[Congressional Record Volume 152, Number 90 (Wednesday, July 12, 2006)]
[House]
[Pages H5056-H5062]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




PROVIDING FOR CONSIDERATION OF H.R. 2990, CREDIT RATING AGENCY DUOPOLY 
                           RELIEF ACT OF 2006

  Mrs. CAPITO. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 906 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 906

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 2990) to improve ratings quality by fostering 
     competition, transparency, and accountability in the credit 
     rating agency industry. The first reading of the bill shall 
     be dispensed with. All points of order against consideration 
     of the bill are waived. General debate shall be confined to 
     the bill and shall not exceed one hour equally divided and 
     controlled by the chairman and ranking minority member of the 
     Committee on Financial Services. After general debate the 
     bill shall be considered for amendment under the five-minute 
     rule. It shall be in order to consider as an original bill 
     for the purpose of amendment under the five-minute rule the 
     amendment in the nature of a substitute recommended by the 
     Committee on Financial Services now printed in the bill. The 
     committee amendment in the nature of a substitute shall be 
     considered as read. Notwithstanding clause 11 of rule XVIII, 
     no amendment to the committee amendment in the nature of a 
     substitute shall be in order except those printed in the 
     report of the Committee on Rules accompanying this 
     resolution. Each such amendment may be offered only in the 
     order printed in the report, may be offered only by a Member 
     designated in the report, shall be considered as read, shall 
     be debatable for the time specified in the report equally 
     divided and controlled by the proponent and an opponent, 
     shall not be subject to amendment, and shall not be subject 
     to a demand for division of the question in the House or in 
     the Committee of the Whole. All points of order against such 
     amendments are waived. At the conclusion of consideration of 
     the bill for amendment the Committee shall rise and report 
     the bill to the House with such amendments as may have been 
     adopted. Any Member may demand a separate vote in the House 
     on any amendment adopted in the Committee of the Whole to the 
     bill or to the committee amendment in the nature of a 
     substitute. The previous question shall be considered as 
     ordered on the bill and amendments thereto to final passage 
     without intervening motion except one motion to recommit with 
     or without instructions.

                              {time}  1100

  The SPEAKER pro tempore. The gentlewoman from West Virginia (Mrs. 
Capito) is recognized for 1 hour.
  Mrs. CAPITO. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentlewoman from California (Ms. Matsui), 
pending which I yield myself such time as I may consume.
  Last night, the Rules Committee granted a structured rule for H.R. 
2990, the Credit Agency Duopoly Relief Act of 2006. The rule provides 1 
hour of general debate equally divided and controlled by the chairman 
and ranking minority member of the Committee on Financial Services; 
waives all points of order against consideration of the bill. The rule 
also provides that the amendment in the nature of a substitute 
recommended by the Committee on Financial Services now printed in the 
bill shall be considered as an original bill for the purpose of 
amendment and shall be considered as read.

[[Page H5057]]

