[Congressional Record Volume 150, Number 124 (Tuesday, October 5, 2004)]
[House]
[Pages H8104-H8110]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          MILITARY PERSONNEL FINANCIAL SERVICES PROTECTION ACT

  Mr. BAKER. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 5011) to prevent the sale of abusive insurance and investment 
products to military personnel, as amended.
  The Clerk read as follows:

                               H.R. 5011

       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 ``Military Personnel Financial 
     Services Protection Act''.

     SEC. 2. CONGRESSIONAL FINDINGS.

       The Congress finds the following:
       (1) Our military personnel perform great sacrifices in 
     protecting our Nation in the War on Terror and promoting 
     democracy abroad.
       (2) Our brave men and women in uniform deserve to be 
     offered first-rate financial products in order to provide for 
     their families and to save and invest for retirement.
       (3) Our military personnel are being offered high-cost 
     securities and life insurance products by some financial 
     services companies engaging in abusive and misleading sales 
     practices.
       (4) One securities product being offered to our service 
     members, the contractual plan, has largely disappeared from 
     the civilian market since the 1980s due to its excessive 
     sales charges and the emergence of low-cost products. A 50-
     percent sales commission is typically assessed against the 
     first year of contributions made under a contractual plan, 
     even though the average commission on other securities 
     products such as mutual funds is less than 6 percent on each 
     sale.
       (5) The excessive sales charge of the contractual plan 
     makes it susceptible to abusive and misleading sales 
     practices.
       (6) Certain life insurance products being offered to our 
     service members are being improperly marketed as investment 
     products. These products provide very low death benefits for 
     very high premiums that are front-loaded in the first few 
     years, making them completely inappropriate for most military 
     personnel.
       (7) Regulation of these securities and life insurance 
     products and their sale on military bases has been clearly 
     inadequate and requires Congressional legislation to address.

     SEC. 3. PROHIBITION ON FUTURE SALES OF PERIODIC PAYMENT 
                   PLANS.

       (a) Amendment.--Section 27 of the Investment Company Act of 
     1940 (15 U.S.C. 80a-27) is amended by adding at the end the 
     following new subsection:
       ``(j) Termination of Sales.--
       ``(1) Termination.--Effective 30 days after the date of 
     enactment of the Military Personnel Financial Services 
     Protection Act, it shall be unlawful, subject to subsection 
     (i)--
       ``(A) for any registered investment company to issue any 
     periodic payment plan certificate; or
       ``(B) for such company, or any depositor of or underwriter 
     for any such company, or any other person, to sell such a 
     certificate.
       ``(2) No invalidation of existing certificates.--Paragraph 
     (1) shall not be construed to alter, invalidate, or otherwise 
     affect any rights or obligations, including rights of 
     redemption, under any periodic payment plan certificate 
     issued and sold before 30 days after such date of 
     enactment.''.
       (b) Technical Amendment.--Section 27(i)(2)(B) of such Act 
     is amended by striking ``section 26(e)'' each place it 
     appears and inserting ``section 26(f)''.
       (c) Report on Refunds, Sales Practices, and Revenues From 
     Periodic Payment Plans.--Within 6 months after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall submit to the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate, a report 
     describing--
       (1) any measures taken by a broker or dealer registered 
     with the Securities and Exchange Commission pursuant to 
     section 15(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o(b)) to voluntarily refund payments made by 
     military service members on any periodic payment plan 
     certificate, and the amounts of such refunds;
       (2) after such consultation with the Secretary of Defense 
     as the Commission considers appropriate, the sales practices 
     of such brokers or dealers on military installations over the 
     past 5 years and any legislative or regulatory 
     recommendations to improve such practices; and
       (3) the revenues generated by such brokers or dealers in 
     the sales of periodic payment plan certificates over the past 
     5 years and what products such brokers or dealers market to 
     replace the revenue generated from the sales of periodic 
     payment plan certificates prohibited under subsection (a) of 
     this section.

     SEC. 4. METHOD OF MAINTAINING BROKER/DEALER REGISTRATION, 
                   DISCIPLINARY, AND OTHER DATA.

       Subsection (i) of section 15A of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o-3(i)) is amended to read as 
     follows:
       ``(i) Obligation to Maintain Registration, Disciplinary and 
     Other Data.--
       ``(1) Maintenance of system to respond to inquiries.--A 
     registered securities association shall--
       ``(A) establish and maintain a system for collecting and 
     retaining registration information;
       ``(B) establish and maintain a toll-free telephone listing, 
     and a readily accessible electronic or other process, to 
     receive and promptly respond to inquiries regarding--
       ``(i) registration information on its members and their 
     associated persons; and
       ``(ii) registration information on the members and their 
     associated persons of any registered national securities 
     exchange that uses the system described in subparagraph (A) 
     for the registration of its members and their associated 
     persons; and
       ``(C) adopt rules governing the process for making 
     inquiries and the type, scope, and presentation of 
     information to be provided in response to such inquiries in 
     consultation with any registered national securities exchange 
     providing information pursuant to subparagraph (B)(ii).
       ``(2) Recovery of costs.--Such an association may charge 
     persons making inquiries, other than individual investors, 
     reasonable fees for responses to such inquiries.

[[Page H8105]]

       ``(3) Process for disputed information.--Such an 
     association shall adopt rules establishing an administrative 
     process for disputing the accuracy of information provided in 
     response to inquiries under this subsection in consultation 
     with any registered national securities exchange providing 
     information pursuant to paragraph (1)(B)(ii).
       ``(4) Limitation of liability.--Such an association, or an 
     exchange reporting information to such an association, shall 
     not have any liability to any person for any actions taken or 
     omitted in good faith under this subsection.
       ``(5) Definition.--For purposes of this subsection, the 
     term `registration information' means the information 
     reported in connection with the registration or licensing of 
     brokers and dealers and their associated persons, including 
     disciplinary actions, regulatory, judicial, and arbitration 
     proceedings, and other information required by law, or 
     exchange or association rule, and the source and status of 
     such information.''.

