[Congressional Record Volume 147, Number 83 (Thursday, June 14, 2001)]
[House]
[Pages H3159-H3182]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INVESTOR AND CAPITAL MARKETS FEE RELIEF ACT

  Mr. OXLEY. Mr. Speaker, pursuant to House Resolution 161, I call up 
the bill (H.R. 1088) to amend the Securities Exchange Act of 1934 to 
reduce fees collected by the Securities and Exchange Commission, and 
for other purposes, and ask for its immediate consideration in the 
House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 161, the bill 
is considered read for amendment.
  The text of H.R. 1088 is as follows:

                               H.R. 1088

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Investor and Capital Markets 
     Fee Relief Act''.

     SEC. 2. IMMEDIATE TRANSACTION FEE REDUCTIONS.

       Section 31 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78ee) is amended--
       (1) by striking ``\1/300\ of one percent'' each place it 
     appears in subsections (b) and (d) and inserting ``$12 per 
     $1,000,000'';
       (2) in the first sentence of subsection (b), by striking 
     ``, except that'' and all that follows through the end of 
     such sentence;
       (3) in paragraph (1) of subsection (d), by striking ``, 
     except that'' and all that follows through the end of such 
     paragraph;
       (4) in subsection (e), by striking ``$0.02'' and inserting 
     ``$0.0072''; and
       (5) by adding at the end the following new subsection:
       ``(i) Pro Rata Application.--The rates per $1,000,000 
     required by this section shall be applied pro rata to amounts 
     and balances equal to less than $1,000,000.''.

     SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PROVISIONS; 
                   ADDITIONAL FEE REDUCTIONS.

       (a) Pooling and Allocation of Collections.--Section 31 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is 
     further amended--
       (1) in subsection (b)--
       (A) by striking ``Every'' and inserting ``Subject to 
     subsection (j), each''; and
       (B) by striking the last sentence;
       (2) by striking subsection (c);
       (3) in subsection (d)--
       (A) by striking paragraphs (2) and (3);
       (B) by striking the following:
       ``(d) Off-Exchange Trades of Last-Sale-Reported 
     Securities.--
       ``(1) Covered transactions.--Each national securities''

     and inserting the following:
       ``(c) Off-Exchange Trades of Exchange Registered and Last-
     Sale-Reported Securities.--Subject to subsection (j), each 
     national securities'';
       (C) by inserting ``registered on a national securities 
     exchange or'' after ``security futures products)''; and
       (D) by striking ``, excluding any sales for which a fee is 
     paid under subsection (c)'';
       (4) in subsection (e)--
       (A) by striking ``except that for fiscal year 2007'' and 
     all that follows through the end of such subsection and 
     inserting the following: ``except that for fiscal year 2007 
     and each succeeding fiscal year such assessment shall be 
     equal to $0.0042 for each such transaction.'';
       (5) in subsection (f), by striking ``Dates for payment of 
     fees.--The fees required'' and inserting ``Dates for 
     payments.--The fees and assessments required'';
       (6) by redesignating subsections (e) through (i) (as added 
     by section 2(5)) as subsections (d) through (h), 
     respectively;
       (7) by adding at the end the following new subsection:
       ``(i) Deposit of Fees.--
       ``(1) Offsetting collections.--Fees collected pursuant to 
     subsections (b), (c), and (d) for any fiscal year--
       ``(A) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Commission; and
       ``(B) except as provided in subsection (k), shall not be 
     collected for any fiscal year except to the extent provided 
     in advance in appropriation Acts.
       ``(2) General revenues prohibited.--No fees collected 
     pursuant to subsections (b), (c), and (d) for fiscal year 
     2002 or any succeeding fiscal year shall be deposited and 
     credited as general revenue of the Treasury.''.
       (b) Additional Reductions of Fees.--
       (1) Amendment.--Section 31 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78ee) is further amended by adding after 
     subsection (i) (as added by subsection (a)(7)) the following 
     new subsections:
       ``(j) Recapture of Projection Windfalls for Further Rate 
     Reductions.--
       ``(1) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust each of 
     the rates applicable under subsections (b) and (c) for such 
     fiscal year to a uniform adjusted rate that, when applied to 
     the baseline estimate of the aggregate dollar amount of sales 
     for such fiscal year, is reasonably likely to produce 
     aggregate fee collections under this section (including 
     assessments collected under subsection (d)) that are equal to 
     the target offsetting collection amount for such fiscal year.
       ``(2) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust each of the rates applicable under subsections (b) and 
     (c) for all of such fiscal years to a uniform adjusted rate 
     that, when applied to the baseline estimate of the aggregate 
     dollar amount of sales for fiscal year 2012, is reasonably 
     likely to produce aggregate fee collections under this 
     section in fiscal year 2012 (including assessments collected 
     under subsection (d)) equal to the target offsetting 
     collection amount for fiscal year 2011.
       ``(3) Review and effective date.--An adjusted rate 
     prescribed under paragraph (1) or (2) and published under 
     subsection (g) shall not be subject to judicial review. 
     Subject to subsections (i)(1)(B) and (k)--
       ``(A) an adjusted rate prescribed under paragraph (1) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (2) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(k) Lapse of Appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect (as 
     offsetting collections) the fees and assessments under 
     subsections (b), (c), and (d) at the rate in effect during 
     the preceding fiscal year, until 30 days after the date such 
     a regular appropriation is enacted.
       ``(l) Definitions.--For purposes of this section:
       ``(1) Target offsetting collection amount.--The target 
     offsetting collection amount for each of the fiscal years 
     2002 through 2011 is determined according to the following 
     table:

                                                      Target offsetting
``Fiscal year:                                        collection amount
  2002....................................................$585,720,000 
  2003....................................................$679,320,000 
  2004....................................................$822,240,000 
  2005....................................................$976,320,000 
  2006..................................................$1,148,040,000 
  2007....................................................$880,880,000 
  2008....................................................$892,080,000 
  2009..................................................$1,023,120,000 
  2010..................................................$1,161,440,000 
  2011..................................................$1,321,040,000 

       ``(2) Baseline estimate of the aggregate dollar amount of 
     sales.--The baseline estimate of the aggregate dollar amount 
     of sales for any fiscal year is the baseline estimate of the 
     aggregate dollar amount of sales of securities (other than 
     bonds, debentures, other evidences of indebtedness, and 
     security futures products) to be transacted on each national 
     securities exchange and by or through any member of each 
     national securities association (otherwise than on a national 
     securities exchange) during such fiscal year as determined by 
     the Commission, after consultation with the Congressional 
     Budget Office and the Office of Management and Budget, using 
     the methodology required for making

[[Page H3160]]

     projections pursuant to section 257 of the Balanced Budget 
     and Emergency Deficit Control Act of 1985.''.
       (2) Conforming amendment.--Section 31(g) of such Act (as 
     redesignated by subsection (a)(6) of this section) is amended 
     by inserting before the period at the end the following: 
     ``not later than April 30 of the fiscal year preceding the 
     fiscal year to which such rate applies, together with any 
     estimates or projections on which such fees are based.''.

     SEC. 4. REDUCTION OF REGISTRATION FEES.

       Section 6(b) of the Securities Act of 1933 (15 U.S.C. 
     77f(b)) is amended by striking paragraphs (2) through (5) and 
     inserting the following:
       ``(2) Fee payment required.--At the time of filing a 
     registration statement, the applicant shall pay to the 
     Commission a fee at a rate that shall be equal to $125 per 
     $1,000,000 of the maximum aggregate price at which such 
     securities are proposed to be offered, except that during 
     fiscal year 2003 and any succeeding fiscal year such fee 
     shall be adjusted pursuant to paragraph (5) or (6).
       ``(3) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year--
       ``(A) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Commission; and
       ``(B) except as provided in paragraph (9), shall not be 
     collected for any fiscal year except to the extent provided 
     in advance in appropriation Acts.
       ``(4) General revenues prohibited.--No fees collected 
     pursuant to this subsection for fiscal year 2002 or any 
     succeeding fiscal year shall be deposited and credited as 
     general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust the rate 
     required by paragraph (2) for such fiscal year to a rate 
     that, when applied to the baseline estimate of the aggregate 
     maximum offering prices for such fiscal year, is reasonably 
     likely to produce aggregate fee collections under this 
     subsection that are equal to the target offsetting collection 
     amount for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust the rate required by paragraph (2) for all of such 
     fiscal years to a rate that, when applied to the baseline 
     estimate of the aggregate maximum offering prices for fiscal 
     year 2012, is reasonably likely to produce aggregate fee 
     collections under this subsection in fiscal year 2012 equal 
     to the target offsetting collection amount for fiscal year 
     2011.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances equal to less than $1,000,000.
       ``(8) Review and effective date.--An adjusted rate 
     prescribed under paragraph (5) or (6) and published under 
     paragraph (10) shall not be subject to judicial review. 
     Subject to paragraphs (3)(B) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 30 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The Commission shall publish in the 
     Federal Register notices of the rate applicable under this 
     subsection and under sections 13(e) and 14(g) for each fiscal 
     year not later than April 30 of the fiscal year preceding the 
     fiscal year to which such rate applies, together with any 
     estimates or projections on which such rate is based.
       ``(11) Definitions.--For purposes of this subsection:
       ``(A) Target offsetting collection amount.--The target 
     offsetting collection amount for each of the fiscal years 
     2002 through 2011 is determined according to the following 
     table:

                                                      Target offsetting
``Fiscal year:                                        collection amount
  2002....................................................$512,500,000 
  2003....................................................$589,380,000 
  2004....................................................$650,385,000 
  2005....................................................$790,075,000 
  2006....................................................$949,050,000 
  2007....................................................$214,200,000 
  2008....................................................$233,700,000 
  2009....................................................$284,115,000 
  2010....................................................$333,840,000 
  2011....................................................$394,110,000 

       ``(B) Baseline estimate of the aggregate maximum offering 
     prices.--The baseline estimate of the aggregate maximum 
     offering prices for any fiscal year is the baseline estimate 
     of the aggregate maximum offering price at which securities 
     are proposed to be offered pursuant to registration 
     statements filed with the Commission during such fiscal year 
     as determined by the Commission, after consultation with the 
     Congressional Budget Office and the Office of Management and 
     Budget, using the methodology required for projections 
     pursuant to section 257 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.''.

     SEC. 5. FEES FOR STOCK REPURCHASE STATEMENTS.

       Section 13(e) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m(e)) is amended
       (1) in paragraph (3), by striking ``a fee of \1/50\ of 1 
     per centum of the value of securities proposed to be 
     purchased'' and inserting ``a fee at a rate that, subject to 
     paragraphs (5) and (6), is equal to $125 per $1,000,000 of 
     the value of securities proposed to be purchased'';
       (2) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year shall be deposited and 
     credited as offsetting collections to the account providing 
     appropriations to the Commission, and, except as provided in 
     paragraph (9), shall not be collected for any fiscal year 
     except to the extent provided in advance in appropriation 
     Acts. No fees collected pursuant to this subsection for 
     fiscal year 2002 or any succeeding fiscal year shall be 
     deposited and credited as general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust the rate 
     required by paragraph (3) for such fiscal year to a rate that 
     is equal to the rate (expressed in dollars per million) that 
     is applicable under section 6(b) of the Securities Act of 
     1933 for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust the rate required by paragraph (3) for all of such 
     fiscal years to a rate that is equal to the rate (expressed 
     in dollars per million) that is applicable under section 6(b) 
     of the Securities Act of 1933 for all of such fiscal years.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances equal to less than $1,000,000.
       ``(8) Review and effective date.--An adjusted rate 
     prescribed under paragraph (5) or (6) and published under 
     paragraph (10) shall not be subject to judicial review. 
     Subject to paragraphs (4) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 30 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The rate applicable under this 
     subsection for each fiscal year is published pursuant to 
     section 6(b)(10) of the Securities Act of 1933.''.

     SEC. 6. FEES FOR PROXY SOLICITATIONS AND STATEMENTS IN 
                   CORPORATE CONTROL TRANSACTIONS.

       Section 14(g) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m(e)(3)) is amended--
       (1) in paragraphs (1) and (3), by striking ``a fee of \1/
     50\ of 1 per centum of'' each place it appears and inserting 
     ``a fee at a rate that, subject to paragraphs (5) and (6), is 
     equal to $125 per $1,000,000 of'';
       (2) by redesignating paragraph (4) as paragraph (11); and
       (3) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year shall be deposited and 
     credited as offsetting collections to the account providing 
     appropriations to the Commission, and, except as provided in 
     paragraph (9), shall not be collected for any fiscal year 
     except to the extent provided in advance in appropriation 
     Acts. No fees collected pursuant to this subsection for 
     fiscal year 2002 or any succeeding fiscal year shall be 
     deposited and credited as general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust each of 
     the rates required by paragraphs (1) and (3) for such fiscal 
     year to a rate that is equal to the rate (expressed in 
     dollars per million) that is applicable under section 6(b) of 
     the Securities Act of 1933 for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust each of the rates required by paragraphs (1) and (3) 
     for all of such fiscal years to a rate that is equal to the 
     rate (expressed in dollars per million) that is applicable 
     under section 6(b) of the Securities Act of 1933 for all of 
     such fiscal years.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances equal to less than $1,000,000.

[[Page H3161]]

       ``(8) Review and effective date.--An adjusted rate 
     prescribed under paragraph (5) or (6) and published under 
     paragraph (10) shall not be subject to judicial review. 
     Subject to paragraphs (4) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 30 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The rate applicable under this 
     subsection for each fiscal year is published pursuant to 
     section 6(b)(10) of the Securities Act of 1933.''.

     SEC. 7. TRUST INDENTURE ACT FEE.

       Section 307(b) of the Trust Indenture Act of 1939 (15 
     U.S.C. 77ggg(b)) is amended by striking ``Commission, but, in 
     the case'' and all that follows and inserting 
     ``Commission.''.

     SEC. 8. PAY PARITY PROVISIONS.

       (a) Securities and Exchange Commission Employees.--Section 
     4(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78d(b)) is amended--
       (1) by striking paragraphs (1) and (2) and by inserting the 
     following:
       ``(1) Appointment, compensation, and benefits.--
       ``(A) In general.--The Commission may appoint and fix the 
     compensation of such officers, attorneys, economists, 
     examiners, and other employees as may be necessary for 
     carrying out its functions under this Act.
       ``(B) Rates of pay.--Rates of basic pay for all employees 
     of the Commission may be set and adjusted by the Commission 
     without regard to the provisions of chapter 51 or subchapter 
     III of chapter 53 of title 5, United States Code.
       ``(C) Additional compensation and benefits.--The Commission 
     may provide additional compensation and benefits to employees 
     of the Commission if the same type of compensation or 
     benefits are then being provided by any agency referred to 
     under section 1206 of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 or, if not then being 
     provided, could be provided by such an agency under 
     applicable provisions of law, rule, or regulation.
       ``(2) Information; comparability.--In establishing and 
     adjusting schedules of compensation and additional benefits 
     for employees of the Commission, which are to be determined 
     solely by the Commission under this subsection, the 
     Commission--
       ``(A) shall consult with and inform the heads of the 
     agencies referred to under section 1206 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989;
       ``(B) shall inform the Congress of such compensation and 
     benefits; and
       ``(C) shall seek to maintain comparability with such 
     agencies regarding compensation and benefits.''.
       (b) Technical Amendments.--
       (1) Section 3132(a)(1) of title 5, United States Code, is 
     amended--
       (A) in subparagraph (C), by striking ``or'' after the 
     semicolon;
       (B) in subparagraph (D), by inserting ``or'' after the 
     semicolon; and
       (C) by adding at the end of the following:
       ``(E) the Securities and Exchange Commission.''.
       (2) Section 5373(a) of title 5, United States Code, is 
     amended--
       (A) in paragraph (2), by striking ``or'' after the 
     semicolon;
       (B) in paragraph (3), by striking the period and inserting 
     ``; or''; and
       (C) by adding at the end the following:
       ``(4) section 4(b) of the Securities Exchange Act of 
     1934.''.

     SEC. 9. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by this Act shall take effect on October 1, 
     2001.
       (b) Pay Parity.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by section 8 shall take effect on the date of 
     enactment of this Act.
       (2) Exception.--The amendments made by section 8(b)(1) 
     shall take effect as of such date as the Securities and 
     Exchange Commission shall (by order published in the Federal 
     Register) prescribe, but in no event later than 1 year after 
     the date of enactment of this Act.

  The SPEAKER pro tempore. In lieu of the amendment recommended by the 
Committee on Financial Services printed in the bill, the amendment in 
the nature of a substitute printed in the Congressional Record and 
numbered 1 is adopted.
  The text of H.R. 1088, as amended, is as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Investor and Capital Markets 
     Fee Relief Act''.

     SEC. 2. IMMEDIATE TRANSACTION FEE REDUCTIONS.

       Section 31 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78ee) is amended--
       (1) by striking ``\1/300\ of one percent'' each place it 
     appears in subsections (b) and (d) and inserting ``$15 per 
     $1,000,000'';
       (2) by striking ``and security futures products'' each 
     place it appears in such subsections and inserting ``security 
     futures products, and options on securities indexes 
     (excluding a narrow-based security index)'';
       (3) in the first sentence of subsection (b), by striking 
     ``, except that'' and all that follows through the end of 
     such sentence and inserting a period;
       (4) in paragraph (1) of subsection (d), by striking ``, 
     except that'' and all that follows through the end of such 
     paragraph and inserting a period;
       (5) in subsection (e), by striking ``$0.02'' and inserting 
     ``$0.009''; and
       (6) by adding at the end the following new subsection:
       ``(i) Pro Rata Application.--The rates per $1,000,000 
     required by this section shall be applied pro rata to amounts 
     and balances of less than $1,000,000.''.

     SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PROVISIONS; 
                   ADDITIONAL FEE REDUCTIONS.

       (a) Pooling and Allocation of Collections.--Section 31 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is 
     further amended--
       (1) in subsection (b)--
       (A) by striking ``Every'' and inserting ``Subject to 
     subsection (j), each''; and
       (B) by striking the last sentence;
       (2) by striking subsection (c);
       (3) in subsection (d)--
       (A) by striking paragraphs (2) and (3);
       (B) by striking the following:
       ``(d) Off-Exchange Trades of Last-Sale-Reported 
     Securities.--
       ``(1) Covered transactions.--Each national securities''
     and inserting the following:
       ``(c) Off-Exchange Trades of Exchange Registered and Last-
     Sale-Reported Securities.--Subject to subsection (j), each 
     national securities'';
       (C) by inserting ``registered on a national securities 
     exchange or'' after ``narrow-based security index))'' (as 
     added by section 2(2)); and
       (D) by striking ``, excluding any sales for which a fee is 
     paid under subsection (c)'';
       (4) in subsection (e), by striking ``except that for fiscal 
     year 2007'' and all that follows through the end of such 
     subsection and inserting the following: ``except that for 
     fiscal year 2007 and each succeeding fiscal year such 
     assessment shall be equal to $0.0042 for each such 
     transaction.'';
       (5) in subsection (f), by striking ``Dates for Payment of 
     Fees.--The fees required'' and inserting ``Dates for 
     Payments.--The fees and assessments required'';
       (6) by redesignating subsections (e) through (i) (as added 
     by section 2(5)) as subsections (d) through (h), 
     respectively;
       (7) by adding at the end the following new subsection:
       ``(i) Deposit of Fees.--
       ``(1) Offsetting collections.--Fees collected pursuant to 
     subsections (b), (c), and (d) for any fiscal year--
       ``(A) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Commission; and
       ``(B) except as provided in subsection (k), shall not be 
     collected for any fiscal year except to the extent provided 
     in advance in appropriation Acts.
       ``(2) General revenues prohibited.--No fees collected 
     pursuant to subsections (b), (c), and (d) for fiscal year 
     2002 or any succeeding fiscal year shall be deposited and 
     credited as general revenue of the Treasury.''.
       (b) Additional Reductions of Fees.--
       (1) Amendment.--Section 31 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78ee) is further amended by adding after 
     subsection (i) (as added by subsection (a)(7)) the following 
     new subsections:
       ``(j) Recapture of Projection Windfalls for Further Rate 
     Reductions.--
       ``(1) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust each of 
     the rates applicable under subsections (b) and (c) for such 
     fiscal year to a uniform adjusted rate that, when applied to 
     the baseline estimate of the aggregate dollar amount of sales 
     for such fiscal year, is reasonably likely to produce 
     aggregate fee collections under this section (including 
     assessments collected under subsection (d)) that are equal to 
     the target offsetting collection amount for such fiscal year.
       ``(2) Mid-year adjustment.--For each of the fiscal years 
     2002 through 2011, the Commission shall determine, by March 1 
     of such fiscal year, whether, based on the actual aggregate 
     dollar volume of sales during the first 5 months of such 
     fiscal year, the baseline estimate of the aggregate dollar 
     volume of sales used under paragraph (1) for such fiscal year 
     (or $48,800,000,000,000 in the case of fiscal year 2002) is 
     reasonably likely to be 10 percent (or more) greater or less 
     than the actual aggregate dollar volume of sales for such 
     fiscal year. If the Commission so determines, the Commission 
     shall by order, no later than such March 1, adjust each of 
     the rates applicable under subsections (b) and (c) for such 
     fiscal year to a uniform adjusted

