Congressional Record, Volume 148 Issue 93 (Thursday, July 11, 2002)

[Congressional Record Volume 148, Number 93 (Thursday, July 11, 2002)]
[Senate]
[Pages S6603-S6616]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PUBLIC COMPANY ACCOUNTING REFORM AND INVESTOR PROTECTION ACT OF 2002

The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 2673, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (S. 2673) to improve quality and transparency in
financial reporting and independent audits and accounting
services for public companies, to create a Public Company
Accounting Oversight Board, to enhance the standard setting
process for accounting practices, to strengthen the
independence of firms that audit public companies, to
increase corporate responsibility and the usefulness of
corporate financial disclosure, to protect the objectivity
and independence of securities analysts, to improve
Securities and Exchange Commission resources and oversight,
and for other purposes.

Pending:
Edwards modified amendment No. 4187, to address rules of
professional responsibility for attorneys.
Gramm (for McConnell) amendment No. 4200 (to amendment No.
4187), to modify attorney practices relating to clients.

[[Page S6604]]

The PRESIDING OFFICER. The Senator from Nevada is recognized.
Mr. REID. Mr. President, this has been cleared by both managers of
the bill. We have had a number of inquiries about the need for more
time to talk on various issues. As the Chair knows, from 12:30 until 2
o'clock, we have our policy luncheon, and normally we don't have votes.
I ask unanimous consent that the previously scheduled order, which
provided that Senator Enzi be recognized at 12 noon today to make a
motion to table the McConnell amendment No. 4200, be modified to
provide that the recognition of Senator Enzi occur at 12:45 today, with
the additional 45 minutes, from 12 to 12:45, equally divided and
controlled between Senators Sarbanes and Gramm, or their designees, and
that all other provisions of the previous order remain in effect.
Mr. DORGAN. Mr. President, reserving the right to object, I would
like to engage in a brief discussion with my colleague from Nevada
under my reservation of an objection, if I might. I shall not object to
the specific request of the Senator, but I have just visited with the
chairman of the committee and you know there exists a list of
amendments that Members of the Senate wish to offer to this
legislation.
As I have watched this process over the last couple of days, it
appears to me that we have set up a gatekeeper of sorts for determining
who will offer amendments and whether there will be votes on the
amendments, and it appears to me we are not making very much progress.
I would like to get some sense of whether we have a clear process
beginning this afternoon, so that this afternoon and this evening we
might be able to move through 6, 8, 10 amendments and get time
agreements so Members of the Senate have the opportunity under the
rules to offer and have considered amendments that they consider
important in this legislation.
Mr. REID. Mr. President, I say to my friend, the chairman of the
committee has worked for hours and hours trying to get movement so
people could offer relevant amendments. We have been not very
successful, to be very candid with the Senator from North Dakota. I
have stood by the Senator from Maryland and coerced, urged, and we
haven't gotten to the debating point yet. We have done everything we
can.
There are a number of Senators, not the least of whom is the Senator
from North Dakota, who have amendments. There is the Senator from
Michigan, the Senator from New York, and others who have spent a lot of
time wanting to offer amendments. We are doing everything we can. We
hope the Enzi motion to table will break some of this loose.
I say to my friend from North Dakota that we understand how he feels.
The only thing I will say is there is no gatekeeper. On one bill the
two managers said they would oppose any amendment that was not
relevant, but that is not the case now. The Senator from Maryland has
expressed to me that there are some relevant amendments which should be
offered. He has done everything he can to----
Mr. BYRD. Mr. President, who controls time?
The PRESIDING OFFICER. Under the previous order, the Senator from
West Virginia controls the next 45 minutes. There is a unanimous
consent request pending.
Mr. BYRD. Mr. President----
Mr. DORGAN. Mr. President, reserving the right to object.
Mr. REID. If I can ask my friend to let me finish. I ask unanimous
consent that the time in the colloquy between the Senator from North
Dakota and the Senator from Nevada not take away from the time of the
Senator from West Virginia.

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, continuing on my reservation--and it is
not my intention to delay the Senator from West Virginia--I want to try
to understand what is happening.
First, my comments should not in any way suggest that the chairman of
the committee hasn't done an extraordinary job. I have great respect
for him. But it has been difficult to get amendments up and get votes
on them in the last day or two. There are a good number of very
important amendments.
Under the reservation, I say that we know what has happened to the
stock market in the last few days. We know this is a critically
important issue--this legislation and the amendments to it. We ought
not to treat this lightly. This piece of legislation ought to be on the
floor and open for amendment, having a robust discussion on the very
important issues dealing with corporate responsibility.
Instead, what is happening is we have a couple people on the floor
who seem to want to stall this process and prevent amendments from
being considered in order. I hope--and I will come back after lunch
today--to offer at least two amendments. I want to debate them and get
them voted on. At least as a Senator I have a right to do that.
It is very important to me that I be able to add these amendments. If
the Senate doesn't like them, fine, we will vote. But it is important
to me to have that opportunity. I shall not object to the unanimous
consent request with respect to the tabling motion.
I wanted to say to the Senator from Nevada and the Senator from
Maryland, who have done everything humanly possible to try to make this
process work, that there are others in the Chamber who are trying to
drag this process out and prevent others from offering amendments. I am
going to assert my rights, to the extent I can, to say that before this
bill is completed we need to have the best ideas everyone in the Senate
has to offer about how to do this job.
The economy in this country is in significant trouble. We know it.
The confidence the American people have in this economy and corporate
governance has been shattered in many ways. It rests upon the shoulders
of this institution to pass this legislation and do everything we can
to make it the best piece of legislation possible to restore that
confidence and give some lift to this economy. I wanted to make that
point.
I appreciate the indulgence and the patience of the Senator from
Nevada. If the Senator from Maryland will give me a chance to say this
once again: In no way am I saying the chairman hasn't done everything
humanly possible to move this along. He wants to move quickly. I shall
not object.
Mr. GRAHAM. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Senator from Florida.
Mr. GRAHAM. Mr. President, I express my great admiration for what
Senator Sarbanes has done in presenting to America such a meaningful
piece of legislation to deal with one of the great scandals that has
occurred in the history of our free enterprise system, and taking a
step toward restoring the confidence of the public in the investment
community.
But as Senator Dorgan, I have an idea which, in fact, in one
instance, is parallel to Senator Dorgan's; that is, I believe we need
to be very clear that we are applying the same standards to
corporations that have their corporate headquarters inside the United
States as we do to corporations that take advantage of our capital
markets and have chosen to locate or relocate their headquarters
outside of the United States.
Mr. REID. Mr. President, I am reclaiming my time.
Mr. GRAHAM. Reserving the right to object, there are enough
incentives to do that already in the Tax Code and otherwise. We should
not be creating additional incentives for companies to run from their
responsibilities within the United States. My specific----
Mr. REID. Mr. President, I want the floor back.
Mr. GRAHAM. I am raising this today----
Mr. REID. Mr. President, I have the floor.
The PRESIDING OFFICER. The Senator from Nevada has the floor.
Mr. GRAHAM. Mr. President, I am reserving my right to object.
Mr. REID. Mr. President, I have the floor.
Mr. GRAHAM. I will conclude my comments in short order.
The PRESIDING OFFICER. The Senator can either object or not.
Reserving the right to object occurs at the indulgence of those who
have the floor.
Mr. REID. Mr. President, we have built in time for people to speak.
It is not fair to Senator Byrd and others who have been waiting to
speak. I have no problem with Senator Graham coming. I agree with his
position. There is

[[Page S6605]]

time to be allowed under this unanimous consent agreement. Otherwise,
the time will be all gone, and there are two Senators who have an hour
and a half, by virtue of a unanimous consent agreement entered into
last night.
It is not fair to use the extra half hour with these speeches that
are taking away from Senator Byrd and Senator McConnell.
The PRESIDING OFFICER. Is there objection?
Mr. GRAHAM. Reserving the right to object, just for the purpose of
concluding my remarks.
Mr. BYRD. Mr. President, I object.
The PRESIDING OFFICER. Objection is heard.
Mr. BYRD. Mr. President, I will be happy to yield to the Senator when
I get the floor. We cannot make long speeches on reservations to
object. We either object or we don't. I object and then I will be happy
to yield to the Senator. I want to be fair. Am I recognized?
The PRESIDING OFFICER. The Senator from West Virginia is recognized.
Mr. BYRD. How much time does the Senator wish?
Mr. GRAHAM. Just 1 minute.
Mr. BYRD. Mr. President, I yield to the distinguished Senator from
Florida for 1 minute, reserving my right to the floor.
Mr. GRAHAM. I appreciate the courtesy of the Senator. I want to bring
to your attention an article from the Washington Post today. I ask
unanimous consent that this article be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:

SEC Chairman Pitt a Potential Liability to Administration

(By Dana Milbank)

