[Congressional Record Volume 145, Number 55 (Wednesday, April 21, 1999)]
[Extensions of Remarks]
[Pages E729-E730]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INTRODUCTION OF H.R. 1256 THE SAVINGS AND INVESTMENT RELIEF ACT OF 1999

                                 ______
                                 

                           HON. VITO FOSSELLA

                              of new york

                    in the house of representatives

                       Wednesday, April 21, 1999

  Mr. FOSSELLA. Mr. Speaker, I am pleased to announce that together 
with the Vice Chair of the Democratic Caucus, Mr. Menendez of New 
Jersey, I have introduced H.R. 1256, the Savings and Investment Relief 
Act of 1999. This legislation is designed to address the growing 
problem of excess Securities and Exchange Commission (SEC) transaction 
fee collections. H.R. 1256 would cap SEC fees which are imposed on 
stock transactions at more reasonable levels than are currently being 
collected, thereby saving investors approximately $2 billion over the 
next seven years. At the same time, the legislation would provide a 
flexible funding mechanism that would ensure the SEC's budget needs are 
always met.
  The SEC collects various ``user fees'' imposed by the securities laws 
in order to recover the government's costs of running the SEC, 
including registration fees on stock offerings and transaction fees on 
stock trades. Over time, these fees had grown to significantly exceed 
the SEC's budget. In fiscal year 1996, for example, total SEC fee 
collections were more than two and one-half times the SEC's budget.
  Under the leadership of the Chairman of the Commerce Committee, Mr. 
Bliley, and the Chairman of the Commerce Subcommittee on Finance and 
Hazardous Materials, Mr. Oxley, Congress significantly restructured the 
SEC fee structure in 1996, as part of the National Securities Markets 
Improvement Act of 1996 (NSMIA). NSMIA's fee provisions were intended 
to reduce total SEC fee collections over time. Transaction fees were 
explicitly designed to recoup the costs of the SEC's able supervision 
and regulation of the securities markets and securities professionals--
indeed, they were intended to be user fees, not general taxes. 
Unfortunately, actual SEC collections grew to over $990 million in 
FY97--over three times the SEC's budget of $305 million.
  This situation prompted one of our most respected former colleagues, 
then-House Rules Committee Chairman Jerry Solomon, to introduce a bill 
last year with Mr. Menendez, H.R. 4213, which sought to place an annual 
cap on transaction fees.
  H.R. 4213 gained 62 cosponsors from both sides of the aisle, and was 
endorsed by the Security Traders Association, the Chicago Stock 
Exchange, the Pacific Stock Exchange, the New York Stock Exchange 
Specialists Association, the NASD, the Electronic Traders Association, 
and the Profit Sharing/401(k) Council of America. It was also endorsed 
by Americans for Tax Reform, the National Taxpayers Union, Citizens for 
a Sound Economy, and numerous state-level pro-taxpayer groups, as well 
as the U.S. Chamber of Commerce and the National Federation of 
Independent Businesses. The Chairman of the Ways & Means Committee, 
Bill Archer, was also a strong supporter of the bill, and expressed the 
Committee's view that transaction ``fees'' were really taxes because 
they greatly exceeded the SEC's regulatory costs.
  A revised version of H.R. 4213 was drafted to avoid the PAYGO scoring 
problems which would have otherwise arisen from a reduction in 
transaction fees deposited as general revenues. By letter dated 
September 24, 1998, the Congressional Budget Office (CBO) scored the 
revised legislation as revenue neutral.
  Since last year, the situation has only worsened. In FY98, SEC fee 
collections ballooned to a staggering $1.78 billion--five and one-half 
times the SEC's $322 million budget. Quite frankly, Mr. Speaker, this 
situation is absurd and unfair. These ``fees'' have undeniably become a 
backdoor tax of over $1 billion on all American investors and 
businesses raising capital.
  Transaction fees are paid by all hardworking investors in my home 
district and across America. This tax directly affects individual 
investors, and impacts those large number of Americans who own stock 
indirectly, such as mutual fund investors and pension plan 
beneficiaries. It also has a particularly severe impact on the many 
NASDAQ market makers and exchange specialists who live in my district. 
These market professionals must frequently put their own capital at 
risk to buy and sell as principals in order to fulfill their legal 
obligation to maintain orderly markets. Excess transaction fees drain 
capital and liquidity from the markets--which disparately impacts the 
smaller, start-up companies that are creating new jobs and fueling 
economic growth.
  Mr. Speaker, there are a number of ways to achieve the desired result 
of reducing transaction fees, including a cap and reducing the rate at 
which fees are levied. While H.R. 1256 embodies the cap approach, I 
want to stress that I would also endorse a rate cut as well. My intent 
in introducing this legislation is to continue to advance the debate on 
this issue, and to provide much-needed (and long overdue) relief to 
American investors.
  I am gratified that Securities and Exchange Commission Chairman 
Levitt has gone on

[[Page E730]]

record in support of fee relief. In a recent hearing in the Senate 
Banking Securities Subcommittee, he testified that ``[t]he SEC shares 
the Subcommittee's concern that fee collections are currently well in 
excess of initial projections.'' Chairman Levitt stated that he is 
willing to work with Congress to address this issue, and indicated that 
a flexible cap on fees is the most workable solution. I commend 
Chairman Levitt for these comments and for his continued leadership on 
issues of great importance to American investors.
  Mr. Speaker, I pledge to work hard to ensure that the goal of 
providing investors with relief from these excessive fees is 
accomplished in the 106th Congress. I look forward to working in a 
bipartisan fashion to achieve this result, and I urge my colleagues to 
cosponsor H.R. 1256.

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