     SEC. 5. FILING DEPOSITORIES FOR INVESTMENT ADVISERS.

       (a) Amendment.--Section 204 of the Investment Advisers Act 
     of 1940 (15 U.S.C. 80b-4) is amended--
       (1) by striking ``Every investment'' and inserting the 
     following:
       ``(a) In General.--Every investment''; and
       (2) by adding at the end the following:
       ``(b) Filing Depositories.--The Commission may, by rule, 
     require an investment adviser--
       ``(1) to file with the Commission any fee, application, 
     report, or notice required to be filed by this title or the 
     rules issued under this title through any entity designated 
     by the Commission for that purpose; and
       ``(2) to pay the reasonable costs associated with such 
     filing and the establishment and maintenance of the systems 
     required by subsection (c).
       ``(c) Access to Disciplinary and Other Information.--
       ``(1) Maintenance of system to respond to inquiries.--The 
     Commission shall require the entity designated by the 
     Commission under subsection (b)(1) to establish and maintain 
     a toll-free telephone listing, or a readily accessible 
     electronic or other process, to receive and promptly respond 
     to inquiries regarding registration information (including 
     disciplinary actions, regulatory, judicial, and arbitration 
     proceedings, and other information required by law or rule to 
     be reported) involving investment advisers and persons 
     associated with investment advisers.
       ``(2) Recovery of costs.--An entity designated by the 
     Commission under subsection (b)(1) may charge persons making 
     inquiries, other than individual investors, reasonable fees 
     for responses to inquiries made under paragraph (1).
       ``(3) Limitation on liability.--An entity designated by the 
     Commission under subsection (b)(1) shall not have any 
     liability to any person for any actions taken or omitted in 
     good faith under this subsection.''.
       (b) Conforming Amendments.--
       (1) Section 203A of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3a) is amended--
       (A) by striking subsection (d); and
       (B) by redesignating subsection (e) as subsection (d).
       (2) Section 306 of the National Securities Markets 
     Improvement Act of 1996 (15 U.S.C. 80b-10, note; P.L. 104-
     290; 110 Stat. 3439) is repealed.

     SEC. 6. STATE INSURANCE JURISDICTION ON MILITARY 
                   INSTALLATIONS.

       (a) Clarification of Jurisdiction.--Any law, regulation, or 
     order of a State with respect to regulating the business of 
     insurance shall apply to insurance activities conducted on 
     Federal land or facilities in the United States and abroad, 
     including military installations, except to the extent that 
     such law, regulation, or order--
       (1) directly conflicts with any applicable Federal law, 
     regulation, or authorized directive; or
       (2) would not apply if such activity were conducted on 
     State land.
       (b) Primary State Jurisdiction.--To the extent that 
     multiple State laws would otherwise apply pursuant to 
     subsection (a) to an insurance activity of an individual or 
     entity on Federal land or facilities, the State having the 
     primary duty to regulate such activity and whose laws shall 
     apply to such activity in the case of a conflict shall be--
       (1) the State within which the Federal land or facility is 
     located; or
       (2) if the Federal land or facility is located outside of 
     the United States, the State in which--
       (A) in the case of an individual engaged in the business of 
     insurance, such individual has been issued a resident 
     license; or
       (B) in the case of an entity engaged in the business of 
     insurance, such entity is domiciled.

     SEC. 7. REQUIRED DEVELOPMENT OF MILITARY PERSONNEL PROTECTION 
                   STANDARDS REGARDING INSURANCE SALES.

       (a) State Standards.--The Congress intends that--
       (1) the States collectively work with the Secretary of 
     Defense to ensure implementation of appropriate standards to 
     protect members of the Armed Forces from dishonest and 
     predatory insurance sales practices while on a military 
     installation of the United States (including installations 
     located outside of the United States); and
       (2) each State identify its role in promoting the standards 
     described in paragraph (1) in a uniform manner within 12 
     months after the date of the enactment of this Act.
       (b) State Report.--It is the sense of the Congress that the 
     NAIC should, after consultation with the Secretary of Defense 
     and within 12 months after the date of the enactment of this 
     Act, conduct a study to determine the extent to which the 
     States have met the requirement of subsection (a) and report 
     such study to the Committee on Financial Services of the 
     House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate.

     SEC. 8. REQUIRED DISCLOSURES REGARDING LIFE INSURANCE.