While President Bush was delivering his long-awaited speech
on corporate governance Tuesday, Securities and Exchange
Commission Chairman Harvey L. Pitt was exactly where many
Bush aides wanted him to be: on a week-long beach vacation.
``We were not surprised that the chairman was not included
in administration plans for public appearances,'' SEC
spokeswoman Christi Harlan said. ``The commission is an
independent agency.''
White House officials, though calling it a coincidence,
acknowledged they had no desire for Pitt's presence.
The arms-length treatment of Pitt underscores a dilemma for
Bush and his radioactive SEC chairman. Many Democrats and
even a few Republicans have called for Pitt's resignation
because of his alleged conflicts of interest and ties to the
accounting industry. There is no sign that Bush is even
thinking of dropping Pitt. But whether Pitt stays or goes, he
is a potential liability.
Dismissing Pitt would violate the Bush code of loyalty and
would be viewed as validating Bush's critics, from Senate
Majority Leader Thomas A. Daschle (D-S.D.) to Bush's
Republican nemesis, Sen. John McCain (Ariz). ``Dropping
Harvey Pitt right now would be an acknowledgment of
wrongdoing where there's been no wrongdoing,'' said GOP
lobbyist Ed Gillespie, a former Bush campaign aide.
Forcing Pitt out would also open the White House to charges
of interfering in the SEC's investigation of Halliburton
Co.'s activities when Vice President Cheney was its chief
executive Underscoring that danger, Halliburton shareholders
yesterday filed a fraud lawsuit in Dallas against the company
and Cheney. White House press secretary Ari Fleischer said
the suit is ``without merit.'' That prompted Larry Klayman,
whose group, Judicial Watch, represents the shareholders, to
accuse the White House of seeking to influence the SEC's
investigation.
Yet Pitt's presence as the government's top securities
watchdog carries dangers for Bush, too. Even some Pitt
defenders say his close ties to the accounting industry limit
his credibility as a reformer. In his first speech as SEC
chairman last year, Pitt told an audience of auditors that
the SEC would be ``a kinder and gentler place for
accountants.''
``Pitt has been in hot water since day one and WorldCom
turned it into a full boil,'' said GOP operative Scott Reed.
Because Bush will not drop Pitt, Reed said, ``McCain and the
Democrats have turned him into a political pinata, and that
will continue ad infinitium.''
Democrat Chris Lehane, who defended Bill Clinton and Al
Gore during that administration's scandals, said Bush is
making the wiser political choice in keeping Pitt, even
though Pitt could undermine faith in Bush's reforms. ``Pitt
could do everything right and nobody's going to give him
credit for it,'' he said.
Pitt's foes point to his past legal work for executives of
now-sullied corporations, including MCI, Merril Lynch & Co.,
Arthur Andersen LLP and other accounting firms. He has also
been criticized for meeting in April with a former client,
KPMG Consulting Inc., while KPMG's audits of Xerox Corp. were
being investigated by the SEC. Critics also say that as a
lawyer, Pitt favored restricting federal oversight of
auditing firms. Over the years, Pitt has represented figures
such as Ivan Boesky and Michael Saylor in SEC actions.
Bush, in his Monday news conference, generously defended
Pitt. ``I support Harvey Pitt--Harvey Pitt has been fast to
act,'' Bush said. Later, Bush added: ``I'm going to give him
a chance to continue to perform.''
Privately, Bush has expressed amazement at the conflict-of-
interest charges. ``It's only in this town that people want
someone who doesn't know what they're talking about to lead
an agency,'' he told congressional Republicans visiting the
White House yesterday.
Pitt has an unlikely defender in Lanny J. Davis, one of
President Clinton's scandal handlers. ``The attack being made
by Democrats could be made on most anyone for having
conflicts from prior positions,'' he said. But Davis said the
administration has been making matters worse. ``The more you
bottle up Harvey Pitt, the more you allow Democrats to make
him an issue,'' Davis said.
Observers on both sides expect Pitt to make a public effort
to build his credibility by demonstrating that he can be hard
on his old friends. Indeed, some in the administration joke
that Pitt will come to resemble a model Democratic SEC
chairman, one heavy on regulations.
The White House has distributed evidence of Pitt's activity
on the job: requiring chief executive and chief financial
officers of the 947 largest companies to personally recertify
the accuracy of their disclosures; seeking to bar 54 officers
and directors; and issuing a long list of new reporting rules
and regulations.
Pitt was not Bush's first choice for the SEC job, and
officials say he continues to be far from Bush's inner
circle. The reforms Bush announced Tuesday were developed
largely by Treasury Secretary Paul H. O'Neill and White House
deputy staff chief Joshua Bolten, with help from Bush
economic advisers Lawrence B. Lindsey and R. Glenn Hubbard.
But Bush is stubborn about demonstrating loyalty to his
aides, which enables him to claim reciprocal loyalty.
Officials say he continues to defend Army Secretary Thomas E.
White, embattled because of his Enron Corp. ties and personal
travel, because White has been faithful to Bush.
But when underlings act disloyal, Bush can quickly cut them
loose. Linda Chavez was dropped as Bush's nominee to be labor
secretary when it appeared she had misled those vetting her
background. Michael Parker, the civilian chief of the Army
Corps of Engineers, was ousted for complaining about
administration budget cutting.
Pitt so far has demonstrated fealty to Bush, and Bush aides
remain loyal to him. ``The best thing to do is vigorously
enforce the law, and that's what he's doing,'' Lindsey said.

Mr. GRAHAM. In this article, the President of the United States has
given as one of his reasons to continue his support for the Chairman of
the Securities and Exchange Commission, Chairman Harvey L. Pitt, the
fact that Mr. Pitt has required chief executives and chief financial
officers of the 947 largest companies to personally recertify the
accuracy of their disclosures.
What was left out were all the American companies which have their
corporate headquarters outside the United States of America.
Apparently, the Chairman of the SEC believes he can discriminate and
apply a principle only against those corporations which are sited in
the United States and exclude corporations outside the United States.
That is an irrational and unfair distinction and one that we should
correct as promptly as possible in this legislation.
I thank the Senator from West Virginia.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. REID. Mr. President, will the Senator yield for a unanimous
consent request?
Mr. BYRD. Gladly.
Mr. REID. Madam President, I renew my unanimous consent request.
The PRESIDING OFFICER (Ms. Landrieu). Without objection, it is so
ordered.
The Senator from West Virginia.
Mr. BYRD. Madam President, since the revelation last month of yet
another corporate accounting scandal--this time involving the second
largest telecommunications provider, WorldCom--the Bush administration
seems to have lost its patience with corporate America. In fact, from
the rhetoric we have heard from the administration in recent weeks, I
expected to hear the President tell corporate America this week that
his top advisors had been in the White House basement planning, not
just a corporate fraud task force, but a new Department of Corporate
Security.
The President said last month at the G8 summit in Canada, ``The
revelations

[[Page S6606]]

that WorldCom has misaccounted [$3.8] billion is outrageous.''
In his June 29 weekly radio address, the President warned corporate
America that ``no violation of the public's trust will be tolerated.
The Federal Government will be vigilant in prosecuting wrongdoers to
ensure that investors and workers maintain the highest confidence in
American business.''
The President apparently is so miffed with these corporate
``wrongdoers'' that he has elevated them in his rhetoric to a bad-guy
level that is almost, but not quite as bad, as al-Qaeda's
``evildoers.'' Almost the same level; perhaps not quite.
WorldCom president and CEO John Sidgmore, in a June 28 letter to
President Bush, joined the President in expressing his outrage. ``I
want you to know that we, the current management team, are equally
surprised and outraged . . . about past accounting irregularities at
WorldCom,'' he said.
So the Bush administration and the CEO of WorldCom now both agree
that American corporations teaming up with unscrupulous (or
incompetent) accountants to mislead shareholders about how much money
the company is making is an ``outrageous'' practice.
Madam President, how comforting it is. As Jackie Gleason used to say:
``How sweet it is.'' How sweet it is. How comforting it is to know that
we have finally reached a consensus on that issue.
Despite the excuses and the explanations, I find little credibility
in the argument that certain corporate executives lacked sufficient
knowledge to ask the right questions about their companies' accounting
practices.
If CEOs are worth their generous pay, one would think they could take
the time to make sure that the company's chief financial officer is not
padding earnings by omitting costs from the balance sheet.
In fact, one finds disconcerting the acute lack of shame--the acute
lack of shame--S-H-A-M-E--on the part of some of these corporate
executives. Former Enron CEO Jeffrey Skilling told the House Energy and
Commerce Oversight Subcommittee that Enron had tight control on
financial risk, but that he could not be expected to oversee everything
and ``close out the cash drawers . . . every night.''
Can you imagine that kind of statement? I think it was Wordsworth who
said: No matter how high you are in your department, you are
responsible for what the lowliest clerk is doing.
Let me repeat that. Wordsworth said: No matter how high you may be in
your department, you are responsible for what the lowliest clerk is
doing. That was William Wordsworth. Let's take that statement and put
it beside the statement of former Enron CEO Jeffrey Skilling when he
told the House Energy and Commerce Oversight Subcommittee that Enron
had tight controls on financial risk but that he could not be expected
to oversee everything and ``close out the cash drawers . . . every
night.'' Oh, that poor man. What a heavy burden he carried. That poor
man. We can all shed crocodile tears for someone who is put into that
very difficult position and then consider the kinds of salaries these
people draw down.
Shakespeare said: ``The quality of mercy is not strain'd, it droppeth
as the gentle rain . . . upon the place beneath.'' I will tell you, it
does strain gentle mercy when we read about these scandals that have
swept over this country and how these people plead the fifth amendment
when they are called up before Senate committees and House committees--
plead the fifth amendment. That is a stunningly irresponsible attitude
for a chief executive.
It is something that you might hear from the teenage manager of a
fast food restaurant who cannot account for a handful of change missing
from the cash drawer at the end of the night. You might hear that from
the teenage manager of a fast food restaurant who cannot account for a
handful of change missing from the cash drawer at the end of the night.
But we are not talking about a handful of change. We are talking about
the American public. Those eyes that are peering--they are peering at
this Senate floor at this very minute through the lenses of those
cameras. They are the taxpayers out there. I see them looking through
those cameras. I see them in West Virginia. I see them in Texas. I see
them in Wyoming. I see them in New York looking through those cameras.
We are talking about them, the American public having lost by some
estimates tens of billions--not millions--tens of billions of dollars
of invested savings in companies that issued false--the Ten
Commandments, I keep them on my walls; some of these CEOs should keep
them on their walls--financial reports and tens of thousands of workers
who have lost their jobs, and many have lost their meager earnings that
they, too, invested, that is what we are talking about.

So here is an individual who tells a House committee he cannot be
expected to oversee everything and close out the cash drawers every
night--such a stunning, irresponsible, arrogant attitude on the part of
a chief executive. I say again it is something that you might expect to
hear--you might--from the teenage manager of a fast food restaurant who
could not account for a handful of change missing from the cash drawer
at the end of the night.
We are not talking, let me say again, about a handful of change. We
are talking about the American public, those people out there,
Republicans and Democrats and Independents, in the Alleghenies, along
the eastern coast, on the storm-beaten coast of Maine, the fishermen on
the mighty deep, the people in the Plains and the Rockies and beyond.
These are the people, north and south, the public. We are talking about
the American public having lost, by some estimates, tens of billions of
dollars of invested savings in companies that issued false--and they
knew they were issuing false--financial reports. Tens of thousands of
workers who have to wash the grime from their hands and their faces,
workers in the fields, in the mines, in the shipyards, those are the
people we are talking about, the public, tens of thousands of workers
who have lost their jobs.
Even after these corporations' fraudulent accounting, somebody ought
to go to jail, and the doors should be locked and the keys thrown away.
Throw away the keys. It really would not be too severe a punishment for
some of these four-flushers.
Even after these corporations' fraudulent accounting methods are
exposed, the accounting games seem to continue. After telling the
Securities and Exchange Commission that it hid nearly $4 billion in
expenses last year, WorldCom submitted revised financial reports to the
SEC which the SEC Chairman, Harvey Pitt, immediately called wholly
inadequate and incomplete. Apparently, WorldCom's revised financial
statements included additional accounting errors dating back to 1999
and 2000. That, Chairman Pitt said, could add at least $1 billion to
the company's financial revision.
No wonder the trust of those people is broken. No wonder the public's
trust in corporate America has eroded. What kind of trust can the
public have in companies that hide information in an effort to pull the
wool over the eyes of American investors?
After WorldCom's announcement, the Bush administration sharpened its
rhetoric and is now working to assure the American public that it
recognizes the importance of transparency and disclosure. The Chairman
of the White House Council of Economic Advisers, Glenn Hubbard, said in
an interview last month that the President wants to reassure investors
about the economy while also delivering a shot across the bow to
leaders of corporations that abuses of the public trust will not be
tolerated.
In the midst of congressional hearings last March, after the collapse
of Enron, the President lectured corporate America about how to regain
the public's trust. He said corporations must disclose relevant facts
to the investing public and they must focus on the interests of
shareholders, who are the real owners of any publicly held enterprise,
to properly inform shareholders and the investing public that we must
adopt better standards of disclosure.

