[Congressional Record Volume 149, Number 89 (Tuesday, June 17, 2003)]
[House]
[Pages H5421-H5424]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      ACCOUNTANT, COMPLIANCE, AND ENFORCEMENT STAFFING ACT OF 2003

  Mr. BAKER. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 658) to provide for the protection of investors, increase 
confidence in the capital markets system, and fully implement the 
Sarbanes-Oxley Act of 2003 by streamlining the hiring process for 
certain employment positions in the Securities and Exchange Commission, 
as amended.
  The Clerk read as follows:

                                H.R. 658

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Accountant, Compliance, and 
     Enforcement Staffing Act of 2003''.

     SEC. 2. APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, AND EXAMINERS 
                   BY THE SECURITIES AND EXCHANGE COMMISSION.

       (a) In General.--Subchapter I of chapter 31 of title 5, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 3114. Appointment of accountants, economists, and 
       examiners by the Securities and Exchange Commission

       ``(a) Applicability.--This section applies with respect to 
     any position of accountant, economist, and securities 
     compliance examiner at the Commission that is in the 
     competitive service.
       ``(b) Appointment Authority.--
       ``(1) In general.--The Commission may appoint candidates to 
     any position described in subsection (a)--
       ``(A) in accordance with the statutes, rules, and 
     regulations governing appointments in the excepted service; 
     and
       ``(B) notwithstanding any statutes, rules, and regulations 
     governing appointments in the competitive service.
       ``(2) Rule of construction.--The appointment of a candidate 
     to a position under authority of this subsection shall not be 
     considered to cause such position to be converted from the 
     competitive service to the excepted service.
       ``(c) Reports.--No later than 90 days after the end of 
     fiscal year 2003 (for fiscal year 2003) and 90 days after the 
     end of fiscal year 2005 (for fiscal years 2004 and 2005), the 
     Commission shall submit a report with respect to its exercise 
     of the authority granted by subsection (b) during such fiscal 
     years to the Committee on Government Reform and the Committee 
     on Financial Services of the House of Representatives and the 
     Committee on Governmental Affairs and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate. Such 
     reports shall describe the changes in the hiring process 
     authorized by such subsection, including relevant information 
     related to--
       ``(1) the quality of candidates;
       ``(2) the procedures used by the Commission to select 
     candidates through the streamlined hiring process;
       ``(3) the numbers, types, and grades of employees hired 
     under the authority;
       ``(4) any benefits or shortcomings associated with the use 
     of the authority;
       ``(5) the effect of the exercise of the authority on the 
     hiring of veterans and other demographic groups; and
       ``(6) the way in which managers were trained in the 
     administration of the streamlined hiring system.
       ``(d) Commission Defined.--For purposes of this section, 
     the term `Commission' means the Securities and Exchange 
     Commission.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     31 of title 5, United States Code, is amended by inserting 
     after the item relating to section 3113 the following:

``3114. Appointment of accountants, economists, and examiners by the 
              Securities and Exchange Commission.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Louisiana (Mr. Baker) and the gentleman from Massachusetts (Mr. Frank) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Louisiana (Mr. Baker).


                             General Leave

  Mr. BAKER. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on this legislation.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Louisiana?
  There was no objection.
  Mr. BAKER. Madam Speaker, I yield myself such time as I may consume.
  It is not long ago that the revolutions of corporate misgovernance 
became apparent to not only those within the corporate world, but to 
investors around the country. The resulting consequences led many hard-
working families who had planned on retirements to reconsider those 
plans, as the value of the 401(k)s and pensions and savings plans 
eroded, literally overnight.
  In addition to those concerns, it was revealed to the American people 
that there were corporate executives who

[[Page H5422]]

had abused their privileges as the leader of an important national 
corporation and taken resources inappropriately, illegally, and used 
them for their own personal gain.
  In light of these revelations, the SEC came to this Congress and 
first asked for additional funding to enhance their regulatory and 
enforcement capabilities, and this Congress responded. Unfortunately, 
because of the rules in which the Securities and Exchange Commission is 
constrained, the ability to utilize that $300 million was greatly 
inhibited.

