[Congressional Record Volume 148, Number 91 (Tuesday, July 9, 2002)]
[House]
[Pages H4357-H4358]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          PRESIDENT TO ADDRESS NATION ON CORPORATE GOVERNANCE

  The SPEAKER pro tempore. Pursuant to the order of the House of 
January 23, 2002, the gentleman from Oregon (Mr. DeFazio) is recognized 
during morning hour debates for 5 minutes.
  Mr. DeFAZIO. Mr. Speaker, we are waiting now and in about 15 minutes 
the President will give a speech where he is expected to address the 
corporate meltdown, where millions of Americans have been defrauded of 
their stock holdings and their 401(k)s, thousands have lost their jobs 
and a few have profited mightily. The President says he wants to get 
tough. We are going to hear a lot of talk about watchdogs and teeth and 
enforcement and maybe putting some people in jail. Maybe. Probably not.
  But the real question is, is he serious? Until recently, of course, 
the President and Vice President Cheney had been touting their 
corporate experience and ties. Mr. Lay of Enron fame was called Ken Boy 
and was given unlimited access to the White House and the Oval Office. 
He is persona non grata now, perhaps. But are they serious? 
Unfortunately, the early indications are the President is not serious, 
but he is covering his political butt. That is because he is saying the 
SEC, which of course until recently he had stiffed in his budget, the 
Securities and Exchange Commission, the official watchdog of the United 
States of America over corporate malfeasance, which has been 
dramatically underfunded, yet the President proposed in his budget to 
not increase their funding, in fact give them a zero budget increase. 
Now he is going to propose a budget increase. That is good; so maybe he 
is serious.
  But then he goes on to say the head of the SEC is doing a great job. 
This guy's name is Harvey Pitt. Harvey Pitt represented most of the 
firms and the individuals who are now taking the fifth amendment before 
Congress. In fact, in a recent action before the Securities and 
Exchange Commission, the toothless watchdog that we have on guard, 
headed by Mr. Pitt, appointed by Mr. Bush, who Mr. Bush says he has 
utmost confidence in, found, this is amazing, actually found that a 
firm, Ernst & Young, had violated its duty to remain independent from 
companies it audits. That is good.
  But guess what? The finding which would ultimately in fact have 
involved a substantial fine was thrown out by an administrative law 
judge. Why? Because the facts were not right? No. Because they had not 
committed the malfeasance? No. Because Mr. Pitt is so conflicted that 
he could not vote and also Cynthia Glassman, the other SEC 
commissioner, was not allowed to vote, either, because they both had 
intimate ties with this firm. They had represented them, worked with 
them; and when they leave their so-called public service, they will 
represent them again as $500- or $1,000-an-hour lawyers.
  So this company got off the hook because only one commissioner, the 
one appointed by President Clinton, could vote. The judge said, There 
were three of you there and only one of you voted. I'm throwing out the 
judgment against Ernst & Young. This is the watchdog that the President 
has ultimate confidence in, a man who is so conflicted

[[Page H4358]]

from his previous work, who represented many of these same securities 
firms, many of these same accounting firms, many of these same 
corporations and CEOs, he is so conflicted that when he was asked 
recently was it not a conflict of interest for him to meet with some 
officials from Xerox while there was an ongoing investigation, this is 
Harvey Pitt, our watchdog, our public servant. He said, If I recuse 
myself from meeting with everybody who I had represented or had 
personal relationships with, I wouldn't be able to meet with anybody. 
That is the man in whom President Bush is supposedly going to invest 
more authority to investigate and prosecute, a man who just came from 
representing these people and as soon as he is done with his public 
service will return to representing these same miscreants.
  This certainly does not give me a great deal of confidence in the 
independent role and the aggressive role of the Securities and Exchange 
Commission; and it does not give me a great deal of confidence that the 
President is really serious about what he is doing here. Certainly 
there is a lot of political butt to be covered. Yes, he is doing a good 
job of that. But will he get serious? If he does not announce that he 
is removing Mr. Pitt, that he is going to have people who do not have 
conflicts of interest in charge of investigating and prosecuting these 
companies, people who could actually vote to prosecute, who would not 
have to recuse themselves because of those conflicts, then we will know 
he is serious. In 10 minutes we will hear.

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