That is nice rhetoric, but this administration hardly sets the model
for openness and transparency. In fact, this is an administration that
prides itself on operating in secrecy and governing by surprise.
Remember the secret government that was being set up? In fact, this is
an administration, let

[[Page S6607]]

me say again, that prides itself in operating in secrecy and governing
by surprise.
I find it difficult to watch this administration lecture corporate
America about virtues of disclosing information to the public while at
the same time it is restricting the public's access to information
about its own executive actions.
Last October, Attorney General John Ashcroft issued a memo
encouraging Federal agencies to withhold unclassified records under the
Freedom of Information Act, the law that gives the American public the
legal right to certain Government information. The Attorney General
even told the Federal agencies that the Justice Department would defend
agency decisions to deny FOIA, Freedom of Information Act, requests.
Last November, the President issued an Executive order to limit
access to Presidential papers that, under the Presidential Records Act
of 1978, would normally be made available to the American public. The
Executive order allows a former or a sitting President to block the
release of records requested under the law by invoking
``constitutionally based privileges.'' The words ``constitutionally
based privileges'' are in quotation marks.
The American people would have to go to court to challenge the
privilege claim. The order could even permit a former or incumbent
President to impede requests for old records simply by withholding
approval for their release, effectively negating the need for the Chief
Executive to even make the claim of executive privilege.
We have had our own little taste of this side of the coin from the
executive branch as we on the Appropriations Committee, Senator Stevens
and I, tried to have the administration let Tom Ridge come up before
the committee and testify.
Then we see this creation of this mammoth reorganization of
Government that sprang like Minerva, fully clothed and armed, from the
forehead of Jupiter.
When this administration's chief executive talks about adopting
better standards of disclosure, I hope that these executive actions are
not what he has in mind. These are just examples of the administration
directly restricting the public's access to government information. The
administration has also moved to limit access by Members of Congress,
who are elected by the people and responsible for the oversight of
executive actions in the public's behalf.
Last December, the President gave notice that he was unilaterally
withdrawing the United States from the Antibalistic Missile Treaty,
allowing the administration to begin development of a new antibalistic
missile defense system. Soon after, the Pentagon began to exempt
missile defense projects from traditional reporting requirements and
Congressional oversight, an overt attempt to keep the Congress and the
American people in the dark about the progress of that system. As the
administration requests additional defense funds, the Pentagon is
taking further steps to shield cost estimates and time tables from the
Congress, making it harder to keep the administration accountable for
technical and budgetary assessments.
The Dark Ages were supposed to have ended in about 1000 A.D. They
lasted 1,000 years, the Dark Ages. Reminiscent of the Dark Ages, an
administration that believes in keeping a Congress in the dark, the
American people in the dark, and we are hearing a lot of sword rattling
about it. An attack on Iraq--the administration should level with the
Congress. It is an equal branch. It is not a subordinate branch to the
Government. It never has been, and I hope never will be. Let's hear
more about this plan to invade Iraq. Watch out for August when Congress
is out of town, or before the election. Who knows?
This reorganization of Government sprang like Aphrodite from the
ocean foam, and she was carried on a leaf to the island of Crete. She
later appeared in full dress before the gods on Mount Olympus. They
were stunned with her beauty.
This is what we see. These ideas sprang from where? This idea to
reorganize the Government--and I am concerned it will also reorganize
the checks and balances of the Constitution unless we are watchful--
sprang from the bowels of the White House, the creation of four
individuals who are named in the public press. Not exactly the equal,
perhaps, of that committee that wrote the Declaration of Independence--
Thomas Jefferson, Benjamin Franklin, Roger Sherman, John Adams, and
Livingston, those five. Not exactly.
But look at all the commotion that ideas has created. Look out, the
Congress is being stampeded into putting its imprimatur on that idea.
Well, some parts of the idea may be OK, but we should not be in too big
a hurry.
And that is to say nothing of the fact that these executive actions
toward secrecy have occurred during a period in which the President has
refused to allow Tom Ridge, in his capacity as the Director of Homeland
Security, to testify before the Congress, and in which the Comptroller
of the General Accounting Office was forced to sue the Vice President
of the United States to obtain information about the White House energy
task force and its connections to Enron.
These are not the actions of an administration that believes in the
virtues of disclosing information to the public. This is an
administration that not only embraces the idea of operating in secrecy,
but flaunts its abilities to hide information from the Congress and the
American public.
Upon announcing its proposal for a new Department of Homeland
Security, the administration bragged to the media about how the plan
had been pieced together by just four men and a few trusted aides in
the basement of the White House. As the work became more detailed and
the working groups expanded, the code of silence was gravely explained
to each new arrival. At the end of each meeting, all papers were
collected: nothing left that room, we've been told. The work was
completed before any member of the Congress was briefed on the plan.
White House Chief of Staff Andrew Card even arrogantly proclaimed, ``We
consulted with agencies and with Congress, but they might not have
known we were consulting.''
Now, get that. I can hardly believe my eyes, except my eyes have seen
this prior to my having stated it on the floor. White House chief of
staff Andrew Card even proclaimed--I used the adverb ``arrogantly,'' I
will put it back in--White House chief of staff Andrew Card arrogantly
proclaimed, ``We consulted with agencies and with Congress but they
might not have known we were consulting.''
What a reflection on Congress. What is he saying about Congress? That
is hardly a model of transparency that I want corporate America to
follow.
We don't want to hear corporate CEOs saying we shared information
with the American public, but they might not have known we were sharing
it with them. The administration's euphoria for secrecy seems motivated
in large part by its desire to implement a political agenda. That is
what it is. A political agenda, regardless of whether it has the
support of the American people.
Mr. REID. Will the Senator yield?
Mr. BYRD. I would be glad to yield.
Mr. REID. Mr. President, I have been listening to the Senator from
West Virginia give his speech, and I am of the opinion maybe the reason
all that secrecy takes place is they are running the White House like
people run corporations. Rather than having a public institution as the
administration and White House should be, maybe they are running the
White House like a corporation.
I say to my friend that the White House, this administration is
covered with corporate America. Maybe they think the White House is to
be run like a corporation.
Mr. BYRD. The distinguished Senator from Nevada introduces an
interesting idea. Maybe they do. Maybe anything goes. All is fair in
love and in war they say. Now we can add, big business. Big business.
That is not a fair thing to say about many big businesses really
because many of the people in big business are honest and try to do the
right thing. They are open, they are transparent. It is too bad a few
bad apples reflect on the whole barrel. I used to sell produce. I was a
produce boy, married, with children coming on, and I found that a few
bad peaches would quickly ruin the whole bushel. The same thing with
apples and other fruits and so on.

[[Page S6608]]

When the administration's polls suggest opposition to certain
policies from the American public, it limits access to information
about that policy. I fear that the American public, and their elected
representatives in Congress, at times are viewed by this administration
as some sort of obstacle or hurdle that is to be avoided. There is a
contempt, there is an arrogancy in this administration, there is a
contempt for Congress. They hold Congress in contempt.
This kind of executive mentality can only emanate from the arrogance
of an administration that believes the White House is the fountain of
wisdom in Washington. Wisdom is the principal thing. Such a mentality
is dangerous, it is absolutely dangerous. I was here in the Nixon
administration. I remember what happened to that administration. Such a
mentality is dangerous. We need only look to the corporate accounting
scandals which this administration has so harshly criticized in recent
weeks to see why.
Most economic pundits seem convinced that the hyperactive stock
market of the late 1990s was the catalyst for a slow, steady
deterioration in professional and ethical standards in corporate
America. The pressure on CEOs and companies to produce earnings,
quarter after quarter, resulted in a kind of competitive behavior that
encouraged companies to push the accounting envelope. Rising profits
and stock prices provided cover for underlying ethical lapses. The
longer the boom lasted, the more brazen these corporations became in
cutting corners and taking a little more off the top.
By the end of the boom, many companies appear to have been engaged in
the kind of fudging, gamesmanship and ethical corner-cutting that,
while legal in some cases, was certainly less than ethical.
Unfortunately, it was only after the stock market began its inevitable
decline and great piles of money were lost that people began to ask the
critical, penetrating questions that should have been asked earlier to
prevent this kind of behavior in the first place. Those harder
questions are now leading to accounting revisions, executive
resignations, lawsuits, and criminal investigations.
So far, the reflexive instinct of the business community and the Bush
administration largely has been to blame a ``few bad apples,'' but that
assertion is hardly consistent with the fact that the SEC opened 64
financial-reporting cases between January and March of this year, and
that almost a thousand companies, not just a handful, have been asked
to recertify to the SEC their financial statements through the last
fiscal year.
It is somewhat ironic that the actions of chief executives were
protected by soaring stock prices, since the administration finds
itself in a similar position. Just like soaring stock, as long as the
President's approval ratings remain high, presumably propped up by the
American public's understandable desire to support the war on
terrorism, the more latitude the administration will be granted in
restricting information about its executive actions under the guise of
national security. This kind of culture can be extremely dangerous. It
was allowed to flourish in corporate America during the late 1990s, and
now threatens the public trust.
The administration would do well to take some of its own medicine and
make itself more transparent to the American public. For all of its
expressed concerns about the public's loss of confidence in corporate
America, this administration seems to have given little, if any,
consideration to the loss of the public's trust in government. That is
the most basic of commodities in republican government. I do not refer
to it, as many politicians who ought to know better glibly refer to
this, our system, as a democracy. They ought to go back and read
Madison's 10th and 14th essays in the Federalist Papers. They will
finally learn the difference--or be reminded of the difference. They
probably have forgotten the difference between a democracy and a
republic.

