, because I think you 
can rest assured that in a circumstance where a specific investor wants 
to find out where his particular investment stands in the viewpoint of 
the DOL, he can get that advisory opinion.
  Mr. TRAFICANT. Mr. Chairman, will the gentleman yield?
  Mr. FAWELL. Mr. Chairman, I yield to the gentleman from Ohio.
  Mr. TRAFICANT. Mr. Chairman, the gentleman is not opposed to advisory 
opinions, but the legislative debate here today dealt with offshore 
investment of pension plan money, dealt with infrastructure; and the 
legislative history can be construed in many, many different ways.
  I think ETI's applied to housing at times can be a little bit 
partisan here. Housing may not necessarily be an economically targeted 
investment in this country. I believe that it should be not in the 
report language but it should be part and parcel to the bill itself 
that treats such investment with such return on its merit.
  Mr. FAWELL. Mr. Chairman, reclaiming my time, I would hope the 
gentleman would not do that, because, again, now he has in statutory 
form all the negative implications to others who might be seeking 
letters of opinion.
  We want to make it very clear that any time someone has an 
economically targeted investment, and they believe that the adjusted 
returns are sufficient to justify that, and if there is any question, 
and a lot of your fiduciaries will have those questions, that they feel 
free that they can propound these requests for advisory opinions.
  I think the amendment has the unfortunate consequence of putting in 
jeopardy all of those others unless we start specifying for every one. 
It has always been a power of the Department of Labor to issue specific 
advisory opinions. In fact, when President Reagan first spoke on the 
subject, it was on housing. It was a request for a specific opinion 
from the Department of Labor, which he was able to get. And we have 
made it clear that that is not being altered, should not be altered at 
all.
  So I think there could be unintended consequences here, when it is, 
let us say, in other areas, in infrastructure or whatever, because they 
do not have specific statutory language, then you raise that negative 
implication.
  Mr. TRAFICANT. Mr. Chairman, if the gentleman will continue to yield, 
taking that argument, if I were to accept that argument, why do we not 
just have, and I could rework my amendment to say that on the advisory 
opinion listed on a broad base in the report language that it shall be 
in fact incorporated in the text of the bill and take away such dubious 
nature and vagueness that would be involved and leave it not with just 
housing then but to satisfy some of the concerns people may have on 
this side? Take your report language that you say speaks to that intent 
and take that report language on the basis of our dialog here and 
incorporate it into the form of an amendment that in fact puts it into 
the text of the bill, not just the report language. If the gentleman 
will do that, I will withdraw my amendment, resubmit it in its general 
form, which would in fact incorporate the gentleman's report language 
into the text of the bill.
  Mr. FAWELL. Well, all I can say is that the report language is one 
thing. It is full and complete, and the gentleman is talking about a 
major lifting of language and inserting it in the bill.
  I do not think I could agree to that, but I can assure that what the 
gentleman are thinking about, individual factual opinions on a specific 
investment that is what we are talking about.
  The CHAIRMAN. The time of the gentleman from Illinois [Mr. Fawell] 
has expired.
  (By unanimous consent, Mr. Fawell was allowed to proceed for 1 
additional minute.)
  Mr. FAWELL. Mr. Chairman, we do not want this construed to mean that 
there can be just generalized opinions. So I think it is something that 
ought to remain in the report language. And I repeat, I think if what 
the gentleman has is centered only upon housing, then all other ETI's 
would, I think, have a negative intention.
  Mr. TRAFICANT. Mr. Chairman, if the gentleman will continue to yield, 
what I was saying is it would incorporate his language in the report 
language, not with its specificity towards housing but its general 
nature into the text of the bill. See, this side of the aisle is 
believing that if what the gentleman is saying cannot be affirmed by 
putting into the bill, then how strong is the intent of it listed in 
the report language?
  So if in fact the bill itself would clarify that which is in the 
report language, what would be the major hurdle for us to handle? I can 
understand the gentleman saying housing would give the negative impact 
on something else or vice versa. But if we are saying the general 
intention of his report language being incorporated into the bill, how 
would it affect the gentleman's intentions?
  Mr. MARTINEZ. Mr. Chairman, I move to strike the requisite number of 
words, and I rise in support of the amendment.
  Well, there is the crux of the whole thing, and no one said it better 
than the distinguished gentleman from Illinois. He said report language 
is one thing, law is another. Report language has no force in law but 
law does prevail. If we go to section 2, paragraphs B and C, we will 
see where those two paragraphs actually preclude the Department of 
Labor from doing its job, of giving a definition on a particular 
project. They combine the two, and especially paragraph C, no officer 
or employee of the Department of Labor may travel, lecture or otherwise 
expend resources available to the Department for the purposes of 
promoting--and get this, because this is the key--directly or 
indirectly economically targeted investments.
  So if a person writes in or calls or wants to find out about a 
targeted investment or something that might be considered a targeted 
investment, if they were to give an interpretation, somebody in the 
Department could take this language and make the definition: Well, I am 
directly and indirectly advising this person on it, so somebody could 
construe it is promoting that targeted investment.
  The bill is badly written. Now, they may have wanted in that 
paragraph C to restrict them from traveling and lecturing and otherwise 
expending resources, but I doubt very much that they really wanted to 
handcuff them from being able to give an opinion on a particular 
project, but that is what they do, in effect. That has been the crux of 
the whole thing.
  Mr. Chairman, the legislative bulletin did nothing like that except 
make it clear to people what they would be getting into and what were 
the definitions of the law. I would support it for all the reasons that 
the gentleman from Ohio has stated: the tremendous need for housing in 
this country. The fact is that most real estate investments wisely 
done, wisely built are great money makers.
  I know a lot of people in this Congress itself that have made 
investments towards retirement in real estate. I certainly have because 
I know it is a serious return on your money. Regardless, under this 
legislation the way it is written now, they will not be allowed to make 
those kinds of investments or at least interpret for an individual 
whether that investment would be a legitimate investment or not.

[[Page H 8766]]

  That is why I think it is paramount we adopt at least the amendment 
of the gentleman from Ohio.
  Mr. TRAFICANT. Mr. Chairman, I ask unanimous consent to withdraw the 
pending amendment.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Ohio?
  Mr. FAWELL. Reserving the right to object, Mr. Chairman, I am not 
quite sure what is happening here.
  Mr. TRAFICANT. Mr. Chairman, will the gentleman yield?
  Mr. FAWELL. I yield to the gentleman from Ohio.
  Mr. TRAFICANT. Mr. Chairman, I plan to offer an amendment in its 
general form that would say nothing in the act shall be construed as 
prohibiting the Department of Labor from issuing advisory opinions 
regarding the legality of investments, period. That would in fact 
incorporate the intent of the report language into the text of the bill 
showing that we are concerned about one specific aspect which may, in 
fact, limit another. I am prepared to withdraw on the strength of the 
gentleman's intent and would simply reinforce his report language into 
the bill in general terms.
  Mr. FAWELL. I object, Mr. Chairman.
  The CHAIRMAN. Objection is heard.


                         parliamentary inquiry

  Mr. TRAFICANT. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. TRAFICANT. Mr. Chairman, is this an open rule or is it not?
  The CHAIRMAN. It is.
  Mr. TRAFICANT. Mr. Chairman, after this vote is evidently taken, I 
can reoffer another amendment, or is that precluded by some aspect of 
the rule?
  The CHAIRMAN. An amendment otherwise in order may be offered.
  Mr. TRAFICANT. Mr. Chairman, I ask unanimous consent, again, to 
withdraw the pending amendment.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Ohio?
  There was no objection.
  The CHAIRMAN. The amendment is withdrawn.

                              {time}  1730


                   amendment offered by mr. traficant

  Mr. TRAFICANT. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Traficant: Page 6, insert after 
     line 2 the following (and redesignate section 5 as section 6 
     accordingly);

     SEC. 5. AUTHORITY OF DEPARTMENT OF LABOR WITH RESPECT TO 
                   INVESTMENTS.

       Nothing in this Act (or the amendments made thereby) shall 
     be construed as prohibiting the Department of Labor from 
     issuing advisory opinions regarding the legality of 
     investments.

