[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[House]
[Pages H8065-H8067]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               EMERGENCY SECURITIES RESPONSE ACT OF 2001

  Mr. OXLEY. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 3060) to amend the Securities Exchange Act of 1934 to augment the 
emergency authority of the Securities and Exchange Commission.
  The Clerk read as follows:

                               H.R. 3060

       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 ``Emergency Securities 
     Response Act of 2001''.

     SEC. 2. EXTENSION OF EMERGENCY ORDER AUTHORITY OF THE 
                   SECURITIES EXCHANGE COMMISSION.

       (a) Extension of Authority.--Paragraph (2) of section 12(k) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78l(k)(2)) 
     is amended to read as follows:
       ``(2) Emergency orders.--(A) The Commission, in an 
     emergency, may by order summarily take such action to alter, 
     supplement, suspend, or impose requirements or restrictions 
     with respect to any matter or action subject to regulation by 
     the Commission or a self-regulatory organization under the 
     securities laws, as the Commission determines is necessary in 
     the public interest and for the protection of investors--
       ``(i) to maintain or restore fair and orderly securities 
     markets (other than markets in exempted securities);
       ``(ii) to ensure prompt, accurate, and safe clearance and 
     settlement of transactions in securities (other than exempted 
     securities); or
       ``(iii) to reduce, eliminate, or prevent the substantial 
     disruption by the emergency of (I) securities markets, 
     investment companies, or any other significant portion or 
     segment of such markets, or (II) the transmission or 
     processing of securities transactions.
       ``(B) An order of the Commission under this paragraph (2) 
     shall continue in effect for the period specified by the 
     Commission, and may be extended. Except as provided in 
     subparagraph (C), the Commission's action may not continue in 
     effect for more than 30 business days, including extensions. 
     If the actions described in subparagraph (A) involve a 
     security futures product, the Commission shall consult with 
     and consider the views of the Commodity Futures Trading 
     Commission. In exercising its authority under this paragraph, 
     the Commission shall not be required to comply with the 
     provisions of section 553 of title 5, United States Code, or 
     with the provisions of section 19(c) of this title.
       ``(C) An order of the Commission under this paragraph (2) 
     may be extended to continue in effect for more than 30 
     business days if, at the time of the extension, the 
     Commission finds that the emergency still exists and 
     determines that the continuation of the order beyond 30 
     business days is necessary in the public interest and for the 
     protection of investors to attain an objective described in 
     clause (i), (ii), or (iii) of subparagraph (A). In no event 
     shall an order of the Commission under this paragraph (2) 
     continue in effect for more than 90 calendar days.''.
       (b) Definition of Emergency.--Paragraph (6) of section 
     12(k) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78l(k)(6)) is amended to read as follows:
       ``(6) Definition of emergency.--For purposes of this 
     subsection, the term `emergency' means--
       ``(A) a major market disturbance characterized by or 
     constituting--
       ``(i) sudden and excessive fluctuations of securities 
     prices generally, or a substantial threat thereof, that 
     threaten fair and orderly markets; or
       ``(ii) a substantial disruption of the safe or efficient 
     operation of the national system for clearance and settlement 
     of transactions in securities, or a substantial threat 
     thereof; or
       ``(B) a major disturbance that substantially disrupts, or 
     threatens to substantially disrupt--
       ``(i) the functioning of securities markets, investment 
     companies, or any other significant portion or segment of the 
     securities markets; or
       ``(ii) the transmission or processing of securities 
     transactions.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Ohio (Mr. Oxley) and the gentleman from New York (Mr. LaFalce) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).