  The rule makes in order only those amendments printed in the Rules 
Committee report accompanying the resolution. It also provides that the 
amendments printed in the report may be offered only in the order 
printed in the report, may be offered only by a Member designated in 
the report, shall be considered as read, shall be debatable for the 
time specified in the report equally divided and controlled by the 
proponent and an opponent, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question in the House or 
in the Committee of the Whole.
  The rule waives all points of order against the amendments printed in 
the report and provides one motion to recommit, with or without 
instructions.
  During consideration of the resolution, all time yielded is for the 
purpose of debate only.
  Mr. Speaker, this is a fair rule, making all germane amendments that 
were offered in the Committee on Rules in order.
  The underlying legislation is an important, commonsense approach to 
providing greater transparency for credit rating agencies. Who can 
forget the scandals following the bankruptcies of Enron and WorldCom? 
Even more shocking is the fact that both corporations were given 
investment grade ratings by credit rating agencies just before their 
financial collapse. This misrepresentation resulted in the loss of 
millions of dollars for investors.
  The root of the problem lies with the current process of recognizing 
statistical rating organizations by the Securities and Exchange 
Commission. The current process stifles competition and fosters an 
environment that has led to two rating agencies holding 80 percent of 
the market share.
  A level playing field is needed so smaller companies with expertise 
in specific areas can enter the market. H.R. 2990 clearly lays out the 
registration requirements for rating agencies replacing the current 
opaque designation process by the SEC. By injecting the current system 
with competition and greater transparency, the quality of ratings will 
be enhanced.
  This act will also provide greater investor protection, including 
provisions requiring rating agencies to be in the business of issuing 
credit ratings for at least 3 years prior to filing an application for 
registration as a nationally recognized statistical ratings 
organization, ensuring better quality assessments for investors.
  Mr. Speaker, the economy is booming due in part to greater 
participation by investors in the various markets. Greater 
transparency, accountability and competition among credit ratings 
agencies will provide investors with better information and encourage 
future investment. The underlying legislation is a step in the right 
direction towards ensuring this success.
  Finally, this legislation will improve the quality of information 
provided to investors. It is no secret that a little competition 
improves quality and expands services offered. Armed with more reliable 
and accurate credit ratings, investors will continue to drive the 
economy and foster a more innovative environment.
  I would like to remind all Members that the rule makes in order all 
germane amendments presented to the Committee on Rules.
  I urge all Members to support this fair rule and the underlying 
legislation.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I yield myself such time as I may consume, 
and I thank the gentlewoman from West Virginia for yielding me the 
time.
  (Ms. MATSUI asked and was given permission to revise and extend her 
remarks.)
  Ms. MATSUI. Mr. Speaker, the issue we are debating today may not be 
glamorous, but I want to emphasize for our constituents its importance. 
H.R. 2990 will significantly affect the guidance investors receive on 
the soundness of all kinds of investments.
  The type of debt rating that a company or municipality receives is an 
essential guidepost for investors, and the degree to which that rating 
is accurate has far reaching consequences. So by reforming the way that 
firms receive the stamp of legitimacy to offer these ratings, Congress 
is making a significant change.
  As we have seen during the past few years, financial investments can 
have a huge impact on our constituents. Just ask anyone who held stock 
in Enron or WorldCom. This is about protecting investors, whether you 
manage your own portfolio or you rely on a pension for your retirement.
  So we need to tread carefully as we consider how we determine which 
firms should be deemed nationally recognized statistical ratings 
organizations. Established in the 1970s, only credit agencies that 
receive this designation have the legitimacy to assess the likelihood 
of a company or a municipality to default on its debt. In other words, 
they tell investors whether they are likely to get paid back.
  Today, there are only five firms that are nationally recognized by 
the Securities and Exchange Commission. The purpose of H.R. 2990 is to 
add to that number, increasing competition in the credit ratings 
market. This is a worthy goal. I know the Financial Services Committee 
has been exploring the best way to achieve it. Unfortunately, in its 
pursuit of quantity, this bill will sacrifice quality. This is a risky 
proposal that I do not believe the House should accept.
  H.R. 2990 would allow virtually any firm to be considered a 
nationally recognized credit rating agency. The SEC would no longer be 
able to ensure that such firms are producing reliable and credible 
ratings. Under this new voluntary regime, any ratings agency that has 
been around for 3 years and discloses its performance data can become 
nationally recognized. That is a pretty low bar.
  I know the majority will argue that H.R. 2990 would allow market 
forces to sift the good credit rating agencies from the bad. While 
Democrats do not object to letting the market play a role in ensuring 
quality, why not let the experts at the SEC also evaluate the quality 
of the ratings firms? Congress needs to strike a balance between 
quantity and quality, but this bill falls short of that goal.
  Under this bill anyone can open up shop and 3 years later be 
nationally recognized. That means we may be allowing firms that will 
offer an investment grade rating to anyone willing to pay, regardless 
of whether that rating is based on sound facts. As long as a rating 
firm continues to provide certain disclosures, it will still be 
nationally recognized, even if it issues credit ratings of the lowest 
possible quality.
  Additionally, this bill could lead to a series of unintended 
consequences. Federal, State and local agencies, as well as many 
private sector entities, rely on the current definition of a nationally 
recognized credit rating agency. By undermining the credibility of this 
established benchmark, this bill could impose a significant burden on 
all of these groups, possibly increasing risks and imposing new costs 
for a wide swath of Americans.
  Certainly, the House can increase competition in a more responsible 
way. Representative Kanjorski, the ranking member on the Capital 
Markets Subcommittee, with the support of Ranking Member Frank, has 
offered a logical substitute. It will ensure quality while moving to 
increase competition in the credit ratings market. I am pleased that 
the rule will allow a vote on this commonsense proposal.
  The Kanjorski substitute would direct the SEC to expeditiously 
complete rulemaking on nationally recognized statistical ratings 
organizations. In doing so, the SEC would, for the first time, publicly 
define what constitutes a nationally recognized credit rating agency. 
It would also direct the SEC to design a process to identify new 
nationally recognized credit rating agencies. These steps would bring 
an unprecedented level of transparency and scrutiny to the selection 
process. The result will increase competition in the credit ratings 
market without the negative consequences associated with H.R. 2990.
  The Kanjorski substitute will also encourage the establishment of a 
voluntary framework for industry self-regulation. This will further 
protect investors from conflicts of interest and other abusive 
practices.
  To ensure that all of these reforms are effective, the Kanjorski 
amendment will require annual hearings on this topic for the next 5 
years.
  So Members have two options today. Both will increase competition in 
the