  Mr. TRAFICANT. I would like to explain this, Mr. Chairman, because I 
believe the gentleman only has a partial draft.
  Mr. Chairman, there are two discussions here on the House floor 
occurring simultaneously. The Democrats are saying that we do not trust 
the intent of the legislative initiative. The Democrats are saying that 
the bill is not needed if we look at the law. The Republicans are 
saying, ``We have handled your intentions. We have no intent to screw 
anybody, give anybody the shaft, but we are taking care of that in the 
report language.''
  We agree that we do not want to ship money overseas, we agree that we 
do not want to prohibit investments in infrastructure, we agree that we 
do not want to, in fact, stop with at least giving advisory opinions on 
some of these things. But if we, in fact, highlight one, then the 
myriad of others brings an evil connotation, that Darth Vader is going 
to come in and take away our freedom.
  What this amendment says is this takes the intent of the legislation 
that is listed in some report language and puts that general intent 
right into the text of the bill and clarifies it. It says,

       Authority of the Department of Labor with respect to 
     investments: Nothing in this act shall be construed as 
     prohibiting the Department of Labor from issuing advisory 
     opinions regarding the legality of investments.

  If that is what I have heard the gentleman state, then this basically 
reinforces the intent of the report language.
  I would like to have the attention of the majority side here, because 
I think I am talking to Peoria, IL. I think we can come to some 
understanding on this. If what the gentleman from Illinois was saying 
is: Look, we have no problem with your amendment, Traficant, the only 
thing is it is already listed, because you are dealing with advisory 
opinions, and we are not trying to kill advisory opinions; but we do 
not want to highlight housing, because if we say yes to housing it will 
give the connotation that all these other things are in fact prohibited 
or they cannot give opinions on them, because they are not listed.
  Therefore, what we do is, in general terms, take the intent of your 
report language, put it in the bill, so if somebody wants to call the 
Department of Labor about infrastructure investments, they are going to 
get an advisory opinion. If they want to call about American versus 
foreign investment or want some materials, they can get an opinion.
  My amendment deals with the advisory opinion of the Department of 
Labor. My amendment attempts to, in fact, incorporate the text of the 
bill. My amendment clarifies, rather than leaves open a vague or 
nebulous connotation on either side, depending on what partisan flag 
people are flying here.
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. TRAFICANT. I yield to the gentleman from Illinois.
  Mr. FAWELL. Mr. Chairman, this is a good example, I think, of people 
trying to, in good faith, have an understanding. The ERISA law is very 
arcane. It is important to understand that the DOL does issue advisory 
opinions, but they do not issue advisory opinions that can tell a 
fiduciary that the particular transaction is or is not legal. They do 
not give an opinion on the legality. The fiduciary will have personal 
liability, if indeed it turns out that a particular investment did not 
meet the various standards of the prudent man rule and all the case law 
that goes with it. So that what the gentleman is setting forth here is 
not what is in the report language.
  The report language was very carefully drawn to be able to continue 
the opinions which over the years the Department of Labor does give in 
reference to prohibited transactions, in matters such as that. However, 
I repeat, it is not so easy that they can just simply say, ``Mr. 
Traficant, in regard to your particular private pension plan and your 
desired investment over here, we can tell you it is legal or it is not 
legal.''
  Therefore, I cannot agree to this amendment. I wish we could have 
gotten together sooner.
  Mr. TRAFICANT. Reclaiming my time, I think what is bothering the 
gentleman is the words, ``the legality of investments.'' Is that the 
gentleman's concern?
  Mr. FAWELL. Certainly in regard to the word ``legality.''
  The CHAIRMAN. The time of the gentleman from Ohio [Mr. Traficant] has 
expired.
  (By unanimous consent, Mr. Traficant was allowed to proceed for 2 
additional minutes.)
  Mr. TRAFICANT. Mr. Chairman, nothing in this act shall be construed 
as prohibiting the Department of Labor from issuing advisory opinions 
regarding investments.
  Mr. FAWELL. Unfortunately, and I do not mean to be troublesome here, 
if the gentleman will continue to yield.
  Mr. TRAFICANT. Reclaiming my time, I am going to ask a direct 
question: What would the intent of the Traficant amendment be that is 
germane, that would be so much different from the intent of the 
gentleman's report language? Could the gentleman specify?
  Mr. FAWELL. The report language is very careful to refer to those 
kinds of activities by the Department of Labor in regard to technical 
releases, prohibited transactions, exemptions, in any number of areas. 
I cannot say that I am such an expert on the subject that I can fully 
give an explanation.
  Mr. TRAFICANT. Reclaiming my time, though, with the gentleman's 
report language in its specificity, would not, in fact, the specificity 
of the report language completely delineate the intent of incorporating 
this general amendment into the text of the bill, to establish the 
gentleman's intent? How in God's name, after the report language is 
listed in the bill, could this 

[[Page H 8767]]
general type of an amendment dealing with intent be so impacted?
  Mr. MARTINEZ. Mr. Chairman, will the gentleman yield?
  Mr. TRAFICANT. I yield to the gentleman from California.
  Mr. MARTINEZ. Mr. Chairman, it would seem to me that the intent here 
is not to have that part of the report language play any effect on what 
the Department of Labor does, because I know the gentleman from 
Illinois [Mr. Fawell] has been here long enough to understand that the 
report language does not carry any force in law, but that the law 
prevails over what is written in the report language.
  That being the case, we have opened Pandora's box to the Department 
of Labor being able to issue these opinions and legislative bulletins 
to individuals who request them on what the status of an investment is 
that they would make, whether it would be in keeping with the fiduciary 
relationship that they have or not, and that is what they are trying to 
prohibit in this whole piece of legislation. What the gentleman has 
done is asked them to put their money where their mouth is, and they 
will not do it.
  Mr. TRAFICANT. Yes.
  Mr. MARTINEZ. Mr. Chairman, I move to strike the requisite number of 
words.
  As I was saying, the gentleman has asked them to put their money 
where their mouth is and they have refused to do it, which shows the 
clear intent of this legislation and why this legislation is not 
necessary. They are going to do it because they have the votes, but it 
is not necessarily going to be right.
  Mr. TRAFICANT. Mr. Chairman, will the gentleman yield?
  Mr. MARTINEZ. I yield to the gentleman from Ohio.
  Mr. TRAFICANT. Mr. Chairman, to our distinguished ranking member, if, 
in fact, the Traficant amendment removes the legality of, and leaving 
it general, would not the general aspect of the Traficant amendment in 
the bill be further clarified and fortified by the support language of 
the report?
  Mr. MARTINEZ. What the gentleman has done in essence in his amendment 
is negated the need for my neutrality amendment which I was going to 
offer later, and my amendment would allow the Department of Labor to 
offer these interpretations and opinions, which is their duty and 
responsibility.
  What the gentleman actually has done is summed it up in a more clear 
way so it would be more universal to all of the problems that arise 
when people are trying to make these kinds of decisions, but do not 
want to be in violation of any law or in violation of ERISA. What the 
gentleman has done, what they have tried to do in their legislation, 
created the inability of the Department of Labor to promote or to 
actually go out and try to push, as they say they would do, which I do 
not believe, but the gentleman has prevented them from doing that in 
this legislation. But he has still allowed them to carry out their 
duties, their functions, and their responsibilities.
  Mr. TRAFICANT. If the gentleman will continue to yield, the managers 
of the bill said ``Look, we are not against this advisory opinion on 
housing, but if we specify housing, bang, you are going to give a 
connotation to this everything else.'' Now you come back and say 
``Look, you are changing the tone of this by the inclusion of the words 
`advisory opinion on the legality of.' '' If, in fact, ``the legality 
of'' is removed, would it not, in fact, give the general focus and 
intent of the bill's report language clarified in the text of the bill 
and then fortified by the support language of the report? In other 
words, what I am saying is I can understand the gentleman's position on 
``the legality of,'' and it does deal now with the specific set of 
legal parameters. That I can understand.
  However, with that removed, even though that is not the pending 
amendment, I cannot in any form or fashion understand a continued 
debate on this issue.
  Mr. MARTINEZ. Taking back my time, Mr. Chairman, what I think the 
gentleman has done is accomplished a great deal in his amendment. I am 
not sure that they will accept it, but the fact is that if we do this, 
without that specific legality language in there, we eliminate a whole 
lot of problems for a whole lot of people, including them. The thing is 
that I still believe that this legislation is erroneous in its concept, 
in its assumptions, and they have taken in a few isolated instances 
where there have been pension funds invested improperly and tried to 
run that into a whole new concept and find problems with the 
interpretive bulletin.
  If they find problems with that, this is something that allows the 
Department of Labor to do what they intended to do with the 
interpretive bulletin but still allows them do it in a way that makes 
them happy, with the department remaining neutral in its promotion of 
ETI's.
  Mr. FAWELL. Mr. Chairman, I rise to oppose the amendment. I am not 
sure just what it is now.
  Mr. Chairman, as it is right now, I gather we are saying that nothing 
in the act shall be construed as prohibiting the Department of Labor 
from issuing advisory opinions. That is obviously so wide open, or 
advisory opinions regarding the legality of investments, and I am not 
sure which one it is, but I gather it is the latter regarding the 
legality of investments. That is a power that the DOL does not have 
right now.
  I would not want to accept it at this point. It may be that down the 
road we could work out some language. If the gentleman took that off, 
then we just open it up to any advisory opinion that might be involved. 
I think that I cannot accept what is before me right now. I would 
regretfully have to oppose the amendment. I would hope we could have a 
meeting of the minds. I do not think that it is necessary when we have 
specific factual situations. There is a pretty well-recognized route 
whereby the DOL has this ability to get informational letters, 
technical releases, prohibited transactions, exemptions. But I am not 
going to wade around in that law at this hour of the day here on the 
floor, when I say to the gentleman from Ohio, who is a good friend of 
mine, I just would not want to try to do it right now.
  I will say to him, I will do everything I can to see that his 
concerns are taken care of if he feels that that report language is not 
sufficient, if and when it does come into a conference committee, but 
this is not the right time. I do not feel, based on my knowledge of all 
of the aspects of that terribly arcane statute known as ERISA, that I 
would want to just say at this point that I could accept this 
amendment.
  Mr. TRAFICANT. Mr. Chairman, will the gentleman yield?
  Mr. FAWELL. I yield to the gentleman from Ohio.
  Mr. TRAFICANT. Mr. Chairman, I ask unanimous consent that the 
amendment be withdrawn.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Ohio?
  There was no objection.
                   amendment offered by mr. traficant