                             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 
and to include extraneous material on the bill.
  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 such time as I may consume.
  Mr. Speaker, I rise today in strong support of H.R. 3060, the 
Emergency Securities Response Act. This legislation will provide the 
Securities and Exchange Commission with a vitally important tool to 
ensure the continued health and operation of our Nation's financial 
marketplace in the event of an emergency that threatens our securities 
markets, as did the attacks on September 11, 2001.
  September 11 was a dark day in our Nation's history. The terrorist 
attacks inflicted great human and physical loss in our country and, in 
particular, in New York City, the financial capital of the world.
  The damage to lower Manhattan, home of the world's largest stock 
market and the heart of our Nation's financial marketplace, suspended 
the operation of the U.S. equities markets for the longest period since 
World War I.
  Mr. Speaker, those were indeed 4 days in which traders were incapable 
of getting to those markets; and our discussions up there with the 
major players, the New York Stock Exchange, the NASDAQ, the American 
Stock Exchange, indicated how severe the damage was, particularly for 
the inability of the traders of the New York Stock Exchange to even get 
physically into the exchange, not to mention, of course, the problems 
that they had with the electrical systems and with the telephone 
system.
  Had it not been for the hard work of Verizon with the power company, 
with all people working at NASDAQ and in the New York Stock Exchange 
and the American Stock Exchange, literally they would have been unable 
to open even that Monday after September 11.
  I had the honor to appear in New York with the Treasury Secretary and 
the Chairman of the Securities and Exchange Commission to witness the 
reopening and closing of the markets that day, and it was a proud day 
for all Americans that those markets were up and running, providing the 
kind of liquidity and the kind of market activity that we have come to 
expect from those great markets.
  To facilitate the successful reopening of those equities markets, the 
Securities and Exchange Commission used, for the first time, emergency 
powers granted in the wake of the market crash of 1987 to ease certain 
regulatory restrictions temporarily. The measures the Commission took 
helped to increase liquidity and promote stability.

[[Page H8066]]

  The Commission and its Chairman, Harvey Pitt, along with the 
financial markets and firms based in New York, as well as those outside 
New York, who pitched in to help their competitors and colleagues, 
deserve special recognition for their efforts in restoring normalcy to 
those markets.
  However, the Commission's emergency authority under current law is 
unnecessarily and dangerously restrictive. For example, that authority 
permits the Commission to provide emergency relief for only 10 business 
days, and is limited to the Securities and Exchange Act of 1934, only 
one of the several Federal securities laws.
  This authority should be flexible enough to be useful where relief is 
necessary for a longer period of time, or under Federal securities laws 
other than the Exchange Act.
  I am pleased to bring to the floor legislation that will accomplish 
those goals. H.R. 3060, the Emergency Securities Response Act, will 
enhance the Commission's authority to take actions in the wake of an 
emergency to reduce, eliminate, or prevent a substantial disruption of 
the securities markets or investment company operations.
  This bipartisan legislation, introduced with the committee's ranking 
member, the gentleman from New York (Mr. LaFalce), extends the maximum 
duration of an SEC emergency order to 30 business days, and under 
certain circumstances, up to a total of 90 calendar days.
  It also extends the Commission's emergency authority to apply to all 
the Federal securities laws.
  I want to explain to the Members, Mr. Speaker, that it was only 
because of the efforts, just to use one example, the emergency powers 
in regard to corporate buy-backs, that it was decided by the Chairman 
of the SEC, and I think wisely, that he should use his emergency 
authority to suspend certain regulations as it related to the ability 
of corporations to buy back their own stock.
  The fact is that by doing so, he was able to stabilize the market. 
Those people who were selling stocks short on the first day of trading 
after it opened up had to be concerned and wary about the prospects 
that those corporations could come in and buy back their stock, 
stabilize those stock prices, and indeed, perhaps make life difficult 
for the short sellers. Indeed, in many cases, that is exactly what 
happened.
  While the markets were down on that particular day by some 600 points 
in the case of the New York Stock Exchange, they were able to trade 
effectively, and the liquidity was there in the marketplace. As a 
matter of fact, the markets that day handled a record volume of trades 
without a glitch; again, I think testament to the ingenuity and the 
hard work of those people in the marketplace. So my hat is off to all 
of those people for their good work, and my hat is also off to the SEC 
for taking the leadership in this important issue.
  While I hope this authority will never have to be used, and all of us 
share that, it is a safety measure our financial markets simply cannot 
do without. I urge all of my colleagues to support H.R. 3060.
  Mr. Speaker, I am including for the Record an exchange of 
correspondence between myself and the Chairman of the Committee on 
Energy and Commerce regarding this legislation:
                                         House of Representatives,