The public's trust in government--when the public loses its trust,
when the public's trust is eroded, all is lost: The public trust. And
sooner or later, high poll numbers will tumble, as they always do. We
have seen them do it before.
Don't read the polls, I say to my colleagues, so assiduously, read
the Constitution--which I hold in my hand. Read the Constitution. I say
to the administration, I say to the executive branch, read the
Constitution. Don't be so enamored with the polls. They are fleeting.
Read the Constitution.
This administration's Chief Executive came into office touting
himself as the first President to earn a master's degree in business
administration. That is certainly more than I have. He announced that
he would run the White House like a modern-day corporation. Ha-ha-ha;
watch out.
To be fair, the President probably didn't realize at the time that he
would be faced with the exposure of a corporate culture--not all his.
The President probably didn't realize at the time that he would be
faced with the exposure of a corporate culture which encouraged shoddy
auditing, negligent or criminal management, and impudent and secretive
corporate CEOs.
In hiding its own actions from the public view, this administration
is fostering the same kind of arrogant, arrogant culture in which these
corporate accounting scandals were allowed to flourish. This
administration would do well to take preventive measures to keep the
nasty, nasty little seeds of arrogance and secrecy that have affected
corporate America from taking root in the executive branch and
threatening the public's trust.
I close with a Biblical parable: Pride goeth before destruction, and
the haughty spirit before a fall.
I ask unanimous consent to have printed in the Record an article from
today's Washington Post titled ``Bush Took Oil Firm's Loans as
Director''; and an article from today's Washington Times titled
``Cheney named in fraud suit.''
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the Washington Post, July 11, 2002]

Bush Took Oil Firm's Loans as Director

(By Mike Allen)

As a Texas businessman, President Bush took two low-
interest loans from an oil company where he was a member of
the board of directors, engaging in a practice he condemned
this week in his plan to stem corporate abuse and accounting
fraud.
Bush accepted loans totaling $180,375 from Harken Energy
Corp. in 1986 and 1988, according to Securities and Exchange
Commission filings. Bush was a director of Harken from 1986
to 1993, after he sold his failed oil and gas exploration
concern to the company. He used the loans to buy Harken
stock.
Corporate loans to officers came under scrutiny after
WorldCom Inc., the long-distance carrier that last month
reported huge accounting irregularities, revealed it had lent
nearly $400 million to Bernard J. Ebbers to buy the company's
stock when he was chief executive. He resigned in April as
the stock price tumbled.
Bush attacked corporate loans during his speech on Wall
Street on Tuesday, when he offered proposals to tighten the
accountability of corporate executives while stopping short
of the tougher measures headed toward passage in the Senate.
``I challenge compensation committees to put an end to all
company loans to corporate officers,'' he said.
A senior administration official, briefing reporters on
Bush's plan, said Tuesday that Bush wants public companies to
ban loans to their officers, including directors. ``Corporate
officers should not be able to treat a public company like
their own personal bank,'' the official said.
The contrast between Bush's record as a business executive
and his rhetoric in the face of corporate scandals
underscores the challenge his administration faces in trying
to credibly foster what he calls ``a new era of integrity in
corporate America.''
Bush was investigated by the SEC in 1991 for possible
illegal insider trading, although the SEC did not take action
against him, and he has admitted making several late
disclosures to the agency, which regulates public companies.
Harken's loans to Bush--at 5 percent interest, below the
prime rate--were reported several times in filings to the SEC
in the years before the debt was retired in 1993 and were
noted in news accounts at the time. The loans were for the
purchase of Harken stock, which was then held as collateral.
Rajesh K. Aggarwal, a Dartmouth College professor who
specializes in executive compensation and incentives, said
such loans ``are not unique, but are by no means
widespread.''
White House communications director Dan Bartlett said
Harken offered the loans to directors to buy shares in the
company as part of an incentive for board members ``to have a
long-term commitment with the company.'' Bartlett said the
loans to Bush were ``totally appropriate--there was no
wrongdoing there.''

[[Page S6609]]

``This is a common practice in small, medium and large
companies,'' Bartlett said. ``These recent abuses of certain
types of loans led the president to believe that the
government should draw a bright line concerning loans going
forward. This is one of the main things that undermined the
confidence of investors and shareholders.''
Bartlett said the loans were for $96,000 in 1986, for
80,000 shares, and $84,375 in 1988, for 25,000 shares. He
said that in 1993, Harken changed its compensation policies
and discontinued the loan program. He said Harken converted
to a program giving directors stock options, allowing them to
buy stock later at a fixed price.
Bartlett, asserting that Bush did not profit on the loans,
said Bush traded the 105,000 shares being held as collateral
for the loans, retiring his debt. Bush then received 42,503
options under the new compensation plan, Bartlett said, The
options were never exercised and expired after Bush left the
board, Bartlett said.
With adminsitration officials privately expressing concern
about the impact of so much fresh attention to old questions
about Bush's career, the White House yesterday distributed
talking points headlined ``If you get asked about Harken'' to
Bush loyalists who might be contacted by reporters. Bartlett
said the fact sheets were sent to members of Congress after
they asked for them.
White House press secretary Ari Fleischer said aides to
Bush have ``talked to the private accountants and private
counsels who are involved in the president's private
transactions'' while preparing answers to reporters' question
during the growing debate over corporate responsibility.
Vice President Cheney also is receiving unwanted attention
to his corporate past. The SEC is investigating an accounting
practice begun by Halliburton Co., the Dallas-based energy
services company, when Cheney was chief executive before
joining Bush's campaign ticket.
Also yesterday, the White House refused to release records
of Bush's service on Harken's board. Bush had pointed to
those records during a news conference on Monday when asked
about his role in the sale of a subsidiary. The transaction
later was used by Harken to mask losses.
``You need to look back on the director's minutes,'' Bush
said.
Bartlett said the administration does not have the minutes
and does not plan to ask Harken for them. ``He personally
would not have access to them,'' Bartlett said. ``These are
company documents. I can't release something I don't have.''
Harken has declined to release board records ever since
questions about Bush's record on the board were raised during
his first campaign for Texas governor, in 1994.
Bartlett also said the White House would not accept a
challenge by Senate Majority Leader Thomas A. Daschle (D-
S.D.) on Sunday to ask the SEC to make public the records of
its investigation into whether Bush had engaged in illegal
insider trading of Harken stock.
Daschle said on CBS's ``Face the Nation'' that Bush would
do well to ask the SEC to release the file. ``We've had
different explanations as to what actually occurred,''
Daschle said. ``I think that would clarify the matter a good
deal.''
Bartlett said Bush will not do that. ``Those are documents
in the possession of an independent regulatory agency,''
Bartlett said. ``I'm not in a position to call on them to do
that. We've made available every relevant document we have in
our possession.''
Administration officials said they would take the same
position about an SEC investigation that resulted in Harken's
restating its earnings to show a $12.6 million loss for a
quarter instead of an earlier reported loss of $3.3 million.
Bush was a member of the board's audit committee.
____

[From the Washington Times, July 11, 2002]

Cheney Named in Fraud Suit

(By Patrice Hill)

Vice President Richard B. Cheney was named yesterday with
the energy company he headed in a lawsuit by investors that
cited bookkeeping practices under investigation by the
Securities and Exchange Commission.
The lawsuit arranged by Judicial Watch, a government
watchdog group, charges that Halliburton Inc. overstated its
revenue by $534 million between 1998 and the end of last year
by illegally booking revenue from oil construction projects
that were in dispute and had not been collected from its
clients. The suit says the accounting fraud resulted in
overvaluation of Halliburton's stock, deciving investors.
Mr. Cheney was Halliburton's chief executive from 1995
until August 2000, after he joined the Bush presidential
campaign. The White House and Halliburton yesterday said the
suit was without merit but both acknowledged that the SEC
investigation is continuing.
``We are working dilgently with the SEC to resolve its
questions regarding the company's accounting practices,''
said Doug Foshee, Halliburton's chief financial officer. The
claims in this lawsuit are untrue, unsupported and
unfounded.''
SEC Chairman Harvey L. Pitt has vowed to pursue the
investigation. ``We don't give anyone a pass,'' he told ABC's
``This Week'' on June 30. ``If anybody violates the law,
we go after them.''
President Bush on Tuesday called for stronger SEC
enforcement and longer prison terms for corporate executives
found guilty of the kind of accounting fraud charged in the
lawsuit. The suit was filed in the U.S. District Court in
Dallas, where Halliburton is based.
A unified Senate approved harsh new penalties yesterday for
corporate fraud and document shredding, adding enforcement
teeth to Mr. Bush's plan to curb accounting scandals. In a
series of unanimous votes, senators added the penalties to an
accounting oversight bill moving toward passage.
Also named as a defendant in the lawsuit is the Arthur
Andersen firm, Halliburton's former auditor, which was fired
in April after the accounting firm was charged with
obstructing an SEC investigation of Enron Corp. Andersen was
convicted of the obstruction charge last month and is no
longer permitted to audit public companies.
The suit says Andersen was a champion of ``aggressive''
accounting tactics and masterminded the bookkeeping maneuvers
that defrauded Halliburton investors.
As evidence of Mr. Cheney's knowledge and approval of these
maneuvers, the suit refers to his appearance in a promotional
video for Andersen in which he said he got ``good advice''
from the firm, advice that went ``over and above just the
normal by-the-books auditing arrangements.''
The lawsuit cites a critical accounting change made by
Halliburton and Andersen in late 1998. Halliburton was facing
losses because of a recession in the oil industry and cost
overruns on construction contracts in which the company had
negotiated fixed, or lump-sum, payment plans.
Before the accounting change, which was never formally
disclosed to investors, Halliburton had booked the cost
overruns as losses on such projects as long as they were in
dispute and customers had not agreed to pay them.
But starting in 1998, the company booked payment for the
cost overruns as revenue if it believed the disputes would be
resolved and the customers would pay the bills.
As a result of this change, Halliburton showed a profit for
several quarters in 1998 and 1999 when it otherwise would
have posted losses, the suit charges. In some years, the
disputed revenue appears to account for as much as half of
the company's reported profits.
``Halliburton overstated profits that many American
citizens relied upon,'' said Larry Klayman, chairman of
Judicial Watch. ``That's fraudulent security practices, and
it resulted in those Americans suffering huge losses.''
The suit says Halliburton and Andersen violated securities
laws when they did not disclose and justify the accounting
change in a letter to investors. Halliburton's financial
statements starting in 1998 do note, however, that it was
booking uncollected revenue from cost overruns.