                              {time}  1230

  In fact, there is a provision within the securities and exchange 
civil service law which provides for expedited hiring of legal counsel. 
This particular provision is very narrow in scope but has been utilized 
successfully over the years to enable the SEC to acquire those legal 
services as it deems necessary. This provision is known as the excepted 
service. It is the purpose of this resolution to expand the scope of 
the excepted service to enable the SEC to further respond to identified 
problems in the area of accountancy, examination and economics.
  If passed, this resolution would enable the Commission to move in an 
expedited manner to hire the needed accountants, examiners and 
economists in order to fulfill the mission described for them by this 
Congress. It solves these problems in a proficient and expedited manner 
and is important that the SEC have these authorities as stipulated to 
restore confidence to the investing public.
  This is achieved without, I am aware, any opposition to the manner in 
which the bill is currently constructed. In fact, the union that 
represents the affected class of employees has now endorsed the 
legislation in its current form. I am not aware of any pending 
objection. I am aware of broad-based support, bipartisan support, and 
the legislation was reported out of committee without objection.
  Madam Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield myself such time 
as I may consume.
  I am glad to join in urging support for this bill. I want to 
recognize the good work done by the gentleman from Pennsylvania (Mr. 
Kanjorski) who is the ranking Democrat on this subcommittee, who could 
not be here with us today, but he spent a lot of time on it, and we 
have a very useful compromise.
  Essentially, we had this situation where we all agreed there was a 
need to expand the Securities and Exchange Commission. We responded 
more slowly than it would have liked, but we responded by increasing 
the budget to the Securities and Exchange Commission.
  Essentially, what happened is the legislation passed last year to 
improve the regulation of the corporate sector authorized increased 
spending for the SEC. The Congress was slow in living up to that 
promise, but finally, by early this year, we did it, but then the 
question was having voted on the additional money, in their case 
overwhelmingly for staff, how quickly could we hire people because 
under the normal rules the Federal Government is not expeditious in 
hiring people, and that is reasonable. There is often not an emergency, 
and we want to make sure we do it right.
  In this case, we wanted to see that hiring was done more quickly. 
There was an original proposal that came that would have allowed people 
to be hired very quickly and, once hired, to remain in a somewhat 
separate status from other employees.
  I want to acknowledge the very responsive attitude of the union that 
represents employees at the SEC, the National Treasury Employees Union. 
I met and talked with them, as did the gentleman from Pennsylvania whom 
I have mentioned, and we found them to be, not surprisingly, as they 
usually are, in a very cooperative mood, and they understood that there 
were two important issues. One was to enhance the ability of the SEC to 
hire people quickly so we could put the regulatory structure in place, 
but also to make sure that employees hired had the protections that any 
employee is entitled to have against political abuse, against arbitrary 
mistreatment, et cetera.
  So what this legislation embodies is a very sensible compromise. The 
SEC will be given under this bill the ability to hire quickly. It will 
be able to hire without some of the normal rules that would slow them 
down, but once the people are hired, they will then have all the rights 
and all of the protections that any other employee would have had. It 
meets the need and sometimes what we do in government is kind of overdo 
or underdo.
  The need here was to hire quickly. There was not the need, we felt, 
to totally revamp the employee procedures of the SEC. This bill is 
carefully tailored to do exactly what was needed and no more. It allows 
the SEC to hire quickly, to take full advantage of the additional 
funds. My understanding is that over 500 people will be hired under 
this, accountants and economists and others, but once they are hired, 
they will not be different than the other employees. We will not have 
this problem of two classes of employees, some with this set of rights, 
some with that set of rights. They will be fully integrated into the 
SEC's workforce.
  It is a workforce which does very good work, which has been 
overstressed because we gave them a lot more to do and did not 
immediately give them the resources. This is a case where taking the 
appropriation bill, together with this bill, we will have given the 
SEC, whose new chairman, I must say Mr. Donaldson seems to be 
performing admirably, and I think we are all encouraged that he has 
done so well, and I think that contributes to the enthusiasm with which 
we support this legislation. There is a great deal of confidence that 
he will use this authority in a very appropriate way.
  What we have done now is to structure things so the SEC will be able 
to take full advantage of the appropriation. They will be able to hire 
the people and the investing public and the American economy will get 
the protection they deserve.
  Madam Speaker, I reserve the balance of my time.
  Mr. BAKER. Madam Speaker, I yield myself such time as I may consume, 
for the purpose of just complimenting the gentleman on his statement 
and expressing my appreciation to him for the courtesies extended 
during the formulation of this legislation.
  At the outset, there were modest differences. I think we were able to 
reach compromise, and I think not only for the SEC function but for 
taxpayers, shareholders as well, and I appreciate the courtesies 
extended.
  Madam Speaker, I yield 3 minutes to the gentlewoman from New York 
(Mrs. Kelly).
  Mrs. KELLY. Madam Speaker, I rise in strong support of H.R. 658, the 
Accountant, Compliance and Enforcement Staffing Act of 2003. This 
legislation will help streamline the hiring process at the SEC, and it 
will allow the Commission to employ additional, much-needed securities 
industry accountants, compliance examiners and economists in an 
expedited manner. Believe me, they need it.
  As we work to improve investor confidence, I think it is very 
important that we work to strengthen the SEC and send a clear message 
to the American people that we are not going to tolerate corporate 
misconduct.
  Last year, Congress increased the funding for the SEC by more than 
$270 million. It was a 62 percent increase. We did that because we want 
to help America understand that we are not going to tolerate corporate 
misconduct. This monumental increase will help the SEC to enhance their 
overall operations which are crucial to implementing and enforcing new 
corporate governance requirements under the Sarbanes-Oxley bill, but 
the Commission is still severely hamstrung by current hiring practices. 
Now the need for this legislation is more urgent than ever.
  With the hiring of accountant positions lagging far behind other 
professionals in the SEC, it is imperative that Congress give the 
Commission direct hiring authority for these critical positions. What 
we must do is enable the agency to fill them in a timely manner, the 
quicker the better, and that is what this legislation does.
  I commend the gentleman from Louisiana (Mr. Baker) for introducing 
this important legislation and the gentleman from Ohio (Mr. Oxley) for 
moving it through the committee and