  Mr. TRAFICANT. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Traficant: Nothing in this act is 
     intended to affect the ability of the Department of Labor to 
     issue advisory opinions, information letters, technical 
     releases, prohibited transactions, exemptions, or other 
     pronouncements interpreting and applying ERISA's fiduciary 
     responsibility rules to particular factual situations, or 
     exempting specific transactions from the prohibited 
     transaction provisions of ERISA (pursuant to 29 U.S.C. 
     Sec. Sec. 1106, 1108).

  Mr. TRAFICANT. Mr. Chairman, I have a report, together with minority 
and additional views. I want to read the language.
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. TRAFICANT. I yield to the gentleman from Illinois.
  Mr. FAWELL. Mr. Chairman, I gather this is a direct copy of the 
language to which I made reference.
  Mr. TRAFICANT. Word for word. It would be incorporated into the text 
of the bill.
  Mr. FAWELL. We can accept that, Mr. Chairman.
  Mr. TRAFICANT. I thank the gentleman.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Ohio [Mr. Traficant].
  The amendment was agreed to.
                              {time}  1745


                    amendment offered by mr. hinchey

  Mr. HINCHEY. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:


[[Page H 8768]]

       Amendment offered by Mr. Hinchey: Insert after section 4 
     the following new section (redesignating section 5 as section 
     6):

     SECTION 5. PROTECTION OF DOMESTIC INVESTMENTS.

       Nothing in this Act shall be construed as prohibiting the 
     investment by an employee benefit plan (within the meaning of 
     paragraph (3) of section 3 of the Employee Retirement Income 
     Security Act of 1974) in domestic investments, as 
     distinguished from foreign investments. The Secretary of 
     Labor shall take such actions as are necessary to encourage 
     domestic investments by pension plans to the extent that such 
     investments are in conformity with the requirements of the 
     Employee Retirement Income Security Act of 1974.

  Mr. FAWELL. Mr. Chairman, I reserve a point of order. We have no copy 
of this amendment and I have no knowledge of what the contents are.
  The CHAIRMAN. The gentleman reserves a point of order.
  Mr. HINCHEY. Mr. Chairman, this country has a major problem. It has a 
major domestic investment deficit. The domestic investment deficit has 
been established to be as high as $1 trillion a year. That is the 
primary reason why we are seeing a decline in the standard of living of 
the American people, why we are seeing a decline in job opportunities, 
and why we are seeing a decline in the purchasing power of American 
working men and women. The investment deficit needs to be corrected. 
Unfortunately this Congress is going to the opposite direction. The 
majority party in the House of Representatives, not content with 
slashing and burning every domestic investment program that this 
country has, exacerbating the economic difficulties of the Nation, they 
are not content with that, now what they want to do by this bill is to 
place in jeopardy every investment trustee who would consider making an 
investment in a domestic program that has some positive social 
consequences.
  Already the problem of investment in these pension plans is causing 
us difficulty in that it is siphoning funds that ought to be invested 
here in the United States to be invested outside of our country 
overseas.
  We have heard some talk about ETI's. The ETI's, targeted investment, 
amount to only about $30 billion. Juxtaposed against that is the fact 
we have $150 billion out of pension funds invested overseas now. If the 
bill in chief passes without the proper amendments, that problem is 
going to be made immeasurably worse. We will see pension trustees 
fearful of being challenged on their investments here in this country, 
domestic investments that have positive social consequences. I am 
talking about things like housing, first home mortgage buyers, medical 
clinics, basic infrastructure. They will be cowed by the language in 
the bill in chief from making those kinds of investments and they will 
find it much easier to target those investments overseas where they are 
not so constrained by the language in this bill.
  What I am seeking to do here basically is to take the language in the 
amendment that was offered by the gentleman from Texas, Mr. Gene Green, 
some time ago and modify that amendment to say as follows:

       The Secretary of Labor shall take such actions as are 
     necessary to encourage domestic investments by pension plans 
     to the extent that such investments are in conformity with 
     the requirements of the Employee Retirement Income Security 
     Act of 1974.

  The language in this amendment is perfectly consistent with the 
provisions of ERISA, perfectly in tune with the protections that are 
enshrined in the law currently with ERISA.
  We have been told that there is nothing in the bill that prevents 
these kind of ETI investments currently being made, that the bill does 
not prevent that. I am skeptical about that and I think that that 
skepticism was reflected by a large number of the Members of this House 
by a vote that was had here earlier this afternoon.
  Nevertheless, whether or not that is the intention, unquestionably 
that is the effect. The effect of this bill, if it passes, the bill in 
chief, will be to send a message to every pension trustee, telling them 
that if they want to invest in their home community, if they want to 
put money into housing in their town, if they want to put money into 
improving the water supply distribution system in their community, if 
they want to improve the sewage treatment plant and clean up the water 
supplies in their area, if they want to provide medical facilities for 
the people in their towns, in their communities,
 they had better think twice about doing it because those investments 
are socially sound and they have positive social value. This bill, the 
bill in chief, would impinge upon their ability to do that and it would 
have the effect of taking that money and investing it overseas.

  If it is true, as the sponsors of the bill have told us, that they 
have no intention of siphoning money that ought to be invested 
domestically and having that money invested overseas, if it is true 
that what they have said, that they have no intention of taking money 
from these targeted investments in needed domestic improvements, if 
that is true, if they do not want to make it difficult to do that, then 
what I am trying to do is make it easier for them. All they have to do 
is accept this language, and the language here in the amendment is 
perfectly consistent with all the safety provisions in ERISA and I 
think consistent with what I have heard from some of the people on the 
other side of the aisle.
  Mr. SAXTON. Mr. Chairman, I rise in opposition to the amendment.
  Mr. Chairman, I would once again make the observation that the 
opponents of the bill are extremely anxious to avoid the real issues 
here and, of course, those issues are the underperformance of ETI's. 
ETI's simply do not have the kind of return that pension plans that 
invest in non-ETI's have. This administration has people residing in it 
who are in responsible places who know these issues, who claim that, as 
we do, that the ETI-type investments generally promote or have 
associated with them rates of return that are approximately 2 percent 
less than non-ETI types of pension fund investments. So all of the 
amendments from the other side to date have been designed to detract 
attention away from the fact that ETI assets offer lower yields and 
more risk than normal investments. Thus ETI's are especially 
inappropriate for pension fund investments.
  I hesitate, but I guess somebody ought to point out here that in 
addition to that, the major thrust of our bill is to take away from the 
Department of Labor the authority, or the position that they are 
currently in, to advocate for any type of investment. That is
 what the clearinghouse is all about. It is set up to advocate for a 
special class of investments. This amendment would advocate for another 
special class of investments.