Mr. REID. Madam President, if the Senator will yield for a
parliamentary inquiry.
Mr. BYRD. Yes. I yield.
Mr. REID. The Senator was allocated 45 minutes. Of course, we have
other time. We have an extra 15 minutes. It is my understanding there
are 4 or 5 minutes left. Is that right?
The PRESIDING OFFICER. There are 3\1/2\ minutes remaining.
Mr. REID. If the Senator so desires, we could also allocate 15
minutes to the Senator from West Virginia if he has more to say.
Mr. BYRD. Madam President, I thank the distinguished majority whip
for his courtesies and generosity, and for his characteristic ways of
helping his colleagues. I think I will let my remarks remain today as
they are. I thank him.
I yield the floor.
Mr. REID. Madam President, while there are a couple of minutes
remaining of the Senator's time, I am sure the chairman of the
committee joins with me in expressing our pleasure at being able to
listen to such a profound statement which the Senator made. I think it
again is what this is all about. By ``this,'' I am talking about the
legislation.
I talked with a friend of mine. We played football together as young
men. He runs a company in Las Vegas. He said: Harry, I took all of my
money out of the stock market. I will never invest in the stock market
until something is done. He said: I am afraid. I said: We all feel that
way.
I think the Senator really condensed what is going on in corporate
America. It needs to be changed, and hopefully this legislation will
help that.
Mr. BYRD. Madam President, let me express my gratitude to the
distinguished Senator for his comments.
And with respect to the manager of this legislation, let me state
without any equivocation that this is one of the finest minds I have
seen in the Senate. I have been here 44 years. I have seen the
equivalent of the entire Senate come and go, and I have never seen a
sharper intellect. I have seen some

[[Page S6610]]

sharp ones--John Pastore, Herman Talmadge, and there are others. I have
never seen any sharper than that of Paul Sarbanes, in my judgment. I
don't know a great deal about the intelligence quotients. I don't know
what the high range is. I assume it could be 150, or 155, or 160--
whatever it is. Paul Sarbanes is the brightest.
Also, he has a way about him of not flaunting his intellect in front
of others. Most of us--not because of that kind of intellect--have been
inclined to speak more often--maybe too much, and perhaps I do already,
but not because of that kind of intellect. But I salute the manager and
commend that kind of intellect. He applies it. I watch him in the
committees, and I watch him on the floor as he manages a bill. He is
never a man to act in haste, or to be too rhetoric in haste. I admire
his patience. He is plotting; he is studying; he is working; and he is
extremely effective.
When I was majority leader, there were certain Senators I would call
into my office from time to time. I would try to pick their brains as
to what we should do on this or that. Scoop Jackson was one. Paul
Sarbanes is always there.
Mr. REID. Madam President, will the Senator yield for a comment?
Mr. BYRD. Yes.
Mr. REID. What the Senator is saying is that the Rhodes Scholar
Committee a number of years ago made a good choice in selecting Paul
Sarbanes to be a Rhodes scholar. Is that what the Senator is saying?

Mr. BYRD. I am saying exactly that. I am happy the distinguished
Senator put it that way.
This bill before the Senate is the product of that kind of mind, that
kind of attention, and that kind of dedication.
I hope we can pass this bill with an overwhelming vote, and, also in
conference so that when put on the President's desk he can sign it. I
am eager to support it in any way I can.
Before I yield the floor, let me say that when we talk about
intellect and sharp intellects, this man from Texas, Phil Gramm, is
another. He is sharp. I have talked to my staff many times about that
kind of intellect. He can talk about anything. He doesn't need a
script. I have prided myself on working with him on several challenges,
and I have found him to be fair and straightforward.
I admire people--like these two--having that kind of sharp intellect.
I was told by an old Baptist pastor, former chief chaplain in the
Army during the war--I don't remember which war it was. But he always
said: The mark of brilliance is to surround yourself with brilliant
people.
I am really proud to look around this Chamber and see people such as
Paul Sarbanes and Phil Gramm. Sometimes I say that North Dakota has the
highest overall quotient, perhaps of all, with its two Senators--
Senators Conrad and Dorgan. I don't know whether they are Rhodes
scholars or not. I am not a Rhodes scholar. I was not fortunate enough.
I just barely made it by working at night for 10 years just to get a
law degree. But these people make me proud to serve in this body.
Let me yield to the Senator from Maryland.
Mr. SARBANES. Madam President, I thank the distinguished Senator for
his extraordinarily generous remarks. I am very appreciative of them.
I want to echo what the very able Senator from Nevada said about the
Senator's eloquent address just a few minutes ago, which is reflective
of the pattern that he has established--which is to go on the floor of
the Senate and go to the very fundamentals of what our system is all
about. His constant reference to the Constitution draws us back to
those fundamentals. The Senator has always put before the Senate this
broader and deeper vision of why we are here, what we ought to be
doing, and calling us back to our basic principles as a nation--right
back to the Founding Fathers--as the Senator pointed out in his talk
today. Important aspects of that are being challenged today in a very
serious way.
I echo what my colleague said and express my appreciation to the
Senator from West Virginia.
Mr. BYRD. Madam President, I thank the distinguished Senator. I am
going to yield the floor.
Before I yield it, I apologize to the distinguished Senator from
Kentucky, Mr. McConnell. He is a Republican and I am a Democrat.
I have been known to go down into Kentucky at his invitation and
speak, and I value his friendship. I apologize to him for imposing on
his time.
Mr. GRAMM. Before the Senator yields, if he would yield very briefly
to me, I thank him for his very sweet comments. I am very happy to be
named along with Paul Sarbanes. And someday when I am talking to my
grandchildren about the fact that their grandpa actually was a pretty
important guy in his day--though his mind, I am sure, at that point
will have seemed to have largely slipped away--I will say: I got to
serve with the great Robert C. Byrd.
Mr. BYRD. I thank the Senator.

Amendment No. 4200

The PRESIDING OFFICER. The Senator from Kentucky will now be
recognized for up to 45 minutes.
Mr. McCONNELL. Thank you, Madam President.
I rise to speak on behalf of the McConnell amendment which will be
voted on sometime in the not too distant future. It is my understanding
that my own colleague, Senator Enzi, may make a motion to table at the
end of the debate. So let me, at the outset, say I support the Edwards-
Enzi amendment.
The second-degree amendment that is pending at the desk, which I will
shortly discuss, does not, in any way, change or diminish the Edwards-
Enzi amendment. I think it is a good idea. However, I think it simply
does not go far enough.
I also supported the Leahy amendment yesterday after my amendment to
combat union fraud was defeated. I will continue to support responsible
corporate accountability measures in this bill.
My only point is, corporations do not have a monopoly on misconduct,
deception, and fraud. As long as we are addressing professional
misconduct, deception, and fraud, we ought to recognize this is a
problem in our entire professional culture, not just in corporate
culture. Let me repeat that. This is a problem in our entire
professional culture, not just in corporate culture.
I understand the mood at the moment is to beat up on corporations.
And they deserve it. That is what the underlying bill is about. On the
other hand, to ignore other areas of abuse, it seems to me, is to miss
an opportunity to address the problem in a broader way.
The Senator from North Carolina raises real problems with the ethics
and conduct of corporate lawyers. I commend him for that. And I commend
the Senator from Wyoming for that. But I have long sought to curb
similar and well-documented abuses in the general practice of law,
specifically in the case of personal injury law.
Let me say at this point that the McConnell amendment applies only to
Federal claims and Federal courts. We are talking here about Federal
claims and Federal courts. My point in offering this amendment is not
to obstruct but to extend and enhance our debate on professional
conduct.
We ought to set standards for corporate attorneys. I favor that. And
we ought to set standards for personal injury lawyers as well.
Corporations and corporate attorneys do not have a monopoly on
misconduct. We are doing a real disservice to the American public if,
during this important debate on professional misconduct, we turn a
blind eye to abuses in our society that have been piling up way
before--long before--Enron, WorldCom, and Global Crossing.
All too often we hear stories about lawyers who take advantage of
their clients by not informing them of the legal fees and costs those
clients will incur. This sad practice results in consumers of legal
services receiving next to nothing in personal injury and other claims.
Let me recount the story of Diana Saxon. Ms. Saxon was a victim of,
among other things, attempted forcible rape. The defendant was
convicted, and Ms. Saxon brought a personal injury action against that
defendant. The attorney she hired said the fee he was going to charge
was 40 percent, plus costs.
Ms. Saxon received an award of $25,000. Of that, per her agreement,

[[Page S6611]]

$8,300 went to her lawyer in attorney's fees. But an additional $20,716
went to her lawyer for expenses. However, none of those costs was made
known to Ms. Saxon during the course of the litigation. She was only
informed of them after her case was concluded.

Now, it gets even better--or, for Ms. Saxon's unfortunate situation,
it gets worse. After her lawyer charged her his costs, she ended up
owing her attorney $4,000--$4,000. That is right. For poor Ms. Saxon,
she was actually left over $4,000 in the hole, in debt.
Now, to be fair, Ms. Saxon's lawyer was actually magnanimous in that
he waived a few costs and a small portion of his fee so that she was
actually able to walk away with the princely sum of $833--$833.
In his letter to her, where he agreed to offer her these few hundred
dollars from her award of $25,000, he wrote:

I'm agreeable to pay the sum of $833. This is the only
money you will receive from your $25,000 settlement.

So, in sum, even though Ms. Saxon's lawyer told her that the lawyer
would get 40 percent of her award, plus costs, in reality, after
including these costs, he got 96 percent--96 percent--of her award.
That is right, 96 cents on every dollar that Ms. Saxon received.
We need to make sure that consumers of legal services are not duped
by this type of inaccurate and incomplete information.
Let me quote Ms. Saxon. She has put the problem better than I could.
Here is what she had to say:

This is not how our civil justice system is supposed to
work. What happened to me should never happen to anyone
again. You have a chance today to make a difference by
passing a law to protect people from the kind of thing my
attorney did to me. Had I known in advance or at some point
along the way how little of my lawsuit was going to benefit
anyone but my lawyer, I might have thought different about
enduring 2 years of emotional trauma during the litigation.