[[Page H5423]]

working with the House leadership to get it on the floor. They have 
continued to work tirelessly on these issue and they are to be 
commended.
  Mr. Speaker, I urge my colleagues to support this legislation and 
help the SEC protect America's investors and restore integrity in the 
market.
  Mr. FRANK of Massachusetts. Madam Speaker, I reserve the balance of 
my time.
  Mr. BAKER. Madam Speaker, I yield 2 minutes to the gentlewoman from 
Florida (Ms. Ginny Brown-Waite).
  Ms. GINNY BROWN-WAITE of Florida. Madam Speaker, I rise today in 
support of H.R. 658, the Accountant, Compliance and Enforcement 
Staffing Act of 2003. This very critical legislation will allow the 
Securities and Exchange Commission to hire much-needed accountants, 
compliance examiners and economists outside of the bureaucratic and 
burdensome civil service hiring guidelines.
  In fiscal year 2003, we increased the Securities and Exchange 
Commission's budget by 63 percent, largely to allow for an additional 
800 professional staff members. On top of that, last year's 
supplemental appropriation bill provided $25 million to the SEC for the 
purpose of hiring 125 new accountants, examiners and economists. This 
increased funding was provided because the SEC desperately needs these 
professionals to enforce the Sarbanes-Oxley corporate accountability 
reforms, corporate accountability standards that were established by 
this body and standards that are very vital importance for investor 
protection. Yet, because of the bureaucratic civil service hiring 
guidelines, these positions have not yet been filled.
  H.R. 658 does not set new precedent. Indeed, all FBI employees, as 
well as health care professionals at the Department of Defense, are 
exempt from civil service hiring standards. This is good, common sense 
legislation that will significantly help the Securities and Exchange 
Commission protect investors.
  I commend the gentleman from Louisiana (Mr. Baker) for crafting this 
important and very timely bipartisan bill, and I urge my colleagues to 
join me in support.
  Mrs. KELLY. Madam Speaker, I ask unanimous consent that I be 
permitted to control the remainder of the time for consideration of 
H.R. 658.
  The SPEAKER pro tempore (Mrs. Biggert). Is there objection to the 
request of the gentlewoman from New York?
  There was no objection.
  Mr. OXLEY. Madam Speaker, this no-cost, commonsense legislation will 
help the Securities and Exchange Commission carry out its critical 
mission of protecting investors and promoting capital formation and 
economic growth.
  With the passage of last year's corporate accountability legislation 
and a substantial budgetary increase, this year the understaffed SEC 
must hire over 800 new professionals--accountants, securities 
compliance examiners, and economists--in order to fulfill its 
regulatory obligations.
  In a troubling development, the Commission has had an extraordinarily 
difficult time hiring these accountants and other professionals 
responsible for monitoring compliance with the securities laws. Under 
current bureaucratic rules, it takes the Commission up to 6 months to 
hire a single accountant, examiner, or economist. Attorneys are 
classified as ``excepted service'' employees and thus fall outside 
these burdensome hiring requirements.
  Quite simply, this legislation will make it easier for the SEC to 
hire these professionals in an expeditious manner. That is good news 
for investors, and will help restore public confidence in the markets. 
It is strongly supported by both the union and management at the 
Commission.
  I want to commend Chairman Baker for crafting an excellent bipartisan 
bill and urge all my colleagues to join me in support. I yield back.
  Madam Speaker, I also want to thank the gentleman from Virginia (Mr. 
Davis), the chairman of the Committee on Government Reform, for his 
cooperation and assistance in moving this important measure forward. I 
am placing in the Record an exchange of correspondence regarding our 
committees' jurisdiction on this matter.
                                         House of Representatives,