[[Page H3162]]

     rate that, when applied to the revised estimate of the 
     aggregate dollar amount of sales for the remainder of such 
     fiscal year, is reasonably likely to produce aggregate fee 
     collections under this section (including fees collected 
     during such 5-month period and assessments collected under 
     subsection (d)) that are equal to the target offsetting 
     collection amount for such fiscal year. In making such 
     revised estimate, the Commission shall, after consultation 
     with the Congressional Budget Office and the Office of 
     Management and Budget, use the same methodology required by 
     subsection (l)(2).
       ``(3) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust each of the rates applicable under subsections (b) and 
     (c) for all of such fiscal years to a uniform adjusted rate 
     that, when applied to the baseline estimate of the aggregate 
     dollar amount of sales for fiscal year 2012, is reasonably 
     likely to produce aggregate fee collections under this 
     section in fiscal year 2012 (including assessments collected 
     under subsection (d)) equal to the target offsetting 
     collection amount for fiscal year 2011.
       ``(4) Review and effective date.-- In exercising its 
     authority under this subsection, the Commission shall not be 
     required to comply with the provisions of section 553 of 
     title 5, United States Code. An adjusted rate prescribed 
     under paragraph (1), (2), or (3) and published under 
     subsection (g) shall not be subject to judicial review. 
     Subject to subsections (i)(1)(B) and (k)--
       ``(A) an adjusted rate prescribed under paragraph (1) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted;
       ``(B) an adjusted rate prescribed under paragraph (2) shall 
     take effect on April 1 of the fiscal year to which such rate 
     applies; and
       ``(C) an adjusted rate prescribed under paragraph (3) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 30 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(k) Lapse of Appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect (as 
     offsetting collections) the fees and assessments under 
     subsections (b), (c), and (d) at the rate in effect during 
     the preceding fiscal year, until 30 days after the date such 
     a regular appropriation is enacted.
       ``(l) Definitions.--For purposes of this section:
       ``(1) Target offsetting collection amount.--The target 
     offsetting collection amount for each of the fiscal years 
     2002 through 2011 is determined according to the following 
     table:

                                                      Target offsetting
``Fiscal year:                                        collection amount
  2002....................................................$732,000,000 
  2003....................................................$849,000,000 
  2004..................................................$1,028,000,000 
  2005..................................................$1,220,000,000 
  2006..................................................$1,435,000,000 
  2007....................................................$881,000,000 
  2008....................................................$892,000,000 
  2009..................................................$1,023,000,000 
  2010..................................................$1,161,000,000 
  2011..................................................$1,321,000,000 

       ``(2) Baseline estimate of the aggregate dollar amount of 
     sales.--The baseline estimate of the aggregate dollar amount 
     of sales for any fiscal year is the baseline estimate of the 
     aggregate dollar amount of sales of securities (other than 
     bonds, debentures, other evidences of indebtedness, security 
     futures products, and options on securities indexes 
     (excluding a narrow-based security index)) to be transacted 
     on each national securities exchange and by or through any 
     member of each national securities association (otherwise 
     than on a national securities exchange) during such fiscal 
     year as determined by the Commission, after consultation with 
     the Congressional Budget Office and the Office of Management 
     and Budget, using the methodology required for making 
     projections pursuant to section 257 of the Balanced Budget 
     and Emergency Deficit Control Act of 1985.''.
       (2) Conforming amendment.--Section 31(g) of such Act (as 
     redesignated by subsection (a)(6) of this section) is amended 
     by inserting before the period at the end the following: 
     ``not later than April 30 of the fiscal year preceding the 
     fiscal year to which such rate applies, together with any 
     estimates or projections on which such fees are based''.

     SEC. 4. REDUCTION OF REGISTRATION FEES.

       Section 6(b) of the Securities Act of 1933 (15 U.S.C. 
     77f(b)) is amended by striking paragraphs (2) through (5) and 
     inserting the following:
       ``(2) Fee payment required.--At the time of filing a 
     registration statement, the applicant shall pay to the 
     Commission a fee at a rate that shall be equal to $92 per 
     $1,000,000 of the maximum aggregate price at which such 
     securities are proposed to be offered, except that during 
     fiscal year 2003 and any succeeding fiscal year such fee 
     shall be adjusted pursuant to paragraph (5) or (6).
       ``(3) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year--
       ``(A) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Commission; and
       ``(B) except as provided in paragraph (9), shall not be 
     collected for any fiscal year except to the extent provided 
     in advance in appropriation Acts.
       ``(4) General revenues prohibited.--No fees collected 
     pursuant to this subsection for fiscal year 2002 or any 
     succeeding fiscal year shall be deposited and credited as 
     general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust the rate 
     required by paragraph (2) for such fiscal year to a rate 
     that, when applied to the baseline estimate of the aggregate 
     maximum offering prices for such fiscal year, is reasonably 
     likely to produce aggregate fee collections under this 
     subsection that are equal to the target offsetting collection 
     amount for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust the rate required by paragraph (2) for all of such 
     fiscal years to a rate that, when applied to the baseline 
     estimate of the aggregate maximum offering prices for fiscal 
     year 2012, is reasonably likely to produce aggregate fee 
     collections under this subsection in fiscal year 2012 equal 
     to the target offsetting collection amount for fiscal year 
     2011.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances of less than $1,000,000.
       ``(8) Review and effective date.-- In exercising its 
     authority under this subsection, the Commission shall not be 
     required to comply with the provisions of section 553 of 
     title 5, United States Code. An adjusted rate prescribed 
     under paragraph (5) or (6) and published under paragraph (10) 
     shall not be subject to judicial review. Subject to 
     paragraphs (3)(B) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 5 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The Commission shall publish in the 
     Federal Register notices of the rate applicable under this 
     subsection and under sections 13(e) and 14(g) for each fiscal 
     year not later than April 30 of the fiscal year preceding the 
     fiscal year to which such rate applies, together with any 
     estimates or projections on which such rate is based.
       ``(11) Definitions.--For purposes of this subsection:
       ``(A) Target offsetting collection amount.--The target 
     offsetting collection amount for each of the fiscal years 
     2002 through 2011 is determined according to the following 
     table:

                                                      Target offsetting
``Fiscal year:                                        collection amount
  2002.....................................................$337,000,000
  2003.....................................................$435,000,000
  2004.....................................................$467,000,000
  2005.....................................................$570,000,000
  2006.....................................................$689,000,000
  2007.....................................................$214,000,000
  2008.....................................................$234,000,000
  2009.....................................................$284,000,000
  2010.....................................................$334,000,000
  2011.....................................................$394,000,000

       ``(B) Baseline estimate of the aggregate maximum offering 
     prices.--The baseline estimate of the aggregate maximum 
     offering prices for any fiscal year is the baseline estimate 
     of the aggregate maximum offering price at which securities 
     are proposed to be offered pursuant to registration 
     statements filed with the Commission during such fiscal year 
     as determined by the Commission, after consultation with the 
     Congressional Budget Office and the Office of Management and 
     Budget, using the methodology required for projections 
     pursuant to section 257 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.''.

     SEC. 5. FEES FOR STOCK REPURCHASE STATEMENTS.

       Section 13(e) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m(e)) is amended
       (1) in paragraph (3), by striking ``a fee of \1/50\ of 1 
     per centum of the value of securities proposed to be 
     purchased'' and inserting ``a fee at a rate that, subject to 
     paragraphs (5) and (6), is equal to $92 per $1,000,000 of the 
     value of securities proposed to be purchased'';
       (2) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year shall be deposited and 
     credited as offsetting collections to the account providing 
     appropriations to the Commission, and, except as provided in 
     paragraph (9),

[[Page H3163]]

     shall not be collected for any fiscal year except to the 
     extent provided in advance in appropriation Acts. No fees 
     collected pursuant to this subsection for fiscal year 2002 or 
     any succeeding fiscal year shall be deposited and credited as 
     general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust the rate 
     required by paragraph (3) for such fiscal year to a rate that 
     is equal to the rate (expressed in dollars per million) that 
     is applicable under section 6(b) of the Securities Act of 
     1933 for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust the rate required by paragraph (3) for all of such 
     fiscal years to a rate that is equal to the rate (expressed 
     in dollars per million) that is applicable under section 6(b) 
     of the Securities Act of 1933 for all of such fiscal years.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances of less than $1,000,000.
       ``(8) Review and effective date.-- In exercising its 
     authority under this subsection, the Commission shall not be 
     required to comply with the provisions of section 553 of 
     title 5, United States Code. An adjusted rate prescribed 
     under paragraph (5) or (6) and published under paragraph (10) 
     shall not be subject to judicial review. Subject to 
     paragraphs (4) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 5 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The rate applicable under this 
     subsection for each fiscal year is published pursuant to 
     section 6(b)(10) of the Securities Act of 1933.''.

     SEC. 6. FEES FOR PROXY SOLICITATIONS AND STATEMENTS IN 
                   CORPORATE CONTROL TRANSACTIONS.

       Section 14(g) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m(e)(3)) is amended--
       (1) in paragraphs (1) and (3), by striking ``a fee of \1/
     50\ of 1 per centum of'' each place it appears and inserting 
     ``a fee at a rate that, subject to paragraphs (5) and (6), is 
     equal to $92 per $1,000,000 of'';
       (2) by redesignating paragraph (4) as paragraph (11); and
       (3) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) Offsetting collections.--Fees collected pursuant to 
     this subsection for any fiscal year shall be deposited and 
     credited as offsetting collections to the account providing 
     appropriations to the Commission, and, except as provided in 
     paragraph (9), shall not be collected for any fiscal year 
     except to the extent provided in advance in appropriation 
     Acts. No fees collected pursuant to this subsection for 
     fiscal year 2002 or any succeeding fiscal year shall be 
     deposited and credited as general revenue of the Treasury.
       ``(5) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust each of 
     the rates required by paragraphs (1) and (3) for such fiscal 
     year to a rate that is equal to the rate (expressed in 
     dollars per million) that is applicable under section 6(b) of 
     the Securities Act of 1933 for such fiscal year.
       ``(6) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust each of the rates required by paragraphs (1) and (3) 
     for all of such fiscal years to a rate that is equal to the 
     rate (expressed in dollars per million) that is applicable 
     under section 6(b) of the Securities Act of 1933 for all of 
     such fiscal years.
       ``(7) Pro rata application.--The rates per $1,000,000 
     required by this subsection shall be applied pro rata to 
     amounts and balances of less than $1,000,000.
       ``(8) Review and effective date.-- In exercising its 
     authority under this subsection, the Commission shall not be 
     required to comply with the provisions of section 553 of 
     title 5, United States Code. An adjusted rate prescribed 
     under paragraph (5) or (6) and published under paragraph (10) 
     shall not be subject to judicial review. Subject to 
     paragraphs (4) and (9)--
       ``(A) an adjusted rate prescribed under paragraph (5) shall 
     take effect on the later of--
       ``(i) the first day of the fiscal year to which such rate 
     applies; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for such fiscal year is 
     enacted; and
       ``(B) an adjusted rate prescribed under paragraph (6) shall 
     take effect on the later of--
       ``(i) the first day of fiscal year 2012; or
       ``(ii) 5 days after the date on which a regular 
     appropriation to the Commission for fiscal year 2012 is 
     enacted.
       ``(9) Lapse of appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under this subsection at the rate 
     in effect during the preceding fiscal year, until 5 days 
     after the date such a regular appropriation is enacted.
       ``(10) Publication.--The rate applicable under this 
     subsection for each fiscal year is published pursuant to 
     section 6(b)(10) of the Securities Act of 1933.''.

     SEC. 7. TRUST INDENTURE ACT FEE.

       Section 307(b) of the Trust Indenture Act of 1939 (15 
     U.S.C. 77ggg(b)) is amended by striking ``Commission, but, in 
     the case'' and all that follows and inserting 
     ``Commission.''.

     SEC. 8. COMPARABILITY PROVISIONS.

       (a) Commission Demonstration Project.--Subpart C of part 
     III of title 5, United States Code, is amended by adding at 
     the end the following:

          ``CHAPTER 48--AGENCY PERSONNEL DEMONSTRATION PROJECT

``Sec.
``4801. Nonapplicability of chapter 47.
``4802. Securities and Exchange Commission.

     ``Sec. 4801. Nonapplicability of chapter 47

       ``Chapter 47 shall not apply to this chapter.

     ``Sec. 4802. Securities and Exchange Commission

       ``(a) In this section, the term `Commission' means the 
     Securities and Exchange Commission.
       ``(b) The Commission may appoint and fix the compensation 
     of such officers, attorneys, economists, examiners, and other 
     employees as may be necessary for carrying out its functions 
     under the securities laws as defined under section 3 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c).
       ``(c) Rates of basic pay for all employees of the 
     Commission may be set and adjusted by the Commission without 
     regard to the provisions of chapter 51 or subchapter III of 
     chapter 53.
       ``(d) The Commission may provide additional compensation 
     and benefits to employees of the Commission if the same type 
     of compensation or benefits are then being provided by any 
     agency referred to under section 1206 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1833b) or, if not then being provided, could be 
     provided by such an agency under applicable provisions of 
     law, rule, or regulation. In setting and adjusting the total 
     amount of compensation and benefits for employees, the 
     Commission shall consult with, and seek to maintain 
     comparability with, the agencies referred to under section 
     1206 of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 1833b).
       ``(e) The Commission shall consult with the Office of 
     Personnel Management in the implementation of this section.
       ``(f) This section shall be administered consistent with 
     merit system principles.''.
       (b) Employees Represented by Labor Organizations.--To the 
     extent that any employee of the Securities and Exchange 
     Commission is represented by a labor organization with 
     exclusive recognition in accordance with chapter 71 of title 
     5, United States Code, no reduction in base pay of such 
     employee shall be made by reason of enactment of this section 
     (including the amendments made by this section).
       (c) Implementation Plan and Report.--
       (1) Implementation plan.--
       (A) In general.--The Securities and Exchange Commission 
     shall develop a plan to implement section 4802 of title 5, 
     United States Code, as added by this section.
       (B) Inclusion in annual performance plan and report.--The 
     Securities and Exchange Commission shall include--
       (i) the plan developed under this paragraph in the annual 
     program performance plan submitted under section 1115 of 
     title 31, United States Code; and
       (ii) the effects of implementing the plan developed under 
     this paragraph in the annual program performance report 
     submitted under section 1116 of title 31, United States Code.
       (2) Implementation report.--
       (A) In general.--Before implementing the plan developed 
     under paragraph (1), the Securities and Exchange Commission 
     shall submit a report to the Committee on Governmental 
     Affairs and the Committee on Banking, Housing, and Urban 
     Affairs of the Senate, the Committee on Government Reform and 
     the Committee on Financial Services of the House of 
     Representatives, and the Office of Personnel Management on 
     the details of the plan.
       (B) Content.--The report under this paragraph shall 
     include--
       (i) evidence and supporting documentation justifying the 
     plan; and
       (ii) budgeting projections on costs and benefits resulting 
     from the plan.
       (d) Technical and Conforming Amendments.--
       (1) Amendments to title 5, united states code.--
       (A) The table of chapters for part III of title 5, United 
     States Code, is amended by adding at the end of subpart C the 
     following:

``48. Agency Personnel Demonstration Project...................4801.''.

       (B) Section 3132(a)(1) of title 5, United States Code, is 
     amended--
       (i) in subparagraph (C), by striking ``or'' after the 
     semicolon;

[[Page H3164]]

       (ii) in subparagraph (D), by inserting ``or'' after the 
     semicolon; and
       (iii) by adding at the end the following:
       ``(E) the Securities and Exchange Commission;''.
       (C) Section 5373(a) of title 5, United States Code, is 
     amended--
       (i) in paragraph (2), by striking ``or'' after the 
     semicolon;
       (ii) in paragraph (3), by striking the period and inserting 
     ``; or''; and
       (iii) by adding at the end the following:
       ``(4) section 4802.''.
       (2) Amendment to securities exchange act of 1934.--Section 
     4(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78d(b)) is amended by striking paragraphs (1) and (2) and 
     inserting the following:
       ``(1) Appointment and compensation.--The Commission shall 
     appoint and compensate officers, attorneys, economists, 
     examiners, and other employees in accordance with section 
     4802 of title 5, United States Code.
       ``(2) Reporting of information.--In establishing and 
     adjusting schedules of compensation and benefits for 
     officers, attorneys, economists, examiners, and other 
     employees of the Commission under applicable provisions of 
     law, the Commission shall inform the heads of the agencies 
     referred to under section 1206 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     1833b) and Congress of such compensation and benefits and 
     shall seek to maintain comparability with such agencies 
     regarding compensation and benefits.''.
       (3) Amendment to firrea of 1989.--Section 1206 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1833b) is amended by striking ``the Thrift 
     Depositor Protection Oversight Board of the Resolution Trust 
     Corporation''.

     SEC. 9. STUDY OF THE EFFECT OF FEE REDUCTIONS.

       (a) Study.--The Office of Economic Analysis of the 
     Securities and Exchange Commission (hereinafter referred to 
     as the ``Office'') shall conduct a study of the extent to 
     which the benefits of reductions in fees effected as a result 
     of this Act are passed on to investors.
       (b) Factors for Consideration.--In conducting the study 
     under subsection (a), the Office shall--
       (1) consider the various elements of the securities 
     industry directly and indirectly benefitting from the fee 
     reductions, including purchasers and sellers of securities, 
     members of national securities exchanges, issuers, broker-
     dealers, underwriters, participants in investment companies, 
     retirement programs, and others;
       (2) consider the impact on different types of investors, 
     such as individual equity holders, individual investment 
     company shareholders, businesses, and other types of 
     investors;
       (3) include in the interpretation of the term ``investor'' 
     shareholders of entities subject to the fee reductions; and
       (4) consider the economic benefits to investors flowing 
     from the fee reductions to include such factors as market 
     efficiency, expansion of investment opportunities, and 
     enhanced liquidity and capital formation.
       (c) Report to Congress.--Not later than 2 years after the 
     date of enactment of this Act, the Securities and Exchange 
     Commission shall submit to the Congress the report prepared 
     by the Office on the findings of the study conducted under 
     subsection (a).

     SEC. 10. STUDY OF CONVERSION TO SELF-FUNDING.

       (a) GAO Study Required.--The Comptroller General shall 
     conduct a study of the impact, implications, and consequences 
     of converting the Securities and Exchange Commission to a 
     self-funded basis. Such study shall include analysis of the 
     following issues:
       (1) SEC operations.--The impact of such conversion on the 
     Commission's operations, including staff quality, 
     recruitment, and retention.
       (2) Congressional oversight.--The implications for 
     congressional oversight of the Commission, including whether 
     imposing annual expenditure limitations would be beneficial 
     to such oversight.
       (3) Fees.--The likely consequences of the conversion on the 
     rates, collection procedures, and predictability of fees 
     collected by the Commission.
       (4) Appropriations.--The methods by which the conversion 
     may be accomplished without reducing the availability of 
     offsetting collections for appropriations.
       (5) Other matters.--Such other impacts, implications, and 
     consequences as the Comptroller General may consider relevant 
     to congressional consideration of the question of such 
     conversion.
       (b) Submission of Report.--The Comptroller General shall 
     submit to the Committees on Financial Services and Government 
     Reform of the House of Representatives and the Committees on 
     Banking, Housing, and Urban Affairs and Governmental Affairs 
     of the Senate a report on the study required by subsection 
     (a) no later than 180 after the date of enactment of this 
     Act.
       (c) Definition.--For the purposes of this section, the term 
     ``self-funded basis'' means that--
       (1) an agency is authorized to deposit the receipts of its 
     collections in the Treasury of the United States, or in a 
     depository institution, but such deposits are not treated as 
     Government funds or appropriated monies, and are available 
     for the salaries and other expenses of the Commission and its 
     employees without annual appropriation or apportionment; and
       (2) the agency is authorized to employ and fix the salaries 
     and other compensation of its officers and employees, and 
     such salaries and other compensation are paid without regard 
     to the provisions of other laws applicable to officers and 
     employees of the United States.

     SEC. 11. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsections (b) and 
     (c), the amendments made by this Act shall take effect on 
     October 1, 2001.
       (b) Immediate Transaction Fee Reductions.--The amendments 
     made by section 2 shall take effect on the later of--
       (1) the first day of fiscal year 2002; or
       (2) 30 days after the date on which a regular appropriation 
     to the Commission for such fiscal year is   enacted.
       (c) Additional Exceptions.--The authorities provided by 
     section 6(b)(9) of the Securities Act of 1933 and sections 
     13(e)(9), 14(g)(9) and 31(k) of the Securities Exchange Act 
     of 1934, as so designated by this Act, shall not apply until 
     October 1, 2002.