[[Page H5058]]

credit ratings market. However, only the Kanjorski substitute will 
ensure that investors continue to receive credible and reliable credit 
ratings from nationally recognized agencies.
  I urge my colleagues to support this wise approach.
  Mr. Speaker, another responsible policy that Members will have an 
opportunity to support today is an increase in the minimum wage. Just 
as the credit rating bill seeks to safeguard average Americans in the 
long term, so should Congress protect their immediate financial needs 
by increasing the minimum wage.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. CAPITO. Mr. Speaker, I yield 5 minutes to the gentleman from 
Pennsylvania (Mr. Fitzpatrick), the sponsor of the bill.
  Mr. FITZPATRICK of Pennsylvania. Mr. Speaker, I thank my friend from 
West Virginia for providing me the time to speak on behalf of the 
Credit Rating Agency Duopoly Relief Act, H.R. 2990, the bill that I 
have introduced.
  I am here today in support, and strong support, of the rule. Mr. 
Speaker, it is vital that Congress bring transparency, competition and 
accountability to the credit rating industry, and the time to do it is 
now.
  Mr. Speaker, it is extremely disturbing that the two largest 
nationally recognized statistical rating organizations, known as 
NRSROs, in the industry, Moody's and Standard & Poor's, both rated 
Enron at investment grade just immediately prior to their bankruptcy 
filings. Essentially, Moody's and Standard & Poor's told the market 
that Enron was a safe investment.
  Credit rating agencies claim that they are not in the business of 
detecting fraud, but they are most certainly in the business of 
impacting the bottom line of companies, municipalities and also school 
districts. The better the credit rating, the lower the interest rate 
the borrower must pay to expand its operations, construct a road or 
build a school.
  Enron was not their only blunder. Moody's and Standard & Poor's also 
rated WorldCom as investment grade just prior to their bankruptcy 
filing, but there are other options throughout the marketplace.
  Mr. Speaker, there are over 130 credit rating agencies in the 
financial market. However, only five are designated as nationally 
recognized statistical rating organizations by the Securities and 
Exchange Commission. This label, I would submit, is the root of the 
problem. To receive the elusive SEC distinction, companies must be 
nationally recognized; that is, their ratings must be widely used and 
generally accepted in the financial markets. This artificial barrier to 
entry has created a chicken and the egg situation for non-NRSRO credit 
rating agencies trying to enter this industry, thus forcing a duopoly 
that we have heard about.
  Moody's and S&P have over 80 percent of the market share, and they 
are rating 99 percent of all debt issued. The lack of competition in 
the credit rating industry has lowered the quality of ratings, inflated 
prices, stifled innovation and allowed anti-competitive industry 
practices and conflicts of interest to go unchecked.
  Mr. Speaker, in the wake of Enron and WorldCom, we must ensure 
integrity in the credit ratings process. H.R. 2990 would inject greater 
competition, transparency and accountability in the credit rating 
industry by eliminating the SEC staff's anti-competitive NRSRO process. 
This legislation replaces the current SEC staff designation process for 
credit rating agencies as NRSROs with a registration process like that 
for other market participants, such as investment advisors and broker-
dealers.
  In addition, H.R. 2990 would require each rating agency to disclose 
relevant information so that investors would have the information they 
need to select the rating agencies that they want to use. As a result, 
prices and anti-competitive practices will be reduced, credit ratings 
quality will improve, and firms will innovate.
  Many organizations whose opinions matter support this legislation: 
The Bond Market Association, the Association for Financial 
Professionals, the Investment Company Institute, the Association for 
