[Congressional Record Volume 148, Number 92 (Wednesday, July 10, 2002)]
[Senate]
[Pages S6523-S6524]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ACCOUNTING REFORM ACT

  Mr. BAYH. I come to the floor of this august body to call for the 
swift enactment of the accounting reform measure, including the Leahy 
amendment. I do so because I believe very strongly that it is in the 
best interests of America at this critical time in our history. I 
believe it goes way beyond mere accounting issues.
  What we are debating today deals with the financial security of 
millions of individual investors across this country, the security of 
their pensions, their 401(k) programs, and their other investments for 
the future of their children and their grandchildren.
  What we are talking about today involves the very vitality of our 
economy, for those who have invested and not invested alike, the amount 
of investment that will take place in the economy, the number of jobs 
that will be created, the vitality of farms. What we are debating today 
involves the standing of America in the international economy; whether 
we will continue to be a safe haven for investments from those abroad, 
attracting the capital that helps us build a strong foundation for 
America's economy.
  More than anything else, what we are debating today is nothing less 
than the basic values upon which this country has been based; whether 
we will continue to encourage those virtues that have always 
characterized America, whether we will continue to be the land of 
opportunity based upon hard work, ability, thrift, honesty, and playing 
by the rules or, instead, whether we will be perceived as the land of 
opportunity based upon artifice, avarice, and financial deceit. I 
believe the choice is clear and that the right thing, based upon 
traditional values and virtues, is embodied in the Sarbanes bill, 
including the Leahy amendment.

  I congratulate our colleague, Senator Sarbanes. He has demonstrated 
leadership and foresight in this issue. I believe the record will show 
that Senator Sarbanes was a leader in this issue a long time before it 
became popular. It is wonderful when events combine with leadership to 
give us an opportunity to truly make historic progress in this body. I 
think Senator Sarbanes has seized the moment.
  I congratulate Senator Leahy for his protection of whistleblowers and 
strong penalties against document shredding and financial fraud. He has 
made this a better bill.
  Mr. President, as you know, we serve on the Intelligence Committee 
together, and since the tragedies of 9/11, our country has been 
involved in twin struggles: One, the physical national security of this 
country; and, second, getting this economy moving again to ensure the 
economic security of Americans across this country. There are parallels 
between these two challenges. Both occurred as a result of unexpected 
tragedies but have presented us with opportunities to make this an even 
better, stronger, more secure Nation. Both involve breaking the 
political gridlock and the bureaucratic inertia that all too often make 
progress in this Capitol

[[Page S6524]]

difficult. And both involve striking the right balance between 
individual freedom and liberty on the one hand, that we cherish, and 
collective security, which makes individual liberty meaningful, on the 
other.
  I believe this bill strikes the right balance. It insists upon 
credibility and transparency of information provided to the 
marketplace, the very foundation upon which capitalism is built, but it 
does so with flexibility to ensure that the regulatory hand is as light 
as possible, and that the information provided, that transparency and 
credibility provided to the marketplace, is done in a manner that is 
least burdensome to shareholders and investors as possible.
  For example, the prohibitions against auditors providing consulting 
services: We have seen, as the chairman would note, in recent years a 
vast expansion of expenses and consulting services which create an 
appearance of a conflict of interest.
  We need to deal with this transparency to reassure the marketplace, 
but we need to do so in a way that imposes less regulation, burden, and 
cost upon existing shareholders as is humanly possible. This bill takes 
that approach by creating a presumption that certain consulting 
services will not be allowed, but by also providing flexibility to the 
new independent oversight board to waive that presumption, or the 
company and its auditors can go to the oversight board and say in this 
instance, under these facts, the presumption should be waived because 
we can provide the transparent data to the marketplace in a less costly 
manner by allowing our auditors to provide these consulting services.
  Basically, the bottom line is where it makes sense to provide the 
consulting services, or the presumption or the appearance of conflict 
is not a conflict in fact, it can be waived, and the consulting 
services can be provided. That is the right balance for transparency 
and credibility provided in the marketplace in the less costly manner 
to shareholders.
  I congratulate the chairman for incorporating that into the bill.
  I have heard some of our colleagues and commentators talk about 
overburdensome regulations. I don't have the reflexive reaction to 
regulate. I am well aware that one of the few laws that we count on in 
Washington is the law of unintended consequences. But the fact that an 
error may be made is no excuse for doing nothing.
  The right answer is not no action to address the inadequacies that we 
have seen, just as it is not an overburdensome action. The right 
answer, my friends, is a well-considered, thoughtful, well-balanced 
action to protect the interests of American investors, and to ensure 
the integrity of our economy. That is the balance which is struck in 
the Sarbanes bill.
  That is why I compliment the chairman for all the work he has done.
  Let me conclude. My colleague from Minnesota has been so gracious for 
allowing me to continue.
  I am pleased to see the chairman in the Chamber. I hope he will have 
a chance to read the complimentary remarks I made about his leadership 
and his farsightedness.
  I said he is the leader on this issue, and I congratulate him for 
that.
  Let me conclude where I began.
  This issue goes a long way beyond mere accounting issues. It goes a 
long way beyond economic policy. It goes to the very heart of who we 
are, what we stand for as a people, and the kind of values we cherish 
in United States of America. This will protect individual investors. It 
will help to ensure the integrity of our economy. But more than 
anything else, it will ensure that those Americans who have embraced 
our tradition with virtues, who have worked hard and saved their money, 
who have played by the rules, and are honest are able to get ahead in 
this society.
  It will send a loud and clear signal to those who practice financial 
deceit and financial chicanery that they do not have an avenue to 
success in this country. That does not embody the best values of 
America.
  That is why I strongly support the Sarbanes bill and the Leahy 
amendment.
  I urge my colleagues to enact this important legislation.
  I thank the Chair. I yield the floor.
  Mr. SARBANES. Mr. President, I say to my good friend, the 
distinguished Senator from Indiana, that he said I should read his 
gracious comments. I actually saw them on one of the monitors. That is 
one of the reasons I came to the floor. I wanted to express my personal 
appreciation to the Senator for his very kind remarks.
  But even more, I wanted to underscore the constructive contributions 
which the Senator made to this legislation in the course of its 
consideration by the committee. I know how closely he followed what we 
were trying to do. He came forward with a number of ideas that were 
most helpful to us in shaping this legislation. I think the statement 
he just made reflects his own deep appreciation of the seriousness of 
the issue with which we are trying to deal, the import it has for the 
functioning of the American economy, and how he understands that they 
are very important issues.
  If we don't move to restore confidence in the U.S. capital markets, 
there will be a negative impact on our economy. We are seeing some of 
that now. We have already seen this tremendous loss in the value of the 
retirement plans. People have just been wiped out. Tens of thousands of 
people are being laid off. The impact on the economy is beginning to 
spread. We need to move in order to counter that and start ascending in 
a different direction.
  I particularly want to thank the Senator for his consistent help in 
the committee as we marked up this legislation.
  Mr. BAYH. I thank the chairman.
  Mr. SARBANES. I thank the Senator from Minnesota.

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