                               Committee on Government Reform,

                                    Washington, DC, June 16, 2003.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, House of 
         Representatives, Washington, DC.
       Dear Mr. Oxley: Thank you for working with me in developing 
     H.R. 658, ``Accountant, Compliance, and Enforcement Staffing 
     Act of 2003.'' As you know, the Committee on Government 
     Reform reported the bill, H.R. 1836, the Civil Service and 
     National Security Personnel Improvement Act. Included in that 
     Act was Title III, Subtitle A, Securities and Exchange 
     Commission. It is my understanding that you intend to move 
     H.R. 658 to the floor through the suspension process with an 
     amendment that will be substantially the same as Title III, 
     Subtitle A of H.R. 1836, as reported.
       In the interests of moving this important legislation 
     forward, I am supporting your request to move H.R. 658 
     through the suspension process with an amendment in the 
     jurisdiction of the Committee on Government Reform. The 
     Committee does hold an interest in preserving its future 
     jurisdiction with respect to issues raised in the amendment, 
     and its jurisdictional prerogatives should the provisions of 
     this bill or any Senate amendments thereto be considered in a 
     conference with the Senate. Therefore, I respectfully request 
     your support for the appointment of an appropriate number of 
     Members from our respective Committees should such a 
     conference arise.
       Finally, I would ask that you include a copy of our 
     exchange of letters on this matter in the Congressional 
     Record during floor consideration. Thank you for your 
     assistance and cooperation in this matter.
           Sincerely,
                                                        Tom Davis,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                    Washington, DC, June 16, 2003.
     Hon. Tom Davis,
     Chairman, Committee on Government Reform, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Davis: Thank you for your recent letter 
     regarding your Committee's jurisdictional interest in H.R. 
     658, the Accountant, Compliance, and Enforcement Staffing Act 
     of 2003. I appreciate all of your efforts to ensure that the 
     Securities and Exchange Commission has the resources it needs 
     to effectively carry out its responsibilities under the 
     Sarbanes-Oxley Act.
       Your understanding regarding the amendment to H.R. 658 to 
     be considered under suspension of the rules is correct, and 
     the text of the amendment will be substantially similar to 
     title III, subtitle A of H.R. 1836, as reported.
       I acknowledge your committee's jurisdictional interest in 
     this legislation and appreciate your cooperation in allowing 
     speedy consideration of the bill and amendment. I agree that 
     your decision to forego further action on the bill will not 
     prejudice the Committee on the Government Reform with respect 
     to its jurisdictional prerogatives on this or similar 
     legislation. I will support your request for an appropriate 
     number of conferees should there be a House-Senate conference 
     on this or similar legislation.
       Finally, I will include a copy of your letter and this 
     response in the Congressional Record when the legislation is 
     considered by the House.
       Thank you again for your assistance.
           Sincerely,
                                                 Michael G. Oxley,
                                                         Chairman.