       (a) Requirement.--Except as provided in subsection (d), no 
     insurer or producer may sell or solicit, in person, any life 
     insurance product to any member of the Armed Forces on a 
     military installation of the United States unless a 
     disclosure in accordance with this section is provided to 
     such member before the sale of such insurance.
       (b) Disclosure.--A disclosure in accordance with this 
     section is a written disclosure that--
       (1) states that subsidized life insurance may be available 
     to the member of the Armed Forces from the Federal 
     Government;
       (2) states that the United States Government has in no way 
     sanctioned, recommended, or encouraged the sale of the 
     product being offered;
       (3) is made in plain and readily understandable language 
     and in a type font at least as large as the font used for the 
     majority of the policy; and
       (4) with respect to a sale or solicitation on Federal land 
     or facilities located outside of the United States by an 
     individual or entity engaged in the business of insurance, 
     except to the extent otherwise specifically provided by the 
     laws of such State in reference to this Act, lists the 
     address and phone number where consumer complaints are 
     received by the State insurance commissioner for the State in 
     which the individual has been issued a resident license or 
     the entity is domiciled, as applicable.
       (c) Enforcement.--If it is determined by a State or Federal 
     agency, or in a final court proceeding, that any individual 
     or entity has intentionally failed to provide a disclosure 
     required by this section, such individual or entity shall be 
     prohibited from further engaging in the business of insurance 
     with respect to employees of the Federal Government on 
     Federal land, except--
       (1) with respect to existing policies; and
       (2) to the extent required by the Federal Government 
     pursuant to previous commitments.
       (d) Exceptions.--
       (1) Federal and state insurance activity.--This section 
     shall not apply to insurance activities--
       (A) specifically contracted by or through the Federal 
     Government or any State government; or
       (B) specifically exempted from the applicability of this 
     Act by a Federal or State law, regulation, or order that 
     specifically refers to this paragraph.
       (2) Uniform state standards.--If a majority of the States 
     have adopted, in materially identical form, a standard 
     setting forth the disclosures required under this section 
     that apply to insurance solicitations and sales to military 
     personnel on military installations of the United States, 
     after the expiration of the 2-year period beginning on such 
     majority adoption, such standard shall apply in lieu of the 
     requirements of this section to all insurance solicitations 
     and sales to military personnel on military installations, 
     with respect to such States, to the extent that such 
     standards do not directly conflict with any applicable 
     authorized Federal regulation or directive.
       (3) Materially identical form.--For purposes of this 
     subsection, standards adopted by more than one State shall be 
     considered to have materially identical form to the extent 
     that such standards require or prohibit identical conduct 
     with respect to the same activity, notwithstanding that the 
     standards may differ with respect to conduct required or 
     prohibited with respect to other activities.

     SEC. 9. IMPROVING LIFE INSURANCE PRODUCT STANDARDS.

       (a) In General.--It is the sense of the Congress that the 
     NAIC should, after consultation with the Secretary of Defense 
     and within 12 months after the date of the enactment of this 
     Act, conduct a study and submit a report to the Committee on 
     Financial Services of the House of Representatives and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate on ways of improving the quality of and sale of life 
     insurance products sold by insurers and producers on military 
     installations of the United States, which may include 
     limiting sales authority to companies and producers that are 
     certified as meeting appropriate best practices procedures or 
     creating standards for products specifically designed for 
     members of the Armed Forces regardless of the sales location.
       (b) Conditional GAO Report.--If the NAIC does not submit 
     the report to the committees as described in subsection (a), 
     the Comptroller General of the United States shall study any 
     proposals that have been made to improve the quality and sale 
     of life insurance products sold by insurers and producers on 
     military installations of the United States and report to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate on such

[[Page H8106]]

     proposals within 6 months after the expiration of the period 
     referred to in subsection (a).

     SEC. 10. REQUIRED REPORTING OF DISCIPLINED INSURANCE AGENTS.

       (a) Reporting by Insurers.--After the expiration of the 2-
     year period beginning on the date of the enactment of this 
     Act, no insurer may enter into or renew a contractual 
     relationship with a producer that solicits or sells life 
     insurance on military installations of the United States 
     unless the insurer has implemented a system to report, to the 
     State insurance commissioner of the State of the domicile of 
     the insurer and the State of residence of the insurance 
     producer, disciplinary actions taken against the producer 
     with respect to the producer's sales or solicitation of 
     insurance on a military installation of the United States, as 
     follows:
       (1) Any disciplinary action taken by any government entity 
     that the insurer knows has been taken.
       (2) Any significant disciplinary action taken by the 
     insurer.
       (b) Reporting by States.--It is the sense of the Congress 
     that within 2 years after the date of the enactment of this 
     Act, the States should collectively implement a system to--
       (1) receive reports of disciplinary actions taken against 
     insurance producers by insurers or government entities with 
     respect to the producers' sale or solicitation of insurance 
     on a military installation; and
       (2) disseminate such information to all other States and to 
     the Secretary of Defense.

     SEC. 11. REPORTING BARRED PERSONS SELLING INSURANCE OR 
                   SECURITIES.

       (a) Establishment.--The Secretary of Defense shall maintain 
     a list of the name, address, and other appropriate 
     information of persons engaged in the business of securities 
     or insurance that have been barred, banned, or otherwise 
     limited in any manner that is not generally applicable to all 
     such type of persons, from any or all military installations 
     of the United States.
       (b) Notice and Access.--The Secretary shall ensure that--
       (1) the appropriate Federal and State agencies responsible 
     for securities and insurance regulation are promptly notified 
     upon the inclusion or removal of a person under such 
     agencies' jurisdiction; and
       (2) the list is kept current and easily accessible--
       (A) for use by such agencies; and
       (B) for purposes of enforcing or considering any such bar, 
     ban, or limitation by the appropriate Federal personnel, 
     including commanders of military installations.
       (c) Regulations.--
       (1) In general.--The Secretary shall issue regulations in 
     accordance with this subsection to provide for the 
     establishment and maintenance of the list under this section, 
     including appropriate due process considerations.
       (2) Timing.--
       (A) Proposed regulations.--Not later than the expiration of 
     the 60-day period beginning on the date of the enactment of 
     this Act, the Secretary shall prepare and submit to the 
     appropriate Committees a copy of the regulations under this 
     subsection that are proposed to be published for comment. The 
     Secretary may not publish such regulations for comment in the 
     Federal Register until the expiration of the 15-day period 
     beginning upon such submission to the appropriate Committees.
       (B) Final regulations.--Not later than 90 days after the 
     date of the enactment of this Act, the Secretary shall submit 
     to the appropriate Committees a copy of the regulations under 
     this section to be published as final.
       (C) Effective date.--Such regulations shall become 
     effective upon the expiration of the 30-day period beginning 
     upon such submission to the appropriate Committees.
       (3) Definition.--For the purposes of this section, the term 
     ``appropriate Committees'' means--
       (A) the Committee on Financial Services and the Committee 
     on Armed Services of the House of Representatives; and
       (B) the Committee on Banking, Housing, and Urban Affairs 
     and the Committee on Armed Services of the Senate.

