[Congressional Record Volume 147, Number 158 (Thursday, November 15, 2001)]
[House]
[Pages H8210-H8213]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       PERMISSION TO POSTPONE FURTHER CONSIDERATION OF H.R. 2269

  Mr. FLETCHER. Mr. Speaker, I ask unanimous consent that during 
consideration of H.R. 2269 pursuant to House Resolution 288, 
notwithstanding the operation of the previous question, the Chair may 
postpone further consideration of the bill to a time designated by the 
Speaker on this legislative day.
  The SPEAKER pro tempore (Mr. LaHood). Is there objection to the 
request of the gentleman from Kentucky?
  There was no objection.
  Mr. FLETCHER. Mr. Speaker, I yield 3 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, we talk about two advisors. I 
do not know how we keep both of them from being bad. As I mentioned, 
our measure removes the obstacles for employers to provide millions of 
workers professional investment advice.
  The bill requires financial service providers to fully disclose their 
fees and any potential conflicts. In this bill's current form, we 
protect people from fly-by-night groups and scam artists looking to 
make a fast buck.
  There are a number of safeguards that will protect workers and ensure 
that they receive investment advice on their 401(k) plans that is in 
their best interest. The pension fund managers at corporations and 
unions who make decisions about their defined benefit funds have access 
to professional portfolio managers. Now this bill will give rank and 
file the same protections.
  The Democrat substitute will not help people. It will just add layers 
of bureaucracy and could prevent people from seeking advice. People 
value their

[[Page H8211]]