Summing up what she had to say: Had she had any idea how little of
the money she might get, she might not have wanted to endure the trauma
of this litigation for 2 long years.
Now, Ms. Saxon, in a sense, was lucky in that at least her lawyer
told her she would be liable for costs, although he obviously did not
tell her the magnitude of the costs she was looking at and, thereby,
completely misled her.
But as these excerpts from the Yellow Pages here in the District of
Columbia area phonebook indicate, some lawyers are not even that
candid.
So let's take a look at the first chart out of the DC phonebook. On
this first chart, we have an ad with the big banner entitled
``AUTOMOBILE ACCIDENTS.'' There is a line almost as big--the fourth
line down--proclaiming: ``No Recovery, No Legal Fees''--``No Recovery,
No Legal Fees.'' It does not say anything about the cost the plaintiff
is going to have to bear and, therefore, does not paint an accurate
picture.
Let's take a look at the second chart, again out of the DC phonebook.
It has a big banner down the right side entitled ``PERSONAL INJURY.''
At the top is says: ``Personal Injury Lawyers Who Put You First.''
``The Firm Boasts an All-Star Roster of Top Personal Injury
[Lawyers].'' And it makes the point: ``No fee if no recovery.'' But,
again, like the last ad, it does not mention at all anywhere in the
ad--nowhere in all of this ad--that the client will be liable for
costs.
Let's take a look at chart No. 3. This ad is marginally--marginally--
better. At the top of the ad there is a headline, in bold, saying:
``Legal Problems Require a Lawyer.'' Obviously, legal problems require
a lawyer. About midway down is a line item saying: ``Call Me. I can
help.'' ``Call me. I can help.'' And right below this line, another
line says: ``No Legal Fee If No Recovery.'' In a little bit smaller
print you will notice, ``No Legal Fee If No Recovery.'' But this
lawyer, at least, to his credit, has an asterisk by this line. If you
look very carefully, you see an asterisk; and way down here at the
bottom of the ad, in minuscule print--which might require you getting
your glasses adjusted or to get a magnifying glass--it says: ``Cost May
Be Additional.''
This lawyer at least gets credit in his ad for mentioning that there
might be some cost, although you better have your glasses adjusted in
order to find it.
Chart No. 4 is a familiar pitch, that there be ``no legal fees unless
recovery.'' This lawyer, to his credit, at least has it in print large
enough to where you might actually see that line. But there is, of
course, an asterisk; down here at the bottom, again, in tiny, minuscule
print, ``Clients may be responsible for reasonable fees.''
This lawyer, at least, gets some credit--be the print ever so small--
for pointing out that there could be a cost involved, and maybe a
careful client would see that in the ad.
Chart No. 5, really my favorite one, it has a big banner at the top,
``accidents,'' all the way across the top. You wouldn't have any
trouble missing that. Underneath, ``No legal fee if no recovery.'' Very
enticing observation to an injured client, potential client, and there
is an asterisk after it.
Going to the bottom of the page, below the Visa and MasterCard logos,
it says, ``excluding costs.'' That is about the smallest print on the
ad. But a careful potential client might be able to find that there
could conceivably be a cost attached to this.
Frankly, I am not sure if this phrase means that costs are excluded
and, therefore, you don't have to pay for these either, or if it means
that costs are excluded from the exclusion, which means you do have to
pay for them. A consumer of legal services should not be enticed by the
prospect of free legal services, including what appears to be an
exclusion of cost from the charges for which he is responsible.
As I will shortly describe, the amendment I am offering would help
prevent people from being duped by incomplete and misleading
representations such as these. Let me repeat that the scope of my
amendment is not every court in America but only applies to Federal
claims and Federal courts.
Shifting gears for a moment, we also hear stories of ambulance
chasers who take advantage of grieving families when they are most
vulnerable. For example, at the scene of a 1993 collision between two
commuter trains in Gary, IN, witnesses reported seeing lawyers'
business cards being passed around at the scene of the accident. And
the injured were being videotaped as they were removed on stretchers.
After an August 1987 crash of a commercial airline flight in Detroit,
a man posing as a Roman Catholic priest, Father John Irish, appeared at
the scene to console families of the victims. He hugged crying mothers
and talked with grieving fathers of God's rewards in the hereafter.
Then he would hand them the business card of a Florida attorney, urging
them to call the lawyer, and then the father would disappear.
We should make sure that misleading ads and shameless ambulance
chasing do not occur. I propose a clients' bill of rights for consumers
of legal services. We have talked a lot in recent years about a
Patients' Bill of Rights to make sure patients are treated properly by
health maintenance organizations. We need a clients' bill of rights to
make sure consumers of legal services are treated fairly.
This clients' bill of rights would do two things. The first thing it
would do is require consumers of legal services to receive basic
information at the beginning, during the course, and at the end of the
case so that all along the way the client, the consumer of legal
services, has a clear understanding of what the financial relationship
is between the lawyer and the client.
As the old saying goes: Knowledge is power. My amendment empowers
consumers by giving them the knowledge they need to make informed
decisions about their legal representation. As I pointed out earlier in
one of my examples, there was a lady who had no earthly idea, because
of not receiving proper information about the extent of the cost that
could be involved in her case, that after getting a $25,000 settlement
she would essentially get nothing. The lawyer then benevolently gave
her $833.
So clients need information all along the way to make informed
decisions about legal representation.
At the initial meeting before they are retained, under the McConnell
amendment, attorneys would have to provide would-be clients with the
following things--and this is not unreasonable; it's elementary
justice--No. 1, the estimated number of hours that will be spent on the
case; No. 2, the hourly fee or the contingent fee that will be charged;
No. 3, very importantly, the probability of a successful

[[Page S6612]]

outcome; next, the estimated recovery reasonably expected; next, the
estimated cost or expenses the plaintiffs will bear; and whether a
client will be subject to fee arrangements with other lawyers.
This is elementary consumer protection. Let me say to my friends in
the Senate who are close to and allied with the plaintiffs' lawyers in
America: We are not talking about capping anybody's fees. This is not
about capping fees. The fee arrangement could still be whatever
astronomical amount the lawyer believes he can charge. But we are
talking about providing basic information to the client so the client
can understand what the fee arrangement is going to be. There are no
fee caps in this amendment.
Monthly statements: My amendment would also require lawyers to
provide their clients with monthly statements so that consumers of
legal services will be informed on a regular basis of the basic
progress of their case. Specifically, the lawyers would have to tell
clients how much time they are expending on their case, what they are
spending their time doing, and what expenses they are incurring in the
case. Again, this is basic information clients should receive so they
know how their case is progressing and how in essence their money is
being spent.
Then an accounting at the end of the case: Clients should receive
basic information at the end of the case so they know exactly what they
paid for during their representation. To this end, my amendment
provides that within 30 days after the end of the case, attorneys shall
provide clients with the number of hours expended; the amount of
expenses to be charged; the total hourly fee or the total contingency
fee in a contingency fee case; the effective hourly fee charged, which
would be determined by dividing the total contingency fee by the total
number of hours expended.
Again, this is elementary, reasonable information, no fee caps, just
providing reasonable information to the client at the end of the case
so they can understand just what the legal services have provided.
Madam President, in the age of disclosure, I cannot believe that my
colleagues would not support some basic disclosures that the first part
of my amendment would provide. It does not limit--I say again--
attorney's fees in any regard. There are no fee caps of any sort in
this amendment. Frankly, I would like to see that. We have had fee caps
under the Federal Tort Claims Act for years, and I am told there is no
dearth of lawyers prepared to bring tort claims against the United
States. But there are not any fee caps in this legislation. That is
something a large number of Members of the Senate do not support. The
first part of my amendment simply enables consumers of legal services
to make informed choices.
The second thing my amendment does is establish a bereavement rule. A
bereavement rule means the provision for a period of mourning, or a
period of bereavement, during which lawyers would have to be respectful
of injured victims or their families. As I mentioned, this provision is
important because there are disturbing stories of ambulance-chasing
lawyers who prey upon victims and their families when these people are
the most vulnerable.
To address this problem, my amendment simply provides that there will
be no unsolicited communication by lawyers to victims, or to their
families, regarding an action for personal injury, or wrongful death,
for 45 days from the date of death or personal injury--just 45 days to
give the victims, or their families, an opportunity to begin to get
their feet back under them before they start considering which lawyer,
if any, they want to retain to pursue the legal action to which they
may be entitled.
Let me repeat. This amendment applies only to unsolicited
communications. If the victims or their families are feeling like it 2
days after the event, they are certainly free to call whomever they
choose. This only applies to unsolicited communications to victims or
their families. Injured parties and their families are free to contact
whomever they want whenever they want.
Madam President, there is precedent for this respectful, considerate
principle in existing Federal law. In 1996, we passed legislation that
prohibited lawyers from engaging in unsolicited communications for 30
days following an airline disaster. Let me say it again. There is
precedent for a bereavement rule already in Federal law. In 1996, we
passed legislation that prohibited lawyers from engaging in unsolicited
communications for 30 days following an airline disaster. Just 2 years
ago, in 2000, we extended this prohibition to 45 days from the date of
an airline crash. That prohibition is codified at 49 U.S.C. section
1136(g)(2).
The point I am making here is that there is precedent in Federal law
already for a bereavement rule, and this simply expands upon that
preference and provides this protection for additional victims during a
period of mourning.
Madam President, someone who has been killed or injured in a train
crash or a shipping accident is just as dead, or just as injured, as
someone who is killed or injured in an airline crash. These victims and
their families deserve the same type of respect and consideration. All
these types of victims and their families are in a vulnerable state
where it is easy for them to be pressured or taken advantage of.
The second part of my amendment would afford victims of other
tragedies the same protection that we afford victims of airline
disasters. The language in my amendment that we used to do so is
virtually identical to current Federal law. It would guarantee these
people a reasonable period of time to grieve, collect their thoughts,
and to think clearly about what action they want to take and who they
want to take such action on their behalf.