     SEC. 11. SENSE OF CONGRESS.

       It is the sense of the Congress that the Federal and State 
     agencies responsible for insurance and securities regulation 
     should provide advice to the appropriate Federal entities to 
     consider--
       (1) significantly increasing the life insurance coverage 
     made available through the Federal Government to members of 
     the Armed Forces;
       (2) implementing appropriate procedures to encourage 
     members of the Armed Forces to improve their financial 
     literacy and obtain objective financial counseling before 
     purchasing additional life insurance coverage or investments 
     beyond those provided by the Federal Government; and
       (3) improving the benefits and matching contributions 
     provided under the Thrift Savings Plan to members of the 
     Armed Forces.

     SEC. 12. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Entity.--The term ``entity'' includes insurers.
       (2) Individual.--The term ``individual'' includes insurance 
     agents and producers.
       (3) NAIC.--The term ``NAIC'' means the National Association 
     of Insurance Commissioners.
       (4) State insurance commissioner.--The term ``State 
     insurance commissioner'' means, with respect to a State, the 
     officer, agency, or other entity of the State that has 
     primary regulatory authority over the business of insurance 
     and over any person engaged in the business of insurance, to 
     the extent of such business activities, in such State.

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


                             General Leave

  Mr. BAKER. Mr. 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 H.R. 5011.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Louisiana?
  There was no objection.
  Mr. BAKER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the members of the House Committee on Financial Services 
and I assume many Members of the Congress were shocked to learn of 
practices on military installations of this Nation wherein the practice 
of bringing in retired military officers to meet with young enlisted 
men and women to represent to them that financial investment 
opportunities were being made available which, in fact, were not 
financial investments but financial misfortune.
  Young men and women, often headed to a theater of war, thinking they 
were buying life insurance for their dependents and their spouses, 
would return finding that the premiums paid yielded very little benefit 
at high cost. Mutual fund investments, which often required half of the 
first year's investment, went into the pockets of the broker.
  It would be years in some cases before these young men or women would 
find a financial return on what they thought would be an investment for 
their family's future.
  Upon learning of these revelations, the committee began its work and 
made serious inquiries into the manner in which these actions were 
permitted. The bill before the House today, the result of work by the 
gentleman from Georgia (Mr. Burns), the gentleman from Illinois (Mr. 
Emanuel) and other Members, takes an important stride forward in that 
it would preclude the sale of contractual mutual fund products period 
on military installations and, secondly, would require the 
establishment of rules and regulations by State insurance commissioners 
to ensure that types of activities previously engaged in here would 
heretofore be prohibited.
  This measure is one with which I believe both sides of the aisle can 
strongly agree. I find it highly appropriate that, as young men and 
women are preparing to stand in defense of this country, that this 
Congress at least stand in defense of their financial security.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1700

  Mr. EMANUEL. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. EMANUEL asked and was given permission to revise and extend his 
remarks.)
  Mr. EMANUEL. Mr. Speaker, I rise in strong support of this 
legislation.
  I would like to thank the gentleman from Louisiana (Chairman Baker) 
and the gentleman from Ohio (Chairman Oxley) and the gentleman from 
Massachusetts (Ranking Member Frank) and the gentleman from 
Pennsylvania (Ranking Member Kanjorski) for helping give our enlistees 
one more line of defense against unfair financial practices and also 
their families.
  I requested this hearing on July 20. We held a subcommittee hearing 
quickly thereafter in early September, September 9, after a series of 
articles in the New York Times on the sales practices of certain 
financial services and industries and companies on our military bases 
throughout the country. The New York Times had cited numerous cases of 
abusive practices, including one instance in which a Coast Guard 
officer went $16,000 into debt after he invested $600 of his $3,600 
salary in a contractual mutual fund.
  Many young recruits and enlistees are of modest financial means. In 
fact, they are forced to draw on other government programs such as food 
stamps to make ends meet and to feed their families, and the last thing 
they need

[[Page H8107]]