time, and they do not have time to seek and sift through paperwork and 
bureaucracy and two advisors. Importantly, our bill retains critical 
safeguards and includes new protections to guarantee that people 
receive sound investment advice. Since employees will work with a plan 
fiduciary advisor, people will be protected by State law, Federal law, 
as well as the SEC. People value their time, and they do not have time 
to sift through a whole bunch of new regulations. That is just wrong.
  Mr. Speaker, I urge my colleagues to reject the Democrat substitute 
and pass H.R. 2269 the way it is.
  Mr. ANDREWS. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
California (Ms. Woolsey).
  (Ms. WOOLSEY asked and was given permission to revise and extend her 
remarks.)
  Ms. WOOLSEY. Mr. Speaker, as I said earlier, H.R. 2269 is a prime 
example of how a good idea can become a bad bill. Is it a good idea to 
make investment advice available to employees at the work site? Of 
course it is. But it is a bad idea to allow self-interested advisors, 
those who could benefit from the advice given, into the workplace. That 
is exactly what H.R. 2269 does.
  Currently ERISA prohibits investment advisors from coming to a 
workplace to provide employees with investment advice if there is any 
reason to think that the advisor might benefit from recommending one 
investment over another. We must remember that ERISA was enacted to 
protect workers from abuses related to their benefits.
  With H.R. 2269, we will allow investment sales folks onto the work 
premises under the guise of the employers' endorsement without 
protecting the workers significantly, or at least enough to make sure 
that they are in good hands when they have heard the advice.
  Fortunately, we have an alternative to H.R. 2269, and that is the 
Andrews substitute. We do not need to wait for employees to be bilked 
by some scam artist to make H.R. 2269. We can pass the Andrews 
amendment and then we have a good bill.
  The Andrews substitute starts with the same good idea of bringing 
investment advisors to the workplace, but the Andrews substitute 
includes strict standards to protect employees from receiving tainted 
advice. The Andrews substitute requires meaningful disclosure of the 
advisors' affiliations in a way that is easily understandable to all 
employees, and it allows employees to meet with an independent advisor 
if there is a conflict of interest.
  The Andrews substitute keeps the good idea of making investment 
advice available to employees at the workplace, but it builds on the 
protections in current laws that employees need and must depend on. The 
Andrews substitute is a win-win for employees, and I urge my colleagues 
to support it as the correct and safe way to provide investment advice 
at the workplace.
  Mr. FLETCHER. Mr. Speaker, I yield 3 minutes to the gentleman from 
North Carolina (Mr. Ballenger).
  Mr. BALLENGER. Mr. Speaker, as an employer with employees who have 
401(k) plans back home, I am pleased that the House is voting on a bill 
to ensure professional investment advice for rank-and-file workers and 
their individual needs.
  I urge my colleagues to reject the Andrews-Rangel substitute which 
would, in fact, reduce the number of employers and financial advisors 
willing to offer their advice to employees. This is just the opposite 
of what the worker needs at a time when they are nervous about their 
retirement assets. It is just more government regulation.
  The substitute is bad because it increases the cost for advisory 
services by requiring two fiduciary advisors as options. It undermines 
the current ERISA remedies, and erodes the preemption statute, and adds 
more Federal regulation in areas already regulated by Federal and State 
entities, areas in which the Department of Labor has no expertise. And 
it reverses the burden of proof in lawsuits against employers and 
financial advisors which surely will attract our friends, the trial 
lawyers. It will reduce the number of employers that are willing to 
have a 401(k) plan.
  Mr. Speaker, it is important that my colleagues support the 