  Let me just point out that I think any responsible pension fund 
manager in the United States of America, given two investments that 
look like they are approximately of equal caliber, one being domestic 
and one being foreign, I would certainly hope that any responsible 
person finding themselves in that position, with American workers' 
money entrusted to them, would make the domestic investment. But we are 
certainly not going to accept an investment that once again puts in the 
lap of the Department of Labor the responsibility of advocating for 
this new special type of investment.
  Let me point out also that it is also the responsibility of the 
pension fund manager, pursuant to the ERISA law, to act solely and 
completely in the best interest of the participants in the pension 
plan. Most pension fund investors, as you have seen by your own charts 
and by your own data that you have brought out, from time to time find 
it necessary to diversify and on some occasions they make investments 
in foreign types of investments that happen to have a rate of return 
that they believe is in the best interest of the participants in the 
plan.
  So it is not in the purview of the Department of Labor to intervene 
in these instances. It is in the purview of the responsibility of the 
pension fund manager to make those kinds of decisions. That is part of 
the free enterprise system and it is not for Secretary Reich or his 
employees or anybody else to meddle in those types of decisions. Your 
amendment, sir, gives Secretary Reich not only the right but the 
responsibility to carry out those kinds of incentives.
  The second point I would like to make with regard to the position 
that you present has to do with the net flow of capital into and out of 
the United States. I pointed this out before. This publication which is 
put out by Council 

[[Page H 8769]]
of Economic Advisors called Economic Indicators points out very clearly 
that there is a net flow of $151 billion in the most recent year 
reported, 1994, into the United States of America. It has been so 
increasingly over the last 5 or 6 years, bottoming out with only $7 
billion in 1991 and once again we are back up to $151 billion.
  So the fact of the matter is that the net flow of assets, of capital 
assets, is into the United States, not out of the United States as the 
gentleman would try to confuse some members of the public by bringing 
forth this amendment.
  I think that once again these amendments are a series of amendments 
which are designed to divert attention away from the real issues here. 
The real issues are in keeping with the intent and the literal language 
of the ERISA law which requires pension fund managers to act solely and 
completely for the best benefit of the participants in the pension 
plan. The underperformance of ETI's by virtue of a full 2 percent and 
the additional risk posed by ETI's and the decisions thereby made by 
pension fund managers with regard to ETI's are certainly not in keeping 
with the spirit or the letter of the law.
  Mr. MARTINEZ. Mr. Chairman, I rise in support of the amendment.
  The gentleman who just spoke would like Members to believe that all 
ETI's are bad investments. That is not true. We have illustrated and we 
have given examples of ETI's that are very successful and very 
profitable for the pension beneficiaries.
  The gentleman is saying over and over again that that is the issue. 
That is not the issue, because the real issue is whether or not those 
that were bad investments were advisable under the law or permissible 
under the law. They were neither permissible nor advisable under the 
law, and that has not changed in anything done by the interpretive 
bulletin, but he chooses to ignore that and keep coming back to the 
same rhetoric.
  The fact is that the majority here wants to mismanage the Department 
of Labor. In fact in this new Congress they want to mismanage every 
part of the Government, including the administrative branch, and we 
will probably next get into the judicial branch. I do not think that is 
the answer.
  The gentleman from New York [Mr. Hinchey] is to be commended for his 
amendment, and I will tell why. I would have offered a stronger 
amendment. I would have offered an amendment that says that no American 
worker's pension fund that he earned here in the United States could be 
invested in any foreign investment because, as earlier was said by the 
gentleman from Ohio [Mr. Brown], those dollars go abroad in investments 
there that create products that come back to steal our markets, and to 
create jobs and economy over there to rob people of jobs here.
  I would have said the gentleman's amendment is a very weak amendment 
really, because my amendment would have said no American pension 
dollars from American workers could be expended anywhere else, in any 
foreign country; it had to be expended here for investment here, to 
realize our economic benefit rather than that of someone abroad.
  Mr. HINCHEY. Mr. Chairman, will the gentleman yield?
  Mr. MARTINEZ. I yield to the gentleman from New York.
  Mr. HINCHEY. Mr. Chairman, I would just like to point out to the 
ranking minority member something that he knows, and that of course is 
that we knew that a stronger amendment would not stand any chance of 
passage or being accepted by the other side of the aisle. It was our 
hope that this amendment, as moderate as it is, and as in keeping with 
ERISA as it is and all the protections and provisions of ERISA as it 
is, would be accepted. But they are apparently so zealous in their 
desire to prevent pension funds from being invested in domestic 
programs, so desirous of seeing that money, if it has to go overseas 
rather than being invested here in this country, that they are even 
opposing this very moderate amendment.

                              {time}  1800

  Mr. MARTINEZ. Reclaiming my time, I agree with the gentleman that 
this is a reasonable amendment as it is offered, but there have been 
several reasonable amendments that have been offered; none of them 
accepted. The intent of this legislation should be clear to everyone.
  Mr. KNOLLENBERG. Mr. Chairman, I move to strike the requisite number 
of words.
  Mr. Chairman, I have been sitting here, obviously, as many of us 
have, listening to the debate and there seems to be a recurring theme 
that comes from the other side of the aisle.
  I do not challenge their honesty and integrity about bringing forth 
the argument. I have heard the words used over there ``hung up'' or 
``ambiguous.'' There is an ambiguity about what we are saying. There is 
a misunderstanding.
  Mr. Chairman, I have misunderstood some of the direction over here as 
well, but there is one thing that we have to keep coming back to. This 
is repetitious. You have heard it before. Nothing like singing the same 
thing over and over. But the Saxton bill does not prohibit investing in 
ETI's. There is no prohibition or language or sentence or phrase that 
refers to that.
  The only thing that I can tell my colleagues, though, is that the 
DOL, the Department of Labor interpretive bulletin does promote 
investments in ETI's and that is where I think the hangup or the 
problem is.
  If my colleagues want some proof of the fact that they are promoting 
it, think about this for just a little bit. They are spending, the 
administration is spending $1 million to establish a clearinghouse to 
produce, I heard, a variety of things. I heard a list, which is 
probably is. But it is a somewhat sanctioned grouping of names of 
investments that are satisfactory, all of which happen to be ETI's. 
That is No. 1.
  No. 2, they are sending the Assistant Secretary around who is 
actively promoting and I understand spending 10 percent of her time 
promoting ETI's. That is proactive.
  No. 3, there has been talk, and not just talk, but indications of 
inappropriate pressure that have been put on the pension managers.
  Let me tell my colleagues something about pension managers. They are 
not blocks of wood. They do assess, they analyze, they scrutinize, they 
weigh, and look at what is best for their pension beneficiaries. It 
might be an investment in Lebanon, IN, or Lebanon, PA, or it may be 
overseas, but it may be in the heart of their own hometown. They look 
at all sides of the equation; not just one.
  Mr. Chairman, I remind my colleagues that one of the reasons that 
ETI's do have to be scrutinized more closely is because the Department 
of Labor itself has acknowledged, my friends on the other side of the 
aisle want to call them social investments. Fine, but these ETI's, I 
will call them ETI's, I have called them PTI's, politically targeted 
investments, but the ETI's are less liquid. They require more expertise 
to evaluate. They require a longer period of time to generate 
significant investment returns.
  Mr. Chairman, I am not a pension investment manager. I think I am 
average in terms of those kinds of things. But if those were the words 
that I read, it would have a great deal of impact on what I would do in 
terms of investing, even as an individual. And pension mangers, as I 
say, are not blocks of wood. They do weigh all of this.
  The problem of this bill is that it addresses the promotion of ETI's. 
And, frankly, that is something that is very contrary to its charge as 
the Nation's pension watchdog. So, I am just suggesting that if there 
is some confusion or misunderstanding, it has to be, I believe, over 
that very issue. That the Saxton bill does not preclude investment in 
any of those arenas, any of those areas.
  Mr. HINCHEY. Mr. Chairman, will the gentleman yield?
  Mr. KNOLLENBERG. I yield to the gentleman from New York.
  Mr. HINCHEY. Mr. Chairman, I am glad that the gentleman from Michigan 
[Mr. Knollenberg] is attempting to clear that up for us, because that 
is exactly what we are trying to do here.
  It has been said, for example, that these ETI's are bad investments. 
As a matter of fact, ETI's in California and New York are actually 
performing better than the market. So, they can be very, very 
profitable investments indeed.
  But we are not trying to force anyone into anything. We are not 
trying to say 