are unnecessary types of financial products with high fees and little 
financial benefit for them. There is simply no reason for some of these 
investment vehicles or life insurance vehicles to be sold to them.
  Take the contractual mutual fund which was in the 1960s discouraged 
in the civilian market to the point that it is almost nonexistent. The 
SEC had recommended to Congress then to ban it, but it basically ran 
out of its purpose in the early 1980s. Today, I think in our hearing we 
found out that, in fact, contractual mutual funds up to north of 95 
percent of them exist only among the military and enlistees. They do 
not exist today, for practical purposes, inside the civilian 
population.
  The question we have to ask ourselves, if contractual mutual funds 
are not good for the civilian market, in fact, the SEC discourages 
them, why would we allow them to be sold and marketed to our troops? If 
we want to allow access to the military bases, fine, for other types of 
financial needs for the financial security of our enlistees, but our 
young men and women are not to be seen as ATM fee-generating machines 
for the financial services industry.
  This legislation requires new disclosure for life insurance products 
so it is crystal clear to our men and women what is being sold, instead 
of the information being buried in the fine print. Now companies will 
have to give plain English documents telling them of subsidized life 
insurance that is readily available through the Armed Forces and that 
the government does not recommend this product.
  In fact, the Armed Forces sells a product for $16.25 a month, 
$250,000 in coverage, one of the things we had recommended; and I am 
hoping later on maybe we can deal with it. The gentleman from Texas 
(Mr. Edwards) and I recommended raising the cap in the military or on 
the government program from $250,000 to 500,000. We should deal with 
that need, and if enlistees want more life insurance they should be 
able to get it; but in this case some of the companies were selling 
life insurance products for about $1,500 for about $15,000 worth of 
value, where the government offers and 96 percent of the enlistees are 
enrolled, a product for $16.25 a month.
  Also, during the hearing, we learned one other issue which I promised 
to take up next year and I said it in the full committee, that, in 
fact, in 2000 Congress permitted members of the Armed Forces to enroll 
in the government Thrift Savings Program. Yet Members of Congress get a 
match, but members of the armed services do not get a match for their 
investment in their savings program. Although this was not the right 
vehicle to deal with it, and we have a sense of the Congress that we 
should in this legislation, I intend next year to introduce a piece of 
legislation to authorize and then appropriate the dollars so enlistees 
get what Members of Congress get or Members of Congress get what 
enlistees get, but we are not going to have the disparity between the 
two.
  Finally, this legislation includes important provisions encouraging 
State and Federal authorities to implement financial literacy programs 
for enlisted personnel. Our troops need the basic financial knowledge 
necessary to make good decisions, and they deserve these commonsense 
measures to protect them from financial distress.
  We in this Chamber can make a choice today. We can restore the values 
that have kept our military strong and that we hold for the future of 
our troops and their families. This bill could be another small measure 
to help make the lives of our troops a little easier, and it sends a 
message reminding them that we are deeply grateful for their service 
and commitment to defending our Nation.
  I encourage my colleagues to support this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BAKER. Mr. Speaker, I yield 5 minutes to the gentleman from 
Georgia (Mr. Burns) who introduced legislation early in this Congress 
and encouraged the committee to act in a timely manner.
  Mr. BURNS. Mr. Speaker, I thank the gentleman for yielding me time.
  I would like to thank the gentleman from Ohio (Chairman Oxley) of the 
Committee on Financial Services and the gentleman from Louisiana (Mr. 
Baker), the subcommittee chairman. I would like to thank my 
distinguished colleagues and the gentleman from Illinois (Mr. Emanuel) 
for their support and input.
  I rise in strong support of H.R. 5011, the Military Personnel 
Financial Services Protection Act.
  Mr. Speaker, I introduced H.R. 5011 to halt the fiscal abuse of our 
servicemen and -women by those in the life insurance and securities 
industry that use devious sales practices to collect exorbitant fees 
and sales commissions.
  Further, H.R. 5011 is targeted at those who use our Federal military 
installations, both at home and abroad, as a shield to evade individual 
State insurance regulations and restrictions.
  The 12th district of Georgia that I represent is home to many active 
duty, Reserve, and retired military personnel. I have Fort Gordon in 
Augusta; Fort Stewart in Savannah. I have the Naval Supply Course 
School in Athens. Georgia is represented by all branches of the 
military service: Army, Air Force, Coast Guard, Marines and Navy.
  In recent months, my office had become aware of servicemen and -women 
residing in the 12th district and throughout the State of Georgia that 
have suffered financially as a result of dubious financial products and 
questionable insurance policies. Unfortunately, these questionable 
sales practices are not limited to the State of Georgia and have been 
found to be pervasive on our military installations within the United 
States and abroad.
  Investigations into these practices are currently being conducted by 
the Department of Defense, the NASD, the Securities and Exchange 
Commission, and the State insurance commission regulators, including 
Georgia's commissioner of insurance, John Oxendine.
  Let me provide my colleagues with a few unfortunate examples of what 
has happened just in Georgia.
  Young recruits have been approached in group settings during boot 
camp and asked to fill out savings plan allotment forms that in truth 
turn out to be primarily payments for insurance premiums and sales 
commissions.
  Junior enlisted personnel have been encouraged by senior enlisted 
personnel to participate in savings plans that are, in fact, insurance 
products.
  Junior enlisted personnel and their superiors have received free 
meals at local restaurants and other gratuities as an enticement to 
participate in these illicit plans.
  Junior officers have been provided free drinks and food at base 
officers clubs and then asked to participate in flawed mutual fund 
contracts that give the appearance of being endorsed by their chain of 
command.
  Retired military personnel now employed by financial insurance firms 
have used their base and command access to inappropriately influence 
junior officers and enlisted personnel to participate in these 
questionable products.
  Flawed mutual fund contractual plans that are disparaged by the 
financial and industry experts have been marketed virtually exclusively 
to our military personnel.
  Outrageous as these may seem, sales agents banned from military 
installations in Georgia subsequently moved to Germany and continued 
their illicit sales practices to soldiers living abroad.
  I will not, and I cannot, sit by and watch innocent servicemembers 
suffer from unscrupulous sales practices on our military installations. 
I say shame on those companies that allowed these practices to take 
advantage of our military personnel and shame on us for not acting 
sooner.
  My staff has been in discussions with the Committee on Financial 
Services, the government regulators, corporate representatives, and 
independent financial experts to ensure that H.R. 5011 effectively 
addresses the illicit sales practice being encouraged by our armed 
services personnel and to prevent any unintended consequences.
  H.R. 5011 does not target systematic investment plans or legitimate 
investment in insurance products, only those flawed mutual fund 
contractual plans and insurance contracts that require the payments of 
exorbitant fees and high front-loaded sales commissions.
  As a bipartisan measure, H.R. 5011 has received overwhelming support 
from the various financial, insurance, and military organizations and 
support

