[Congressional Record Volume 148, Number 91 (Tuesday, July 9, 2002)]
[House]
[Pages H4397-H4398]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           REFORMING THE SEC

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Oregon (Mr. DeFazio) is recognized for 5 minutes.

[[Page H4398]]

  Mr. DeFAZIO. Mr. Speaker, today the President gave a long, rather 
long speech full of words that really administered a pretty heavy 
feather duster to the miscreants on Wall Street, the CEOs, the analysts 
and the others who have been robbing our corporations, our economy, 
blind. He said he was not going to put up with it anymore. He was going 
to get tough.
  But it is more what he did not say than what he did say that is 
important. He did not say he would support tough legislation to 
overhaul the securities firms, the Sarbanes bill. He did go on to say 
he would support the weaker House version, the one that really would 
not do anything for pension reform or auditing, the show bills that 
passed the House here before this thing really imploded, that the 
Republican majority pushed through. They would still allow corporations 
to direct their employees to be stuck with stock and would not really 
fix the problems of auditing and those things.
  He did not talk about corporate tax dodges. The phony incorporations 
of U.S. firms in Bermuda to avoid tens of millions of dollars in taxes. 
He did not talk about rescinding his order which would allow corporate 
lawbreakers to get government contracts. He did not say a word about 
Harvey Pitt, the toothless watchdog of the Securities and Exchange 
Commission. Now the principal watchdog over America's securities firms 
and the stock markets and all those financial investments, all of those 
very complicated, high falooting things which have allowed people to 
steal hundreds of millions, billions, of dollars, bankrupt companies, 
put people out of work, steal their pensions and crater the 401(k)s of 
tens of thousands of American. We have an organization already in place 
that is supposed to take care of that. The Securities and Exchange 
Commission.
  Earlier this year, just a couple of months ago, the President 
proposed a zero funding increase for them. Today, he pretended that he 
had been asking for a long time for more money for the SEC. He has not 
been, but I am glad that he has been born again in asking for some 
increase. But the increase he is asking for is a tiny fraction of the 
money that has been stolen. It will be inadequate to make the SEC the 
kind of watchdog we want as long as Harvey Pitt is the chairman.
  Now, Harvey Pitt is a former securities lawyer. He is so compromised 
that when he recently met with a firm that was being investigated and 
he was questioned about it, he said, well, look, you cannot ask me not 
to meet with firms that are being investigated by the SEC just because 
I represented them, because then I would not be able to meet with 
anybody.
  This is our watchdog. This is the President's appointee. This is the 
guy who is going to bring honesty. Come on. If that gentleman is not 
removed the President is not serious.
  Recently the SEC tried to do an enforcement action against Ernst & 
Young. There were three commissioners present. They heard the evidence 
and at the end, the evidence was compelling, Ernst & Young should pay a 
fine. They had committed some improprieties. But guess what? Only one 
of the three SEC, Securities and Exchange Commission, members could 
vote because the other two were so compromised that they would have 
been penalized under law for voting because of their associations with 
this firm. So the one voted to penalize them, the Clinton appointee. 
But then an administrative law judge said, you cannot convict these 
people with one Securities and Exchange commissioner. You have to have 
more than one.
  So here we have a Securities and Exchange Commission which is so 
compromised with their contacts, with their clients, who have 
represented all these people robbing America blind that they cannot 
even vote on enforcement actions. And the President is trying to tell 
us with his speech today, by God, he is taking care of this problem.
  He has not taken care of the problem. He has tried to take care of 
one problem today and that is the political problem he has, the 
gathering storm of anger in this country that is beginning to look for 
someone to blame for the fact that billions of dollars of wealth have 
evaporated.
  Americans are opening their 401(k) statements this month and many of 
them are shocked, disappointed and, yes, angered. They want to know who 
is responsible. How could these high-flying companies, how could these 
CEOs who are paying themselves tens of millions, hundreds of millions 
of dollars, boards of directors loaning themselves hundreds of millions 
of dollars, how could they suddenly be worthless? How could their 
401(k)s have dropped so much? Because the money was stolen. And because 
there is no one home to enforce the law.
  The Securities and Exchange Commission is the place to enforce the 
law, and until the President replaces the compromised people on the 
SEC; he has even got one nominated now, he comes from a securities 
firm. But as soon as that person gets there, he will not be able to 
vote on any of these things because they worked on all of these things. 
These are their buddies, the people they go to the luncheons with, the 
country club, they go yachting with, they go to their multimillion-
dollar homes in Florida with.
  We need to clean up this mess. The President had a chance today; he 
did not take it. Perhaps we can give him another chance again soon. 
Perhaps the Republican leaders of the House will relent and allow real 
reforms for pensions, real reforms for securities. Maybe they will undo 
some of the things they did back in 1995, which essentially exempted 
these securities firms from prosecution.
  We can take some real measures here if there is the will. But there 
is so much money flooding from these people into politics that I fear 
we will not get there.
  Some of us will continue to speak out. Others will begin to speak 
out. But will they put their vote where their mouth is? And will the 
President really put firm steps where his rhetoric is? Not today.
  Tomorrow is another day. Americans will be a little madder tomorrow. 
This will still be going on tomorrow. Let us see what happens then.

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