[[Page H 8770]]
that anyone should go into an ETI or anything of that nature. All this 
amendment says is to the extent that it is possible, the Secretary of 
Labor shall take whatever action he deems necessary, consistent with 
the protections and provisions of ERISA, to try to ensure that these 
funds are invested domestically; that they are invested here in this 
country and the needs of this country, so that we can create jobs for 
our people and increase their standards of living and increase their 
buying power, which has been shrinking for the better part of 20 years. 
That is all this amendment says. Just invest the money here in this 
country domestically.
  Mr. KNOLLENBERG. Mr. Chairman, reclaiming my time, those are good, 
solid suggestions about what you want to do, but here is what bothers 
me a great deal.
  The CHAIRMAN (Mr. Emerson). The time of the gentleman from Michigan 
[Mr. Knollenberg] has expired.
  (By unanimous consent, Mr. Knollenberg was allowed to proceed for 2 
additional minutes.)
  Mr. KNOLLENBERG. Mr. Chairman, I want to look at this aspect of it 
since, in the judgment of the gentleman from New York [Mr. Hinchey], 
the Department of Labor's directive does not preclude investment in 
ETI's, and since the bill of the gentleman from New Jersey [Mr. Saxton] 
does not preclude or prohibit or in any way challenge the investment in 
ETI's, why is there any need for an amendment?
  Mr. HINCHEY. Mr. Chairman, if the gentleman would continue to yield, 
I think it is very clear. We want the investment trustees to have as 
much latitude as possible to act in the context of their lights in the 
best interests of the people they represent in their pension system.
  We want them to do it insofar as it is consistent with all the 
protections and provisions in the law in a way that is going to promote 
economic growth and development in this country, because that too is in 
the best interest of the pensioners, potential pensioners, the 
investors in that pension system.
  To the extent that we can grow this economy and marshal our 
investment in ways that produce growth and create income, we are 
benefiting everyone in the economy. That is what we are trying to do 
with this amendment, because it is not clear in the bill that that 
would be allowed.
  Contrarily, if I may, the bill indicates that the trustees, if they 
do that in a way that is socially just, they will be imperiled.
  Mr. KNOLLENBERG. Mr. Chairman, reclaiming my time, we do not need the 
amendment, because we have not precluded investment in any domestic 
activity.
  The CHAIRMAN. Does the gentleman from Illinois [Mr. Fawell] insist 
upon his point of order? He had reserved a point of order.
  Mr. FAWELL. Mr. Chairman, I withdraw my reservation of a point of 
order on the amendment.
  Mr. Chairman, I move to strike the requisite number of words.
  Mr. Chairman, I rise, briefly, in opposition to the amendment. There 
is just one point that I think I can add that might be of help. It 
seems to me that we have come full circle now. We have legislation 
which was introduced which basically was aimed at proscribing the 
Department of Labor from being able to go out and promote and hype, 
spend millions of dollars toward being able to have a clearinghouse, et 
cetera, et cetera, to encourage ETI's.
  We did not outlaw ETI's, but we simply said that they are a part of 
the investment area, but nobody has to do it, especially the entity 
which is the regulator and is supposed to be the watchdog for proper 
investments. That is not appropriate for the Department of Labor to be 
doing that.
  Mr. Chairman, now what do we get here? We now say that the Secretary 
of Labor shall take such actions as are necessary, anything in his 
discretion, to encourage domestic investments, which means obviously of 
course ETI's, which may have the main emphasis of social investments. 
And he can, if it is in his discretion, it could be with affirmative 
action, it could be goals, timetables, it could be quotas, the whole 
shooting match.
  Well, I will give the gentleman from New York [Mr. Hinchey] credit. I 
do not want to take up a whole lot of time, but to me, the gentleman 
has surpassed the basic problem that this bill is here to try to 
rectify. Mr. Chairman, I think that it is not a very good amendment and 
should be defeated.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from New York [Mr. Hinchey].
  The question was taken; and the Chairman announced that the noes 
appeared to have it.
  Mr. HINCHEY. Mr. Chairman, I demand a recorded vote, and pending 
that, I make the point of order that a quorum is not present.
  The CHAIRMAN. Pursuant to the order of the House of today, further 
proceedings on the amendment offered by the gentleman from New York 
[Mr. Hinchey] will be postponed.
  The point of no quorum is considered withdrawn.
  The CHAIRMAN. Are there further amendments?
    amendment in the nature of a substitute offered by mr. martinez

  Mr. MARTINEZ. Mr. Chairman, I offer an amendment in the nature of a 
substitute.

  The Clerk read as follows:

       Amendment in the nature of a substitute offered by Mr. 
     Martinez: Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SENSE OF THE CONGRESS.

       It is the sense of the Congress that the Department of 
     Labor, as the principal enforcer of fiduciary standards in 
     connection with employee pension benefit plans and employee 
     welfare benefit plans (as defined in paragraphs (1) and (2) 
     of section 3 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1002(1), (2))), should remain neutral 
     regarding economically targeted investments.

     SEC. 2. PROHIBITIONS ON DEPARTMENT OF LABOR REGARDING 
                   ECONOMICALLY TARGETED INVESTMENTS.

       (a) In General.--Interpretive Bulletin 94-1, issued by the 
     Secretary of Labor on June 23, 1994 (59 Fed. Reg. 32606; 29 
     C.F.R. 2509.94-1), shall be interpreted so as to neither 
     advocate nor discourage economically targeted investments.
       (b) Restrictions on Department of Labor Regulations.--The 
     Secretary of Labor may not issue any rule, regulation, or 
     interpretive bulletin which promotes or otherwise encourages, 
     or which discourages, economically targeted investments as a 
     specified class of investments.
       (c) Restrictions on Activities of the Department of 
     Labor.--No officer or employee of the Department of Labor may 
     travel, lecture, or otherwise expend resources available to 
     such Department for the purpose of promoting or discouraging, 
     directly or indirectly, economically targeted investments.
       (d) Continued Authority of Secretary.--Nothing in this 
     section shall be construed to preclude the Secretary of Labor 
     from offering advice in response to requests as to the 
     appropriateness under the Employee Retirement Income Security 
     Act of 1974 of particular investments or investment 
     strategies.
       (e) Economically Targeted Investment Defined.--For purposes 
     of this section, the term ``economically targeted 
     investment'' has the meaning given such term in Interpretive 
     Bulletin 94-1, as issued by the Secretary of Labor on June 
     23, 1994 (59 Fed. Reg. 32606; 29 C.F.R. 2509.94-1).

     SEC. 3. EFFECTIVE DATE.

       The preceding provisions of this Act shall take effect on 
     the date of the enactment of this Act.

  Mr. MARTINEZ (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  Mr. MARTINEZ. Mr. Chairman, my amendment is an amendment in the 
nature of a substitute to the bill and is designed to achieve complete 
neutrality on the part of the Department of Labor, much as the bill 
that we are considering now says it claims to do or claims that it 
wants to do.
  Mr. Chairman, my bill clearly states that the interpretive bulletin 
is not to be interpreted as either encouraging or discouraging 
investments in ETI's. Further, it prevents the Department from taking a 
position either in favor of ETI's or against them as a matter of 
investment strategy.
  It does preserve the requirement that the Department of labor respond 
to specific inquiries from investment managers and employee benefit 
plans with respect to any investment strategy, solely in order to 
ensure that the opinions of legality under ERISA may continue to be 
rendered as they have been since ERISA was first implemented a 
generation ago.
  Finally, my amendment in the nature of a substitute prohibits 
expenditures by the Department of Labor 

[[Page H 8771]]
which are made with the purpose of either discouraging or encouraging 
investments in ETI's.
  Mr. Chairman, I urge the adoption of this amendment, because it truly 
is a neutrality amendment; one that answers any of the reasons given 
for the bill in the first place. Yet, my amendment has the benefit of 
ensuring that the investment community is able to take whatever action 
it deems necessary with respect to investment strategies.
  Under the bill as brought to the floor today, I am advised that this 
is not the case. The bill we are presented with will result in 
litigation by any party disgruntled with any investment for the sole 
reason that the investment can have a collateral benefit.
  My amendment ensures that the investment manager is the one who 
considers the investment, not an outsider, and that the investment 
manager is not subject to ``Monday morning quarterbacking'' with 
respect to those decisions.
  Mr. Chairman, I offer this amendment in the hopes that it would be 
accepted. I do not fool myself. I am fully prepared for what will 
ensue.
  Mr. SAXON. Mr. Chairman, I rise in opposition to the amendment.
  Mr. Chairman, once again we have another in a series of amendments 
that is intended to divert attention from the underlying issue under 
consideration here, and that is the underperformance of ETI.
  Mr. Chairman, ETI's historically have been shown to produce rates of 
return that are approximately 2 percent less than other good pension 
fund investments, and that is at a substantially higher risk.
  I further oppose this amendment because in my opinion the substitute 
amendment's attempt to ensure DOL neutrality is unnecessary, since the 
bill simply makes clear that the law is as it was before the Department 
of Labor's decision to promote ETI's took place.
  Under the bill as it currently stands, we negate the interpretive 
bulletin that Secretary Reich issued more than a year ago, which is the 
subject of a great deal of debate and has been ever since. We do away 
with the clearinghouse that was set up to promote economically targeted 
investments, because we believe that for the most part they are 
investments that should be viewed with a great deal of skepticism.
  Third, we stop the sending of any Federal moneys to encourage ETI's 
through the Department of Labor or any other Federal department.
  Mr. Chairman, this amendment is totally unnecessary, and I believe is 
intended to divert attention away from the real issues, which are the 
economics of how pension funds are invested.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from California [Mr. Martinez].
  The amendment in the nature of a substitute was rejected.


     amendment in the nature of a substitute offered by mr. andrews

  Mr. ANDREWS. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The Clerk read as follows:

       Amendment in the nature of a substitute offered by Mr. 
     Andrews: Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SENATE OF THE CONGRESS.