  The SPEAKER pro tempore. After 60 minutes of debate on the bill, as 
amended, it shall be in order to consider the further amendment printed 
in the Congressional Record and numbered 2 if offered by the gentleman 
from New York (Mr. LaFalce) or his designee, shall be considered read 
and shall be debatable for 1 hour, equally divided and controlled by 
the proponent and the opponent.
  The gentleman from Ohio (Mr. Oxley) and the gentleman from New York 
(Mr. LaFalce) each will control 30 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).

                              {time}  1115


                             General Leave

  Mr. OXLEY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 1088.
  The SPEAKER pro tempore (Mr. Quinn). Is there objection to the 
request of the gentleman from Ohio?
  There was no objection.
  Mr. OXLEY. Mr. Speaker, I yield 5 minutes to the gentleman from 
Indiana (Mr. Burton) and ask unanimous consent that he be permitted to 
control that time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. OXLEY. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, I am pleased today to bring to the floor H.R. 1088, the 
Investor and Capital Markets Fee Relief Act. This legislation returns 
excessive Securities and Exchange Commission fees, $14 billion over the 
next 10 years, to America's investors and those seeking access to our 
markets.
  Introduced by my good friend, the gentleman from New York (Mr. 
Fossella), an important Member of the Committee on Financial Services, 
H.R. 1088 reduces or eliminates all of the securities fees in a 
responsible way by holding the appropriators harmless and ensuring that 
the SEC has a long-term stable funding source for its important mission 
of protecting investors and promoting capital formation.
  Contrary to the explicit intent of the Congress, the government now 
collects fee revenues that far exceed the operating costs of the SEC. 
In fiscal year 2000, actual SEC fee collections reached a staggering 
$2.27 billion, over six times the SEC's $377 million budget; and it is 
estimated that fee collections this fiscal year will be substantially 
higher.
  In my home State of Ohio, the Public Employees Pension Fund will pay 
several million dollars in the next decade if this legislation is not 
enacted, and that goes for all of the public employees return systems 
throughout the country.
  Each day this year investors across the country are paying more than 
$3 million in excess transaction fees alone. The excess revenues are 
being used to fund other Federal programs, entirely unrelated to 
regulation of the securities markets. The fees are unmistakably a tax 
on investors and capital formation. They are no longer about government 
need, but about government greed.
  The legislation also includes a provision granting SEC employees pay 
parity with the banking regulators. The commission faces a staffing 
crisis. In the last 3 years, over one-third of the SEC's staff have 
left the agency. In the

[[Page H3165]]

increasingly consolidated financial services industry, SEC staff 
perform the same functions and work side by side with their 
counterparts at the Federal Banking Agency, yet inexplicably earn 
anywhere from 25 to 45 percent less.
  In an environment where the investors and markets need effective 
regulation more than ever, it is important to address the morale 
problem and its effects on retention of SEC staff. The securities 
industry strongly supports pay parity, because it will, by helping the 
commission attract and retain first-rate staff, improve the regulation 
efficiency of our capital markets.
  We intend the pay parity provisions to be executed in a responsible 
fashion, enabling the SEC to provide the same benefits to its employees 
as those provided to the Federal banking regulators, but not more.
  I am pleased that so many Members on the other side of the aisle have 
helped in this effort. I particularly appreciate all of the efforts of 
the gentlewoman from New York (Mrs. Maloney), the gentleman from New 
York (Mr. Crowley), and the gentleman from New Jersey (Mr. Menendez) 
for their hard work and efforts on our behalf.
  This bipartisan legislation enjoys widespread support from the 
investing public, the Securities and Exchange Commission, major pension 
funds, the Profit-Sharing/401(k) Council of America, and the securities 
industry.
  H.R. 1088 is pro-investor, good government legislation. I urge all of 
my colleagues to vote against the Democratic substitute and to support 
final passage.
  Mr. Speaker, I include for the Record two exchanges of letters 
between myself and Chairman Thomas and Chairman Combest regarding their 
respective committee's jurisdiction. I also want to thank both of them 
for their cooperation in bringing this important legislation to the 
floor.

                                         House of Representatives,


                                     Committee on Agriculture,

                                    Washington, DC, April 2, 2001.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Mr. Chairman: On March 28, 2001, the Committee on 
     Financial Services ordered reported H.R. 1088, the Investor 
     and Capital Markets Fee Relief Act. As you are aware, section 
     2 of the bill affects the Agriculture Committee's 
     jurisdiction with regard to transaction fees on security 
     futures products.
       Because of your willingness to consult with the Committee 
     on Agriculture regarding this matter and the need to move 
     this legislation expeditiously, I will waive consideration of 
     the bill by the Agriculture Committee. By agreeing to waive 
     its consideration of the bill, the Agriculture Committee does 
     not waive its jurisdiction over H.R. 1088. In addition, the 
     Committee on Agriculture reserves its authority to seek 
     conferees on any provisions of the bill that are within our 
     jurisdiction during any House-Senate conference that may be 
     convened on this legislation. I ask your commitment to 
     support any request by our Committee for conferees on H.R. 
     1088 or related legislation.
       I request that you include this letter and your response as 
     part of your committee's report on the bill and the 
     Congressional Record during consideration of the legislation 
     on the House floor.
       Thank you for your cooperation in this matter.
           Sincerely,
                                                    Larry Combest,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                    Washington, DC, April 2, 2001.
     Hon. Larry Combest,
     Committee on Agriculture, Longworth House Office Building, 
         Washington, DC.
       Dear Chairman Combest: Thank you for your letter regarding 
     your Committee's jurisdictional interest in H.R. 1088, the 
     Investor and Capital Markets Fee Relief Act.
       I acknowledge your committee's jurisdictional interest in 
     the changes to the fee structure for security futures 
     products contained in this legislation and appreciate your 
     cooperation in moving the bill to the House floor 
     expeditiously. I agree that your decision to forego further 
     action on the bill will not prejudice the Committee on 
     Agriculture with respect to its jurisdictional prerogatives 
     on this or similar legislation. I will include a copy of your 
     letter and this response in the Committee's report on the 
     bill and the Congressional Record when the legislation is 
     considered by the House.
       Thank you again for your cooperation.
           Sincerely,
                                                 Michael G. Oxley,
     Chairman.
                                  ____

                                         House of Representatives,


                                  Committee on Ways and Means,

                                    Washington, DC, April 2, 2001.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Congressman Oxley: I am writing to express my support 
     for what you are trying to accomplish in H.R. 1088, the 
     Investor and Capital Markets Fee Relief Act. The Committee on 
     Ways and Means has long taken a jurisdictional interest in 
     the fees collected by the Securities and Exchange Commission. 
     In our view, these ``fees'' are taxes because they greatly 
     exceed the SEC's regulatory costs. In the past, we worked 
     with the Committees on Commerce and Appropriations to attempt 
     to rectify this problem.
       As you know, I am strongly committed to protecting the 
     jurisdictional interest of the Committee on Ways and Means 
     and to ensuring that all revenue measures are properly 
     referred to this Committee. To this end, the Committee on 
     Ways and Means relies upon the statement issued by the 
     Speaker in January 1991 (and reiterated by Speaker Hastert on 
     January 3, 2001) regarding the jurisdiction of the House 
     Committees with respect to fees and revenue measures. 
     Pursuant to that statement, the Committee on Ways and Means 
     generally will not assert jurisdiction over ``true'' 
     regulatory fees that meet the following requirements:
       (i) The fees are assessed and collected solely to cover the 
     costs of specified regulatory activities (not including 
     public information activities and other activities 
     benefitting the public in general);
       (ii) The fees are assessed and collected only in such 
     manner as may reasonably be expected to result in an 
     aggregate amount collected during any fiscal year which does 
     not exceed the aggregate amount of the regulatory costs 
     referred to in (i) above:
       (iii) The only person subject to the fees are those who 
     directly avail themselves of, or are directly subject to, the 
     regulatory activities referred to in (i) above; and
       (iv) The amounts of the fees (a) are structured such that 
     any person's liability for such fees is reasonable based on 
     the proportion of the regulatory activities which relate to 
     such person, and (b) are nondiscriminatory between foreign 
     and domestic entities.
       Additionally, pursuant to the Speaker's statement, the mere 
     reauthorization of a preexisting fee that had not 
     historically been considered a tax would not necessarily 
     require a sequential referral to the Committee on Ways and 
     Means. However, if such a preexisting fee were fundamentally 
     changed, it properly should be referred to the Committee on 
     Ways and Means.
       We last addressed SEC fees in the National Securities 
     Markets Improvement Act of 1996. That legislation was 
     intended to reform the SEC fee structure and bring the total 
     amount of fees down to the level of the SEC's budget. In a 
     letter from then Chairman Archer to the Chairman of the 
     Commerce Committee, Congressman Bliley (whose committee had 
     jurisdiction over the SEC at the time), Chairman Archer noted 
     the Committee on Ways and Means' longstanding goal of 
     reducing these ``fees'' so that they truly are fees rather 
     than taxes. Chairman Archer also reserved jurisidictional 
     interest in the fee structure, and stated that the Committee 
     would strongly oppose any attempts to delay or lengthen the 
     fee phase-down schedule provided by the 1996 Act.
       Since the enactment of the 1996 Act, it has become 
     increasingly clear that actual fee collections greatly exceed 
     what was estimated in 1996. In fact, I understand that these 
     fees are projected to generate over $2.5 billion in revenue 
     in fiscal year 2001, more than six times the SEC budget. H.R. 
     1088 seeks to address this issue by reducing these fees down 
     to the level of the SEC's budget, which was also the goal of 
     the 1996 Act.
       Because H.R. 1088 would not ensure that fee collections 
     will not exceed the amount required to fund the relevant 
     regulatory activities of the SEC fees, the bill does not meet 
     requirements (i) and (ii) of the Speaker's statement set 
     forth above. If the fees were being newly created, or were 
     fundamentally different from existing fees, the Committee on 
     Ways and Means would ask that H.R. 1088 be referred to it, in 
     accordance with its jurisdictional prerogative. However, the 
     Committee understands that the intent of H.R. 1088 is to 
     significantly reduce these fees and eliminate fees in excess 
     of the SEC's budget. Under such circumstances (and without 
     prejudice to the jurisdictional interest of the Committee on 
     Ways and Means), I will not seek sequential referral of H.R. 
     1088, as currently written, or have any objection to its 
     consideration, in its current form, by the House.
       However, I would emphasize that, if the fee structure set 
     forth in H.R. 1088 is modified in the future, the Committee 
     on Ways and Means will take all action necessary to protect 
     its proper jurisdictional interest.
       Finally, I would respectfully request that you include a 
     copy of this letter in the report for H.R. 1088 or in the 
     Record during floor consideration of the bill. With best 
     personal regards,
           Sincerely,
                                                      Bill Thomas,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                    Washington, DC, April 2, 2001.
     Hon. William M. Thomas,
     Committee on Ways and Means, Longworth House Office Building, 
         Washington, DC.
       Dear Chairman Thomas: Thank you for your letter regarding 
     your Committee's jurisdictional interest in H.R. 1088, the 
     Investor and Capital Markets Fee Relief Act.

[[Page H3166]]

       I acknowledge your committee's jurisdiction over the 
     revenue aspects of this legislation and appreciate your 
     cooperation in moving the bill to the House floor 
     expeditiously. I agree that your decision to forego further 
     action on the bill will not prejudice the Committee on Ways 
     and Means with respect to its jurisdictional prerogatives on 
     this or similar legislation. I will include a copy of your 
     letter and this response in the Committee's report on the 
     bill and the Congressional Record when the legislation is 
     considered by the House.
       Thank you again for your cooperation.
           Yours truly,
                                                 Michael G. Oxley,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself 7 minutes.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, this bill will do two basic things: first 
of all, it will achieve pay parity for SEC employees, and there is 
almost unanimity of opinion, at least amongst Democratic and Republican 
members of the Committee on Financial Services on that issue. So pay 
parity is in the principal bill, and pay parity is in the substitute 
that I would be offering or the motion to recommit, should that be 
necessary.
  There is a difference of opinion within the whole House of 
Representatives though, primarily from the chairman of the Committee on 
Government Reform, the gentleman from Indiana (Mr. Burton), but I will 
let him speak for himself at the appropriate time.
  But there is another important aspect of the bill that is 
controversial, and that is the issue of fee reductions. Now, for the 
most part, the publicity that has been given to fee reductions has been 
given exclusively with respect to so-called section 31 fees. When 
individuals walked into our office, all they really talked about was 
section 31 fees.
  Now, section 31 fees are transaction fees. These are very, very small 
amounts of money; but given the volume of transactions, they wind up 
coming to huge amounts of money. In the last Congress, about the only 
thing that was being talked about was a reduction in those transaction 
fees, the section 31 fees. As a matter of fact, I am told that an 
accord had been entered into between Democrats and Republicans dealing 
with the reduction exclusively in that fee.
  But it is a different Congress, and you cannot throw red meat at 
somebody without having them bite. It looked as if we will be able to 
get anything through this Congress we wanted, so let us not just reduce 
section 31 fees, let us reduce section 6 fees. Let us also reduce 
section 13 and section 14 fees.
  Now, what are they? Well, section 6 fees are the registration fees. 
They are not transaction fees. Section 13 and section 14 are merger and 
tender-offer fees. They are not transaction fees. Yet the reduction is 
with respect to them too.
  So when I do offer my substitute, it will be dealing with the issue 
of not section 6 and Not Section 13 or section 14, but exclusively with 
section 31; and I will reduce the fees, but not quite as much as the 
gentleman from Ohio does in his bill.
  Now, why am I taking what I think is a more prudent approach? Well, 
for a whole slew of reasons. First of all, we need to be concerned not 
just with the enforcement capacity of the SEC; we need to be concerned 
with the enforcement capacity of the totality of government that is 
involved in enforcing our securities laws. As the gentleman from 
Pennsylvania (Mr. Kanjorski) more than any other Member in this body 
has pointed out, it is not just the SEC, it is the FBI, it is the 
Justice Department; and we have got to give them additional resources 
in addition to giving additional resources to the SEC.
  The gentleman from Pennsylvania (Mr. Kanjorski) tried in 
subcommittee, he tried in full committee, he tried before the Committee 
on Rules, but he was unable to get an amendment to clarify that under 
existing law we must provide fees that deal for the totality of the 
governmental enforcement effort. I think that that is really 
unfortunate, because his was not a partisan amendment; it was a 
rational, law enforcement amendment. The gentleman should have been 
allowed to offer it.
  Secondly, I think we are putting the cart before the horse in a 
terrible, terrible way. I think we are making a huge mistake. Look back 
from 1 year to the present. The American public has lost approximately 
$5 trillion in equity market valuation. Now, there are a whole slew of 
reasons for this, of course; but there are things within the purview of 
the SEC and the Justice Department and the Congress that we need to be 
looking at very aggressively.
  One of them is analyst independence. Are the analysts promoting 
themselves? Are the analysts promoting the companies they work for? Are 
the analysts trying to promote the interests of the investor? Well, we 
are having a hearing on that this very minute. I think what is going on 
insofar as investor advice is scandalous, and I do not think we should 
be reducing fees when we have not addressed that problem.
  Look what is going on in accounting. In the past several years, we 
have seen a trebling of the number of restatements of earnings. In the 
restatement of earnings cases alone, investors have lost over $30 
billion. According to the chief accountant of the SEC, Mr. Lynn Turner, 
this is the tip of the iceberg. We should be investigating that before 
we reduce fees.
  I think the SEC budget and the Justice Department and FBI budget 
dealing with securities should be beefed up at least 200 to 300 percent 
in order to protect the American investor who is in the marketplace 
today, far, far greater than the investor has ever been in America's 
history. Unfortunately, today's bill will preclude the type of 
effective enforcement that I believe we need.
  I think it is regrettable that we are doing this. I think it is 
almost inevitable. I think the cards are in, but I think we are making 
a tragic mistake.
  Mr. Speaker, H.R. 1088 contains a central flaw that could have an 
adverse impact on many areas of legislative endeavor. The fundamental 
problem is what I, and a number of my colleagues, consider an excessive 
cut in fees charged by the SEC to corporations and, in some cases, 
individuals. Basically, H.R. 1088 cuts approximately $14 billion in 
federal revenues from FY2002 to FY2011. For FY2002 alone, it results in 
$1.3 billion in cuts from what otherwise would be collected under 
present law. I will subsequently join with a number of my colleagues in 
offering an amendment to remedy this core flaw by diminishing the cuts. 
At this point, however, I would like to focus on the potential 
consequences of the approach taken in H.R. 1088.
  The Securities and Exchange Commission functions as the primary 
guardian of U.S. equity and debt markets which are used by better than 
half American households. It is funded entirely by a variety of complex 
fees it charges to a range of users. Some of those fees are earmarked, 
by permanent statute, for the SEC's use. These are referred to as 
offsets. Others flow into the general revenues. Yet, the markets, 
directly or indirectly, are the source. The renowned transparency of 
these markets is the bedrock of the American economy, and the fees are 
integral to preserving that transparency and protecting investors. How 
the funds are utilized might be readjusted in the future, but I do not 
believe that the current revenue stream should be depleted so 
substantially by permanent statute without a fuller exploration of the 
adequacy of current oversight and enforcement efforts. The pending 
substitute would take a more prudent approach.
  Prudence is particularly important given substantial evidence that 
greater oversight and more aggressive enforcement is called for. For 
example, financial statements are a key barometer of stock worth 
throughout the entire system, a key piece of information for investors 
and their accuracy is a central oversight responsibility of the SEC. 
Yet, judging by the numbers of companies that have had to revise their 
financial statements in recent months, many major companies have 
succumed to the temptation to manipulate their results. The number of 
restatements has more than trebled from the early 1990s, from an 
average of less of than 50 a year to 156 last year. More than half of 
the companies accused of financial fraud in shareholder class action 
suits last year have already been forced to restate their earnings. 
These figures are particularly troubling when one notes that the 
original statements are of financials that had been approved by the 
firms' auditors.
  The $14 billion in fee reductions in H.R. 1088 deny the SEC any 
claims on those funds to reverse this trend. I realize that much of 
that $14 billion now flows into the general revenue and is not now 
earmarked for SEC use. However, once these substantial cuts are 
embraced, any objective review and possible subsequent determination 
that Congress

[[Page H3167]]

should in fact bolster SEC resources and expand agency responsibilities 
through charges to market users will be seriously compromised. If 
anything, more of those funds which now flow into general revenue 
should perhaps be earmarked for SEC use and targeted to enforcement 
activities. I am not prepared to say to what degree. However, I am 
prepared to say that prudence should be the rule in allowing any cuts 
at this point. H.R. 1088, as reported, is in my view too extravagant 
and will impair future efforts to bolster the SEC.

  Second, H.R. 1088 needlessly puts pressure on existing budget limits. 
Let me emphasize that the OMB has not given an opinion on this bill. 
Indeed, careful reading of the appendix to the President's budget would 
lead one to believe the administration is assuming user fees are not 
cut but continue at the present rates. Additionally, we are all keenly 
aware that there is considerable pressure on discretionary spending and 
this institution will be forced to make some hard choices this summer 
and fall. There is reason for deep concern that reserves will be 
quickly exhausted and that Medicare fund will have to be invaded. In 
addition, there are valuable social and economic development programs 
that are facing substantial cuts, which many Members would prefer to 
give priority over large-scale fee reductions, including important 
housing programs cut under the HUD budget. H.R. 1088 will only 
necessitate further belt-tightening. SEC funds flowing to general 
revenue, as opposed to those earmarked as offset for the SEC, would be 
reduced by $8.9 billion from FY 2002 to 2006. In FY 2002 alone, the 
reductions to general revenue would amount to more than $1.3 billion. 
In short, H.R. 1088 will increase the immediate threshold of pain 
substantially and undeniably. The substitute that I and my colleagues 
will offer as an amendment goes a long way toward solving this problem.
  I do solidly support one aspect of this legislation--giving all SEC 
employees full pay parity with the employees of the bank regulators. 
The Financial Services Committee reported such a provision, but 
subsequent efforts at compromise by my Republican colleagues put that 
provision at risk. I am pleased that further discussion resulted in the 
full pay parity provision being reported to the floor as part of H.R. 
1088. Such a provision is also included in the substitute that I and my 
colleagues will offer. The situation at the SEC is dire. This is not 
only because of its high vacancy and turnover rate. It is also because 
of the priority we should attach to its mission. If the markets are not 
made safer through high quality and experienced oversight and 
enforcement, both investors and our broader economy are at risk. The 
threat is real, and full pay parity is a necessary and overdue part of 
the solution.
  I urge my colleagues to oppose the bill as reported by the Rules 
Committee and support the Democratic substitute.
  Mr. BURTON of Indiana. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, first of all, let me say to everyone paying attention to 
this debate that I am under no illusion that this bill is going to go 
down to defeat. I think it is going to pass overwhelmingly.
  I do support wholeheartedly the $14 billion in fee reductions, which 
in effect is going to be like a tax cut for the American people. It is 
going to be an economic stimulus. What I do oppose, however, is the pay 
parity provisions, because I think it is going to end up costing the 
taxpayers of this country a great deal of money.
  Now, the SEC in effect wants to take the lid off of the salaries for 
the people that work there and to have them raised up in conjunction 
with the other financial institutions in this country. But let me just 
give you some facts that I think are very important.
  The SEC right now has the authority to pay retention allowances under 
current law up to 25 percent of base pay. So if somebody is making 
$160,000 a year, right now they could get a $40,000 bonus to keep that 
person employed. That would kick them up to $200,000. So they do not 
need this legislation to do that.
  The SEC has the authority to pay recruitment bonuses up to 25 percent 
of base pay. So, once again, if a person was being hired at $160,000, 
they could give them a $40,000 bonus, which would take them to 
$200,000. They have that ability right now.
  The SEC has the authority to grant employees up to a $10,000 
performance bonus, in addition to the other bonuses I just talked 
about. So a person, if they did a good job, could get $210,000, if 
their base pay was $160,000.
  Now, clearly the SEC is a mismanaged agency. In a recent letter to me 
from OPM, the Office of Personnel Management, about a 4-page letter, 
they cited all the problems with the SEC that need to be corrected 
before they start talking about pay parity. They also said they opposed 
the pay-parity provisions. The White House, the Office of Management 
and Budget, opposes the pay-parity provisions.