  Mr. KANJORSKI. Madam Speaker, I rise to support H.R. 658, the 
Accountant, Compliance and Enforcement Staffing Act of 2003. Investor 
protection is one of my top priorities for my work on the House 
Financial Services Committee, and H.R. 658 will improve investor 
protection by allowing the Securities and Exchange Commission to 
accelerate the hiring process for hundreds of accountants, economists, 
and compliance examiners. As a result, I support this bill.
  During the last year, Democrats led the efforts in Congress to 
significantly augment the resources available to the Securities and 
Exchange Commission, including increasing its annual budget by more 
than $270 million. We increased this funding to help the Commission to 
effectively implement the Sarbanes-Oxley Act, which we enacted in 2002 
in response to a series of large-scale corporate scandals at companies 
like Enron, WorldCom, Tyco, Global Crossing, Adelphia, and Rite Aid.
  The increased appropriations provided to the Commission have 
permitted the hiring of hundreds of new professionals to police the 
securities industry. The SEC estimates that the additional resources 
provided by the fiscal 2003 budget will result in the hiring of 200 
lawyers, 250 accountants, 300 examiners, 10 economists, and some other 
specialists. This increase in the Commission's labor force comes on top 
of the additional 125 professionals that we allowed the agency to hire 
as a result of the fiscal 2002 supplemental appropriation law.
  Unfortunately, as it has worked in implement the Sarbanes-Oxley Act 
and restore investor confidence in our capital markets, the Commission 
has encountered some difficulties in identifying and expeditiously 
hiring the best workers for many of these new positions. H.R. 658 seeks 
to address this problem by streamlining the hiring process at the 
Commission for a number of specialized professions. The Commission, 
like all other government agencies, already has similar authority for 
recruiting and hiring attorneys.
  The legislative language contained in this bill resulted from 
negotiations between the

[[Page H5424]]

Commission's management and the National Treasury Employees Union's 
leaders. As a result, this legislation will accelerate the hiring of 
mission-critical workers at the Commission, it will protect the rights 
of these employees, and it will advance investor protection. I support 
each of these worthwhile goals, and congratulate the Commission and the 
National Treasury Employees Union for their good work. Their joint 
efforts help to demonstrate the effectiveness of labor-management 
cooperation in the federal workplace.
  I am also pleased that the legislation we are considering today, 
unlike the introduced bill, will require the Commission to conduct two 
studies about the implementation of this special hiring authority. The 
inclusion of this study provision, which I requested, will provide the 
Congress with information on the use of the authority, including its 
impact on the hiring of veterans, minorities, and other demographic 
groups, that will be needed to evaluate the effects of this change in 
the law. It is my expectation that the Commission will use the 
expansion of its professional ranks as an opportunity to aggressively 
seek qualified veterans and minorities to serve at the Commission.
  Although I support this bill, I differ with my colleagues on the 
other side of the aisle on one remaining issue: the length of time that 
the Commission should have this special hiring power. As currently 
drafted, H.R 658 would provide the SEC with the permanent authority to 
bypass civil service rules in order to accelerate the hiring process 
for accountants, economists, and compliance examiners. I believe that 
this special authority, requested by the Commission in a time of 
urgency, should sunset so that the Congress can evaluate the 
effectiveness of the program at an appropriate time. Because H.R 658 
will make extraordinary changes in the normal hiring process and 
because this power has the potential to be abused, the prudent course 
of action would have been for the Congress to sunset the law on a date 
certain and determine at that time whether to continue it. In short, 
the Congress should jealously guard the special powers that it grants 
government agencies.
  Accordingly, during the consideration of H.R 658 by the Financial 
Services Committee and the Government Reform Committee, I sought to 
make a good bill even better by offering an amendment to sunset the 
expedited hiring authority at the end of fiscal 2008. This amendment 
would have provided the Commission with sufficient time to meet its 
short-term staffing needs and preserved the ability of Congress to 
reevaluate this special power on a date certain. Although we did not 
include a sunset in this bill, H.R 658 is still pragmatic and desirable 
legislation.
  In closing, Madam Speaker, H.R 658 will streamline the hiring process 
for hundreds of new professionals at the Commission, it will safeguard 
the civil service rights of these workers, and it will enhance investor 
protection. Notwithstanding my one reservation concerning a sunset, 
which I hope my colleagues in the Senate will fix during their 
consideration of this bill, I support H.R 658 and urge its adoption by 
the full House.
  Mr. FRANK of Massachusetts. Madam Speaker, if the gentlewoman has no 
further requests for time, I congratulate the gentlewoman on being 
given the right to control nothing, and I yield back the balance of my 
time.
  Mrs. KELLY. Madam Speaker, we have no further requests for time, and 
we yield back the balance of our time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Louisiana (Mr. Baker) that the House suspend the rules 
and pass the bill, H.R. 658, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mrs. KELLY. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

                          ____________________