bipartisan Boehner bill endorsed by Labor, Commerce, Department of 
Treasury, along with the National Association of Manufacturers and the 
National Rural Electric Coop. These groups speak for a great many of 
the employers and employees in my district, and I support the Boehner 
bill as a much-needed update of the current law.
  This bill gives protection and access to today's employees who seek 
investment advice to maximize their retirement savings. The primary 
focus of this act is to give participants advice solely in their best 
interest. The bill achieves this by including strict disclosure 
requirements, with sanctions, to inform plan participants about any 
potential fees or conflicts of interest in what average investors have 
today.
  Most important, workers will have full control over their investment 
decisions. I urge the House to reject the substitute amendment and pass 
the Boehner bill today.
  Mr. ANDREWS. Mr. Speaker, I reserve the balance of my time.
  Mr. FLETCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Georgia (Mr. Isakson).
  Mr. ISAKSON. Mr. Speaker, the intentions of the gentleman from New 
Jersey (Mr. Andrews) in the substitute are as noble as the intentions 
of the authors of the underlying bill, but I happen to favor the 
underlying bill for a couple of reasons that, hopefully, Members will 
listen closely to.
  To be against the underlying bill and for the substitute, Members 
have to presume we cannot trust employees or IRA-SEP beneficiaries, 
independent contractors, to have information and then make a decision.
  Secondly, and most importantly, Members need to understand that most 
Americans today, unlike 25 years ago, are going to need to depend on 
401(k)s, IRA-SEPs or other self-directed plans for their retirement. I 
ran as a trustee of a 401(k) plan for my company for 22 years, offered 
an IRA-SEP plan for the 800 contractors we had.
  I understand the firewall that prohibits the employer from giving any 
advice and the limited amount of advice that becomes accessible to 
either IRA-SEP or 401(k) beneficiaries.
  It is wrong to presume that an employer would intentionally, 
willfully or wantfully allow bad advice to come to their employees. To 
the contrary, it is the security blanket which binds those people to 
the company. In this time when we are needing the best information 
possible, we should trust our employees to be able to allow access for 
their employees and independent contractors to credible, competent 
financial advice.
  In the substitute, Members trust the Department of Labor to determine 
who can give the right advice. In the underlying bill, Members trust 
the employer, whose most valued asset is their employees, to be able to 
offer credible advice through advisors to their employees and 
independent contractors.
  Mr. Speaker, I urge Members to adopt the underlying bill and reject 
the substitute.
  Mr. FLETCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Indiana (Mr. Souder).
  (Mr. SOUDER asked and was given permission to revise and extend his 
remarks.)
  Mr. SOUDER. Mr. Speaker, I rise in opposition to the motion to 
recommit of the gentleman from New Jersey (Mr. Andrews). I understand 
some of his concerns and share some of the gentleman's concerns, but I 
wanted to speak because overall this is a very strong bill. It is one 
that we need to pass.
  I believe that some of the comments that have been made here in this 
debate have been inappropriate and indeed anticapitalist and 
antibusiness. To argue that workers should not get financial advice or 
to argue that businesses are somehow going to trick their employees or 
bring in charlatans is in many ways beyond the pale of debate here in 
Congress.
  Quite frankly, some advice may be bad; but much of the advice out in 
the financial world is bad right now. Employees, at present, can go to 
the Internet and get all sorts of mail at home that has no anchor. No 
employer is completely infallible. No employer can bring in somebody 
who is going to give perfect advice that everybody is going to get rich 
from.

