[Congressional Record Volume 148, Number 90 (Monday, July 8, 2002)]
[House]
[Page H4337]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              REFORMING THE SECURITIES EXCHANGE COMMISSION

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Oregon (Mr. DeFazio) is recognized for 5 minutes.
  Mr. DeFAZIO. Mr. Speaker, tomorrow the President will go to New York, 
to Wall Street, to give a much-anticipated speech on reforming the mess 
in corporate America.
  Now this will be an interesting day because this is the same 
President and Vice President and cabinet who have long touted their 
extraordinarily tight ties with corporate America; the same President 
who appointed Harvey Pitt, a former securities lawyer, as head of the 
Securities Exchange Commission; Mr. Pitt, who, when he was sworn in, 
promised a kinder, gentler Securities and Exchange Commission, even 
while all these abuses were going on. And, in fact, recently Mr. Pitt 
was berated for meeting with people from a firm under investigation; 
and he said, well, how could I not meet with people from firms under 
investigation who I represented? I represented them all.

                              {time}  1915

  He is saying as the head of the Securities and Exchange Commission, 
basically if he recused himself for conflict of interest from his 
former clients, and obviously future clients when he leaves his measly 
government salary and goes back to earning millions of dollars a year, 
representing these crooks and swindlers, he would not be able to do his 
job. In fact, he is not able to do his job.
  Just the other day, an administrative law judge dismissed a finding 
by the SEC because Harvey Pitt could not vote, because he can meet with 
these people, he can consult with them and talk with them and tell them 
what the SEC is looking at and doing about them, he can do that; but 
the line is drawn by Federal law at voting. If he has recently 
represented these people, which he has, he could not vote.
  So in the case of Ernst and Young, Chairman Pitt had to recuse 
himself. Commissioner Cynthia Glassman had to recuse herself. So there 
was only one person left to vote who was a Clinton appointee, who did 
not have a conflict of interest, who had not represented these 
miscreants previously; and an administrative law judge said that is not 
adequate, you cannot have just one person vote to prosecute these 
folks.
  Now we are confronted with the fact that we have a Securities and 
Exchange Commission, which has been dramatically underfunded by the 
Bush administration, 40 percent less than the House budget which was 
not adequate. In fact, the President, as recently as March, and his 
staff were representing a zero funding increase for the Securities and 
Exchange Commission, the one that is so outgunned, and now the one they 
are bragging on for doing all of this investigating and putting these 
people in jail and all this stuff they are going to be doing. Of 
course, they cannot do any of that if the head of the Securities and 
Exchange Commission is so extraordinarily conflicted that he cannot 
vote in any of the prosecutions and other members of the board are also 
conflicted. In fact, the President has nominated yet another person 
from another accounting firm to be on the board of the Securities and 
Exchange Commission.
  Hopefully, what we will hear tomorrow from the President will be 
something that is a radical change from the first year and a half of 
his administration, where they have been coddling these crooks and 
criminals, the Ken Lays of the world, that basically wrote the energy 
policy of the United States of America. The Bush administration has yet 
to release the documents regarding the meetings that Mr. Lay and Enron 
had with the administration in formulating that policy. We do know that 
Enron met more than once a day, more than once a day, this giant 
corporation met with the energy commission, more than once a day. That 
is a real good distance. Those are the kind of watchdogs we want.
  Mr. Pitt and the SEC are kind of reminding me of my old chessie bear. 
He is a wonderful old dog, a great watchdog, but he is now 13\1/2\ 
years old, much past his expected longevity for a chessie. His teeth 
are kind of worn down and he is still a big dog, and even when he 
barks, we know it is not very serious. That is kind of what we got at 
the SEC today, and I am afraid that is what we are going to get from 
the President tomorrow.
  There will be some barking, but there are not going to be any real 
teeth; and we are going to know it is not very serious because the 
people that they would have to go after are the same people who 
contributed to the record fundraiser the Republicans had 3 weeks ago, 
the record amount of money that President Bush raised in his 
Presidential campaign. Their largess might be constrained. I mean, 
sure, they have hidden some of it in places where we cannot go after 
it, like mansions in Florida and that; but we want to make sure, I am 
certain, that they have some left to contribute to political causes 
after all.
  So I expect we are going to get the toothless, barkless watchdog 
tomorrow. We are going to have to watch very carefully what the 
President proposes.
  Will he support the Senate bill, the Sarbanes bill? Thus far they 
have opposed it and supported the phony bill that passed the House to 
reform some of these practices.
  Will they go after the corporate tax havens? Will they go after these 
thieves and crooks and criminals and put them in jail? Will they try 
and get Americans back their 401(k)s and pensions or not? The proof 
will be in the speech tomorrow. We will all listen carefully.

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