                              {time}  1130

  Yet, it is in this bill, and I am confident it is going to pass 
today. But I want to go on record opposing it, because it is going to 
get into the American taxpayers' pockets.
  Let me just talk about a couple of other things. Right now the SEC, 
with recruitment allowances and retention bonuses combined with the 
special pay rates, could pay attorneys $14,000 more than the FDIC 
today. They could pay $6,000 more than the Comptroller of the Currency. 
So if we are talking about making sure that that pay parity is there, 
it is already there. They just need to utilize the tools they already 
have available to them.
  So despite the claims of the SEC, they have recruitment and retention 
problems really in only three areas, and that is attorneys, 
accountants, and examiners. If we take those three categories out, the 
loss of jobs, the people leaving the SEC, has only gone down by 3.1 
percent. So the problem that needed to be addressed was only the 
attorneys, accountants, and examiners, and we tried to work that out, 
and we could not.
  Let me tell the Members something. As a result of this bill being 
passed, other agencies of government are going to want the same thing, 
which means the lid is going to be taken off as far as salaries are 
concerned for government employees.
  Already, the Department of Veterans Affairs, the Commodity Futures 
Trading Commission, the Export-Import Bank, and the Patent Trademark 
office have all asked for the same pay parity provisions that are in 
this bill, and I guarantee the Members that every agency of government 
is going to want the same thing. They are already calling my office, 
since my committee has jurisdiction over those pay increases. So 
Members can just count on pay going through the roof in many agencies 
of government.
  Now, the President wanted a 4 percent cap on spending. It has been 
raised to about a 5 percent cap on spending. When all the agencies that 
want these pay parity provisions get them, that cap is going to just be 
busted right to smithereens, and the cost of government is going to go 
up. That means the taxpayers are going to have to pay more and more and 
more for government.
  The top pay right now at the FDIC and the Office of Thrift 
Supervision equals the pay of the Vice President of the United States 
right now. The pay schedule for an employee at the National Credit 
Union Administration in San Francisco is almost $300,000 a year.
  At the other banking regulating institutions, one out of every five 
employees makes more than $100,000. At the Federal Housing Finance 
Board, it is one out of every three employees. In the rest of the whole 
government, only one out of 25 employees makes that kind of money. 
Members can see they are all going to want the same thing. It is going 
to force a raising of the salaries throughout the government. All the 
employee unions are going to see this and start pushing for it. This is 
the camel's nose under the tent. The American people are going to end 
up paying a heck of a lot more for government than they are paying 
right now.
  This is not a good provision. I support the fee reductions, but this 
pay parity provision is going to really be bad for the country.
  Mr. OXLEY. Mr. Speaker, I yield such time as she may consume to the 
gentlewoman from New Jersey (Mrs. Roukema).
  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. Mr. Speaker, I rise in strong support of this 
legislation, and I want to commend the gentleman from Ohio (Chairman 
Oxley) for taking long overdue leadership in bringing this bill to the 
floor and Congressman Fossella for introducing it. The Financial 
Service Committee reported the bill by voice vote and passed the Senate 
by unanimous consent.

[[Page H3168]]

  Before Memorial Day, we passed the most significant tax cut in the 
last twenty years. Millions of American families who are saving and 
investing in their future will be able to have greater control over 
their finances. Today we have the opportunity to do the same by passing 
H.R. 1088. This bipartisan legislation will protect American investors 
from paying excessive fees on their investments today and end 
Washington's hidden tax on securities transactions.


                             excessive fees

  Fees established in the 1930s for the sole purpose of funding the 
Securities and Exchange Commission (SEC) have exceeded the amount 
needed to run the agency by vast sums. Last year alone investors were 
charged more than six times the amount needed.
  Currently, the nearly 88 million American investors who contribute to 
a public or private retirement plan, 401(k) plan, mutual fund, bank 
trust, stock or investment product are being overcharged in government 
fees. Since 1990, American investors have been overcharged in fees by 
almost $9.2 billion.
  In fact, in my state of New Jersey the public retirement plan, the 
New Jersey Division of Investment, was overcharged $307,000 last year 
in fees. That is a 10 year total of over $3 million!
  We should encourage workers to invest for their future rather than 
diminish the value of their savings. With more and more options, 
including mutual funds and online trading, available, the number of 
Americans investing in the stock market as their primary or 
supplemental means of saving for retirement has dramatically increased.
  As a result of the larger number of employers offering retirement 
plans, this increase has not been among the very wealthy--the increase 
in fund ownership between 1998 and 2000 was stronger among households 
with income of less than $35,000. These retirement funds, because they 
are traded in large blocks, are especially hard hit by the current SEC 
fees.
  It does not make sense that we overcharged investors in order to 
create a Washington slush fund. These excessive fees should be 
eliminated and I urge my colleagues to support this important 
legislation.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from New York (Mr. Fossella), the sponsor of the legislation.
  (Mr. FOSSELLA asked and was given permission to revise and extend his 
remarks.)
  Mr. FOSSELLA. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  I thank him for his leadership, because without his leadership, we 
would not be able to bring this bill to the floor; as well as the 
gentleman from Louisiana (Chairman Baker), on the other side; my 
colleague, the gentlewomen from New York, Mrs. Maloney and Mrs. Kelly; 
the gentleman from New York (Mr. Crowley); and the gentleman from New 
Jersey (Mr. Menendez), among others.
  Today this legislation fulfills the promise with the American people. 
The original intent of the Congress was to fund the SEC, and it does a 
wonderful job enforcing our Nation's securities laws to protect 
investors.
  But what has happened over the years is that these fees have become a 
cash cow for the Federal Treasury. So while the SEC may need a budget 
or require a budget of about $420 million, the fees collected exceed $2 
billion per year.
  Those fees become an indirect tax on capital and investors. So if 
someone is involved in an IRA, he or she benefits under this bill. If 
someone has a mutual fund, he or she benefits under this bill. If 
someone is involved in a 401(k), he or she benefits under this bill. If 
one is involved in a pension fund, they benefit under this bill. If one 
is an investor, they benefit under this bill.
  Indeed, almost 100 million Americans will benefit, because what 
Congress does today is to say to the American people, when we make a 
promise, we keep it. When we say we want money to fund the SEC, we will 
take that money, but anything over and above that, send it back to the 
American people.
  We know what happens when we send the money back to the American 
people. Not only do we encourage more investment, which is a good thing 
for America, but we put more money back in the capital markets to allow 
those entrepreneurs to create more jobs, to allow investors to have a 
little more freedom to do what they want with their own money.
  Talk about savings, I know we are going to hear a lot of numbers 
today. In my home State of New York, the New York State Pension Fund, 
teachers pension fund, pays $305,000 in excess fees because Congress 
has failed to act to date. That is one fund. Could Members think of the 
thousands across the country that will benefit from this?
  I urge my colleagues to support this bill and to reject the 
substitute, because that is not even half a loaf. It is not even a 
quarter of a loaf. The substitute continues the charade with the 
American people. The substitute does not go far enough in providing 
adequate relief for investors. At the end of the day, that is what this 
is all about.
  Mr. Speaker, I thank the chairman once again for his leadership.
  Mr. LaFALCE. Mr. Speaker, I yield 4 minutes to the gentleman from 
Pennsylvania (Mr. Kanjorski), the ranking member of this subcommittee.
  Mr. KANJORSKI. Mr. Speaker, I thank the gentleman for yielding time 
to me.
  Mr. Speaker, I rise in opposition to the bill and in favor of the 
substitute. The reason for that is very simple. I hear my friends on 
the other side, and I do not delude myself, this is going to pass 
overwhelmingly. Maybe the 107th Congress will get the reputation of 
being the corporate Congress because, of all the funds that are out 
there for special use purposes, the first to come before the Congress 
is the securities industry fund; not the other funds that we collect 
and use for other purposes, but this fund.
  That being beside the point, I think my friends on the other side are 
disingenuous. The intention of the act that created the user fee for 
this fund was not for the purposes of funding alone the SEC, it was 
created for the purposes of funding the cost of the security industry 
in this country to the United States government. The SEC is just a 
part, and a small part, of that cost.
  For instance, take the FBI, a major investigative agency involved in 
stock fraud cases all the time. I think, to the best of my 
recollection, the FBI's budget is around $12 billion a year. Could we 
imagine maybe 10 percent of the investigative time of the FBI is 
involved in business fraud and stock fraud situations? That would be 
$1.2 billion. We receive nothing back from this user's fee to the 
general fund to fund that. No, the taxpayer, the man who delivers milk, 
the farmer that grows farm products, everybody in America pays for that 
special protection for the securities industry of the Federal 
government.
  Let us look at some of the other side expenses. The Justice 
Department, how much time and how many Federal attorneys are used, and 
what are their costs involved with security transactions in this 
country? Certainly they have to be far greater than zero. Nothing is 
allotted in the user fee scale to cover these costs. We could go on and 
on. The judicial branch, how much of the court system is devoted to 
trying cases and litigating issues and securities?
  The intention of the original act was that the Federal Treasury would 
be compensated by this user fee for that purpose. But my friends on the 
other side, and I daresay most of my colleagues on the Democratic side, 
they are going to be so happy to reduce the very small portion of the 
fee on security transactions and in fact underfund the cost to the 
United States government of the security industry, because we do not 
know the real costs.
  The full intent of my original amendment and the substitute is to 
provide sufficient time and study to allocate the real cost of the 
security industry to all of the United States government, and make sure 
the fee is sufficient to compensate that cost. Instead of doing that, 
we are only going to cover the cost of the SEC.
  We are sending all the money back, and the additional cost of the 
FBI, the Justice Department, the court system, and every other element 
of government involved in security industry transactions in this 
country is going to be borne by that 50 percent of the American people 
through their income taxes and other taxes, and they have no 
participation in the benefit of the securities industry. It is a 
shifting of burden, and the shifting is to the ones that could least 
afford it.
  Our substitute wants to reduce the user fee to reasonable amounts, 
but it says, very basically, let us find out what the real cost is. 
Instead, the first order of business of the majority of

[[Page H3169]]

this House is to run forward and see how we can affect and get the 
appreciation of the securities industry of the United States; a 
tremendous victory, $14 billion over 10 years.
  Unfortunately, what my friends on the other side are not telling the 
rest of the American people is that they are going to be paying taxes 
in other forms to fund some of the cost of government that directly 
pertains to the securities industry.
  I urge my colleagues on our side to stand up for reason and 
rightfulness. Vote for the substitute and vote down this bill.
  Mr. OXLEY. Mr. Speaker, I am honored to yield such time as he may 
consume to the gentleman from Iowa (Mr. Nussle), chairman of the 
Committee on the Budget.
  Mr. NUSSLE. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  I rise in support of H.R. 1088, the Investor and Capital Markets Fee 
Relief Act of 2001. As the chairman of the Committee on the Budget, I 
can report to my colleagues that this important bill is fully 
contemplated and consistent with the recently-agreed conference report 
on the budget resolution for fiscal year 2002.
  The combined reduction in revenue from this bill, with $1.4 billion 
for fiscal year 2002 and $8.8 billion for the first 5 years, and the 
recently-enacted Economic Growth and Freedom Act of 2001, is fully 
within the revenue parameters established by the budget resolution for 
fiscal year 2002.
  I would share and express some concern, however, with the provision 
in the bill that would exempt financial regulators from the SEC from 
the civil service pay scale. It is important that we consider the 
impact of this change on the Federal budget and its implications for 
other Federal agencies requesting comparable treatment.
  I would urge the Committee on Financial Services and the chairman to 
work with the Committee on Government Reform and Oversight during the 
conference to address this issue raised by the provision pay parity to 
prevent further and future adverse budgetary impact.
  I rise in support of this bill and urge its adoption.
  Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
California (Ms. Waters), the ranking member of the subcommittee.
  Ms. WATERS. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I rise in opposition to H.R. 1088, the Investor and 
Capital Markets Fee Relief Act, and in support of the substitute. I 
believe that its purpose is questionable and its approach excessive.
  The current fees on the sale of stock amount to just 33 cents per 
$10,000 of transactions. In other words, most individuals will likely 
presently spend more to buy a newspaper to read the stock prices than 
they do on these transactions.
  This bill would reduce revenues by approximately $14 billion between 
2002 and 2011. I am concerned, especially in light of the recently-
enacted tax cut and the need for funding such critical areas, including 
education, and some relief from high energy prices for my constituents 
in California, as well as ensuring the solvency of Social Security, 
that H.R. 1088 is simply cutting too much too soon.
  I am an original cosponsor of the Democratic alternative, H.R. 1480, 
the Fairness in Securities Transactions Act, which represents a 
reasonable approach to this issue.
  The substitute will lower fees by $4.8 billion over 10 years, as 
opposed to the $14 billion in the bill before us. In addition, the 
substitute, like the underlying bill, gives the SEC the ability to 
match the pay and benefits of Federal banking regulators to address the 
SEC's inability to attract and retain qualified staff, no matter what 
their pay grade or job title.

                              {time}  1145

  It is important to resolve the differences between the salaries of 
SEC employees and employees of other Federal regulatory agencies, 
because the SEC pays as much as 40 percent less than the other 
financial regulatory agencies. The SEC has lost more than 1,000 
employees over 3 years, which is more than one-third its total staff. 
Attrition at the agency has doubled the government average.
  With the passage of the Gramm-Leach-Bliley Act last Congress, the 
distinctions between the job of an SEC lawyer and a Fed lawyer, for 
example, have become even more blurred. It is crucial that the SEC have 
the ability to obtain and retain qualified staff so that investors can 
receive the protection they deserve.
  Mr. Speaker, I urge my colleagues to support the Democratic 
alternative and oppose H.R. 1088.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentlewoman from New 
York (Mrs. Kelly), the chairman of the Subcommittee on Oversight and 
Investigations.
  Mrs. KELLY. Mr. Speaker, I thank the gentleman from Ohio (Mr. Oxley) 
for yielding me the time.
  Mr. Speaker, I thank my colleagues from both sides of the aisle for 
their work on this bill. I rise today in strong support of H.R. 1088, 
the Investor and Capital Markets Fee Relief Act.
  This is legislation to prune fees which have grown to become an 
implicit tax on long-term investors. The excessive fees, especially 
section 31 fees, penalize those who invest their savings in the market, 
and those who have pensions invested in the market.
  It is untenable for us to silently tax investors, entrepreneurs, and 
businesses through fees designed to fund securities regulation. In 
addition, these excessive fees are passed right on to consumers. While 
the fees are small on a single trade, they exponentially add up over 
the years for folk who invest in mutual funds or have pensions.
  I am talking about teachers, police officers, workers whose pensions 
should be protected and encouraged, not taxed. This is a stealth tax.
  In addition, the growth of these fees runs directly counter to the 
legislation that created them. The 1934 Act clearly states that these 
fees were created to cover the costs of running the SEC. There was 
nothing about other priorities. Unfortunately, the fees now bring in 5 
times as much money as necessary to properly run the SEC.
  While it is hard for Washington to return excess money, that is 
exactly what we must do today. This debate is about priorities, 
strengthening and encouraging pensions and investment must be our 
priority.
  In crafting this bill with my friends, the gentleman from Louisiana 
(Mr. Baker) and the gentleman from New York (Mr. Fossella), I feel it 
is the best possible solution to the current problem of excessive fees 
imposed on investors.
  This bill will return $14 billion to investors and pension 
beneficiaries who earned them, and this is where the money belongs.
  Mr. Speaker, I ask my colleagues on both sides of the aisle to join 
me in voting to return the excess fees to the pensions and to the 
investors. Vote to follow the intent of Congress when it created these 
fees. I believe that we should all vote to support the Investor and 
Capital Markets Fee Relief Act.
  Mr. LaFALCE. Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman 
from the City of New York (Mrs. Maloney) who has a little bit of 
interest in this issue.
  Mrs. MALONEY of New York. Mr. Speaker, I thank the gentleman from New 
York (Mr. LaFALCE), the ranking member, for yielding me the time and 
for his incredible leadership in so many areas.
  Mr. Speaker, American investors have been overcharged. Over the last 
10 years, the Securities and Exchange Commission has collected $9.2 
billion more than it has needed for its operations. This money comes 
directly from capital markets participants, including individual 
investors and new issuers.
  This legislation is proconsumer, proinvestor legislation that cuts 
these fees down to a level that provides the SEC with the resources it 
needs to do its job while saving investors over $14 billion over the 
next 10 years.
  These fees were intended to merely cover the operating costs of the 
SEC. They were never intended to multiply so dramatically. I can 
remember when stock ownership was reserved for a select few. Today, 52 
percent of American households own stock or mutual funds.
  Former SEC Chairman Levitt has stated that 87 percent of the New York 
Stock Exchange fees and 82 percent of NASDAQ fees are paid by 
investors.
  The New York State Public Pension Plan estimated recently that they 
will

[[Page H3170]]