                              {time}  1315

  But I would say that most employers in America are not like Samuel 
Insull from the 1900s. Give me a break.

[[Page H8212]]

  Most employers know that if they brought in somebody with a conflict 
of interest, that would be out there and informed at their plant 
immediately. If they had somebody who was a charlatan ripping off, you 
would have all sorts of contract negotiation problems, not to mention 
that if it is a smaller company that is not unionized, the people 
probably have their kids go to school in the same place, they eat in 
the same restaurants, they live in the same town. To imply that 
employers are somehow likely to want to rip off their employees or give 
them bad advice at a time when this would be a way to help them and 
improve their relations with their own workforce is absurd.
  The problem is that our law is arcane. It has been out of date for a 
number of years. As more and more employees in America have 
flexibility, they need to have the same advice that the management is 
getting, that the business leaders are getting and we should not 
discriminate against employees.
  Mr. ANDREWS. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Tennessee (Mr. Ford).
  Mr. FORD. Mr. Speaker, I am a little disappointed that we are 
actually in the midst of having this debate today before actually 
completing work on an aviation security bill and before completing work 
on a stimulus package for people all across this great Nation. 
Hopefully, the encouraging news we have heard today about progress 
being made on that bill will not only give assurance or perhaps provide 
a vehicle for us to pass something before we leave here but provide the 
American people with some comfort as they prepare to travel on the 
busiest holiday of the year.
  I rise today, Mr. Speaker, with a lot of disappointment about the 
package that has come before the House and with great concern. I rise 
to support the gentleman from New Jersey (Mr. Andrews), who has worked 
so tirelessly with Members on both sides of the aisle to find some sort 
of agreement acceptable, one that would balance the needs of advisors 
with investors. I might add that the Andrews substitute achieves the 
twin goals of investor education and choice far better than the base 
bill. The substitute offered by the gentleman from New Jersey presents 
the best opportunity, particularly in my eyes and I am sure many even 
on the other side, to achieve these goals.
  First, the Andrews substitute would ensure that individuals were 
aware of all potential conflicts by requiring that the disclosure be 
contemporaneous with each occasion on which advice is rendered, 
something all of us should be for. Although most advisors would act 
professionally and be up front, as we would say, this provision would 
prevent an unscrupulous firm from burying one line of disclosure boiler 
plate in a 10-page document filled with legalese.
  Second, the substitute would ensure that the advice is provided by 
qualified, licensed and regulated professionals. This provision would 
simply ensure that the advice is at least as good as they promised it 
to be. I have heard my friends on the other side talk about this, and 
why we do not guarantee this and mandate this is beyond me.
  Finally, as the gentleman from New Jersey said so well in his opening 
statement, the substitute empowers consumers to make a choice should 
they determine that a potential conflict necessitates declining that 
advice, meaning, as the gentleman from New Jersey said, that the 
advisor would have to consent to providing the investor a different 
advisor if he or she so chose.
  Any Member with misgivings about the scope of this bill should 
carefully consider the serious implications uncovered in a series of 
hearings held this past year. I would urge a ``yes'' vote on the 
substitute. I have not made my mind up on final passage, but I would 
certainly urge a ``yes'' vote on the Andrews substitute.
  Mr. ANDREWS. Mr. Speaker, I yield myself such time as I may consume.
  The arguments we have heard against the substitute that the gentleman 
from New York (Mr. Rangel) and I have put forward essentially boil down 
to two arguments: one is that employers would get sued if the 
substitute were adopted; and the second is that investment advice would 
be too expensive for investment advice firms to give if the substitute 
were adopted. Each of these arguments is incorrect.
  Liability protection provisions in this substitute are essentially 
identical for employers as those that are in the base bill. If an 
employer does not engage in any independent act of negligence or 
illegality, the employer is not liable under the substitute, as is the 
case in the base bill. In fact, the substitute adds provisions, adds 
protections to employers which do not exist under present law to 
provide a safe harbor for employers who hire investment advisors. So 
the argument that this somehow is going to unleash a flood of 
litigation against employers is reminiscent of the similar false point 
made under the patients' bill of rights debate and it is equally wrong.
  The second argument that somehow or another the expense that is going 
to be imposed upon advisor firms is going to preclude them from giving 
advice is equally wrong. It is not very expensive to tell an employee 
that there is somewhere else he or she can go to get advice. It took me 
about 4 seconds to say it. It would not take much longer for the 
advisor to say it, either. It is not very expensive to say to an 
investor that before you put your money in this fund, you ought to know 
that I as your advisor make more money if you put the money in the fund 
than if you do not. It took me about 4 seconds to say it, and it would 
take about 4 seconds for the advisor to say it as well. The additional 
cost that would be imposed upon investment advice firms I am sure would 
be gladly borne by those firms in order to win the commissions which 
they rightfully earn by giving the advice in the first place.
  Our substitute, I believe, covers the key grounds. It says that a 
conflicted advisor must give full, timely and understandable 
disclosure. It says that every person giving advice, not most people 
giving advice but every person giving advice must be duly qualified and 
accountable to lose his or her license if they breach their fiduciary 
duty.
  It says that every person receiving advice from a conflicted advisor 
must know that there are other choices to whom the person can turn that 
are not conflicted. And it says that if a fiduciary duty is breached, 
if bad advice is given and a pensioner or worker suffers, there is 
somewhere to go to be made whole, not to get back most of what you lost 
or some of what you lost but to get back all of what you lost if your 
advisor has broken the law.
  Our substitute deserves the support of Members on both sides of the 
aisle. We respectfully ask its adoption.
  Mr. Speaker, I yield back the balance of my time.
  Mr. FLETCHER. Mr. Speaker, I yield myself such time as I may consume.
  As we come to the close of this debate on the substitute, certainly 
we appreciate the work of the gentleman from New Jersey and the, I 
think, attempt to certainly make sure that we protect workers as they 
get advice on their investments.
  As we have seen over the last number of years, and as I recall owning 
a business and providing retirement plans for my employees, there has 
been a substantial shift from what we call defined benefits to defined 
contributions, to the 401(k)s and 403(b)s and other such accounts. It 
becomes imperative with that shift that we allow advice to be made to 
the employees and that we do it in such a way where it is efficient, 
where it does not drive up the administrative cost, and where the 
employees can be assured that there is the appropriate accountability.
  The gentleman from Ohio (Mr. Boehner), the chairman of this 
committee, has worked for over 6 years; and I think he has put together 
an excellent, balanced bill which meets those requirements. It 
certainly provides an ability for employers to continue to offer good 
retirement plans of the defined contribution sort. It also provides the 
ability for them to offer advice so that their employees can make the 
best investment and have the most money when they retire at the end of 
their work livelihood. It additionally provides for great 
accountability. There is a disclosure that must be made if there are 
conflicts of interest.
  I think the difference we see between these two bills is the balance, 
of how

