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




                          CORPORATE GOVERNANCE

  The SPEAKER pro tempore. Pursuant to the order of the House of 
January 23, 2002, the gentleman from Washington (Mr. Inslee) is 
recognized during morning hour debates for 5 minutes.
  Mr. INSLEE. Mr. Speaker, I sat in with the Financial Services 
Committee at our WorldCom hearing yesterday; and if you heard a sense 
of outrage from the Members on both sides of the aisle, it mirrored the 
outrage of the American public who have seen their savings go down the 
drain while there has been so much malfeasance in the accounting and 
auditing practices in our corporate boardrooms. It is very disturbing 
because this has created a substantial lack of confidence in our 
capital markets system. It is clear that we have a very systemic 
problem we have got to fix. It seems to me that this is a time for 
action that Teddy Roosevelt would have taken. Teddy Roosevelt did not 
say, Speak loudly and carry a small twig. He put it a different way. So 
today when the President addresses the Nation and Wall Street about how 
we are going to work ourselves out of this terrible situation, I hope 
that he will be guided much more by Teddy Roosevelt and much less by 
Calvin Coolidge. What I mean by that is we need him not just to speak 
loudly, which I am very confident he will do, we need him to act with 
great fervor. We need action, not just language.
  Today I would suggest that a Teddy Roosevelt approach to this problem 
would involve six separate actions, not just speeches. We hope that the 
President will join us in the Democratic Party who propose these 
actions.
  First, I think Teddy Roosevelt would be getting America a new 
director of the Securities and Exchange Commission. The present 
director of that organization, Mr. Harvey Pitt, is a man of great 
intelligence; but America needs more than that. America needs an agent 
of change at the helm of the Securities and Exchange Commission. We 
cannot have a leader of the Securities and Exchange Commission that we 
have to drag kicking and screaming every time that we need to do some 
modest, commonsense regulation of the industries that Mr. Pitt used to 
represent and work for. Unfortunately, Mr. Speaker, Mr. Pitt has drug 
his feet time and time again to take even the most modest efforts to 
deal with these systemic problems. We hope that we have new leadership 
at that helm.
  Second, I am convinced Teddy Roosevelt would impose the sternest 
criminal sanctions on the corporate people and accountants who failed 
to abide by their responsibilities, who consciously, intentionally 
defraud investors. I am confident the President will call for jail time 
for these scofflaws. But we need more than simply maximum times in 
jail. We need minimum times in jail. Here is the reason I say that. We 
need mandatory jail times for these flimflam artists. The reason is 
that all too often in white collar crime, these white collar criminals 
go up to the judge and says, he was a good man, he belonged to a great 
country club, he gave money to charity and they do not see the inside 
of a penitentiary. If you sell 50 grams of crack cocaine, you get 10 
years mandatory, no ifs, ands, or buts. It ought to be the same rule 
for these people who have destroyed the retirement incomes of thousands 
of Americans. The President should do no less than mandatory minimum 
jail times.
  Third, it is not just that we have people breaking the rules; we do 
not have the right rules in our accountancy and auditing system. We 
need new rules. So the third thing we should do is we need to divorce 
the consulting aspects of accounting from the auditing aspects of 
accounting.
  Mr. Speaker, I have sat through, I think now, 12 hearings about these 
disasters. The one thing they almost all have in common is the people 
who are supposed to be auditing these corporations were also making 
millions of dollars providing the same corporations they are supposed 
to be riding herd on, providing them consulting advice. We found that 
this creates just too many disincentives for rigorous auditing. At a 
minimum, at an absolute minimum, we should require the auditing 
committee to agree to those multiple contracts before they allow people 
to provide those two services. This is a systemic problem, and it is 
something we have got to fix.
  Fourth, we need an independent public accountancy board. It is 
important that it be independent. It needs to be independent of the 
organizations that it regulates. We need that quickly.
  Five, we need CEOs to have to certify their financial records so that 
they are personally responsible.
  And, sixth, and this is very important, Mr. Speaker, we need stock 
analyst independence, independent from the investment banking side.
  Mr. Speaker, I am confident Teddy Roosevelt would take all six of 
these steps today. I hope the President will do so. America deserves no 
less.

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