pay $13.5 million in fees over 5 years. These fees are also paid by the 
holders of retirement accounts, including 401(k) accounts.
  This is the investors' money. We should let them keep it. The bill 
also included much needed pay parity for the SEC. At the very least, 
SEC employees should be paid the same as banking regulators. We are in 
a staffing crisis.
  At the SEC regional office, at 7 World Trade Center in New York, 19 
percent of the staff left during fiscal year 2000.
  Mr. Speaker, I urge my colleagues to support the bill and oppose the 
substitute. H.R. 1088 is supported by labor, the National Treasury 
Union, the industry, and the SEC. This bill will send a strong message 
to the Senate that they should take up our version of the bill and get 
relief to investors as quick as possible.
  Finally, let me thank all that have worked on this bill in a 
bipartisan way, particularly the gentleman from Ohio (Mr. Oxley); the 
gentleman from the great State of New York (Mr. Fossella); and I must 
thank very much the gentleman from New York (Mr. LaFalce), the ranking 
member; and the gentleman from Pennsylvania (Mr. Kanjorski).
  While we disagree on the extent to which SEC fees should be cut, no 
one has worked harder to secure parity for the SEC employees, and I 
thank them greatly for their work in this area.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Cooksey). The Chair would remind the 
Members that it is not appropriate to advise the Senate on what actions 
they should take.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Sam Johnson).
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Speaker, it is time to end this 
excessive fee on savings and investment. It is a fee that is a tax. It 
was wrong for Congress to impose a fee, otherwise known as a tax, on 
tens of millions of Americans.
  The current tax was levied to fund the Securities and Exchange 
Commission, but guess what, it soon became a cash cow and Congress now 
uses it to fund other government programs, and that is just not right. 
One of my constituents, Al Anderson, of Coastal Securities is an 
example of someone who is adversely affected by this so-called fee.
  When I visited his company, he told me he had to pay an additional $4 
million in taxes over the last 3 years just because of this fee.
  Now, that is not a small sum of money, and when he factored it into 
his business plan, it meant one thing, slower growth. There was a job 
impact. The government should not be in the business of slowing 
business down. The business that government ought to be in is to 
encourage businesses to grow.
  While this bill helps companies like Coastal Securities, it will also 
make it easier for people to save for retirement through either 
individual stock investments, mutual funds, 401(k)s, or pension plans.
  So this bill, which relieves the tax that has gotten far too big and 
it is used far too wide. With all the talk about the need to prepare 
for retirement, the least this Congress can do is remove this barrier 
to savings.
  We need to cut taxes again for the people. Support America. Support 
this bill.
  Mr. LaFALCE. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from the great City of New York (Mr. Ackerman), a member of the 
Subcommittee on Financial Institutions and Consumer Credit.
  Mr. ACKERMAN. Mr. Speaker, I want to thank the gentleman from the 
great State of New York (Mr. LaFalce), the ranking member of the 
Committee on Financial Services for yielding me the time.
  Mr. Speaker, I am proud to be an original cosponsor of H.R. 1088, the 
Investor and Capital Markets Fee Relief Act. This is very important 
legislation which will reduce the securities transaction fees, and I 
rise in strong support of the measure.
  A reduction in these fees will benefit not only Wall Street, but will 
benefit so many families throughout the country who today own more 
stock than ever before. In addition to individuals, State and local 
pension plans will benefit from a reduction in these fees.
  For example, in my State of New York, it is estimated that payments 
in the public pension plans alone in section 31 fees are presently 
projected to be approximately close to $14 million over the next 5 
years.
  An important component of any legislation addressing reducing 
security transaction fees is paid parity for SEC employees.
  These Federal workers are stationed not just in Washington, D.C., 
they live throughout the Nation and work in the SEC field offices. Some 
of them are my constituents who work in the largest SEC field office in 
the City of New York.
  We must be able to attract and retain highly qualified regulators to 
ensure the integrity and strength of our markets. We are not seeking to 
compete with the private sector. As we all know, government service 
requires a special level of devotion to our Nation, which is often not 
well compensated, as well as work in the private sector. However, 
within the Federal Government, the certain standard should exist.
  It is simply unacceptable for the SEC regulators not to be paid on 
par with their counterparts in other Federal financial agencies. I am 
very pleased that the pay parity provision is included in this bill.
  Mr. Speaker, I am very happy to join with so many of our colleagues 
both on our committee and others in the House in supporting one of the 
first measures to be considered on the floor from this new committee, 
the Committee on Financial Institutions and Consumer Credit.
  Mr. Speaker, I look forward to the passage of legislation on the 
floor today, swift action in the Senate and signing by the President. I 
encourage our colleagues to vote for this important measure.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from New 
Jersey (Mr. Menendez), the vice chairman of the Democratic Caucus.
  (Mr. MENENDEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. MENENDEZ. Mr. Speaker, I want to thank the gentleman from Ohio 
(Mr. Oxley) for standing by our bipartisan agreement, for keeping his 
commitments to those of us on the Democratic side of the aisle, and for 
fighting for American investors.
  I also need to say I am not used to disagreeing with the gentleman 
from New York (Mr. LaFalce), the distinguished ranking member, my 
friend, because he is such a thoughtful legislator and a good friend. I 
want to thank him for his principled leadership on the Committee on 
Financial Institutions and Consumer Credit.
  However, I strongly support this bill which as written has strong 
union support, industry support, and agency support.
  It is rare to get all of those parties supporting one effort, but 
this bill has it. It has that support for a good reason. The stock 
market has increasingly become the investment of choice for America's 
working families, and these families are relying on the growth of their 
savings to finance everything from buying a home, to putting their kids 
through college, to having a secure retirement.
  But just as the savings of American families have moved into the 
market, the government-imposed fees these families pay to purchase 
these stocks are taking an every-increasing bite out of their profits. 
Fees are assessed from everything from mutual funds to pension funds in 
ways that many investors are not often even aware of and are costing 
Americans billions of dollars. Once you figure in the loss of compound 
interest, these fees can rob an individual family of thousands of 
dollars in lost profits over time.
  The fees were originally authorized by Congress to cover the 
operating costs of the Securities and Exchange Commission. That is a 
necessary and valid purpose which I totally support. Consumers and 
investment firms benefit from the market, and I think it is reasonable 
to ask market participants to help pay the costs of the very agency 
that ensures the market runs efficiently and fairly.
  The problem is that today, because of a rise in market value, no one 
could have predicted these fees are taking almost six times what is 
necessary to

[[Page H3171]]

fund the Securities and Exchange Commission. That is simply not 
reasonable.
  Let us oppose any weakening amendments. Let us make sure that we give 
investor fee relief. Let us do it in the bipartisan way that this bill 
has been crafted.

                              {time}  1200

  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York (Mr. Meeks), a member of the committee from the City of New York.
  Mr. MEEKS of New York. Mr. Speaker, I stand today in strong support 
of H.R. 1088, the Investor and Capital Markets Fee Relief Act.
  Let me thank the gentleman from Ohio (Chairman Oxley) for his 
leadership and the gentleman from New York (Mr. LaFalce), the ranking 
member, for his leadership on the committee. As indicated by the last 
speaker, this is an unusual opportunity with which I disagree with the 
ranking member, but on this one I do.
  This bill will save investors and other market participants $14 
billion over the next 10 years. The SEC 31 fees and other fees 
collected by the SEC were created to fund the SEC without the need for 
an appropriation from the general treasury. However, over the past two 
decades, an increasing number of individuals have been participating in 
the market through 401(k)s, mutual funds, and on-line transactions.
  This has caused the SEC to collect $9.2 billion more in fees over the 
last 10 years than has been needed to fund the agency's operation. As a 
result, the agency has been put in a position of collecting additional 
taxes from the public for the general treasury.
  H.R. 1088 and its companion bill in the other Chamber will correct 
this inequity while containing a provision that will allow for fees to 
be adjusted upward should the SEC face a funding shortfall.
  Probably the most important provision for me of this bill is this 
provision for pay parity for SEC employees with their Treasury and 
Federal Reserve counterparts. As it stands, the Federal Government is 
not able to compete with the private sector when it comes to paying our 
financial regulators what they are worth.
  The SEC is at a serious disadvantage when they cannot compete for 
employees with their government counterparts. The result has been a 
loss of approximately one-third of their employees over the past 3 
years. This creates delays and inefficiencies in carrying out their 
regulatory duties to safeguard fairness and transparency and all in our 
capital markets, capital markets which are critical to our position as 
the world's economic superpower.
  I want to thank the sponsor and cosponsor of this bill and encourage 
all Members of the House to support it.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentleman from the Big Apple, New York, (Mr. Crowley), a distinguished 
member of our committee.
  (Mr. CROWLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. CROWLEY. Mr. Speaker, I thank the gentleman from Ohio (Mr. Oxley) 
for yielding me the time and the gentleman from New York (Mr. LaFalce) 
for his diligent work on this bill as well. I rise in strong support, 
in favor of the Investor and Capital Markets Fees Relief Act. I want to 
thank the lead sponsors, the gentleman from New York (Mr. Fossella) and 
the gentlewoman from New York (Mrs. Maloney), both from New York City, 
for introducing this legislation.
  These SEC charges are user fees and not taxes, and they currently 
bring in almost six times more than are needed to operate the SEC. It 
is fair to lower these fees and pass these savings on to the American 
people.
  While these fees appear small, they can have a substantial effect on 
Americans who purchase and sell stocks or those Americans who open 
mutual funds or 401(k)s or who are saving for a retirement in a public 
pension plan.
  In fact, these fees, with their excessive collections, have become an 
onerous form of taxation on investment, hindering investment and saving 
opportunities for Americans.
  Right now, under the current formula, the typical family will pay 
$1,300 in fees over their lifetime to the SEC. By lowering these fees 
and applying these same dollars to their investments, like pension 
funds and 401(k)s, this money could grow to over $11,000 in extra 
savings.
  In my home State of New York, the State's public pension program will 
pay over $14 million in the next 5 years in SEC fees if Congress does 
not take action, fees that are not needed for their intended purpose of 
financing and operating the Securities and Exchange Commission.
  That $14 million could be better invested into people's pockets for 
their retirement. As 50 percent of Americans now own stock and have 
some say in the actions of the financial markets, this bill will 
provide relief to Main Street, not just to Wall Street.
  Furthermore, this legislation will finally provide full pay equity to 
the hard working employees at the Securities and Exchange Commission, 
many of whom live in my district and throughout many of the 
metropolitan cities in America.
  This pay equity is not only fair but is also justified and is also 
badly needed.
  In fact, one SEC office in New York City has witnessed 100 percent 
turnover. This bill will help adjust the staffing problem at the SEC.
  As both the representative for the financial capital of the world and 
a lifelong resident of Queens, I recognize that investors of yesteryear 
wore wingtip shoes, but the investors today wear workboots.
  I urge my colleagues to support this legislation.
  Mr. Speaker, I rise in strong support of the Investor and Capital 
Markets Fee Relief Act and want to thank the lead sponsors 
Representatives Vito Fossella and Carolyn Maloney for introducing this 
legislation. These SEC charges are user fees--not taxes--and they 
currently bring in almost 6 times more than are needed to operate the 
SEC. It is fair to lower these fees--and pass these savings on to 
Americans. While these fees appear small, they can have a substantial 
effect on Americans who purchase and sell stock, or those Americans who 
own mutual funds or 401(k)'s or who are saving for a retirement in a 
public pension plan. In fact, these fees, with their excessive 
collections, have become an onerous form of taxation on investment, 
hindering investment and savings opportunities for Americans.
  Right now, under the current formula, the typical family will pay 
$1,300 in fees over their lifetime to the SEC. By lowering these fees 
and applying these same dollars to their investments, like pension 
funds and 401(k)'s, this money could grow to over $11,000 in extra 
savings. In home state of New York, the State's public pension program 
will pay over $13 million in the next 5 years in SEC fees if Congress 
does not take action--fees that are not needed for their intended 
purpose of financing the operations of the Securities and Exchange 
Commission. That $13 million could be better invested into people's 
pockets for their retirement. As 50 percent of Americans now own stock 
and have some say in the actions of the financial markets, this bill 
will provide relief to Main Street not just to Wall Street. 
Furthermore, this legislation will finally provide full pay equity to 
the hard working employees at the Securities and Exchange Commission, 
many of whom live in my district and in major metropolitan areas 
throughout the United States.
  They live in places like San Francisco, Los Angeles, Denver, Salt 
Lake City, Miami, Atlanta, Chicago, Boston, Philadelphia, Fort Worth 
and, of course, Washington, D.C. This pay equality is not only fair and 
justified but also badly needed. Currently, the employees of the SEC--
the people making sure the securities industry is working for America--
are earning less pay than their counterparts at other federal 
regulatory agencies of the same field, like the Treasury, the Federal 
Reserve Bank, and the Office of the Comptroller of the Currency.The 
result--massive staff turnover at the SEC. In fact, one SEC office in 
New York City has witnessed 100 percent turn over--this bill will help 
address this staffing problem at the SEC. As both a representative from 
the financial capital of the world and a lifelong resident of Queens, I 
recognize that the investors of yesteryear wore wingtips, but the 
investors of today wear workboots.
  This legislation is for the tens of millions of Americans who invest 
for their retirement, a child's education or a better life and to the 
hard working and dedicated employees at the SEC, who deserve equality 
and fairness in their compensation. I urge my colleagues to support 
this legislation.
  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York City, New York, (Mr. Engel) of the Committee on Energy and 
Commerce.
  Mr. ENGEL. Mr. Speaker, I want to thank the gentleman from New York 
(Mr. LaFalce). Even though we disagree on this bill, he is truly one of 
the great Members of this House.

[[Page H3172]]

  I rise to voice my strong support for H.R. 1088. I also want to urge 
my colleagues to support the manager's amendment. I was a cosponsor of 
this bill in the last Congress when jurisdiction rested with the 
Committee on Energy and Commerce on which I serve, and I am also a 
cosponsor this year as well.
  This bill is obviously important to my home city, New York City, and 
important to the rest of the country as well. The need for the 
underlying bill is just simple mathematics. Current law allows the 
Federal Government to charge far more in fees than are needed to keep 
the SEC operating.
  Let us be clear. By the end of this fiscal year, the SEC will have 
collected $22 billion more than it has needed to operate. That is $22 
billion that could have stayed with the individual investors to be 
invested and made available to the capital markets.
  We in Congress have done a lot to encourage our constituents to start 
saving for retirement. Millions of Americans are now investing in the 
stock market through their 401(k) plans and mutual funds. But some of 
their savings are actually being drawn off to pay for the fees that 
have been accumulating at the SEC. We need to fix this now.
  These fees drain capital from the private markets, removing it at the 
very start of the capital-raising process, and divert it to the U.S. 
Treasury. The transaction fee is assessed when brokerages charge an 
investor for selling shares, and are generally passed on to the 
customer as part of the cost of the transaction.
  Once this fee is reduced, investors will be able to see the savings 
immediately. The individual investor, not the broker, is paying the 
vast bulk of these transaction fees. On the New York Stock Exchange, 87 
percent of the section 31 fees are paid by individual investors and 82 
percent on the NASDAQ. This is unacceptable.
  Also, the manager's amendment adopts the language for pay parity. 
This is something I have supported for a very long time. We cannot 
expect the government to attract the talent it needs if we are going to 
pay these people sometimes half of what they can earn in the same job 
in the private sector.
  So, Mr. Speaker, I urge a yes vote on the manager's amendment and a 
yes vote on the underlying bill. This is a bill whose time has come.
  Mr. OXLEY. Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, how much time do we have remaining?
  The SPEAKER pro tempore (Mr. Cooksey). The gentleman from New York 
(Mr. LaFalce) has 8 minutes remaining.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I might 
consume.
  Mr. Speaker, there are some individuals, for example, labor unions 
who support this bill, and they support it because of the pay parity 
provisions, and that is it. They really do not care that much about the 
various fee reductions. They will support any bill that has pay parity 
within it. So much for that.
  Who are the other ones who are primarily supporting this bill? Well, 
let us not kid ourselves. It is the securities industry. It is not 
individual investors. They have not been coming to us. I do not think I 
have received one phone call or one letter from an individual investor. 
But I have been inundated by representatives from the various 
securities industries. They are the ones who are most interested, and 
they want this reduction. They think it is going to be good for their 
industry.
  Reductions might be in order. The question is how much and what 
should one do before the reductions. Well, first of all, it seems to me 
before one does the reductions, one ought to figure out what one needs. 
We have not done that.
  There is not a person in this House who could tell me how much the 
FBI spends on enforcing our securities laws. There is not a person in 
this House who can tell me how much the Department of Justice spends on 
enforcing our securities laws. Most important, no one can tell me how 
much we should be spending amongst the SEC and the FBI and the Justice 
Department to fund our securities laws.
  Now, that is pretty important. I think that is unbelievably important 
because we are talking about trillions and trillions of dollars. I 
mean, you know, we are talking about a relative pittance, we are 
talking about a relative amount of pennies for individual investors. 
But when their stock that was 100 all of a sudden goes to 2, there is 
an enormous problem. That is not a pittance now. That is their life 
that has been lost. That has been taking place time after time after 
time for a whole slew of reasons.
  At the very minute we are considering this bill, the subcommittee 
that produced this bill is considering another issue, investor 
independence. There is an enormous problem there, so enormous that the 
industry itself yesterday came out with some practices that they said 
are absolutely imperative to improve the performance of analysts to get 
their act together. They are a good first step, but they do not go 
nearly far enough. They are voluntary in nature.
  At one time, there was an investigation of thousands of different 
recommendations, and about 1 percent of those recommendations said 
sell. Wow. There used to be a ratio of, say, 6 to 1 buy to sell. 
Lately, that ratio has been revealed to be about 100 to 1.
  We have an entirely different type of terminology. The SEC and the 
FBI and the Justice Department should be investigating this. That is 
what we should be talking about rather than saying reduce the fees.
  Accountants, what are accountants doing? Well, for the most part, 
accountants are not making very much money doing accounting or 
auditing. They are doing an audit of a firm, maybe getting $2 million 
for the audit, and then making $100 million on consulting fees. One has 
to wonder about the independence and objectivity of that audit.
  In the past couple of years, we have seen a tripling of the number of 
restatements of earnings. Each and every single one of those restated 
earnings had initially been approved by the accountant auditing firm. 
That is troubling. That has resulted in the decimation of people's 
lives. They have loss their savings, maybe not 100 percent, but maybe 
50 percent, 75 percent of their savings.
  The SEC does not have the present capacity. We have seen a geometric 
increase in market valuation and no increase in staff. We have seen a 
geometric increase in IPOs and no increase in staff. Now we are going 
to have an increase in pay, pay parity, and no increase in staff 
authorizations. So fewer staff.
  I am concerned about that. I am concerned about that because the 
single greatest reason we had problems, Mr. Speaker, with the S&Ls was 
inadequate supervision, when the number of examiners, the number of 
supervisors were cut back. There are a multiplicity of reasons, but 
that was the single greatest one. We put this cart before the horse. We 
give the industry what it asks for unwittingly.
  All the money that was given, by the way, is coming from general 
revenues. Certain of the monies, certain of the fees are going to a 
special fund, and the other fees go to general revenues. The reductions 
we are making all come from general revenues.
  So we are going to have $14 billion less for other things, too, not 
just SEC, $14 billion less for prescription drugs, for health care for 
the uninsured, for housing for those who are homeless. One has to 
wonder where our priorities are. I wonder.
  The bill will pass, but it should not pass, not until we ask all 
these other questions and answer them and deal with all these other 
problems first.
  Mr. Speaker, I yield back the balance of my time.
  Mr. OXLEY. Mr. Speaker, I am to yield 2 minutes to the gentleman from 
Tennessee (Mr. Ford).
  Mr. FORD. Mr. Speaker, I thank the gentleman from Ohio (Mr. Oxley) 
for yielding me this time, and certainly to the gentleman from New York 
(Mr. LaFalce), my friend and distinguished ranking member, whom I agree 
with an overwhelming majority of the time, but on this issue here we 
have a small disagreement.
  I rise in support of H.R. 1088. There is no doubt that excessive fees 
imposed on financial transactions should be reduced.

                              {time}  1215

  These fees were originally intended to fund the enforcement 
activities of

[[Page H3173]]

the Securities and Exchange Commission, but the revenue collected by 
these user fees has come to far surpass the amount needed by the SEC, 
as a matter of fact, by a factor of five; and this warrants a little 
fixing, as they say in my part of the country.
  To be sure, we have a host of budget priorities exceedingly more 
important than the issue on the floor today; the quality and delivery 
of education, prescription drugs for seniors, and, clearly, national 
defense, as the President struggles to talk about it across the globe. 
But we should be addressing these priorities by being responsible with 
general tax revenue, not by overcharging a specific industry on user 
fees. It is simply unfair to say to investors, sorry, we charged you 
too much by accident; but we are not going to give the money back 
because we need it for other purposes.
  SEC fees should be reduced to the point where they fully fund the 
enforcement responsibilities of the Securities and Exchange Commission. 
And for the SEC to do its job effectively, its employees need to be 
paid at a competitive rate. Recruitment and retention of key employees 
are critical for the effective operation of any business or any 
government agency. However, the SEC's effectiveness will deteriorate if 
it cannot maintain its institutional memory and continuity of purpose.
  We rely on the SEC to protect investors, a mission that is becoming 
increasingly complex as more and more Americans become investors and 
our financial system becomes increasingly global. It is time we 
establish pay parity between SEC employees and the other financial 
regulators. H.R. 1088 accomplishes both goals, reducing SEC fees and 
establishing pay parity for SEC employees. It corrects an unfairness 
caused by unforeseen changes in the market, and for that reason I am 
proud to support it.
  The SPEAKER pro tempore (Mr. Cooksey). The time of the gentleman from 
New York (Mr. LaFalce) has expired; the gentleman from Ohio (Mr. Oxley) 
has 8\1/2\ minutes remaining.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
Indiana (Mr. Pence).
  Mr. PENCE. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I rise in strong support of H.R. 1088.
  Mr. Speaker, a rose by any other name is still a rose, and government 
fees are nothing more than government taxes. When the fees that are 
designed to be drawn from the system to pay for the costs of that 
system exceed the cost, they are simply and plainly excessive taxes.
  The vision of the gentleman from Ohio (Mr. Oxley), expressed in H.R. 
1088, is the right vision for America. It represents an enormous 
savings to taxpayers. According to the CBO, this bill will save 
taxpayers, which are the investors who pay the fees, an estimated $1.5 
billion in 2002 alone and $8.9 billion from 2002 to 2006.
  It is time, in these uncertain days of instability and 
unpredictability in our stock market in America, to say yes to those 
Americans that invest in America; and I rise, therefore, in strong 
support of 1088 and say let us reduce the fees that are nothing more 
than taxes.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Bentsen).
  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I rise in strong support of the underlying bill. I think it 
is a good bill. I think it is the right thing to do.
  I will say that I do not think this bill is a panacea. It is not 
going to affect every taxpayer. It is not going to even out corrections 
in the stock market. But what it will do is save the investors money, 
it will save issuers money; and more importantly, I think, in an era of 
surpluses it will get us back to using fees for what Congress 
originally intended them to be.
  Quite frankly, I would hope that we would follow up in passing this 
bill in bringing the CARA bill to the floor, which passed 
overwhelmingly, so we could use the fees from offshore drilling, off 
the coast of my State of Texas and other States, for coastal 
conservation, as was intended by President Johnson when the Land and 
Water Conservation Fund was set up. But this bill is the first step in 
that right direction, and I think it will also require us to go back 
and look at our budgets and budget appropriately, which, quite frankly, 
we have not done.
  This is a good bill, I support it, I commend the chairman for 
bringing it to the floor, and I hope my colleagues will follow suit and 
pass it.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I have no further speakers under general debate; but I 
just want to acknowledge and thank the subcommittee chair, the 
gentleman from Louisiana (Mr. Baker). He is very obviously supportive 
of the bill, it came out of his subcommittee, but he is chairing a very 
important hearing, as we speak, on the securities issues regarding 
stock analysts; and that is why he was unable to be present during the 
general debate.
  Ms. CARSON of Indiana. Mr. Speaker, I rise today in support of the 
LaFalce Amendment. While I agree with the principle of a reduction in 
SEC fees, and pay parity for SEC employees, I believe that Mr. 
LaFalce's substitute approaches this issue with a prudence not present 
in H.R. 1088.
  As many of my colleagues have highlighted, agencies such as the 
Congressional Budget Office have estimated that the fees required to be 
collected by the SEC from all sources will total over $2.47 billion in 
fiscal year 2001. This represents more than five times the SEC's fiscal 
2001 appropriation of $422.8 million. The current levels of SEC fees 
that were developed to fund the cost of regulating the securities 
markets, now seriously exceed the government's cost of regulation to 
such a degree that they constitute a drag on capital formation, and a 
special burden on every American investor.
  Both H.R. 1088 and the LaFalce substitute address the SEC's staffing 
crisis by giving the SEC the much-needed ability to match the pay and 
benefits of other federal banking agencies, and they also recognize 
that in the wake of the historic Gramm-Leach-Bliley Act of 1999, the 
ability to compensate SEC staff at the same level as their sister 
regulators at the banking agencies is more imperative than ever. With 
pay-parity the SEC can continue to function effectively by remaining an 
institution that can attract and retain dedicated professionals.
  Since 1990, American investors have been overcharged over $9 billion, 
as the volume of investment has soared since the fees were originally 
levied in the 1930s. In 1996, Congress enacted reductions in the fee 
rates, to take effect over 10 years, with the intention that after 
fiscal year 2007 the amount collected should be approximately equal to 
the SEC's budget, or the cost to the government of regulating the 
markets. However, trading volumes and merger activity have soared, and 
fee receipts are projected to continue to exceed the SEC's budget by a 
wide margin.
  While I support a fresh attempt to bring SEC fees back down to 
reasonable levels, and believe that a reduction will benefit all of 
America's investors, I feel that the LaFalce substitute provides 
American investors with a more prudent and more secure solution to the 
reduction of SEC fees, and providers the SEC with a stable solution to 
its current problems.
  Mr. CHAMBLISS. Mr. Speaker, I rise today to speak on H.R. 1088, the 
Investor and Capital Markets Fee Relief Act.
  While I commend Representative Fossella, Chairman Oxley, and Chairman 
Burton on their work to reduce fees imposed by the Securities and 
Exchange Commission, I am bothered by the lack of inclusion of pay 
parity for the Commodity Futures Trading Commission while a pay parity 
provision for the SEC is included. The SEC and the CFTC are the only 
federal financial regulators governed by the pay scales outlined in 
title V of the United States Code. The CFTC, as does the SEC, 
experiences difficulties in recruiting and retaining staff. Including 
provisions solely for the SEC would only further disadvantage the 
regulatory body over which my Subcommittee has jurisdiction.
  The Commodity Futures Trading Commission cannot currently offer 
salaries competitive with the private sector; the Commission's ability 
to compete with fellow public financial regulators will be further 
hindered. Over a 22-month period, the Commission lost over 40 percent 
of key staff to better paying positions. Of those who left for better 
pay, over 20 percent went to the Securities and Exchange Commission--
where a 10 percent pay differential was offered within title V. One can 
only expect for this number to increase if the SEC becomes exempt from 
title V as other federal financial regulators have. Concerns over 
recruitment and retention of staff will only be augmented due to this 
provision in the bill.
  The Commodity Futures Modernization Act, signed into law December 
2000, is now being implemented by both the CFTC and SEC. Six months 
after the bill has become law is not an appropriate time to 
disadvantage the agency.