[[Page H8108]]

groups and has been reported out of Committee on Financial Services by 
a unanimous vote, bipartisan vote of 68 to zero.
  Working together we can and we must act in a prudent manner to 
protect our servicemen and -women from harm caused by dubious financial 
products and questionable financial and insurance sales practices and 
policies.
  I urge my colleagues to recognize the importance of acting to protect 
the financial interests of our armed services personnel and vote 
``yes'' on this worthy resolution.
  Mr. EMANUEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Massachusetts (Mr. Frank), the ranking member, who helped us on this 
legislation in passing it.
  Mr. FRANK of Massachusetts. Mr. Speaker, I thank the gentleman from 
Illinois for showing great leadership on this. He was, to my knowledge, 
the first Member of this body to decide that we ought to take some 
action. He spoke to me early when this was first called to our 
attention, and he has been very diligent and very thoughtful and 
others, the gentleman from Texas, gentleman from New York, have joined 
in.
  So I am glad we are at this point where we are about to pass very 
good consumer protection legislation, and this is a species of that 
legislation; and it shows what our role ought to be, namely, to start 
from the assumption that the market will work and we will leave things 
to the market, but to be ready to step in when the market fails and it 
does not include the kind of protections that it ought to include.
  This is a very thoughtful piece of legislation, worked out in a 
bipartisan way, under the leadership of the gentleman from Louisiana 
(Mr. Baker), the chairman of the subcommittee; the gentleman from 
Pennsylvania (Mr. Kanjorski), the ranking member. I am delighted to 
join in supporting it.
  Mr. BAKER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Kansas (Mr. Ryun).
  Mr. RYUN of Kansas. Mr. Speaker, I thank the chairman for the time.
  I am a strong supporter of this legislation that we are considering 
today, and I want to thank Mr. Burns for his leadership on this issue 
and also the gentleman from Ohio (Chairman Oxley) for his work moving 
this bill to the floor in a very timely and expedient fashion.
  As a member of both the Committee on Armed Services and Committee on 
Financial Services, the issue at hand today is one that I care very 
deeply about. Today, by passing H.R. 5011, we will be protecting our 
men and women in uniform.
  I have the honor of representing three military installations and 
have seen firsthand the dedication and service of our servicemembers. 
These military men and women deserve the protection found in H.R. 5011. 
Congress has a responsibility to provide our servicemembers access to 
financial services while protecting them from dishonest agents.
  I was honored to work with the gentleman from Georgia (Mr. Burns) in 
the committee to include language that will improve installation 
commanders' knowledge of previous predatory offenses. This will allow 
our commanders to keep previous offenders from soliciting on the bases.
  I urge and encourage my colleagues to support this legislation.
  Mr. EMANUEL. Mr. Speaker, I yield 3 minutes to the gentleman from New 
York (Mr. Israel), a distinguished member of both the Committee on 
Armed Services and the Committee on Financial Services, who introduced 
earlier in the year, life insurance for American troops after an 
unfortunate death of a constituent in the Iraqi theater.
  Mr. ISRAEL. Mr. Speaker, I thank my friend from Illinois for the 
time.
  I want to thank our chairman of our subcommittee, chairman of our 
committee and our ranking member for their bipartisan cooperation, and 
I also want to thank the gentleman from Texas (Mr. Edwards) for keeping 
this Congress focused on this vitally important issue.
  I am particularly pleased with a provision of this bill that the 
gentleman from Kansas just discussed which he and I worked together on 
on a bipartisan basis requiring the DOD to maintain a list of all sales 
agents who have been barred from any base and to report such barring to 
the relevant State or Federal regulator. That database will ensure that 
agents barred from one base cannot simply move to another base to prey 
on personnel in different areas.
  Simultaneously, the reporting requirement will enable the regulator 
immediately to begin taking investigative action and appropriate 
disciplinary action. These measures will protect our troops from those 
who are looking to exploit them wherever, whenever they can.
  This is an important step, but we still have a long way to go. We 
still have a long way to go in protecting the protectors and meeting 
the financial needs of those who are fighting for our security.
  In that vein, Mr. Speaker, I want to share with my colleagues the 
story of one of the families that I represent, a constituent that I 
used to represent, Raheen Tyson Heighter, 19-years-old, grew up in Bay 
Shore, New York, enlisted in the Army. When he enlisted, he was told he 
had to have life insurance. He said I cannot afford life insurance; 
they do not pay me enough to pay my premiums. They said, you have got 
to have life insurance. He said, well, I am 19 years old. He thought, 
like most 19-year-olds, I am invincible. He said, give me the cheapest 
policy you can.
  He was killed in action in Iraq. His mother received a call from a 
casualty officer saying we regret to inform you of the death of your 
son, and all he had was a $10,000 life insurance policy because that is 
all Raheen Tyson Heighter could afford to pay.
  No family in America who receives the horrible news of the death of 
their son or daughter in war should also have to suffer the indignity 
of being financially abused.
  We have a bipartisan bill in this Congress, sponsored by the 
gentleman from New York (Mr. King) and myself, called the Raheen Tyson 
Heighter Life Insurance for America's Troops Act. If we really want to 
protect the protectors, we ought to be providing them with the base 
amount of $250,000, and we ought to pick up the tab for their premium. 
If they can afford to give up their lives for us, we ought to be able 
to afford to pay their life insurance.