[[Page H8213]]

much are we going to go toward trying to, what I would say build a box 
that is padded so no one gets themselves bruised. In a world where we 
have freedom here, people are going to make mistakes. That is part of 
what freedom is about. How much are we going to restrict that freedom 
in order to try to make sure that we protect individuals? There needs 
to be a balance that is struck, and I think the substitute goes too 
far. It does not allow the freedom that will encourage businesses to 
offer the kind of advice that is needed. It will restrict in the long 
run the ability, and there are differences in the liability sections, 
there are some very vague portions here where the liability not only to 
the fiduciary advisor but, as it says on page 33, or any other party 
with respect to whom a material affiliation or contractual relationship 
of the fiduciary advisor resulted in a violation of that section, 
certainly that could include, in the vagueness of it, the employer and 
possibly any other person. So I think it does open up a substantial 
liability and some vagueness which makes that liability unpredictable. 
The bill we are looking at, the base bill, has strong accountability.
  When you talk about getting advice from someone, I was even thinking 
that all the advice that we get in whatever purchases we make, and I go 
back to the individual who offers me advice on buying suits, a guy 
named Harlan Logan. He is in Lexington, Kentucky. I know every suit I 
buy from Harlan Logan, he is going to make money. He should make money. 
He should be able to make a good, honest living for doing what he says. 
But that does not keep him from giving me good advice on what he is 
saying to me, and that is clearly disclosed. In the bill we have here, 
that conflict of interest, as you call it, is disclosed. It is 
disclosed at request. It is mandated to be disclosed on an annual basis 
initially and if there are any significant changes.
  I think the substitute bill here, the amendment, really impedes the 
ability of employers to do what the purpose of this bill intends to do 
and that is provide employees with good advice and to make sure that 
they have a good retirement plan.
  I would encourage Members to vote against that bill.
  Mr. Speaker, I yield the balance of my time to the gentleman from 
Ohio (Mr. Boehner).
  Mr. BOEHNER. I thank the gentleman for yielding time.
  Mr. Speaker, I want to thank the gentleman from Kentucky (Mr. 
Fletcher) for his work on this bill and the gentleman from Texas (Mr. 
Sam Johnson) and all of the work that they have put into it over the 
last several years. I want to thank the gentleman from New Jersey (Mr. 
Andrews), who has worked closely with me as we have developed this 
bill. Obviously it does not have as many protections as he would like 
at this point in time. But as I have pledged to him over the years, we 
will continue to work through this process.
  We have got a strong bipartisan bill. We have added new protections 
or at least have an agreement to add some additional protections based 
on a colloquy I had with the gentleman from North Dakota (Mr. Pomeroy). 
But I think all of us know that the substitute that we have before us 
just goes way too far. While it is well meaning and well intended, 
expanding litigation in our country is not going to create an 
environment for employers or their advisors to want to give investment 
advice which I believe the substitute does. The extra regulatory 
burdens that are contained in the substitute will again discourage 
employers and their advisors from engaging in making sure that the 
American workers get the kind of investment advice they need if they 
are going to increase their retirement security.
  Why is this investment advice so sorely needed? Because we have got 
all kinds of problems out there, with people who are underinvested in 
their self-directed accounts, having their money in low-yield 
instruments for long periods of time when we know that over a course of 
10, 20, 30 years, equities would provide a much greater return and much 
greater retirement security.
  On the other end of the spectrum, we know that we have got employees 
who are overinvested in one sector or another and we have seen this 
happen, especially in the technology sector, when people were 
overinvested in that industry and what has happened to their self-
directed accounts over the last 18 months to 2 years.

                              {time}  1330

  So we know investment advice is necessary.
  We heard the gentleman from Kentucky (Mr. Fletcher) talk about the 
advice that he got from his tailor. Let us say that an employee today 
outside of his employment with his own savings, his or her own money, 
if they want to go to a broker, a mutual fund, and they ask for advice, 
guess what? They get all kinds of advice. Why? Because outside of 
ERISA, outside of an employer-provided plan, there is plenty of advice.
  What we are trying to do here is make sure that those same employees 
within the employer plan have the same kind of access to that advice 
that they have outside of the employer's plan.
  So, Mr. Speaker, I would ask my colleagues to vote no on the Andrews-
Rangel substitute and to support final passage.
  Mr. FLETCHER. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 
288, the previous question is ordered on the bill, as amended, and on 
the amendment offered by the gentleman from New Jersey (Mr. Andrews).
  Pursuant to the previous order of the House, further consideration of 
the bill is postponed.

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