       It is the sense of the Congress that the Department of 
     Labor should apply the same fiduciary standards to 
     economically targeted investments (as defined in Interpretive 
     Bulletin 94-1, issued by the Secretary of Labor on June 23, 
     1994 (59 Fed. Reg. 32606, 29 C.F.R. 2509.94-1)) as are 
     applicable to investments by pension plans generally under 
     the Employee Retirement Income Security Act of 1974.
     SEC.  2.  EFFECT  OF  INTERPRETIVE BULLETIN 94-1.

       Interpretive Bulletin 94-1 (referred to in section 1) shall 
     be null and void to the extend it is construed to authorize 
     investments which are in violation of the Employee Retirement 
     Income Security Act of 1974.
     SEC. 3. PROHIBITION ON FEDERAL AGENCIES AGAINST ESTABLISHING 
                   OR MAINTAINING ANY CLEARINGHOUSE OR OTHER 
                   DATABASE RELATING TO ECONOMICALLY TARGETED 
                   INVESTMENTS.

       (a) In General.--Part 5 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1131 et seq.) is amended by adding at the end the following 
     new section:


 ``prohibition on federal agencies against establishing or maintaining 
 any clearinghouse or other database relating to economically targeted 
                              investments

       ``Sec. 516. (a) In General.--No agency or instrumentality 
     of the Federal Government may establish or maintain, or 
     contract with (or otherwise provide assistance to) any other 
     party to establish or maintain, any clearinghouse, database, 
     or other listing--
       ``(1) for the purpose of making available to employee 
     benefit plans information on economically targeted 
     investments,
       ``(2) for the purpose of encouraging, or providing 
     assistance to, employee benefit plans or any other party 
     related to an employee benefit plan to undertake or evaluate 
     economically targeted investments, or
       ``(3) for the purpose of identifying economically targeted 
     investments with respect to which such agency or 
     instrumentality will withhold from undertaking enforcement 
     actions relating to employee benefit plans under any 
     otherwise applicable authority of such agency or 
     instrumentality.
       ``(b) Economically Targeted Investment Defined.--For 
     purposes of this section, the term `economically targeted 
     investment' has the meaning given such term in Interpretive 
     Bulletin 94-1, as issued by the Secretary on June 23, 1994 
     (59 Fed. Reg. 32606; 29 C.F.R. 2509.94-01).''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act is amended by inserting at the end of the items 
     relating to part 5 of subtitle B of title I the following new 
     item.

``Sec. 516. Prohibition on Federal agencies against establishing or 
              maintaining any clearinghouse or other database relating 
              to economically targeted investments.''.

     SEC. 4. TERMINATION OF CONTRACTS.

       The head of each agency and instrumentality of the 
     Government of the United States shall immediately take such 
     actions as are necessary and appropriate to terminate any 
     contract or other arrangement entered into by such agency or 
     instrumentality which is in violation of the requirements of 
     the provisions of this Act or the amendments made thereby.

     SEC. 5. EFFECTIVE DATE.

       The preceding provisions of this Act (and the amendments 
     made thereby) shall take effect on the date of the enactment 
     of this Act.

  Mr. ANDREWS (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
New Jersey?
  There was no objection.
  Mr. FAWELL. Mr. Chairman, I reserve a point of order on the 
amendment. I am not aware of just what this amendment is all about.
  The CHAIRMAN. The gentleman from Illinois [Mr. Fawell] reserves a 
point of order on the amendment.
  The gentleman from New Jersey [Mr. Andrews] is recognized for 5 
minutes.
                              {time}  1815

  Mr. ANDREWS. Mr. Chairman, there are some severe problems with 
America's pension system as we meet here tonight. There are employees 
of private companies and pensioners of private companies who are 
legitimately worried that they may not have a pension someday because 
of the failure of many American businesses and the extent to which the 
Private Pension Guarantee Benefit Corporation is thinly capitalized. 
There is a very real risk if we do not do something about that problem 
that many Americans may not have the pension check on which they 
depended. There are Americans who used to work for governments or 
school districts or who work for government or school districts today 
who are legitimately worried about their pensions because it has become 
the practice of some governments at the State and local level around 
America to borrow from that pension fund or not put enough in in order 
to meet short-term budgetary or political objectives. That is a real 
problem that deserves our attention.
  Tonight as we consider this legislation, however, neither of those 
problems receives any attention, and instead I rather think that we are 
looking at a bill that in good faith presents a solution in search of a 
problem by talking about economically targeted investments. 
Nevertheless, my friends on the majority side have raised some real and 
viable questions about economically targeted investments or ETI's. My 
substitute amendment attempts to address each of those legitimate 
points and place the Secretary of Labor exactly where he belongs, with 
respect to economically targeted investments or any kind of decision by 
pension fund managers. It places the Secretary of Labor out of the 
picture because the Secretary of Labor, absent his regulatory duties 
under ERISA, has 

[[Page H 8772]]
no business, none, meddling in the decisions of pension managers across 
the country.
  We have heard that people are concerned about spending a million 
dollars of taxpayer money on a clearinghouse to deal with the ETI's. So 
I am concerned about that. So my substitute abolishes the clearinghouse 
and permits the expenditure of nothing on it.
  We have heard that people are concerned about this bill or the 
pronouncements of the Secretary of Labor creating a standard of review 
other than the traditional prudent man standard for ETI's. I am 
concerned about that, too. So my amendment expressly
 provides that the prudent man rule will remain the only measure under 
which investments will be evaluated under the ERISA law. It says the 
prudent man standard and only the prudent man standard.

  Here is the difference between my substitute and the bill that is 
before us: My substitute says that the Secretary of Labor shall not 
promote ETI's, but neither shall detract from ETI's. My amendment says 
the Secretary of Labor shall not promote investments in U.S. savings 
bonds nor shall be detract from investments in U.S. savings bonds or 
the stock of IBM or any other potential investment. My amendment says 
that the Secretary of Labor has no rightful place meddling in the 
investment decisions of our pension funds.
  My amendment, I would think, in many ways is a quintessential 
conservative amendment in that it says the Federal Government simply 
has on place injecting itself in the decisions of investment managers 
of the pension funds of our country.
  So to summarize, Mr. Chairman, wish that we had brought to the floor 
tonight legislation that would address the underfunding of the Private 
Benefit Guarantee Corporation, the Pension Benefit Guarantee 
Corporation that put the pensions of many Americans at risk. I wish we 
had brought to the floor tonight an amendment I offered in committee 
that would have provided public employees with the right of review if 
their Governor and the State legislature decides to play budget fiscal 
politics with their pension and make it subject to some review under 
ERISA.
  The CHAIRMAN. The time of the gentleman from New Jersey has expired.
  (By unanimous consent, Mr. Andrews was allowed to proceed for 2 
additional minutes.)
  Mr. ANDREWS. We have not addressed either of those issues. Instead we 
brought forward this proposal, and I read its intent as a wholesome and 
good-faith one that says that the Secretary of Labor has no business 
meddling in the investment decisions of investment managers. I agree. 
So what we simply say is that he should be neutral with respect to all 
such investments and stay out.
  We hear the proponents of this bill saying that we should not spend 
$1 million of taxpayers' money on a clearinghouse. I agree. So my 
substitute strikes the authority to do that.
  The difference between my amendment and the pending bill is simply 
this: I say that we should not take a position at all on ETI's, that 
the position of the Secretary of Labor ought to be that is a decision 
that the investment fund managers ought to make under the prudent man 
and only under the prudent man rule.
  The CHAIRMAN. The gentleman from Illinois reserved a point of order. 
Does he insist on it?
  Mr. FAWELL. No; I do not reserve the point of order.
  Mr. SAXTON. Mr. Chairman, I move to strike the last word. I would 
like to thank my colleague from New Jersey for a very clear statement 
as to say how he feels about the current situation.
  As I was saying, Mr. Chairman, I would like to commend the gentleman 
from New Jersey for his very articulate recognition of the situation, 
and I might say that although we cannot accept his amendment, he does 
move in the right direction, and we appreciate the fact that for the 
first time we have an amendment that at least recognizes that there is 
a problem with the way the Department of Labor is doing business.
  I wish that we could accept the gentleman's amendment. However, he 
simply does not go far enough. What we are trying to do with the bill 
as it stands is to go back to the situation that existed during the 
Carter years and the Reagan years and the Bush years, where essentially 
what the gentleman has suggested occurred, and that was that the 
Department of Labor did not take a position relative to the ETI's 
unless they were requested to do so by somebody, some pension fund 
manager who wanted the Department of Labor's interpretation as to the 
appropriateness of an investment. So we negate the interpretive 
bulletin.
 We do away with the clearinghouse, and we stop the expenditure of any 
Federal moneys to in any way promote ETI's.