[[Page H3174]]

The best lawyers are needed to implement this bill that is critically 
important to the financial industry.
  Although I have supported H.R. 1088 on the merit of fee reduction, I 
am disappointed that Chairmen Oxley and Burton could not grant my 
request to include equitable treatment to the Commodity Futures Trading 
Commission regarding pay parity.
  Mr. OXLEY. Mr. Speaker, I yield back the balance of my time.


     Amendment in the Nature of a Substitute Offered by Mr. LaFalce

  Mr. LaFALCE. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The SPEAKER pro tempore. The Clerk will designate the amendment in 
the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

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

     SECTION 1. SHORT TITLE; FINDINGS.

       (a) Short Title.--This Act may be cited as the ``Fairness 
     in Securities Transactions Act''.
       (b) Findings.--The Congress finds the following:
       (1) The United States capital markets are recognized as the 
     most liquid, efficient, and fair in the world.
       (2) The Securities and Exchange Commission has been charged 
     since 1934 with maintaining the integrity of the United 
     States capital markets and with the protection of investors 
     in those markets.
       (3) The majority of American households have their savings 
     invested in those securities markets.
       (4) A lack of pay parity for the employees of the 
     Securities and Exchange Commission with other United States 
     financial regulators poses a serious threat to the ability of 
     the Commission to recruit and retain the professional staff 
     required to carry out its essential mission.

     SEC. 2. IMMEDIATE FEE REDUCTION.

       Section 31 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78ee) is amended by striking ``1/300 of one percent'' 
     each place it appears and inserting ``1/500 of one percent''.

     SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PROVISIONS; 
                   ADDITIONAL FEE REDUCTIONS.

       (a) Pooling and Allocation of Collections.--Section 31 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is 
     further amended--
       (1) in subsection (b)--
       (A) by striking ``Every'' and inserting ``Subject to 
     subsection (i), each''; and
       (B) by striking the last sentence;
       (2) by striking subsection (c);
       (3) in subsection (d)--
       (A) by striking paragraphs (2) and (3);
       (B) by striking the following:
       ``(d) Off-Exchange Trades of Last-Sale-Reported 
     Securities.--
       ``(1) Covered transactions.--Each national securities''
     and inserting the following:
       ``(c) Off-Exchange Trades of Exchange Registered and Last-
     Sale-Reported Securities.--Subject to subsection (i), each 
     national securities'';
       (C) by inserting ``registered on a national securities 
     exchange or'' after ``security futures products)'';
       (D) by striking ``, excluding any sales for which a fee is 
     paid under subsection (c)'';
       (4) by redesignating subsections (e) through (h) as 
     subsections (d) through (g), respectively;
       (5) in subsection (e) (as redesignated by paragraph (4)), 
     by striking ``(b), (c), and (d)'' and inserting ``(b) and 
     (c)''; and
       (6) by adding at the end the following new subsection:
       ``(h) Deposit of Fees.--
       ``(1) Offsetting collections.--Fees collected pursuant to 
     subsections (b) and (c) for any fiscal year--
       ``(A) shall be deposited and credited as offsetting 
     collections to the account providing appropriations to the 
     Commission, except that the amount so deposited and credited 
     for fiscal years 2007 through 2011 shall not exceed the 
     target offsetting collection amount for such fiscal year; and
       ``(B) shall not be collected for any fiscal year except to 
     the extent provided in advance in appropriation Acts.
       ``(2) General revenues.--Fees collected pursuant to 
     subsections (b) and (c) for fiscal years 2007 through 2011 in 
     excess of the amount deposited and credited as offsetting 
     collections pursuant to paragraph (1) for such fiscal year 
     shall be deposited and credited as general revenue of the 
     Treasury. No fees collected pursuant to such subsections for 
     fiscal years 2002 through 2006, fiscal year 2012, or any 
     succeeding fiscal year shall be deposited and credited as 
     general revenue of the Treasury.''.
       (b) Additional Reductions of Fees.--
       (1) Amendment.--Section 31 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78ee) is further amended by adding after 
     subsection (h) (as added by subsection (a)(6)) the following 
     new subsections:
       ``(i) Recapture of Projection Windfalls for Further Rate 
     Reductions.--
       ``(1) Annual adjustment.--For each of the fiscal years 2003 
     through 2011, the Commission shall by order adjust each of 
     the rates applicable under subsections (b) and (c) for such 
     fiscal year to a uniform adjusted rate that, when applied to 
     the baseline estimate of the aggregate dollar amount of sales 
     for such fiscal year, is reasonably likely to produce 
     aggregate fee collections under this section that are equal 
     to the sum of--
       ``(A) the target offsetting collection amount for such 
     fiscal year; and
       ``(B) the target general revenue amount for such fiscal 
     year.
       ``(2) Final rate adjustment.--For fiscal year 2012 and all 
     of the succeeding fiscal years, the Commission shall by order 
     adjust each of the rates applicable under subsections (b) and 
     (c) for all of such fiscal years to a uniform adjusted rate 
     that, when applied to the baseline estimate of the aggregate 
     dollar amount of sales for fiscal year 2012, is reasonably 
     likely to produce aggregate fee collections under this 
     section in fiscal year 2012 equal to the target offsetting 
     collection amount for fiscal year 2011.
       ``(3) Limitation on rate adjustment.--Notwithstanding 
     paragraphs (1) and (2), no adjusted rate established under 
     this subsection for any fiscal year shall exceed the rate 
     that would otherwise be applicable under subsections (b) and 
     (c) for such fiscal year.
       ``(4) Review and effective date.--An adjusted rate 
     prescribed under paragraph (1) or (2) and published under 
     subsection (g) shall not be subject to judicial review. 
     Subject to subsections (h)(1)(B) and (j), an adjusted rate 
     prescribed under paragraph (1) shall take effect on the first 
     day of the fiscal year to which such rate applies and an 
     adjusted rate prescribed under paragraph (2) shall take 
     effect on the first day of fiscal year 2012.
       ``(j) Lapse of Appropriation.--If on the first day of a 
     fiscal year a regular appropriation to the Commission has not 
     been enacted, the Commission shall continue to collect fees 
     (as offsetting collections) under subsections (b) and (c) at 
     the rate in effect during the preceding fiscal year, until 
     such a regular appropriation is enacted.
       ``(k) Definitions.--For purposes of this section:
       ``(1) Target offsetting collection amount.--The target 
     offsetting collection amount is an amount equal to--
       ``(A) $976,000,000 for fiscal year 2002;
       ``(B) $1,132,000,000 for fiscal year 2003;
       ``(C) $1,370,000,000 for fiscal year 2004;
       ``(D) $1,627,000,000 for fiscal year 2005;
       ``(E) $1,913,000,000 for fiscal year 2006;
       ``(F) $1,110,000,000 for fiscal year 2007;
       ``(G) $1,144,000,000 for fiscal year 2008;
       ``(H) $1,327,000,000 for fiscal year 2009;
       ``(I) $1,523,000,000 for fiscal year 2010; and
       ``(J) $1,745,000,000 for fiscal year 2011.
       ``(2) Target general revenue amount.--The target general 
     revenue amount is an amount equal to--
       ``(A) zero for each of the fiscal years 2002 through 2006;
       ``(B) $463,000,000 for fiscal year 2007;
       ``(C) $449,000,000 for fiscal year 2008;
       ``(D) $500,000,000 for fiscal year 2009;
       ``(E) $551,000,000 for fiscal year 2010; and
       ``(F) $614,000,000 for fiscal year 2011.
       ``(3) Baseline estimate of the aggregate dollar amount of 
     sales.--The baseline estimate of the aggregate dollar amount 
     of sales for any fiscal year is the baseline estimate of the 
     aggregate dollar amount of sales of securities (other than 
     bonds, debentures, other evidences of indebtedness, and 
     security futures products) to be transacted on each national 
     securities exchange and by or through any member of each 
     national securities association (otherwise than on a national 
     securities exchange) during such fiscal year as determined by 
     the Congressional Budget Office in making projections 
     pursuant to section 257 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 and as contained in the 
     projection required to be made in March of the preceding 
     fiscal year.''.
       (2) Conforming amendment.--Section 31(g) of such Act is 
     amended by inserting before the period at the end the 
     following: ``not later than April 30 of the fiscal year 
     preceding the fiscal year to which such rate applies''.

     SEC. 4. COMPARABILITY PROVISIONS.

       (a) Commission Demonstration Project.--Subpart C of part 
     III of title 5, United States Code, is amended by adding at 
     the end the following:

          ``CHAPTER 48--AGENCY PERSONNEL DEMONSTRATION PROJECT

``Sec.
``4801. Nonapplicability of chapter 47.
``4802. Securities and Exchange Commission.

     ``Sec. 4801. Nonapplicability of chapter 47.

       ``Chapter 47 shall not apply to this chapter.

     ``Sec. 4802. Securities and Exchange Commission

       ``(a) In this section, the term `Commission' means the 
     Securities and Exchange Commission.
       ``(b) The Commission may appoint and fix the compensation 
     of such officers, attorneys, economists, examiners, and other 
     employees as may be necessary for carrying out its functions 
     under the securities laws as defined under section 3 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c).
       ``(c) Rates of basic pay for all employees of the 
     Commission may be set and adjusted by the Commission without 
     regard to the provisions of chapter 51 or subchapter III of 
     chapter 53.
       ``(d) The Commission may provide additional compensation 
     and benefits to employees of the Commission if the same type 
     of compensation or benefits are then being provided by any 
     agency referred to under section 1206 of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989

[[Page H3175]]

     (12 U.S.C. 1833b) or, if not then being provided, could be 
     provided by such an agency under applicable provisions of 
     law, rule, or regulation. In setting and adjusting the total 
     amount of compensation and benefits for employees, the 
     Commission shall consult with, and seek to maintain 
     comparability with, the agencies referred to under section 
     1206 of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989 (12 U.S.C. 1833b).
       ``(e) The Commission shall consult with the Office of 
     Personnel Management in the implementation of this section.
       ``(f) This section shall be administered consistent with 
     merit system principles.''.
       (b) Employees Represented by Labor Organizations.--To the 
     extent that any employee of the Securities and Exchange 
     Commission is represented by a labor organization with 
     exclusive recognition in accordance with chapter 71 of title 
     5, United States Code, no reduction in base pay of such 
     employee shall be made by reason of enactment of this section 
     (including the amendments made by this section).
       (c) Implementation Plan and Report.--
       (1) Implementation plan.--
       (A) In general.--The Securities and Exchange Commission 
     shall develop a plan to implement section 4802 of title 5, 
     United States Code, as added by this section.
       (B) Inclusion in annual performance plan and report.--The 
     Securities and Exchange Commission shall include--
       (i) the plan developed under this paragraph in the annual 
     program performance plan submitted under section 1115 of 
     title 31, United States Code; and
       (ii) the effects of implementing the plan developed under 
     this paragraph in the annual program performance report 
     submitted under section 1116 of title 31, United States Code.
       (2) Implementation report.--
       (A) In general.--Before implementing the plan developed 
     under paragraph (1), the Securities and Exchange Commission 
     shall submit a report to the Committee on Governmental 
     Affairs and the Committee on Banking, Housing, and Urban 
     Affairs of the Senate, the Committee on Government Reform and 
     the Committee on Financial Services of the House of 
     Representatives, and the Office of Personnel Management on 
     the details of the plan.
       (B) Content.--The report under this paragraph shall 
     include--
       (i) evidence and supporting documentation justifying the 
     plan; and
       (ii) budgeting projections on costs and benefits resulting 
     from the plan.
       (d) Technical and Conforming Amendments.--
       (1) Amendments to title 5, united states code.--
       (A) The table of chapters for part III of title 5, United 
     States Code, is amended by adding at the end of subpart C the 
     following:

``48. Agency Personnel Demonstration Project...................4801.''.

       (B) Section 3132(a)(1) of title 5, United States Code, is 
     amended--
       (i) in subparagraph (C), by striking ``or'' after the 
     semicolon;
       (ii) in subparagraph (D), by inserting ``or'' after the 
     semicolon; and
       (iii) by adding at the end the following:
       ``(E) the Securities and Exchange Commission;''.
       (C) Section 5373(a) of title 5, United States Code, is 
     amended--
       (i) in paragraph (2), by striking ``or'' after the 
     semicolon;
       (ii) in paragraph (3), by striking the period and inserting 
     ``; or''; and
       (iii) by adding at the end the following:
       ``(4) section 4802.''.
       (2) Amendment to securities exchange act of 1934.--Section 
     4(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78d(b)) is amended by striking paragraphs (1) and (2) and 
     inserting the following:
       ``(1) Appointment and compensation.--The Commission shall 
     appoint and compensate officers, attorneys, economists, 
     examiners, and other employees in accordance with section 
     4802 of title 5, United States Code.
       ``(2) Reporting of information.--In establishing and 
     adjusting schedules of compensation and benefits for 
     officers, attorneys, economists, examiners, and other 
     employees of the Commission under applicable provisions of 
     law, the Commission shall inform the heads of the agencies 
     referred to under section 1206 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     1833b) and Congress of such compensation and benefits and 
     shall seek to maintain comparability with such agencies 
     regarding compensation and benefits.''.
       (3) Amendment to firrea of 1989.--Section 1206 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1833b) is amended by striking ``the Thrift 
     Depositor Protection Oversight Board of the Resolution Trust 
     Corporation''.

     SEC. 5. EFFECTIVE DATE.

       This Act and the amendments made by this Act shall take 
     effect on October 1, 2001.

  The SPEAKER pro tempore. Pursuant to House Resolution 161, the 
gentleman from New York (Mr. LaFalce) and a Member opposed each will 
control 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. LaFalce)
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I do not believe the debate should take that long. I 
offer this amendment on behalf of the gentleman from Pennsylvania (Mr. 
Kanjorski), the gentleman from Massachusetts (Mr. Frank), the 
gentlewoman from California (Ms. Waters), the gentleman from Michigan 
(Mr. Dingell), the gentleman from New York (Mr. Towns), and the 
gentleman from Massachusetts (Mr. Markey).
  I have stated before what this amendment in the nature of a 
substitute does. It has basically the same pay-parity provisions that 
the underlying bill does; but with respect to the reduction of fees, it 
focuses in on transaction fees, section 31 fees, and reduces them not 
by the amount that the main bill does but by approximately half that 
amount, by approximately $5 billion rather than by about $10 billion 
over a 10-year period. It does not reduce either registration fees or 
tender-offer or merger fees.
  That is the basic difference, and I would hope that Members would 
support it.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Is the gentleman from Ohio (Mr. Oxley) 
opposed to the amendment?
  Mr. OXLEY. I am indeed.
  The SPEAKER pro tempore. The gentleman is recognized for 30 minutes.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume, 
and indeed I rise in opposition to the amendment.
  Let me say to my friend from New York that we have had a good debate 
on this issue, and it has been a bipartisan debate, which has been 
quite enlightening. My big concern is that there is some misperception 
that somehow these SEC fees should be used for something other than 
funding the Securities and Exchange Commission, that is, the FBI and 
the Justice Department. Let me remind the Members that when Congress 
passed the Capital Markets bill, the NSMIA bill, back in 1996, under 
the leadership of our good friend Jack Fields, the effort at that time 
was to create a user fee. Those folks who would use the SEC to police 
the markets and to make certain that things ran smoothly, that those 
fees would be used to fund the SEC. A genuine user tax. A user tax like 
when we buy gasoline at the pump. That tax goes into roads and bridges. 
And that is what a user fee really is.
  The user fee in this case has become so large and has grown so 
exponentially, as a matter of fact I have a chart which shows the SEC 
funding versus fee collections, and we can see the SEC appropriations 
down here and the total SEC fees have gone up exponentially, 
particularly during the bull market; and as a result those fees have 
become excessive and have in fact funded this SEC six times over.
  Now, my friend from New York, who offered the substitute amendment, 
if he were sincere about taking some of those revenues and using them 
for something other than the SEC would have directed those fees to the 
FBI and to the Justice Department, and maybe even to the Metropolitan 
Police Department of the District of Columbia. But that is not what the 
SEC fees were all about. That is what the Congress decided back in 
1996, and we were so successful that they have overextended the SEC 
budget by six times.
  So what we are saying is this is an overtax. It is a tax on 
investment, it is a tax on savings, it is a tax on job creation and 
ought not maintain. So that is where we are today. So while my friend 
wants to cut some of the fees, but not all of the fees, our argument is 
just the opposite, that we only need these fees to run the SEC.
  Later on this year we will be debating and discussing the 
reauthorization for the Securities and Exchange Commission. It may very 
well be, I will say to my friend from New York, that the SEC will come 
in and make a case for increasing their authorization. And if indeed 
they do, I will join my friend from New York in authorizing more funds 
so that the SEC can continue to do its good work. But that will come 
later, and that is a different issue in that regard.
  So this is an amendment that needs to be defeated. We need to return 
those excess fees back to where they belong, and that is the American 
investor; and I would ask that the amendment be defeated.
  Mr. Speaker, I reserve the balance of my time.