                              {time}  1715

  This is a good bill. This is an important bill. It is a good step, 
but we still have a ways to go in protecting our protectors.
  I thank the committee for their bipartisan cooperation in moving this 
forward, but we still need to go a little further.
  Mr. BAKER. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Carter).
  Mr. CARTER. Mr. Speaker, I rise today in strong support of H.R. 5011, 
the Military Personnel Financial Services Protection Act. The military 
has a major presence in central Texas, and I have a great interest in 
protecting the financial well-being of our soldiers and their families.
  I find it absolutely deplorable that our men and women in uniform are 
being actively coerced into spending any part of their already modest 
incomes on unnecessary, overpriced insurance policies and predatory 
investment plans. Companies that solicit these plans knowingly exploit 
the financial naivety of our newest soldiers through unscrupulous 
practices, which have been described here today and recently detailed 
in a New York Times series.
  At a time when soldiers should be focusing their efforts and limited 
resources on providing for their families, it is unconscionable we 
allow our soldiers to be swindled into contractual plans that have not 
been offered to civilian markets since the 1980s, or to be sold 
expensive insurance policies that provide inadequate coverage.
  Therefore, I ask my colleagues to protect those who so selflessly 
stand on the wall and protect us and to vote in favor of H.R. 5011.
  Mr. EMANUEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Edwards), who represents Fort Hood, home to 40,000 soldiers, 
most of whom have served in Iraq, including the First Cavalry Division 
and the Fourth Infantry Division, which captured Saddam Hussein.
  Mr. EDWARDS. Mr. Speaker, this is the way Congress should work. The

[[Page H8109]]

New York Times made it obvious that there were new standards that 
needed to be set to protect our troops who were risking their lives for 
our country. The gentleman from Georgia (Mr. Burns), the gentleman from 
Illinois (Mr. Emanuel), and Members on a bipartisan basis came together 
quickly to address that problem. And I want to commend all of those 
involved in the leadership for bringing this bill to the floor.
  As the gentleman from Illinois (Mr. Emanuel) said, for 14 years I 
have had the privilege of representing Fort Hood, the only two-division 
installation in the U.S. Army. During times of war and peace, I have 
seen the incredible personal sacrifices made by our military troops and 
their families on behalf of our Nation.
  We can never repay the debt of gratitude we owe the young 20-year-old 
soldier I met at Walter Reed Hospital recently, who came back from Iraq 
with an amputated leg. We cannot repay the young widow I met at Fort 
Hood recently with a small baby in her arms, a baby who will never gaze 
into the eyes of its father.
  As a small downpayment on that debt of gratitude, we in Congress must 
continue our efforts to improve pay, health care, housing, and 
education for military families and their children.
  I also salute this bill for helping protect our troops against 
misrepresentations in the sale of mutual funds and life insurance 
policies. While our military forces should have the right to invest in 
their family's futures, it is clear that higher standards are needed to 
protect our servicemen and -women from unscrupulous practices.
  This bill is a step in the right direction by prohibiting unfair 
policies, by requiring greater regulation of insurance sales on 
military installations, such as Fort Hood in my district, and by 
encouraging the Department of Defense and State regulatory agencies to 
set new and higher standards for the sale of these policies.
  I hope this is a first step, not the last step, in protecting our 
troops. After passing this legislation, I hope Congress will move 
forward with legislation I and the gentleman from Illinois (Mr. 
Emanuel) and others have authored to require the Department of Defense 
to offer up to $500,000 in life insurance to our troops, rather than 
the present cap of $250,000.
  In today's world, $250,000 simply is not enough life insurance for 
many young families with children to feed, clothe, educate, and to send 
to college. By increasing life insurance at affordable rates up to 
$500,000, the Department of Defense and Congress can prevent many of 
the abuses outlined so well by the recent New York Times articles. 
Until Congress takes that action, this bill is a very positive, solid 
step forward toward protecting military families who are sacrificing so 
much to protect American families.
  Mr. Speaker, I again thank those who, working on a bipartisan basis, 
brought this legislation so quickly to the floor of the House; and I 
would hope that the other body would act accordingly.
  Mr. EMANUEL. Mr. Speaker, I yield myself such time as I may consume 
to close.
  I want to also thank the gentleman from Louisiana (Mr. Baker), our 
chairman, for the hearing and the way he conducted the hearing on 
September 9, for the leadership of the gentleman from Ohio (Mr. Oxley) 
and the ranking member, the gentleman from Massachusetts (Mr. Frank) 
showed when we did finally pass the legislation, which passed 
unanimously in our committee.
  This was a quick response to what is clearly needed by everybody's 
standard. We should not allow our enlistees to be targeted for the type 
of financial services and products that are merely for the gain of the 
industry representatives and not for the protection of our enlistees. 
This was the right thing to do.
  Hopefully, the Senate can move quickly, although there are other 
things we would like to move, as noted by the gentleman from Texas (Mr. 
Edwards), such as our legislation raising the cap on the life insurance 
from $250,000 to $500,000. And there are things not in this bill that 
we still need to do. But this is the right step; it is the right 
action.
  Mr. Speaker, the bipartisanship that was shown here I would hope 
would extend to other areas. And again I want to thank the chairman of 
the subcommittee for the hearing and also seeing through this 
legislation to today's conclusion.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BAKER. Mr. Speaker, I yield myself such time as I may consume.
  I simply wish to acknowledge the good work of the gentleman from 
Illinois (Mr. Emanuel) and his colleagues on this matter and to express 
appreciation for the bipartisan manner in which it was considered, 
passed and, I think this afternoon, passed on the floor of this House.
  Clearly, when we identify a problem of such pressing urgency to the 
young men and women of our national defense, it is highly appropriate 
this Congress should be timely and responsive in meeting their need. I 
think H.R. 5011 achieves that goal, and I am appreciative of the 
opportunity to have worked with my colleague and echo the observations 
of the gentleman from Illinois. I hope this bipartisan approach 
continues with issues yet to come.
  Mr. OXLEY. Mr. Speaker, I rise in support of H.R. 5011, the Military 
Personnel Financial Services Protection Act. This legislation, 
introduced by my good friend Max Burns of Georgia, will protect the men 
and women who put their lives on the line each day for our Nation.
  Mr. Speaker, since the awful day of September 11, 2001, our country 
has been at war with radical Islamic terrorists. In the prosecution of 
this war, our armed services have performed heroically. Indeed, many 
have made the ultimate sacrifice for the cause of freedom.
  Sadly, at the same time, there are a few bad actors in the securities 
and insurance industries determined to take financial advantage of our 
service men and women. These unscrupulous companies and salesmen gain 
access to military installations and use aggressive, misleading, and 
often illegal sales tactics, to sell high-cost products of dubious 
value that are unsuitable for any investor.
  The Pentagon has issued several directives intended to curtail these 
abuses. But for a whole host of reasons, it is clear that the abuses 
will not stop unless Congress passes this legislation.
  H.R. 5011 prohibits bad products and bad sales practices, clarifies 
regulatory jurisdiction on U.S. installations here and abroad, adds 
strong consumer protections and disclosures, and ensures proper 
reporting systems between our military and the financial regulators to 
ensure that bad actors cannot continue their predatory behavior. It 
also makes the process of selecting a broker more transparent for all 
investors, by providing online access to background information--
including disciplinary actions--on broker-dealers. These are tough 
measures that will greatly enhance consumer protections for military 
services members, and make financial transactions on base more 
transparent and investor-friendly.
  Our Committee reported this bill to protect our service men and women 
on a unanimous 68-0 vote. This overwhelming bipartisan consensus is the 
result of strong leadership by Mr. Burns, the author of this 
legislation; by Mr. Emanuel for highlighting this issue for the 
Committee and working with us on a bipartisan basis; the Chairman of 
the Subcommittee on Capital Markets, Mr. Baker, who led our 
investigation into the abusive practices and bad products; Mr. Jim Ryun 
and Mr. Israel who worked closely together on the reporting 
requirements of this bill; and last but not least, Congresswoman Ginny 
Brown-Waite for ensuring appropriate SEC oversight of broker-dealer 
sales practices on military installations. Their hard work and 
leadership is well-reflected in this legislation.
  Mr. Speaker, I am also including for the record an exchange of 
letters between myself and the Chairman of the Committee on Armed 
Services regarding their jurisdictional interest on this legislation. I 
want to thank the distinguished Chairman for his assistance in moving 
this legislation forward in an expeditious fashion.