As I said, there is current precedent for it in Federal law, and I
hope my colleagues will support it, along with the disclosure
provisions in my amendment.
Madam President, what is the time situation?
The PRESIDING OFFICER. The Senator has 20 minutes remaining.
Mr. McCONNELL. Madam President, let me sum up what the McConnell
amendment is. There are essentially two parts to it. First, it would
require that lawyers provide to their clients all along the way, from
initially being retained until the conclusion of the case, adequate
consumer protection information so the clients will have a sense at
every stage of the case how the case is moving along, what the
likelihood of success is and, very importantly, what kind of costs the
client may be incurring in the course of the litigation.
Secondly, we provide for a bereavement rule of 45 days to give the
victims and their families an opportunity to get back on their feet
during an atmosphere in which unsolicited efforts to retain these
victims are put off. If, however, the family at any point during that
45-day period decides it is ready to move on and wants to look at its
legal options, there is nothing in the amendment that would prevent the
victim or victim's families from retaining a lawyer at any time. All
this does is protect them from unwanted solicitations for a brief
period of 45 days following the occurrence of the event.
As I pointed out, there is already precedent in Federal law for such
a bereavement period of 45 days. That applies in the wake of airline
disasters.
Finally, let me repeat this because I know this is something that is
offensive to many Members of the Senate, particularly on the other side
of the aisle. As much as I would like to see fee caps established, this
amendment has no fee caps in it. Even though, under the Federal Tort
Claims Act, since the late 1940s, we have had a fee cap of 25 percent
in tort actions against the Federal Government, no such fee cap is in
this amendment.
So I think this is a modest proposal to provide consumer protection
to victims of accidents as they contemplate their futures and
determine, first, which lawyer to hire, and after hiring the lawyer,
have adequate information along the way to make sure they understand
what the fee arrangement is.
I yield the floor and retain the remainder of my time and now urge--
and I will also do so later--the Senate to adopt this amendment.
The PRESIDING OFFICER (Mrs. Clinton). Who yields time?
Mr. SARBANES. Madam President, can I inquire as to what the
allocation of time is? Let me make a parliamentary inquiry. I
understand the vote on a motion to table that will be offered by
Senator Enzi is scheduled to take place at 12:45.

[[Page S6613]]

The PRESIDING OFFICER. That is correct.
Mr. SARBANES. Can the Chair inform us as to the allocation of time
from now until quarter to 1?
The PRESIDING OFFICER. The unanimous consent agreement provided that
the time between the conclusion of Senator McConnell's remarks and the
12:45 p.m. vote will be evenly divided between Senators Gramm and
Sarbanes, and Senator McConnell has a remaining amount of time of 16
minutes.
Mr. SARBANES. Sixteen minutes?
The PRESIDING OFFICER. That is correct.
Mr. McCONNELL. Madam President, is it the Senator's thought we move
up the vote?
Mr. SARBANES. Staff has made an announcement, and people have planned
accordingly. I understand that is the situation on both sides of the
aisle for that matter. It was announced earlier on. People, therefore,
made plans accordingly.
The PRESIDING OFFICER. If Senator McConnell used all of his remaining
time, each side would have approximately 10 minutes.
Mr. McCONNELL. I say to my friend from Maryland, I will be happy to
hear from the other side on the amendment. I am reluctant to yield back
my time until I know the extent of the debate in which we are going to
engage. In any event, the vote, Madam President, occurs at quarter to
1?
The PRESIDING OFFICER. That is correct.
Mr. McCONNELL. I retain the remainder of my time until such time we
decide otherwise. I have not heard from the other side.
Mr. SARBANES. As I understand the agreement, I do not think others
can use time until the Senator from Kentucky uses his time.
The PRESIDING OFFICER. That is the Chair's understanding.
Mr. McCONNELL. I suggest we divide the remainder of the time between
now and the vote. Will that be acceptable?
The PRESIDING OFFICER. Is there objection?
Mr. SARBANES. I ask unanimous consent that the remaining time between
now and quarter of 1 be divided equally to the manager of the bill, to
Senator Enzi, and to Senator McConnell. That will give us about 10
minutes each, I think.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Maryland.
Mr. SARBANES. Madam President, I will speak briefly to the McConnell
amendment which has been added as a second-degree amendment to the
Edwards-Enzi amendment. Before I address that amendment itself, let me
again indicate my very strong support for the underlying first-degree
amendment, the Edwards-Enzi amendment, which was very carefully worked
out and I believe represents a constructive suggestion. I am hopeful we
can get to that amendment and have a vote on it sometime in the near
future.
Obviously, the way things are now structured, we have to dispose of
the McConnell second-degree amendment in order to get to the Edwards-
Enzi amendment, but I think the Edwards-Enzi amendment warrants both
the attention and the support of this body. I hope at some point we
will be able to do that.
I am not going to address the substance of the McConnell amendment,
or perhaps I will discuss it only in passing. I simply wish to observe
that it is not relevant to this bill. It is talking about a client's
bill of rights which may or may not be a worthy subject to examine.
How we regulate the lawyers is a complicated problem, obviously. It
has mostly been done at the State level. The Senator from Kentucky has
some sweeping proposals on a national basis, and they may warrant
examination, but I certainly do not think they warrant coming into this
debate on a very different issue. I do not know that there has been any
study of it. I do not think this represents the recommendation or the
report of any committee that is putting this forward, having undertaken
an appropriate series of hearings in order to examine the subject. I
have not had the benefit of testimony from the proponents and
opponents. In fact, if the Senator from Kentucky will yield for a
question, has a committee of the Senate recommended anything like this?

Mr. McCONNELL. I say to my friend from Maryland, no committee of the
Senate recommended the energy bill on which we spent 6 weeks in the
Senate, and the majority leader has bypassed committees consistently
throughout the last year. So I do not know that the Senate was
constrained in any way--
Mr. SARBANES. It may be a response to say to me it was done somewhere
else. I have a very specific question: Has a committee of the Senate
recommended this proposal?
Mr. McCONNELL. I would like to provide my own answer. If the Senator
is asking for an answer from the Senator from Kentucky, I would like to
be able to express myself, if that is OK with the Senator from
Maryland.
Mr. SARBANES. The Senator from Kentucky is very skilled. I watched
him on these television programs. I know he is very good when the
question is put to him to give the answer he wants to give, even though
it is not directed to the question. Obviously, I will have to go
through that same experience on the floor of the Senate now.
Mr. McCONNELL. I thank my friend from Maryland for his compliment and
respond, as with many other bills over the last year that we dealt with
on the floor of the Senate, it has not been reported by a committee.
But many worthwhile ideas have been adopted and made a part of law that
have been recommended by both Democratic and Republican Senators that,
in the years my friend and I have been here, were not officially
reported out of a committee.
Mr. SARBANES. Have any hearings been held on these proposals--the
bereavement period and the fees proposal? Have hearings been held on
those issues?
Mr. McCONNELL. I am unaware of any hearings to that effect, but I ask
my friend from Maryland why he thinks something as elementary as this,
something as obviously as fair as this, and in the case of the
bereavement rule, which we adopted in Federal law for families and
victims of airline crashes, would not be an appropriate thing to do
with or without hearings?
Mr. SARBANES. It seems to me there are complicated issues that are
raised by Senator McConnell's proposal, and they certainly should have
been preceded by hearings in which the pros and cons could have been
carefully examined.
Madam President, I reiterate my point, this amendment is not relevant
to the issue before us. It does not come to us on the basis of any
hearings that back up or buttress the proposal. It has not worked
through any committee. It certainly has not been recommended by any
committee, and there have not even been any hearings, as I understand
it, by any committee.
At the appropriate time, I will be very strongly supportive of the
motion to table that will be offered by the able Senator from Wyoming.
This is, of course, the second McConnell second-degree amendment we
have had to deal with on this legislation.
I hope the Senator from Kentucky does not view this as a kind of fair
hunting game to bring forth at each step along the way, whenever there
is an opening for a second-degree amendment, whatever sort of pet
project he has been harboring in his office for whatever period of
time.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. I yield myself some of my time to respond to my friend
from Maryland.
As I listened carefully to my friend from Maryland, he is straining
to think of a good argument against this worthwhile amendment. It has
been my experience over the years in the Senate that when we start
saying there has been no committee action, there have been no hearings,
we are having a hard time thinking of a good argument against the
proposal on the merits.
So let me repeat again what the merits are. It seems to me we do not
need committee hearings or committee action to convince us that a 45-
day bereavement rule for victims and their families, which we have
already adopted in Federal law for victims and families of plane
crashes--we do not need committee action to tell us this is a
fundamentally appropriate thing to do.

[[Page S6614]]