[[Page H3176]]

  Mr. LaFALCE. Mr. Speaker, I yield myself 2 minutes. First of all, the 
distinguished chairman says that we are going to reduce the fees now 
and then later on we are going to consider the needs of the SEC; that 
later on, if we feel that there are greater needs, then we will 
increase their authorization. I think he has just proven that we are 
putting the cart before the horse. We ought to consider what the needs 
of the SEC are first before we engage in the fee reduction.
  Secondly, he says that these fees are only for the SEC. But the fact 
is the law does not say that. The law does not use the word SEC. The 
law uses the word government. It is the resources of government that 
are necessary for the enforcement of our securities law that are to be 
funded by these fees. And that includes, at the very least, the FBI and 
the Justice Department.
  Now, we wanted to clarify that. We offered an amendment in 
subcommittee to clarify that. It was argued against. We offered an 
amendment in the full committee. We attempted to offer an amendment on 
the floor of the House to clarify that these fees should be used by the 
totality of government law enforcement agencies with respect to our 
securities' laws. The Republican majority gave us a gag rule on that 
issue. They refused to allow us to say that the fees raised should be 
used for the totality of enforcement, not just SEC, but FBI and the 
Justice Department.
  So to come in and make the argument that all these fees are to be 
used for SEC when the world knows we need more than the SEC if we are 
to have effective enforcement, and we are saying, yes, we need these 
fees for the other governmental agencies too for effective enforcement, 
I think is misleading and erroneous.
  Mr. Speaker, I reserve the balance of my time.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume, 
before recognizing my next colleague, to respond to my friend from New 
York, if I may.
  The gentleman had the opportunity to put in his substitute anything 
he wanted, which would have included, of course, the provisions that he 
mentioned.

                              {time}  1230

  Mr. Speaker, I am not making any preconceived ideas about the needs 
for the SEC. That will obviously come in the necessary regular order as 
it relates to the SEC and their funding and the reauthorization. But to 
say that these fees somehow should be used for law enforcement other 
than the SEC strikes me as simply not correct. The gentleman could 
simply introduce an amendment to the proper appropriations bills that 
would increase the funding for the FBI and the Department of Justice 
directly related to the SEC.
  Mr. LaFALCE. Mr. Speaker, will the gentleman yield?
  Mr. OXLEY. I yield to the gentleman from New York.
  Mr. LaFALCE. Mr. Speaker, the gentleman is not denying that an 
amendment was offered by the gentleman from Pennsylvania (Mr. 
Kanjorski) that the gentleman from Ohio strongly opposed? The gentleman 
is not denying that the gentleman from Pennsylvania (Mr. Kanjorski) 
joined forces before the Committee on Rules in order to seek the 
permission of the Rules Committee to offer an amendment on the floor of 
the House and that the gentleman from Ohio opposed it and that the 
majority of the Rules Committee opposed its being offered on the floor, 
does the gentleman?
  Mr. OXLEY. Of course not. I am simply saying those amendments were 
defeated handily in the subcommittee and committee, and the gentleman 
from New York had the opportunity to put that language in his 
substitute.
  Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. 
Fossella).
  (Mr. FOSSELLA asked and was given permission to revise and extend his 
remarks and include extraneous material.)
  Mr. FOSSELLA. Mr. Speaker, I rise to oppose the amendment in the 
nature of a substitute. As someone who likes to look at the positive, I 
commend the gentleman from New York for reducing transaction fees; but 
not enough. That is the problem with the amendment. It does not go far 
enough.
  If we go back to the original intent here, what Congress promised the 
American people, and my colleagues have heard it here a number of 
times, we need enough money to fund the SEC, to allow the SEC to do its 
job. Above and beyond that, to the tune of an excess of $2 billion per 
year, let us send that money back to the investors. If we believe that 
we want to make more American investors, we should reduce the fee, as 
in the underlying bill. If we want to make more people participants in 
IRAs, support the underlying bill. If we want to make more people 
participants in 401(k)s or pension funds, then vote for the underlying 
bill and oppose this amendment.
  Mr. Speaker, the teachers' pension fund in New York alone paid 
$305,000 in excess fees. Why should we, Congress, force the teachers' 
pension fund of New York to pay $305,000 per year? Where does that 
money come from? It comes from their members. Think of the thousands of 
funds across the country.
  As far as those who are concerned about the budget of the SEC, and it 
is a reasonable concern, I ask unanimous consent that this letter dated 
March 15, 2001 be entered into the Record. ``I am pleased to write in 
enthusiastic support of the proposed Investor and Capital Markets Fee 
Relief Act. This bill, as you described it today, will provide 
meaningful securities fee relief to investors, market participants, and 
public companies, while assuring full and stable long-term funding of 
the Commission.'' This was signed by the acting chairman of the SEC. 
Obviously there is a certain and reasonable level of comfort that the 
SEC is going to get the funding it needs to do its job.
  Mr. Speaker, the underlying bill is what provides investors across 
America the real purpose and intent of what it was all about. Congress 
broke its word for awhile. Now it is fulfilling its promise and giving 
Americans more incentives to invest.
  The letter previously referred to is as follows:
                                                   U.S. Securities


                                      and Exchange Commission,

                                   Washington, DC, March 15, 2001.
     Hon. Vito J. Fossella,
     Committee on Financial Services, House of Representatives, 
         Longworth House Office Building, Washington, DC.
       Dear Congressman Fossella: I am pleased to write in 
     enthusiastic support of the proposed ``Investor and Capital 
     Markets Fee Relief Act.'' This bill, as you described it 
     today, will provide meaningful securities fee relief to 
     investors, market participants, and public companies, while 
     assuring full and stable long-term funding of the Commission. 
     I commend you and Chairman Oxley, Subcommittee Chairman 
     Baker, Representatives Sue Kelly, Felix Grucci, Carolyn 
     Maloney, and Joseph Crowley, as well as the other cosponsors 
     and your staff, for crafting such a considered approach to 
     this technically complex and multifaceted issue.
       The pay parity provision is particularly important to the 
     Commission's ability to attract and retain qualified staff. 
     The proposed bill, together with commensurate authorization 
     and appropriation, will help address this issue.
       Again, I express my sincere thanks for your leadership on 
     these issues. Please let me know if there is anything my 
     staff or I can do to assist you as this process moves 
     forward.
           Sincerely,
                                                   Laura S. Unger,
                                                  Acting Chairman.

  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Maloney).
  Mrs. MALONEY of New York. Mr. Speaker, I rise in opposition to the 
substitute, but not in opposition to the substitute's sponsors. The 
gentleman from New York (Mr. LaFalce), the ranking member, and the 
gentleman from Pennsylvania (Mr. Kanjorski), the subcommittee chairman; 
and I disagree on the extent to which SEC fees should be reduced.
  Mr. Speaker, I want to make sure that all of my colleagues are aware 
of the tremendous hard work that they have done in ensuring that the 
pay parity provisions for SEC employees were included in the process. 
There are no two Members who have been more committed to making sure 
that the professionals who regulate our capital markets are the most 
qualified in the world than the gentleman from New York (Mr. LaFalce) 
and the gentleman from Pennsylvania (Mr. Kanjorski).
  Mr. Speaker, while their substitute includes the pay parity 
provisions that are in the underlying bill, I will oppose it because I 
believe SEC fee reduction should be more expansive than proposed. I 
believe cutting section 31 fees,

[[Page H3177]]

merger and transaction fees, and fees on new issues is the fairest way 
to provide fee relief.
  Under the formula in the underlying bill, all users of the capital 
markets will be given fee relief, avoiding a situation where one group 
of users of the capital market overly subsidizes the cost of market 
regulation for others.
  Regardless of our disagreement on this issue, the gentleman from New 
York has been a leader on pay parity; and I praise his efforts and his 
principled leadership on the Committee on Financial Services.
  The substitute proposal, while well intended, does not significantly 
reform the current fee structure. The underlying bill has strong union 
support, industry support, and agency support. It is incredibly rare to 
have all three parties supporting a bill, yet the underlying bill has 
their support.
  Mr. Speaker, I urge support for the underlying bill, and I urge my 
colleagues to vote against the substitute.
  Mr. OXLEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
New York (Mr. Grucci), a valuable member of our committee.
  Mr. GRUCCI. Mr. Speaker, I rise in opposition to the LaFalce, 
Kanjorski, Frank, Dingell, Markey, Towns, Waters substitute amendment, 
and in favor of H.R. 1088. This substitute amendment clearly does not 
address the excessive and unnecessary transaction fees that are imposed 
on investors and market participants on a daily basis.
  Today nearly half of the U.S. households, 57 percent of which have an 
annual household income of less than $75,000, invest in mutual funds. 
Between 1998 and 2000, the largest increase of mutual fund ownerships 
has been strongest among households with annual incomes of less than 
$35,000. Approximately 88 million Americans own stock directly or 
indirectly through a pension fund, a 401(k), or a mutual fund. The 
average American investor is no longer a Wall Street tycoon. The 
average American investor is now your neighbor.
  I believe we have a responsibility here in Congress to encourage 
hardworking American families to invest in their futures and in those 
of their children rather than waste money from their savings on 
unnecessary transaction fees.
  A good example of this unnecessary waste is the New York State 
Teachers' Pension Fund. The fund was overcharged $305,000 in the year 
2000; and over a 10-year span, this could amount to a loss of $3.6 
million.
  Now I understand that this fee structure was originally created in 
the 1930s in order to provide the SEC with an appropriate operating 
budget. However, with the growth in the investment community, these 
fees are no longer necessary. The substitute amendment does not address 
the excessive fees to the extent that we are able to and should not be 
approved.
  Mr. Speaker, I am sure my colleagues will agree that it is simply 
common sense for Congress to return hard-earned dollars back to 
consumers, families, and investors. The savings achieved through the 
elimination of these securities transaction fees will be better spent 
by individual Americans on education, retirement, and reinvestment 
opportunities.
  Mr. Speaker, I ask my colleagues to join me in voting against the 
substitute amendment and in favor of H.R. 1088.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Toomey).
  Mr. TOOMEY. Mr. Speaker, I rise in strong support of the underlying 
bill and in opposition to the Democratic substitute.
  The difference between the majority's bill and the Democratic 
substitute is simple. The majority's bill lowers all fees that all 
investors pay to the SEC, approximately to the point where the fees 
collected would about cover the cost of operating the SEC.
  The Democratic alternative lowers some fees, but much less, leaving 
American savers and investors forced to continue to overpay fees to pay 
this overcharge so it can serve as a cash cow for all of government.
  Our bill provides $14 billion over 10 years in fee reduction because 
the SEC is poised otherwise to charge $14 billion in excess fees. The 
Democratic alternative provides less than $5 billion in fee reduction. 
And one of the things that we have heard this morning is a criticism of 
our bill because it takes into account only the direct costs of the SEC 
and not all of the other costs that might be associated with some kind 
of securities enforcement.
  Mr. Speaker, I have to say that it does not appear that that 
provision is the intent of the substitute amendment. I would cite a 
``Dear Colleague'' that was circulated by the supporters of the 
substitute in which they argued that excess securities fees should be 
spent on elderly housing programs, Head Start, medical research, and 
transportation infrastructure. In other words, basically all of 
government. The idea embodied in the Democratic alternative is that 
this should continue to serve as a cash cow for the rest of government.
  If the minority wants more money for all of these spending programs 
to grow government, to grow programs, to increase spending, I think it 
should be paid in a more straightforward way, in a way in which all 
Americans are more equal in sharing in the burden, and it should not be 
hidden in fees charged to investors.
  Mr. Speaker, it is not fair to do it that way. It is not productive 
to our capital markets to do it that way. I urge my colleagues to 
reject the Democratic substitute amendment, and vote for the underlying 
bill which would be a huge savings for America's savers and investors.
  Mr. LaFALCE. Mr. Speaker, I yield 5 minutes to the gentleman from 
Pennsylvania (Mr. Kanjorski), a distinguished ranking member of the 
Subcommittee on Capital Markets.
  Mr. KANJORSKI. Mr. Speaker, it is a very interesting question that 
the substitute suggests that we fund all other elements of government. 
Why do we not look at the special funds that are being collected that 
are not being used for the purposes that they are being collected for?
  I think some of my colleagues on the Committee on Transportation and 
Infrastructure would say we have airport funds, taxes that are being 
charged and levied against every traveler at every airport with funds 
of billions of dollars that are not being used to build airports and to 
solve the transportation problem, but are going to fund other areas of 
the Federal Government.
  I can tell you a perfect example. I come from an area that involves 
coal mining. We have the abandoned mine land charge on coal companies 
in this country with more than $1.5 billion in that fund, and this 
Congress has not allocated those funds for 7 or 8 years. We are not 
even putting out the interest on those funds to correct a grievous 
error on the environment of air and water pollution in this country.
  The idea that suddenly within 5-6 months since the beginning of the 
107th Congress, this bill is here on the floor already, moved through 
the committees, I think even paved in the United States Senate. There 
is no need to conference this bill. It has been preconferenced.
  I ask the question: Why? Why can the majority party legislate in 165 
days from its beginning this buildup in the securities area of taxation 
and fund-raising, and they cannot attend to the other problems. They 
cannot attend to the fact that we have needs in hospitals from the 
Medicare fund; and needs of education and educational funds to raise. 
Nobody ever looks at that.
  I just have to believe, and I do not like to believe it, but when the 
telephone rings and our Congress listens, there seems to be direct and 
very loud communications from Wall Street.
  I do not like to say that because I just came from a hearing, 
otherwise I would have spent my whole day arguing this bill. But over 
there we were trying to discover whether we have independent analysts. 
Millions of investors lose a portion or all of their life-savings with 
bad advice, with partial advice.
  Mr. Speaker, have we said any of these funds should be made available 
to establish standards to provide ethical conduct and enforcement of 
those standards to see that investors in America sometimes do not lose 
trillions of their dollars? I raised the question when one of the 
witnesses talked about every investor on Wall Street should not rely on 
an analyst, he should read the prospectus, the balance statement of the 
firm and the profit and loss statement.

[[Page H3178]]

  I asked the question: Why is the majority party heading down this 
railroad so quickly? The other side of the aisle wants to even 
privatize Social Security and allow 130 million Americans to take a 
percentage of their Social Security and invest it in the stock market, 
all on the advice of analysts that to some indication have not been 
forthright with even the more sophisticated investors.

                              {time}  1245

  I asked the question: What are you going to do when all of these 
people come into the market? We know 23 percent of the American people 
are functionally illiterate. We are not going to have a program and we 
are not going to have the funds to make sure there are protections for 
this, whether they are done by private industry or government. I prefer 
private industry to do it.
  What you are doing right now is taking the funding mechanism away for 
any further protection and information systems that may have to be 
established, intrastate, interstate on stock security transactions, on 
payments back on fraud cases from the protection fund. You are taking 
all this money away. In the future if we discover we need more FBI 
investigations, more prosecutions, more studies or more information, we 
are going to come back and take it out of the pot of the average 
taxpayer, Joe Blow, who has to go to work every day, maybe makes a 
little bit above minimum wage, and he is going to pick up the tab for 
the Wall Street investor.
  I think it is wrong. I do not think this legislation is wrong. I 
think the issue of not using user fees for purposes they are not 
intended to be used is a correct issue. I stand by it. I just say it is 
premature. Why did you pick the securities industry first? Why did you 
not think of American transportation? Why did you not think of American 
medical and health needs and use those funds first? I urge my 
colleagues to support the substitute and oppose the bill.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from North 
Carolina (Mr. Jones), a member of the committee.
  Mr. JONES of North Carolina. Mr. Speaker, I rise today in opposition 
to the proposed substitute to H.R. 1088. I believe the underlying bill 
that the gentleman from Ohio (Mr. Oxley) and my colleagues from both 
sides of the fence worked so hard to bring to the floor is superior.
  Congress created a simple fee structure so that the SEC would be paid 
directly by the regulated securities community rather than the general 
taxpayer. The Securities and Exchange Commission accomplished this by 
imposing user fees on investors. The problem that we are faced with 
today results from the fact that the revenue we collect from these 
securities fees total over six times the amount of the SEC's annual 
budget. The excess fees go into the general revenue fund and are used 
to fund programs that have nothing to do with the original 
congressional intent of only covering the operating costs of the SEC.
  The proposed substitute does not fix the problem. Mr. Speaker, the 
underlying bill before us today, H.R. 1088, would return $14 billion 
over the next 10 years to American investors and those seeking access 
to our securities markets. For this reason, both the Americans for Tax 
Reform and National Taxpayers Union strongly endorse passage of H.R. 
1088.
  Mr. LaFALCE. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Massachusetts (Mr. Frank).
  Mr. FRANK. I thank the ranking member for yielding me this time.
  Mr. Speaker, the Committee on Financial Services, on which we serve, 
has jurisdiction over at least two sets of fees. When we were doing our 
budget reviews, they both came up. One set of fees are the fees that go 
to the SEC, which we are substantially lowering. The other set of fees 
are the fees that go to the Federal Housing Administration, the FHA. 
The Bush administration has announced that they are going to raise 
those.
  Now, I hope that when some of us try to contest this fee raising, 
that all of this fervor against stealth taxes and excessive fees will 
not have totally dissipated, although I would not want to bet on it, 
even if betting were legal, which it is of course not. In fact, the FHA 
is a net contributor to the Federal treasury. We had a hearing called 
by the chair of the Subcommittee on Housing, the gentleman from New 
Jersey, in which all of the Federal auditing agencies made it clear, 
the FHA is in very good shape.
  So how do we respond to the FHA, which has the mandate of helping 
housing, helping particularly nonrich people, because there is a limit 
on how much house you can get under the FHA, so the FHA is a middle-
class and moderate income housing program. The fees on multiple family 
housing, a commodity in very short supply in much of this country, will 
be raised. Why will they be raised? Apparently in part so we can reduce 
the fees on the SEC, because we are talking about a fungible part of 
money.
  So the people who are engaged in stock trading, a perfectly 
reasonable and honorable occupation but not one I had previously 
thought as being in the ranks of the oppressed, will get relief. Most 
of the people involved have already gotten relief through other tax 
measures, but the FHA fees will go up. If Members wonder whether or not 
I am violating the rule of germaneness, the answer is no, because these 
are both fee structures within the jurisdiction of the Committee on 
Financial Services. Indeed, under the instructions we get from the 
budget authority, raising one and lowering the other, these are 
offsets.
  I agree there is a case for lowering the SEC fees. But by lowering 
them to this extent, we are also making multiple family housing for 
moderate- and middle-income people more expensive. That is not my 
choice, that is the choice of this administration, because there is a 
proposal pending from Secretary Martinez to raise the FHA fees. Under 
our budget structure, there is an offset here.
  Now, it is not simply in this particular instance that I think we err 
by raising the fees for people of moderate income who are seeking 
multiple family housing. By the way, the administration has asked us to 
enhance the ability of the FHA to finance units in some parts of the 
country. That is their major housing production program right now, the 
FHA multiple family housing area, and they want to raise the fees on 
it. On the other hand, they want to reduce, more than I think is 
justified, the fees on the SEC.
  It is not simply this particular instance that troubles me. We have 
an economy which has been doing better during this past decade than any 
economy in the history of the world. I am delighted with that, as we 
all are. We are all working to keep that going. It has produced wealth 
in amounts beyond what people thought possible. That is a very good 
thing. But we also know that there have been inequities in the 
distribution of it.
  And what has this Congress consistently done? We have seen inequity 
and decided to make it worse. We have seen a gap and tried to widen it. 
That is what we do today. To the people who are in the financial 
industry and the stock part of the economy where things have over the 
decade done well, although there is obviously a slight drop now, we 
give them more benefits. In the area of housing, under the FHA, where 
we have a national crisis and many people, working people, middle-
income people in great distress, this administration wants to raise the 
fees.
  I would hope that we could pass this amendment, not reduce the fees 
as much, and then turn to the legislative measures that would be 
necessary to prevent the steep increase in FHA fees that we may be 
facing. So I am grateful that we have had a chance, because we like to 
talk about priorities. Here is the chance. You have two sets of fees. 
As we speak, the administration is preparing to raise FHA fees and we 
could reduce the necessity for that. It would take some legislative 
changes but it is all a fungible part of money, if we were to not lower 
these fees as much.
  For people who say, well, why should one subsidize the other, the 
fact is neither one is being subsidized if you look at the fee 
structure the way we do it. The FHA fees in fact are in surplus. So the 
FHA fees will be increased so they can make a bigger contribution to 
the tax cut and the SEC fees will be substantially reduced, further 
exacerbating inequality. The Congress should not try to get rid of all 
inequality. It

[[Page H3179]]

could not if it wanted to. But for Congress to take a set of actions, 
Congress and the administration together, that make this kind of 
inequity and maldistribution worse rather than better is absolutely the 
wrong way to go.
  Mr. OXLEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Arizona (Mr. Shadegg), a member of our committee.
  Mr. SHADEGG. I thank the gentleman for yielding me this time.
  Mr. Speaker, I rise in strong support of H.R. 1088. I want to 
compliment the gentleman from Ohio (Mr. Oxley), the chairman of our 
committee, and the gentleman from New York (Mr. Fossella), the author 
of this bill, for bringing forward such a commonsense piece of 
legislation.
  The reality of this bill is very simple and very straightforward. 
American investors, and that is over half of all families in America, 
are being overcharged. It is simple, it is straightforward, it is that 
basic. They are being overcharged by $14 billion over the next 10 
years. That is indeed an inequity and it is a maldistribution.
  This commonsense bill, brought to the floor after a thoughtful 
legislative process, with hearings, fixes that inequity. And so I rise 
in strong support of the bill but also in strong opposition to the 
amendment.
  The authors of the amendment are well intended. The substitute, they 
say they want to go not quite so far. What they would do is overcharge 
America's investors by $9.2 billion. I also want to compliment them on 
being very honest and straightforward. They are not doing this in a 
deceptive fashion. They say point blank, yes, we know it raises more 
money than we need, we know it raises $9 billion more than we need, but 
we ought to spend that money on, as they propose, elderly housing 
programs, CDBG blocks, Head Start, medical research, transportation and 
infrastructure. They admit it raises more than we need and we put that 
burden on investors, and they say spend it on general funds. I am glad 
there is bipartisan support for not doing that to America's investors. 
We have heard Democrats rise on this floor today and support the 
majority bill and oppose the substitute.
  I just want to make the point in opposition to the remarks that were 
just made. It was just pointed out by my colleague, an argument was 
made that what is being done wrong here is that, and the argument was 
made, that we are raising the cost and making more expensive multiple 
family housing by lowering this excessive fee which collects more than 
is needed for what the fee is supposed to do. Nothing could be further 
from the truth. The inequity in maldistribution is that we are imposing 
this fee on investors, not on others.
  If we want to subsidize housing, multiple housing, then let us do so 
honestly. Let us tell the American people we are doing it. I simply 
think it is fair to my colleagues and the American people to 
understand. If we want to subsidize multiple family housing, so be it, 
but do not hide it in this bill.
  We owe the American people honesty. This bill is honest. We owe 
American investors, more than half of all American families, to charge 
only what the fee is supposed to collect. I compliment the sponsors of 
the bill and I urge my colleagues to support H.R. 1088.
  Mr. LaFALCE. Mr. Speaker, I make the point of order that a quorum is 
not present.
  The SPEAKER pro tempore (Mr. Cooksey). The Chair is unable to 
entertain the gentleman's point of order until the Chair has put the 
question on the amendment.
  Mr. LaFALCE. Would the Chair restate that position? I thought that I 
would be able at any point that I was recognized to get up and make a 
point of order that a quorum was not present.
  The SPEAKER pro tempore. Under the rules of the House, the Chair may 
not recognize the absence of a quorum during debate. The only time the 
point of order may be entertained is when the Chair puts the question 
to the House on the gentleman's amendment.
  Mr. LaFALCE. So you could debate within the House of Representatives 
without a quorum?
  The SPEAKER pro tempore. A point of order of no quorum is not 
permitted during the debate, no.
  Mr. LaFALCE. Mr. Speaker, I move to adjourn.
  The SPEAKER pro tempore. The Chair is unable to recognize the motion.
  The previous question is ordered under the rule without such 
intervening motion.
  Mr. OXLEY. Point of inquiry. Does the request have to be in writing?
  The SPEAKER pro tempore. On demand, the motion needs to be in 
writing.
  Mr. OXLEY. The gentleman from New York was recognized for what 
particular purpose?
  The SPEAKER pro tempore. With the previous question having been 
ordered to passage without intervening motion pending is the debate on 
the amendment controlled by the gentleman from Ohio (Mr. Oxley) and the 
gentleman from New York (Mr. LaFalce). Under the special rule, no other 
motions are permissible.
  Mr. LaFALCE. A motion to adjourn is not permissible at this time?
  The SPEAKER pro tempore. The gentleman is correct.