  The gentleman's amendment, while it is certainly well thought out, 
according to the information I have here, expresses the sense of 
Congress that it is inappropriate for the Department of Labor to 
promote ETI's and that is nice. However, we prefer to have this carry 
the effect of law, and that is what the bill, as it currently stands, 
does.
  In addition to that, the gentleman's amendment also renders the 
interpretive bulletin null and void, but he weakens that statement by 
saying only to the extent that is construed to violate ERISA. I am not 
quite sure at this hour how to interpret exactly what that does or what 
it is intended to do, so I think the bill, as it currently stands, is 
absolutely clear. It goes to the points that the gentleman made in his 
very articulate explanation of his amendment. It negates the 
interpretive bulletin. It does away with the clearinghouse, as it 
currently stands, and it stops the expenditures of money to advocate 
for a particular class of investment.
  Mr. GOODLING. Mr. Chairman, will the gentleman yield?
  Mr. SAXTON. I yield to the gentleman from Pennsylvania, the chairman 
of the full committee.
  Mr. GOODLING. Mr. Chairman, my major concern with this substitute is 
the point the gentleman mentioned. 94-1 shall be null and void to the 
extent it is construed in violation of ERISA. My fear is that, and I 
have many, many wonderful attorney friends but they are all very busy 
at the present time, my fear is that we are going to give them much 
more business than they can ever handle, and it may be a long, long 
time until we go through the court process to find out what is 
construed in violation of ERISA means, and that would be my major 
concern with the substitute.
  Mr. CLAY. Mr. Chairman, I move to strike the requisite number of 
words.
  (Mr. CLAY asked and was given permission to revise and extend his 
remarks.)
  Mr. CLAY. Mr. Chairman, I rise in support of this amendment.
   Mr. Chairman, I support this amendment.
  This is the amendment that my Republican colleagues should have 
reported out of the committee had the leadership not been determined to 
placate the sponsor of the bill, and to satisfy their own desire to 
demagog on this issue.
  Democrats and Republicans who want to continue the tradition of 
bipartisan pension policy should support this amendment.
  From the moment that the sponsor of the bill surfaced with his 
legislation, the Republican leadership of the Opportunities Committee 
knew full well that the original Saxton bill would have been an 
absolute disaster. It basically dropped a nuclear bomb on 15 years of 
bipartisan pension policy.
  Unfortunately, Representative Fawell was allowed to make only modest 
improvements in the original bill. If the Saxton bill is a hydrogen 
bomb, obliterating everything in its path, the Fawell bill is a neutron 
bomb. It leaves standing all past Labor Department administrative 
opinions on ETI's, but obliterates every other mention of the term. It 
keeps intact the vague,
 overbroad GAG order on Labor Department personnel. It repeals 
interpretive bulletin 94-1, even though everyone agrees that bulletin 
simply restates 15 years of bipartisan interpretation of ERISA.

  The purpose of the Andrews amendment is to take the committee 
Republicans at their word that their overriding objective is to require 
the Labor Department to acknowledge the prudent man rule and to remain 
neutral 

[[Page H 8773]]
on ETI's. This bears repeating: Mr. Andrews has taken our colleagues at 
their word about their intended goal.
  The Andrews amendment gives them neutrality. As long as ERISA is 
satisfied, ETI's are to rise or fall on their own merits. No help from 
the Labor Department. No promotion of ETI's. No clearinghouse.
  The Andrews amendment establishes as the overarching policy that the 
Labor Department is to apply ERISA's strict fiduciary standards to 
ETI's in the same manner that they are applied to plan investment 
generally. ERISA comes first. Beneficiaries come first. The application 
of the prudent man rules comes first.
  If you support the fiduciary standards of ERISA.
  If you support the prudent man rule.
  If you support giving private sector pension managers the maximum 
flexibility allowed under ERISA to consider investments, free of any 
political pressure, then support the Andrews amendment.
  Mr. ANDREWS. Mr. Chairman, will the gentleman yield?
  Mr. CLAY. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Chairman, I would like to respond, if I could, to 
the two points raised about concern about the substitute.
  First of all, with respect to whether or not the substitute prohibits 
the Secretary of Labor from promoting ETI's or simply declares that to 
be the sense of the Congress, in fact, the amendment does prohibit, in 
section 3, specifically prohibits the Secretary of Labor from entering 
into any contract or taking any step which does so. So it is simply not 
a sense of Congress.
  Second, with respect to the chairman's concern about creating 
employment for attorneys, which is a truly valid concern, I would 
suggest that that really is something, with all due respect, it is a 
red herring for this reason: My amendment says that if the bulletin is 
construed to be null and void because it violates ERISA, my 
understanding is that an investment which runs afoul of the prudent man 
standard is, in fact, a violation of ERISA as ERISA has been 
interpreted. So, therefore, this incorporates by reference the prudent 
man standard that is applied, for years, since 1974, the year ERISA was 
first enacted. I believe, should litigation be brought to interpret 
this section, it would be quickly resolved, and it would be very 
clearly resolved that to the extent that this interpretive bulletin 
authorizes or permits an investment decision outside the scope of the 
prudent man rule, it is illegal and not permitted.
  Mr. CLAY. Mr. Chairman, this amendment establishes the over- arching 
policy that the Labor Department is to apply ERISA's strict fiduciary 
standards to ETI's in the same manner they are applied to plan 
investments generally.
  ERISA comes first. Beneficiaries come first. The application of the 
prudent man rule comes first. If you support the fiduciary standards of 
ERISA, if you support the prudent man rule, if you support giving 
private sector pension managers maximum flexibility allowed under 
ERISA, free of any political pressure, then you have to support the 
Andrews amendment, and I urge my colleagues to do just that.
  Mr. FAWELL. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, I rise to oppose the amendment. I think it is a move in 
the right direction, I believe, in the short chance I have had to 
review it. It is woefully weak in regard to a very important element, 
and that is proscribing the right of the Department of Labor to 
continue to promote and hype in regard to ETI's.
  What we had in section 1 were where we clearly said this is 
inappropriate, that language is gone, and as I read even insofar as 
section 3 and section 2 of the amendment. The prohibitions against 
promotion, et cetera, are gone.
  The amendment certainly renders this very confusing interpretive 
bulletin null and void, but as has been indicated by several, only to 
the extent it is construed to violate ERISA. Our bill really did not 
live or die on that basis or even make that claim. What we said is the 
interpretive bulletin is a very outlandish effort to start promoting 
what the Department of Labor set forth as a definition of ETI's, and it 
was that to which we made, of course, major objection. To introduce 
this language about whether it does or does not violate ERISA, I agree 
with the statement made by Chairman Goodling, we will have a lot of 
lawyers arguing how many angels can dance on the end of a pin as a 
result of that.
  I think that although this is a movement in the right direction, we 
have a very clear bill that has to go through an awful lot of rigorous 
examination, and for that reason, with the utmost respect for the 
gentleman who has proffered this amendment, I certainly must oppose it.