                             Committee on Energy and Commerce,

                                Washington, DC, November 13, 2001.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Oxley: It is my understanding that the 
     Committee on Financial Services desires to consider H.R. 
     3060, the Emergency Securities Response Act of 2001, on the 
     House floor under suspension of the Rules in the near future.
       Recognizing your desire to act on H.R. 3060 expeditiously, 
     my Committee will not seek a sequential referral of the bill 
     when you file your report. In exchange, I request that your 
     Committee not seek a sequential referral of H.R. 1101, the 
     Public Utility Holding Company Act of 2001, should it be 
     reported in a form substantially similar to the introduced 
     bill, or seek a referral of comparable legislation designed 
     to restructure the electricity industry, should such 
     legislation be introduced or reported.
       I would appreciate your written response to this request.
           Sincerely,
                                            W.J. ``Billy'' Tauzin,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                Washington, DC, November 13, 2001.
     Hon. W. J. ``Billy'' Tauzin,
     Chairman, Committee on Energy and Commerce, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Tauzin: Thank you for your letter concerning 
     H.R. 3060.
       I appreciate your agreeing not to pursue a sequential 
     referral of this legislation. In exchange, my Committee will 
     not seek a sequential referral of H.R. 1101, the Public 
     Utility Holding Company Act of 2001, should it be reported in 
     a form substantially similar to the introduced bill, or seek 
     a referral of comparable legislation designed to restructure 
     the electricity industry, should such legislation be 
     introduced or reported.
       Again, thank you for consideration.
           Sincerely,
                                                 Michael G. Oxley,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of the bill. First of all, I want to 
say that I agree fully with every word spoken by the distinguished 
chairman of the Committee on Financial Services, the gentleman from 
Ohio (Mr. Oxley). The SEC played a very crucial role in the recovery of 
our financial markets from the devastating effects of the attacks of 
September 11.
  In addition to the important role the Commission played in 
coordinating market participants throughout the crisis, the emergency 
orders issued by the SEC helped provide needed liquidity and stability 
to the markets and market participants.

                              {time}  1730

  The actions of the SEC helped to ensure an orderly reopening of 
markets, something that was in the interests of our economy and of all 
investors. While the SEC used the emergency authority available to it 
very effectively after September 11, I believe this authority would be 
strengthened by allowing the SEC to extend emergency actions beyond the 
10 business days allowed under current law.
  I was concerned after September 11 as to whether the emergency 
authority available to the SEC was adequate. I expressed these concerns 
when the Chairman of the SEC, Harvey Pitt, appeared before our 
Committee on Financial Services on September 26 on the status of the 
recovery.
  The Chairman told the committee that enhancements to the SEC's 
authority would be useful in enabling it to respond effectively to 
emergencies. The formal legislative request he later submitted asked 
that we provide the Commission with additional emergency authority to 
respond to any future crisis both by extending the potential length of 
emergency orders and by extending the authority to clearly cover all of 
the Federal securities loss.
  Our Committee on Financial Services worked with the Commission to 
craft an appropriate framework for any future emergency actions that 
the SEC may need to take.
  The bill permits the SEC to issue emergency orders for 30 business 
days, which I believe will give it the flexibility needed to ensure 
that it can respond in a timely and effective manner to any future 
situation. To issue an emergency order, the SEC will have to find that 
an emergency exists, that an emergency order is necessary in the public 
interest and for the protection of investors, and that it is necessary 
to restore fair and orderly markets, that it is necessary to ensure 
prompt and accurate securities clearance and settlement, or to prevent 
substantial disruption to the securities markets or portions of such 
markets.
  Further, our bill provides the Commission with the authority in 
limited circumstances to extend the emergency orders for an additional 
90 days upon a finding that the emergency continues to exist, and that 
extension of the order continues to be necessary in the public 
interest.
  As became clear after September 11, serious disruptions in 
communications, computer systems, transportation, and many other 
systems, as well as physical damage to facilities, can have a profound 
impact on the securities market and market participants. This bill will 
give the SEC an expanded set of tools to deal with such emergencies 
throughout the securities markets no matter what the underlying cause 
of the emergency may be.