                         parliamentary inquiry

  Mr. LaFALCE. Mr. Speaker, I have a parliamentary inquiry. When is a 
motion to adjourn permissible?
  The SPEAKER pro tempore. With the previous question being ordered to 
final passage without intervening motion under the rule that motion can 
be entertained after the question of passage of the bill.
  Mr. LaFALCE. Not before passage of the bill?
  The SPEAKER pro tempore. That is the ruling of the Chair.
  Mr. LaFALCE. I will not appeal the ruling of the Chair. But 
attempting to expedite this, and I have made an offer that we could 
proceed expeditiously without vote on the substitute, without offering 
a motion to recommit, without vote on final passage, and I have been 
rebuffed. The reason I have been making these motions is because I have 
been rebuffed in my attempt to expedite the consideration of the House.

                              {time}  1300

  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Richmond, Virginia (Mr. Cantor), a distinguished member of our 
committee.
  Mr. CANTOR. Mr. Speaker, I rise today in opposition to the proposed 
substitute and in strong favor of the underlying bill.
  I would like to commend the gentleman from Ohio (Mr. Oxley) for his 
leadership on the bill and the gentleman from New York (Mr. Fossella) 
for bringing this bill forward.
  I think it has been said before, the basic notion behind this bill is 
a fee for service and, in this case, Depression-era Federal securities 
laws imposed various user fees on investors and market participants so 
that the regulated community paid for the costs of their regulation. 
Here we have a case where the fee has been far in excess of the need 
for operating the regulatory agency, and ultimately the fee has turned 
into a back-door hidden tax increase for all Americans who choose to 
invest their hard-earned money in the capital markets.
  The impact of these provisions can be felt by every American at every 
income level as an estimated 80 million Americans own stocks directly 
or indirectly through mutual funds, pension funds or college savings 
plans.
  These investment vehicles provide access to wealth, security and 
retirement and the ability for families to pay for a college education. 
Fees for registration, merger, tender offers and transactions all add 
costs to these beneficial programs.
  The tax levied upon the American people by securities fees are 
detrimental to the creation of capital, thereby impeding job creation, 
economic opportunity and growth. Providing immediate relief from these 
excessive fees will benefit all investors of all types at every income 
level, including individuals and small businesses, providing a much 
needed boost to our slowing national economy.
  American investors suffer as these costs are consistently passed on 
to individuals while excess fee revenues are deposited into the U.S. 
Treasury to be spent on unrelated government programs.
  Mr. Speaker, the situation is unfair and the time has come to correct 
this injustice. The proposed substitute does not represent a fair 
return of this hidden tax.

[[Page H3180]]

  Mr. Speaker, I again express my strong support for the underlying 
bill and its attempt to provide truth in fees and transparency for all 
Americans, and I urge defeat of the substitute and adoption of the 
underlying bill.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Cox).
  (Mr. COX asked and was given permission to revise and extend his 
remarks.)
  Mr. COX. Mr. Speaker, I rise in strong support of the Investor and 
Capital Markets Fee Relief Act and in opposition to the substitute 
offered by the gentleman from New York (Mr. LaFalce). Markets do not 
pay taxes; people do.
  So we are just today attempting to relieve taxpayers, people, savers, 
retirees, teachers, cops, moms and pops, retirees of a burden on 
savings and investment, and a significant one. We are doing so only to 
the extent that it is fiscally reasonable. The fees, the taxes that we 
are talking about here are meant to fund the SEC but over the past many 
years, and we have been studying this issue for 8 years, we have seen 
that the fees are running far in excess of what it requires to operate 
the SEC.
  There is a big tax overcharge and it runs into billions of dollars. 
If we were to adopt the substitute, then the tax overcharge would run 
to well over $2 billion still. As a result, it is very, very important 
to reject the substitute and to pass the underlying legislation.
  The bill that we are considering today will repeal the penalty tax on 
savings and investment that is represented by these enormous fees. The 
substitute would maintain the status quo. It will not stop the tax 
overcharge. It will not deliver the tax relief that American savers and 
investors deserve. It would allow the SEC to continue to impose fees 
far in excess of what the agency needs to fund its operations.
  The substitute is really a great way to stick it to investors and 
savers. In California, our teachers' retirement, our CALPERS retirement 
fund, has paid in overcharges, in just the year 2000, $2.6 million. 
That is for those worthy people's retirement savings. Why should we 
take it away from them if it is not necessary for the SEC to fund its 
operations?
  This is a vitally needed bill. It is very, very good for the country. 
It is good for savers, and I urge that we reject the substitute.
  Mr. Speaker, I rise in strong support of the Investor and Capital 
Markets Fee Relief Act (H.R. 1088), and in opposition to the substitute 
amendment offered by the gentleman from New York [Mr. LaFalce].
  Markets don't pay taxes--people do.
  Before I begin my formal remarks, I'd like to take a moment to 
commend the chairman of the Financial Services Committee, the 
distinguished gentleman from Ohio [Mr. Oxley], as well as the Chairman 
of the Capital Markets Subcommittee, the gentleman from Louisiana [Mr. 
Baker], for their hard work on this legislation, and for making passage 
of this bill a top priority for the Committee.
  It's entirely appropriate that this legislation follows so closely on 
the heels of the recently-enacted tax bill, as the legislation before 
us today provides significant additional tax relief for American 
investors by reducing the excessive fees now imposed on the sale of 
Securities: Stocks you own directly, or trust your company retirement 
plan, or union pension fund, to own in your name. If you're a teacher 
or peace officer, it's the investments that the trustees of your 
retirement plan makes.
  Today, investors and other participants in U.S. capital markets are 
being massively overcharged by the Securities and Exchange Commission 
for the services it provides. When Congress wrote the Securities Act of 
1933 and the Exchange Act of 1934, we authorized the SEC to impose 
certain fees to help offset the agency's costs of regulating the 
securities marketplace. But in recent years the government has been 
imposing fees on investors and other participants in the securities 
market that are far beyond what is needed to pay for the SEC's budget.
  Last year alone, investors paid $2.3 billion in fees to the SEC--six 
times the amount needed to pay for the agency's $380 million budget.
  Over the last decade, the SEC has collected $9.2 billion in excessive 
fees.
  These so-called ``fees'' are a direct tax on savings and investment. 
All the excess taxes not needed by the SEC are not returned to 
retirees, or young workers. Instead they're sent along to the U.S. 
Treasury, to add to our record-breaking tax surplus.
  The bill we are considering today, H.R. 1088, will repeal this 
penalty tax on savings and investment. H.R. 1088 cuts the rate of every 
major SEC fee.
  The substitute, on the other hand, would maintain the status quo. It 
won't stop the tax overcharge. It won't deliver the tax relief that 
American seniors and investors deserve. It would allow the SEC to 
continue to impose fees far in excess of what the agency needs to fund 
its operations.
  The weaknesses of the substitute amendment are evident:
  One third the total tax relief. The substitute amendment guarantees 
that government will continue to collect overcharges of nearly $10 
billion. Of course, none of these extra taxes would go to benefit the 
SEC whose budget is already fully funded under H.R. 1088. Instead, the 
overcharges will be passed along to the U.S. Treasury to add to the 
record-high tax surplus.
  Limited transaction fee relief reduces so-called Section 31 fees, 
which are imposed on the sale of securities. In 1996, these fees raised 
$134 million; but in 2000, the amount collected had grown to more than 
$1 billion. Under substitute, Section 31 fees could cost investors $2 
billion in 2006.
  No registration fee relief. Despite the recent growth in transaction 
fee collections, Section 6(b) fees--which are imposed on the 
registration and issuance of new securities--still raise more revenue 
than any other fee imposed by the SEC: $1.1 billion last year alone. 
H.R. 1088 reduces 6(b) fees by 62%; unfortunately, the substitute 
amendment contains no reduction in 6(b) fees.
  No other fee relief. In addition to ignoring the need to reduce 
securities registration fees, the substitute also fails to reduce the 
other tax overcharges covered by H.R. 1088. It contains no relief for 
hard-working Americans.
  For all these reasons, I urge my colleagues to reject the substitute 
amendment. It fails to provide investors--who have been massively 
overpaying for the SEC's services--with the relief they deserve from 
these massive tax overcharges on savings and investments. By rejecting 
this amendment, and instead approving the tax relief in H.R. 1088, 
Congress can protect Americans from burdensome taxes on their life 
savings, on capital formation and on the competitiveness of the U.S. 
economy.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Royce), a distinguished member of our committee.
  Mr. ROYCE. Mr. Speaker, when Congress created the current fee 
structure for securities transactions, the intent there was to ensure 
that the regulated community would pay for the cost of their 
regulation, and basically due to a rising stock market and due to 
unprecedented trading volume the government is now collecting fees that 
greatly exceed the operating budget of the SEC; in fact, by some six 
times greater than that operating budget.
  What happens to this revenue? Well, it is deposited into the U.S. 
Treasury and it is used for other Federal programs.
  What would be the benefit of eliminating the tax overcharge? Well, by 
reducing the transaction fees paid by investors each time they sell a 
stock, by reducing the registration fees, then this would eliminate 
basically a tax on equity transactions. This is a tax felt by everyone 
who invests in mutual funds. This is a tax felt by everyone in 
retirement accounts and, as we know, Mr. Speaker, it is a majority of 
Americans.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
Illinois (Mr. Manzullo), a distinguished member of our committee.
  Mr. MANZULLO. Mr. Speaker, I rise in opposition to the Democrat 
substitute. We have heard a lot today about the SEC, through no fault 
of its own, collecting six times more per year than it needs to fulfill 
its obligations. That extra money goes into the general government 
money pot and then it is spent on other programs. Apparently some 
people think that is okay, but the bottom line is this: More Americans 
are investing than ever before and this is good. Unfortunately, only 20 
percent of small business owners are able to set up pension plans for 
their employees. This is bad. Any unnecessary money we collect 
diminishes the value of American savings and may prevent other small 
businesses from helping their employees plan for retirement.
  We should not penalize the millions of American families and small 
businesses who are working hard to plan for the future. I would 
encourage my colleagues to vote no on the Democratic substitute.
  Mr. LaFALCE. Mr. Speaker, I reserve the balance of my time.

[[Page H3181]]

  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Rogers), a member of our committee.
  Mr. ROGERS of Michigan. Mr. Speaker, I thank the gentleman from Ohio 
(Mr. Oxley) for his leadership.
  Mr. Speaker, my father was a teacher for 32 years. He paid into his 
pension regularly; never missed, quite obviously. His pension was being 
overcharged by user fees.
  I have a friend that is a milk hauler, works long hours, spends a lot 
of time away from his family. He diligently puts a little money aside 
every week in his 401(k). His pension, his savings for his family, is 
being overcharged.
  I have a friend of mine, a young widow with two children, puts a 
little money away in an education savings plan in Michigan. That 
education savings plan, the very thing that is going to allow her 
children to better themselves, is being overcharged.
  This is very, very simple. We can talk about $14 billion and we can 
talk about the structure of the SEC and the regulators and pay parity, 
and all of those things are important, but what is important to me and 
the people I represent are these teachers, are these widows, are these 
hard-working individuals who get up every day and play by the rules who 
just say, look, I understand I have to pay for it but do not overcharge 
me one penny, please, because it is my money.
  The weight and burden should not be on the shoulders of those who 
save for their future.
  Mr. LaFALCE. Mr. Speaker, I reserve the balance of my time.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Thomas), the distinguished chairman of the Committee on 
Ways and Means.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Speaker, I want to compliment everyone who worked on 
this particular bill. For a long time, the quote/unquote, SEC user fees 
were actually taxes, and there is a long record of the fact that it was 
a revenue raiser. In fact, it was a tax on investing. For some time, 
there has been a history of the Committee on Ways and Means using a 
constitutional provision in dealing with taxes called blue slipping 
legislation that moves from the Senate, since they do not have the 
ability to originate revenue, and the SEC user fees clearly fit the 
pattern of taxes.
  With this bill, that is no longer the case. With the adjustment in 
the user fees, what they actually are going to be are user fees. If 
someone wants to mark progress in the Federal system, the idea of 
having legislation to call something what it actually is is a blue 
ribbon day.
  So I want to thank the committee in terms of producing a product in 
which the phrase ``user fee'' is used and it is, indeed, a user fee. I 
congratulate the chairman for this.
  Mr. LaFALCE. Mr. Speaker, I yield back the balance of my time.
  Mr. OXLEY. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Cooksey). Pursuant to House Resolution 
161, the previous question is ordered on the bill, as amended, and on 
the amendment in the nature of a substitute offered by the gentleman 
from New York (Mr. LaFalce).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from New York (Mr. LaFalce).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. OXLEY. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 126, 
nays 299, not voting 7, as follows:

                             [Roll No. 164]

                               YEAS--126

     Abercrombie
     Allen
     Baca
     Baldacci
     Baldwin
     Barrett
     Becerra
     Berman
     Bonior
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capuano
     Cardin
     Carson (IN)
     Clay
     Clayton
     Clyburn
     Conyers
     Coyne
     Cummings
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Frank
     Gephardt
     Green (TX)
     Hastings (FL)
     Hilliard
     Hinchey
     Hoeffel
     Holden
     Honda
     Hooley
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     LaFalce
     Lampson
     Langevin
     Lantos
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Luther
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McKinney
     Meehan
     Meek (FL)
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Murtha
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Owens
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rivers
     Rodriguez
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Skelton
     Slaughter
     Solis
     Spratt
     Stark
     Stupak
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Turner
     Udall (CO)
     Udall (NM)
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Woolsey
     Wynn

                               NAYS--299

     Ackerman
     Aderholt
     Akin
     Andrews
     Armey
     Bachus
     Baird
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bentsen
     Bereuter
     Berkley
     Berry
     Biggert
     Bilirakis
     Bishop
     Blagojevich
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boucher
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Crowley
     Culberson
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Everett
     Flake
     Fletcher
     Foley
     Ford
     Fossella
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hinojosa
     Hobson
     Hoekstra
     Holt
     Horn
     Hostettler
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Kleczka
     Knollenberg
     Kolbe
     Kucinich
     LaHood
     Largent
     Larsen (WA)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Maloney (CT)
     Maloney (NY)
     Manzullo
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     McNulty
     Meeks (NY)
     Menendez
     Mica
     Miller (FL)
     Miller, Gary
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Nadler
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ortiz
     Osborne
     Ose
     Otter
     Oxley
     Pallone
     Pascrell
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Roukema
     Royce
     Rush
     Ryan (WI)
     Ryun (KS)
     Sanchez
     Sandlin
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Souder
     Spence
     Stearns
     Stenholm
     Strickland
     Stump
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Traficant
     Upton
     Velazquez
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Whitfield
     Wicker
     Wilson
     Wolf
     Wu
     Young (AK)
     Young (FL)

                             NOT VOTING--7

     Cubin
     Ferguson
     Houghton
     Johnson, E. B.
     Jones (OH)
     Lucas (OK)
     Watts (OK)

                              {time}  1335

  Mrs. KELLY, Ms. SANCHEZ, and Messrs. COBLE, DAVIS of Illinois,

[[Page H3182]]

GILMAN, CARSON of Oklahoma, McNULTY, PICKERING, REYES, BARR of Georgia, 
ROTHMAN, TOWNS, and RUSH changed their vote from ``yea'' to ``nay.''
  Mr. WYNN and Mr. THOMPSON of Mississippi changed their vote from 
``nay'' to ``yea.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. WATTS of Oklahoma. Mr. Speaker, I was unavoidably detained across 
town at an important Energy Seminar and unfortunately missed the vote 
on the LaFalce Substitute Amendment to H.R. 1088 earlier today.
  I ask that the Record reflect that, had I been able to be here for 
the vote, I would have voted ``no'' on the LaFalce Substitute.
  The SPEAKER pro tempore (Mr. Linder). 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. FOSSELLA. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 404, 
noes 22, not voting 6, as follows:

                             [Roll No. 165]

                               AYES--404

     Abercrombie
     Ackerman
     Aderholt
     Akin
     Allen
     Andrews
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barr
     Barrett
     Bartlett
     Barton
     Bass
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilirakis
     Bishop
     Blagojevich
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Brown (SC)
     Bryant
     Burr
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clay
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Condit
     Conyers
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crenshaw
     Crowley
     Culberson
     Cummings
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeGette
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dicks
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Fattah
     Flake
     Fletcher
     Foley
     Ford
     Fossella
     Frank
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (TX)
     Green (WI)
     Grucci
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hilliard
     Hinchey
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Honda
     Hooley
     Horn
     Hostettler
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Israel
     Issa
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kerns
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kingston
     Kirk
     Kleczka
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Langevin
     Lantos
     Largent
     Larsen (WA)
     Larson (CT)
     Latham
     LaTourette
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Lucas (OK)
     Luther
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDermott
     McGovern
     McHugh
     McInnis
     McIntyre
     McKeon
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Mica
     Millender-McDonald
     Miller (FL)
     Miller, Gary
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Neal
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Oberstar
     Ortiz
     Osborne
     Ose
     Otter
     Owens
     Oxley
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Roukema
     Roybal-Allard
     Royce
     Rush
     Ryan (WI)
     Ryun (KS)
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Saxton
     Scarborough
     Schaffer
     Schakowsky
     Schiff
     Schrock
     Scott
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Solis
     Souder
     Spence
     Spratt
     Stearns
     Stenholm
     Strickland
     Stump
     Stupak
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watson (CA)
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Whitfield
     Wicker
     Wilson
     Wolf
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NOES--22

     Burton
     Clayton
     DeFazio
     Delahunt
     Dingell
     Duncan
     Filner
     Jones (OH)
     Kanjorski
     Kaptur
     Kucinich
     LaFalce
     Lee
     Markey
     Obey
     Olver
     Stark
     Taylor (MS)
     Thurman
     Tierney
     Visclosky
     Waters

                             NOT VOTING--6

     Cubin
     Ferguson
     Greenwood
     Houghton
     Jefferson
     Johnson, E. B.

                              {time}  1354

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

                          ____________________