                                      Committee on Armed Services,


                                     House of Representatives,

                                  Washington, DC, October 4, 2004.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services,
     Rayburn House Office Building.
       Dear Mr. Chairman: On September 29, 2004, the Committee on 
     Financial Services reported H.R. 5011, a bill to prevent the 
     sale of abusive insurance and investment products to military 
     personnel. As you know, H.R. 5011, as ordered reported, 
     contained provisions within the jurisdiction of the Committee 
     on Armed Services.
       Because of your willingness to consult with this Committee, 
     and because of your desire to move this legislation 
     expeditiously, I will waive consideration of the bill by the 
     Committee on Armed Services. By agreeing to waive this 
     consideration of the bill, the Committee does not waive its 
     jurisdiction over H.R. 5011. In addition, should a conference 
     be convened on this legislation, the Committee reserves its 
     authority to seek

[[Page H8110]]

     conferees on any provisions of the bill that are within its 
     jurisdiction. I ask for your commitment to support any 
     request for conferees by the Committee on H.R. 5011 or 
     similar legislation.
       I request that you include this letter and your response in 
     the Congressional Record during your consideration of the 
     legislation on the House floor. Thank you for your 
     consideration of these matters.
       With best wishes.
           Sincerely,
                                                    Duncan Hunter,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                  Washington, DC, October 4, 2004.
     Hon. Duncan Hunter,
     Chairman, Committee on Armed Services,
     Rayburn House Office Building, Washington, DC.
       Dear Chairman Hunter: Thank you for your recent letter 
     regarding your committee's jurisdictional interest in H.R. 
     5011, the Military Personnel Financial Services Protection 
     Act. I appreciate all of your efforts to expedite 
     consideration of this important legislation.
       I acknowledge your committee's jurisdictional interest in 
     section 11 of this bill as ordered reported by the Committee 
     on Financial Services and appreciate your cooperation in 
     allowing speedy consideration of the legislation. I agree 
     that your decision to forego further action on the bill will 
     not prejudice the Committee on Armed Services 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 Committee's report on the bill and the 
     Congressional Record when the legislation is considered by 
     the House.
       Thank you again for your assistance.
           Sincerely,
                                                 Michael G. Oxley,
                                                         Chairman.

  I urge all of my colleagues in the full House to support this 
bipartisan effort and vote ``yes'' on H.R. 5011.
  Mrs. TAUSCHER. Mr. Speaker, I rise today in support of this bill, 
H.R. 5011, the Military Personnel Financial Services Protection Act. 
Every American--especially every American who suits up to protect our 
Nation--should rest assured that their family's future is provided for 
if the unthinkable happens. I support Representative Burns's bill 
because basic life insurance should not be a worry on our fighting 
force's shoulders, it should be a trusted guarantee. It is utterly 
unconscionable for insurance agents to be peddling policies to our 
troops that provide poor coverage and charge exorbitant fees, such as 
these contractual plans. I recently returned from a trip to Iraq and I 
am pleased to know that the young soldiers I met will soon be protected 
from fraudulent or misleading sales practices with the passage of this 
bill.
  Mr. BAKER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Ose). 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. 5011, 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.
  Mr. BAKER. 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.

                          ____________________