[[Page H8067]]

  Mr. Speaker, I want to commend all the members of committee, the 
staff of our committee, both Republican and Democrat, and the staff and 
members of the SEC. I urge everyone to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. OXLEY. Mr. Speaker, I am awaiting the subcommittee chairman, the 
gentleman from Louisiana (Mr. Baker) who has indicated he would come 
over to the floor.
  If I could inquire of the Chair as to how much time is remaining on 
this side.
  The SPEAKER pro tempore (Mr. Culberson). The gentleman from Ohio (Mr. 
Oxley) has 14 minutes remaining. The gentleman from New York (Mr. 
LaFalce) has 16 minutes remaining.
  Mr. MARKEY. Mr. Speaker, I rise in reluctant opposition to H.R. 3060, 
the Emergency Securities Response Act.
  This legislation amends a provision that I authored, which the 
Congress approved as part of the H.R. 3657, Market Reform Act of 1990, 
to give the SEC the power to suspend trading of securities and to issue 
emergency orders consistent with the public interest and the protection 
of investors (See Congress Record, September 28, 1990, at H8376-8383). 
This provision grew out of the investigations that the Subcommittee on 
Telecommunications and Finance, which I then chaired, carried out into 
the 1987 stock market cash. One of the things we found was that the SEC 
lacked many of the types of emergency authorities that the CFTC had, 
and we felt it was desirable that they be granted broader emergency 
authorities.
  My objection to the legislation is not that it expands the SEC's 
authority to suspend trading or issue emergency orders from 10 days up 
to 30 days, with further extensions of up to 90 days possible. Indeed, 
in an earlier version of this legislation (H.R. 4997, introduced in 
1988, I had actually proposed allowing the SEC to exercise its 
emergency authorities for periods of up to 30 days). So, I have no 
problem with doing so today.
  Instead, my concerns about the bill we are debating today is that it 
expands the range of coverage of this emergency provision from the 
Securities Exchange Act of 1934 to the full range of federal securities 
laws. This has the effect of expanding coverage of the provision to 
cover all the federal securities laws. And while there may be some good 
reasons to extend these authorities to the Securities Act of 1933, the 
Investment Company Act of 1940, the Investment Advisors Act of 1940, 
the Trust Indenture Act of 1939, and the Securities Investors 
Protection Act of 1970, I believe that the effect of this provision is 
to extend the reach of section 12(k) of the Securities Exchange Act of 
1934 (15 U.S.C. 781(k)(2)) to allow the SEC to issue exemptions from 
the Public Utilities Holding Company Act of 1935 (known as ``PUHCA''), 
which regulates the activities of large, multi-state, electric or 
natural gas holding companies.
  While the Financial Services Committee may successfully have 
absconded with the Energy and Commerce Committee's securities 
jurisdiction, the last time I checked PUHCA was within the jurisdiction 
of the Energy and Commerce Committee. Our Committee has held no 
hearings or had any other process with respect to whether granting the 
SEC emergency powers to grant exemptions to PUHCA was warranted or in 
the public interest. Given the Commission's rather shoddy record in 
recent years of administering the Act, I am not comfortable with 
granting such an exemption today. I am particularly concerned when I 
have seen no justification from the SEC or its staff for giving the SEC 
such authority, no analysis of the possible impact of this on PUHCA or 
on our nation's electricity or natural gas markets, and no indication 
that the lack of such authority has posed any problems for PUHCA-
companies post-September 11.
  I would also note that while H.R. 3060 has provisions requiring the 
SEC to consult with and consider the views of the CFTC whenever 
exercising its emergency authorities with respect to a stock-index 
future, there is no similar requirement with respect to the FERC when 
PUHCA is concerned. Given the fact that PUHCA and the Federal Power Act 
were passed simultaneously, and that both laws deal with regulation of 
energy markets, such consultation may be needed in this area as well. 
We at least should have been given the chance to consider it.
  At the very minimum, the Energy and Commerce Committee should have 
been given a referral of this bill so that it could consider the need 
for this provision and any amendments to it affecting matters within 
our jurisdiction. I have been informed that in lieu of such a referral, 
the Majority may have exchanged letters on this matter. However, no one 
on the Minority of the Committee has been granted access to these 
letters, so I have no idea what they say or whether the Committee's 
substantive and jurisdictional interests have been preserved.
  This is not the proper way to legislate. I object to bringing up this 
bill today.
  Mr. LaFALCE. Mr. Speaker, I yield back the balance of my time.
  Mr. OXLEY. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Ohio (Mr. Oxley) that the House suspend the rules and 
pass the bill, H.R. 3060.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________