Do we need hearings and committee action to tell us that in Federal
claims and in Federal cases it is appropriate and only right that
lawyers provide information to their clients at the beginning, during,
and at the end of their handling of the case as to the possible costs
involved? That is what is before us, not the issue of whether or not we
should have hearings on this or whether or not the committee should
act. My goodness, we spent 6 weeks on an energy bill that the committee
did not pass out of the Energy Committee. We do that frequently. The
Senate is not known to be constrained by tight rules of germaneness,
nor by official committee action.
So I urge my colleagues to look at the amendment itself, not these
rather extraneous arguments seeking to divert our attention away from
what the amendment itself provides, which is protections for consumers
of legal services.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. SARBANES. Madam President, on the energy analysis, I simply point
out that the Energy Committee held extended hearings over a long period
of time on the energy issue. Then, they did not actually evolve a bill,
but they had a very full set of hearings and a lot of recommendations
available to be included in an energy package.
On the other, I say to my colleague, I forbore from discussing the
substance because I did not want to prejudice the Senator on some
future occasion by having to go substantively into the weaknesses and
deficiencies of the proposal that is before us. Since the time is
limited and that would take quite a while to do, I intend to continue
to do that out of a sense of consideration to my colleague because
presumably, if this amendment is tabled, he will be back visiting with
us on another day, perhaps on an appropriate vehicle. I do not know.
One would have to wait and see whether that would be realized.
Out of some deference of respect for my friend from Kentucky, I
simply thought I would not undertake to go into this point by point on
the substance because it is really not appropriate. We ought to
recognize that and go ahead and table the amendment, and maybe when it
finally comes up in an appropriate context, we can then address its
substantive weaknesses or strengths. Perhaps at that time it would have
evolved into a different animal.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
The Senator from Wyoming.
Mr. ENZI. Madam President, I yield myself such time as I may consume.
At 12:45, I will be making a motion to table the McConnell second-
degree amendment to amendment No. 4200. We are working on a bill that I
have spent hundreds of hours on, part of them in hearings, much of the
time in drafting my own legislation, then working with Senator Gramm to
come up with an even better bill, and then working with Senator
Sarbanes to come up with the bill we have before us.
There is a crisis in the stock market. Two days ago, it dropped by
185 points. Yesterday, it dropped by 285 points. Some suggest that is
because Congress is working on this issue and it is scaring the heck
out of the people of the United States. I hope that is not the case. I
hope it is a sign that they do want to have a solution, and they want
to have a solution quickly. We do have the solution that, combined with
the House bill, can serve the purpose of restoring the confidence of
American investors.
The McConnell amendment is a clients' bill of rights to reform the
way attorneys treat their clients. It is not about securities and
exchange. It is all about attorneys. Senator Edwards and I modified our
amendment so it applies only to action before the Securities and
Exchange Commission. That was so that if this debate draws out with
multiple second-degree amendments well beyond the time we have the
cloture vote, our amendment will still be germane.
A standard that the Senator from Texas, Mr. Gramm, has put on
amendments is that they be germane. He did an extensive speech last
night about the need to do germane amendments and get this finished.
This amendment is good and well intended. It requires attorneys to do
a number of things in representing those who put their trust in
attorneys' hands, and this includes requiring attorneys to provide
written disclosure to their clients on the number of hours that will be
spent on their case, the attorney's hourly or contingent fee, the
probability of successful outcome, estimated recovery of costs, and
bereavement.
Under normal circumstances, I probably would be very excited about
this bill. The reason I am opposing it is simply because it does not
have anyplace in the accounting reform bill that we are debating today.
I realize it does not change anything in my amendment. It is not a
substitute amendment, but it is an addition that will cause problems
further down the road. It will delay actually getting accounting reform
into place. The accounting reform bill is being used as a vehicle to
provide a free ride for a nongermane, unrelated amendment. I will
probably use that same line again on a number of other amendments that
come up later--it is nongermane.
The McConnell amendment needs to hitchhike on a different road with a
different vehicle at a different time.
Over several months, I and my esteemed colleagues on both sides of
this aisle have worked hard on the accounting reform bill. We have
worked hard to keep out surplus, nonrelevant issues so we can get
through the process of getting accounting legislation through in a
timely fashion and in a bipartisan manner. We have been very successful
at keeping out exact amendments even that deal with how to do
accounting and have set up a process where people who are knowledgeable
on that can figure out the right way to do it and the right way to do
it faster than before.
I strongly believe this bill cannot afford to be held up any longer
just for Members on both sides of the aisle to score political points
on hot button issues. A lot of us have pet projects and issues we would
have liked to add on, but we resisted and we encouraged our colleagues
on the Banking Committee to do the same thing.
We are now in the amendment process, but amendments should be germane
to the contents of the underlying bill and amendment. That is not a
requirement until after cloture, but we need to get the bill done.
There is no reason we even need to go to cloture if we would get the
germane amendments done and get this into a conference committee so we
can get the work done.
The McConnell second-degree amendment, while well intended, is not
germane. It does not deal solely with securities laws or those
attorneys appearing and practicing before the SEC. It does not deal
solely with attorneys working for publicly traded companies but to any
attorney and any client practicing any form of Federal law. It does not
deal with an attorney's professional responsibilities of reporting
Federal securities law violations to its corporate client. It is much
broader than the underlying amendment which does deal strictly with
Federal securities laws, attorneys appearing and practicing before the
SEC, and internal reporting by an attorney within a publicly traded
company.
In addition, the McConnell amendment is going to require study and
debate, meaning more time spent diverting passage of the much needed
accounting reform bill. We are running out of time before the next
recess and have several important bills yet to consider, including
Homeland Security Department legislation.
While the McConnell amendment is well intended, the timing is simply
wrong. I respect my colleague from Kentucky and his constant support
and earnest effort to make attorneys play it straight with their
clients. But I must respectfully oppose this amendment at this time. I
hope we will be able to debate and vote on it on another day. When the
time is appropriate under the agreement, I will make a motion to table
the amendment.
I yield the floor, and I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. Madam President, let me say first with regard to
whether this is appropriate to be added to this bill, the ranking
member of the Banking Committee, the manager of the bill

[[Page S6615]]

on this side, supports my amendment. Obviously, it is not his view that
this is in any way inappropriate for this legislation.
I also say to my good friend from Wyoming, this will not slow down
the bill. This amendment will be voted on at 12:45. There is a time
agreement on it. We certainly are not in any way trying to slow down
the passage of the underlying bill which I fully expect to support.
The issue is whether we are only interested in corporate defense
counsel misbehavior. Why are we only interested in corporate defense
counsel misbehavior? My amendment applies to the other side, the
plaintiff's side. It would apply to cases, for example, brought under
the Federal Employers Liability Act, which governs injury and wrongful
death actions against railroads in interstate commerce by railroad
workers and their families. It would apply to cases brought under the
Longshore and Harbor Workers Compensation Act, which establishes no-
fault compensation for employees injured on navigable rivers. And it
would apply to plaintiffs bringing action under the Price Anderson Act
amendments of 1998, which creates a Federal cause of action for nuclear
accidents. It would also apply to the Federal Tort Claims Act, which
creates Federal causes of action for tort claims against the U.S.
Government. It would apply to lawyers representing clients bringing
cases under the Public Health Service Act, which are suits against
certain federally supported health centers and their employees brought
under the Federal Tort Claims Act. And finally, it would apply to
lawyers representing clients bringing actions under part of Federal
law, very important in my State, the Black Lung Benefits Act of 1972,
which establishes a compensation scheme for coal miners allegedly
suffering from blank lung disease and survivors of miners who died from
or were totally disabled by the disease.
Let me sum it up again: it is not my intent to slow the bill down.
This amendment will be voted on at 12:45, so it clearly is not slowing
anything down. It seems to me entirely consistent with the underlying
amendment dealing with corporate defense counsel misbehavior to also
address the question of a plaintiff's lawyer's misbehavior.
Beyond that, we are talking simply about providing consumers of legal
services with basic information, at the beginning, during, and at the
end of a lawsuit, and a modest 45-day bereavement rule giving the
victims and their families a chance to get back on their feet before
they are contacted by lawyers seeking to represent them in court. It
would not in any way prevent families from contacting a lawyer during
that time but would protect them from unwarranted solicitation of legal
services for a mere 45 days.
This is a very modest proposal. I would love to go a lot further. I
like the fee caps in the Federal Tort Claims Act. That is not what we
have offered. That is not what I offered. There is no impact on fees,
no caps on damages. This is strictly consumer protection in the area of
legal services. It is a very modest proposal which I hope the Senate
will adopt when we vote on it at 12:45.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Madam President, I will give a little explanation for the
point raised that this particular bill--because a time has been set for
the vote--will not hold things up. There are about 60 amendments out
there; there are probably 10 that actually deal with what is in the
bill. There has to be some point where we have to ask, Can we not
concentrate on what is in the bill instead of bringing up the other
things? I am sorry that yours is the bill on which we are starting
that.
Mr. McCONNELL. Will the Senator yield?
Mr. ENZI. Sure.
Mr. McCONNELL. It was my understanding that cloture was filed last
night. Would my friend from Wyoming not agree, that cloture vote brings
the bill to a conclusion? I am not in any way trying to delay the
passage of the bill. I support the underlying bill. I believe my
amendment is appropriate to be considered.
Mr. SARBANES. Will the Senator yield?
Mr. ENZI. Yes.
Mr. SARBANES. Actually, I will use my own time, and the Senator may
reserve his time.
We must table this amendment. Otherwise, it becomes an invitation for
others to come in and offer second-degree amendments that are not
relevant to the bill. This amendment is not relevant to the bill--
nowhere close. If we start this process now, opening up the bill to
these nonrelevant amendments, what will happen to the relevant
amendments, some of which are germane under cloture and others of which
might miss the tight test of germaneness but are relevant material,
which are pending, which other colleagues have offered, if they want to
get to those amendments?
We could have done the Edwards amendment yesterday and moved on to
something else, but we came in with a second-degree amendment, not
relevant--not only not relevant to the Edwards amendment, not relevant
to the bill.
Frankly, we are well beyond the point where we at least ought to set
aside amendments that have no relevance to the underlying legislation.
Mr. McCONNELL. Will the Senator yield?
Mr. SARBANES. Certainly, I yield.
Mr. McCONNELL. I ask my friend from Maryland, if he believes my
amendment may have some merit, whether he would support taking it up as
a freestanding measure with a time agreement.
Mr. SARBANES. No, I would not support that.
Mr. McCONNELL. I thank the Senator.
Mr. SARBANES. Why would I support a request like that? Surely the
Senator from Kentucky is just making a joke on the floor of the Senate
by making that inquiry. That must be apparent to all. I appreciate the
Senator's sense of humor in that regard. I also appreciate his
indication, just a moment or two ago, he intends to support the
underlying bill. Of course, we are gratified to hear that.
I yield the floor and reserve whatever time I may have left.
What is the time situation?
The PRESIDING OFFICER. The Senator has 33 seconds, Senator McConnell
has 4 minutes 38 seconds, and the Senator from Wyoming has 3 minutes.
Who yields time?
The PRESIDING OFFICER. The Senator from Kentucky.
Mr. McCONNELL. It was my understanding that Senator Santorum was on
the way. But if he has not arrived yet, I suppose the best thing to do
would be to enter a quorum call knowing full well my time is running.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. REID. Madam President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Madam President, I will alert Members we are going to have
a vote later. The two members of the Appropriations Committee have
finally gotten a meeting with the House appropriators on the
supplemental appropriations bill. I think it would be in everyone's
best interest that they are allowed to go forward with that most
important meeting.
We received a request from the chairman of the Appropriations
Committee, Senator Byrd. Therefore, I ask unanimous consent that the
order that is now in effect be modified and that Senator Enzi would be
recognized at 2 p.m. to move to table the amendment, and that 8 minutes
prior to that would be devoted to debate between the two managers of
the bill, Senator Sarbanes and Senator Gramm, and that Senator Enzi
would be recognized for 2 minutes, and Senator McConnell for 2
minutes--a total of 8 minutes. All other provisions of the unanimous
consent agreement now in effect would remain the way they are.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. REID. Madam President, the vote will occur at 2 o'clock today. In
the meantime, I ask there be a period from now until then for morning
business, with the time equally divided between Senator Daschle or his
designee or Senator Lott or his designee.

[[Page S6616]]

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. I suggest the absence of a quorum, and I ask the time be
charged equally between Senator Daschle and Senator Lott.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will call the roll.
The bill clerk proceeded to call the roll.
Mrs. CLINTON. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Miller). Without objection, it is so
ordered.

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