Financial Professionals, and the well-regarded Financial Services 
Roundtable, who opposes Moody's and Standard & Poor's.
  Mr. Speaker, I urge a ``yes'' vote on the rule.
  Ms. MATSUI. Mr. Speaker, I yield 4 minutes to the gentleman from 
Massachusetts (Mr. McGovern), my colleague on the Rules Committee.
  Mr. McGOVERN. Mr. Speaker, I have no problem with the rule before us. 
All germane amendments were made in order, but I rise because I do have 
a serious problem with the way this House is being run.
  There is something very, very wrong with this Congress when the 
Republican leadership refuses to recognize and appreciate the important 
contributions of workers in this country, and consistently, and I would 
add callously, refuses to raise the Federal minimum wage.
  The Federal minimum wage is $5.15 an hour. A full-time minimum-wage 
worker's annual pay is $10,712 a year. The last time Congress raised 
the minimum wage was 9 years ago, and during that same period of time, 
Congress has voted to increase its own salary nine times, totaling 
nearly $35,000.
  I would say to my colleagues on the other side of the aisle, Have a 
heart. Minimum-wage workers work every bit as hard as any Member of 
this Congress.
  Mr. Speaker, if the Republican leadership continues to block a 
minimum-wage increase, then it should repeal the congressional pay 
raise.

                              {time}  1115

  Congress should not have a pay raise until low-income workers get a 
pay raise as well.
  Mr. Speaker, there is no reason whatsoever for us not to raise the 
minimum wage. I have heard some of my colleagues on the Republican side 
say that increasing the minimum wage will hurt job growth. Yet, 
according to the Fiscal Policy Institute, since 1998, States with 
higher minimum wages experienced better job growth than States paying 
only the Federal minimum wage.
  Among small retail businesses in those higher minimum-wage States, 
job growth was double the rest of the country. Mr. Speaker, even Wal-
Mart, even Wal-Mart, hardly the champion of workers' rights, has come 
out in support of increasing the minimum wage, but not the Republican-
controlled Congress.
  Republican priorities, in my opinion, are messed up. You pass tax cut 
after tax cut after tax cut after tax cut for millionaires, but you 
give a cold shoulder to millions of American workers. You give billions 
of dollars in tax breaks and subsidies to big oil companies that are 
gouging Americans at the gas pump, but you will not do a thing for 
workers who can no longer afford to fill their gas tanks.
  And while all your giveaways to the rich and powerful add greatly, 
hugely to our out-of-control deficit, increasing the minimum wage costs 
nothing; and if anything, will help workers spend more and, in turn, 
will help improve our economy.
  Mr. Speaker, does any Member of this House believe that the Federal 
minimum wage, which is at $5.15 an hour, is enough for a family to 
live, pay their bills, pay for gas, pay for health care, and get above 
the poverty line? Is the majority of this House so out of touch that 
they do not realize the urgency of this issue? Is corporate greed part 
of your Family Values Agenda?
  It is time for this Congress to do what is right, to raise the 
Federal minimum wage.
  Let us make a statement that we value all working Americans, not just 
the ones that contribute to your campaigns. You will have an 
opportunity today to make a difference by voting against the previous 
question so that we can bring an increase in the minimum wage up for a 
vote.
  I urge my Republican colleagues to demonstrate to the workers of this 
country that you get it, that you care. The American people are tired 
of the indifference of your callousness, of your blatant disregard for 
their needs. This is supposed to be a government of the people, for the 
people, and by the people. It is time for this Congress to start acting 
like that.
  Mrs. CAPITO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to remind my colleagues that the vote that 
we