                              {time}  1830

  Mr. ANDREWS. Mr. Chairman, will the gentleman yield?
  Mr. FAWELL. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Chairman, I hear that my friend, the gentleman from 
Illinois [Mr. Fawell], is making two objections. I would like to try to 
meet them.
  With respect to the effect of Interpretive Bulletin 94-1, in the 
appropriate procedural manner, Mr. Chairman, I would offer to change 
that section to say the following:
  Interpretive Bulletin 94-1 referred to in section 1 shall be null and 
void, period, because that is the intent of this section.
  Second, with respect to the gentleman's concern about the----
  Mr. FAWELL. Reclaiming my 
time, if I may say, ``Except to the 
extent----''
  Mr. ANDREWS. Well, why do we not strike that? I would offer to strike 
it.
  Second, let me say this to the gentleman, that to the extent that he 
is concerned about a prohibition against the promotion of ETI's by the 
Government, let me just read to him section 3. It will be section 
516(a).

       No agency or instrumentality of the Federal Government may 
     establish, or maintain, or contract with or otherwise provide 
     assistance to any other party to establish or maintain any 
     clearinghouse data base or any other listing, sub 2, for the 
     purpose of encouraging or providing assistance to employee 
     benefit plans or any other part relating to an employee 
     benefit plan to undertake or evaluate economically targeted 
     investments.

  That seems pretty clear to me is a prohibition against promotion. I 
would be curious if the gentleman can explain to me why it is not.
  Mr. FAWELL. As I have indicated, first of all in section 1 the 
gentleman has entirely removed the very clear statement that any 
promotion is inappropriate on behalf of the Department of Labor.
  In reference to the other sections of the bill, frankly the gentleman 
had here a complete new bill of seven or, eight pages, and I have not 
had the chance to go fully through it, but I have noted that at least 
statements where we have said that we had proscriptions in regard to 
promotion, it seemed to me the gentleman had left those out. In fact in 
section 2 I am informed that those proscriptions have been pretty well 
deleted.
  Mr. ANDREWS. If the gentleman would yield, that is certainly not our 
intent, not my understanding. I do not know of any broader proscription 
we could include.
  Mr. FAWELL. It does appear in section 2 that is the case. I am not 
absolutely sure in regard to section 3, but we have an excellent bill. 
It is too bad something like this was not introduced in committee. The 
gentleman is a member of the committee, and we certainly would have 
considered it, but nevertheless I have a great deal of respect for the 
gentleman, and I know he put some work into it. I appreciate that.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from New Jersey [Mr. Andrews].
  The question was taken; and the Chairman announced that the noes 
appeared to have it.


                             recorded vote

  Mr. ANDREWS. Mr. Chairman, I demand a recorded vote.
  The CHAIRMAN. Pursuant to the order of the House of today, further 
proceedings on the amendment in the nature of a substitute offered by 
the gentleman from New Jersey [Mr. Andrews] will be postponed.
  The point of no quorum is considered withdrawn.

[[Page H 8774]]



          sequential votes postponed in committee of the whole

  The CHAIRMAN. Pursuant to the order of the House of today, 
proceedings will now resume on those amendments on which further 
proceedings were postponed in the following order: the amendment 
offered by the gentleman from New York [Mr. Hinchey]; the amendment in 
the nature of a substitute offered by [Mr. Andrews].


                    amendment offered by mr. hinchey

  The CHAIRMAN. The pending business is the demand for a recorded vote 
on the amendment offered by the gentleman from New York [Mr. Hinchey] 
on which further proceedings were postponed and on which the noes 
prevailed by voice vote.
  The Clerk will designate the amendment.
  The Clerk designated the amendment.


                             recorded vote

  The CHAIRMAN. A recorded vote has been demanded.
  A recorded vote was ordered.
  The CHAIRMAN. This will be a 15-minute vote followed by a possible 5-
minute vote.
  The vote was taken by electronic device, and there were--ayes 179, 
noes 234, now voting 21, as follows:
                             [Roll No. 650]

                               AYES--179

     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     de la Garza
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fields (LA)
     Filner
     Flake
     Foglietta
     Forbes
     Ford
     Fox
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Peterson (FL)
     Peterson (MN)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Rivers
     Roemer
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Skelton
     Slaughter
     Spratt
     Stark
     Stokes
     Studds
     Stupak
     Tanner
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Towns
     Traficant
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NOES--234

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Bonilla
     Bono
     Brewster
     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
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Fowler
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Montgomery
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weller
     White
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--21

     Abercrombie
     Ackerman
     Boehner
     Durbin
     Fattah
     Fazio
     Hilliard
     Jefferson
     Lantos
     Menendez
     Moakley
     Mollohan
     Parker
     Pelosi
     Reynolds
     Sisisky
     Torricelli
     Tucker
     Waldholtz
     Weldon (PA)
     Williams

                              {time}  1855

  So the amendment was rejected.
  The result of the vote was announced as above recorded.
     AMENDMENT IN THE NATURE OF A SUBSTITUTE OFFERED BY MR. ANDREWS

  The CHAIRMAN. The pending business is the demand for a recorded vote 
on the amendment in the nature of a substitute offered by the gentleman 
from New Jersey [Mr. Andrews] on which further proceedings were 
postponed and on which the noes prevailed by voice vote.
  The Clerk will designate the amendment in the nature of a substitute.
  The Clerk designated the amendment in the nature of a substitute.


                             Recorded Vote

  The CHAIRMAN. A recorded vote has been demanded.
  A recorded vote was ordered.
  The CHAIRMAN. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 178, 
noes 232, not voting 24, as follows:

                             [Roll No. 651]

                               AYES--178

     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     de la Garza
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Forbes
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kingston
     Kleczka
     Klink
     LaFalce
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Mfume
     Miller (CA)
     Mineta
     Minge
     Montgomery
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Peterson (FL)
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Rangel
     Reed
     Richardson
     Rivers
     Roemer
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Skelton
     Slaughter
     Stark
     Stokes
     Studds
     Stupak
     Tanner
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Towns
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates
     
[[Page H 8775]]


                               NOES--232

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Bonilla
     Bono
     Brownback
     Bryant (TN)
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Mink
     Molinari
     Moorhead
     Moran
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Rahall
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Spratt
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Traficant
     Upton
     Velazquez
     Vucanovich
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--24

     Abercrombie
     Ackerman
     Bateman
     Boehner
     Bunn
     Clinger
     Durbin
     Fattah
     Herger
     Hilliard
     Jefferson
     Lantos
     Menendez
     Moakley
     Mollohan
     Parker
     Pelosi
     Reynolds
     Sisisky
     Torricelli
     Tucker
     Waldholtz
     Weldon (PA)
     Williams

                              {time}  1904

  Mr. WISE changed his vote from ``no'' to ``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
                          personal explanation

  Mr. ABERCROMBIE. Mr. Chairman, during rollcall vote Nos. 650, 651 on 
H.R. 1594 I was unavoidably detained. Had I been present I would have 
voted ``aye'' on both.
  The CHAIRMAN. The question is on the committee amendment in the 
nature of a substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly the Committee rose; and the Speaker pro tempore (Mr. 
Dickey) having assumed the chair, Mr. Emerson, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 1594) to 
place restrictions on the promotion by the Department of Labor and 
other Federal agencies and instrumentalities of economically targeted 
investments in connection with employee benefit plans, pursuant to 
House Resolution 215, he reported the bill back to the House with an 
amendment adopted by the Committee of the whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on the amendment to the committee 
amendment in the nature of a substitute? If not, the question is on the 
committee amendment in the nature of a substitute.
  The committee amendment in the nature of a substitute was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             recorded vote

  Mr. FAWELL, Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--yeas 239, 
nays 179, not voting 16, as follows:
                             [Roll No. 652]

                               AYES--239

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     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
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson (SD)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Montgomery
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Reed
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tanner
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Traficant
     Upton
     Vucanovich
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                               NOES--179

     Abercrombie
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     de la Garza
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Forbes
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDade
     McDermott
     McHale
     McKinney
     McNulty

[[Page H 8776]]

     Meehan
     Meek
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moran
     Murtha
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Richardson
     Rivers
     Roemer
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Slaughter
     Spratt
     Stark
     Stokes
     Studds
     Stupak
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Towns
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                             NOT VOTING--16

     Ackerman
     Durbin
     Fattah
     Jefferson
     Lantos
     Menendez
     Moakley
     Mollohan
     Nadler
     Parker
     Reynolds
     Sisisky
     Torricelli
     Tucker
     Waldholtz
     Williams

                              {time}  1925

  Mr. DOOLEY changed his vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  

                          ____________________