[[Page H5059]]

are discussing is the rule on the duopoly bill, which will increase the 
number of credit rating agencies so that we can have more transparency, 
more accountability, so that not only investors will be protected, but 
also those folks who work for those businesses who have 401(k)s who 
have their savings invested in the company that they work for.
  This will provide for them better protections, better transparency, 
and better accountability.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I yield 4 minutes to the gentleman from 
Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. Mr. Speaker, let me just emphasize that 
there is no conflict between what the gentlewoman from West Virginia 
said and our approach. We are not trying to displace the underlying 
bill. We are seeking to defeat the previous question so we can also 
have a vote on the minimum wage.
  Let me say first with regard to the underlying bill that the 
gentleman from Pennsylvania, who is the ranking member of our relevant 
subcommittee, who is a very thoughtful student of these matters, has a 
substitute; and I appreciate that it was made in order, which I think 
addresses the issue in a far more thoughtful fashion.
  Interestingly, as he has noted, the approach we are taking here does 
not wait for input from the SEC, the Securities and Exchange 
Commission. I have found them to be in recent years a very thoughtful 
contributor to the process. So I will be strongly supporting the 
substitute the gentleman from Pennsylvania has put forward.
  But none of that says that there is any conflict between that and the 
minimum wage. The amendment we will make, if the previous question is 
defeated, will not diminish any consideration of the underlying bill, 
it will simply give the House a chance to vote on the minimum wage.
  Now, that is what the majority objects to. They do not believe 
sufficiently in the democratic process to allow a vote on it. Now, here 
is the reason. It certainly is not time. We finished up about 3 o'clock 
yesterday afternoon. We are going to finish about 3 o'clock this 
afternoon. We will be out Friday. We do very little those days.
  The reason is very simple. There are two sets of issues around today. 
One set are issues that the American public favors and the majority 
does not. They do not come up, because the majority is afraid they 
might pass.
  The other set of issues are those that the majority favors and the 
American public does not. They do not come up either. So we do very 
little because the majority has had to confront the fact that its 
agenda is unpopular with the American people. As Members of the 
majority are running for reelection, as are we, they are trying very 
hard to avoid those votes which would be unpopular with their voters. 
What other justification is there for the House of Representatives not 
voting on the minimum wage?
  If Members are opposed to it, let them vote ``no.'' I must say that 
the evidence, the last time we raised the minimum wage in 1996, was 
overwhelmingly that the minimum-wage increase caused no negative effect 
on employment.
  In fact, in those areas of the economy at that time where the minimum 
wage is relevant, there were job shortages because the minimum wage, if 
anything, may have influenced some people to enter the economy. So 
there is no economic reason to vote against it.
  By the way, it is particularly relevant, and I speak here as a member 
of the Financial Services Committee, for us to bring it up in this 
context, because we have a bill that I have introduced into the 
Financial Services Committee supported by people on our side to give 
stockholders the right to vote on CEO salaries.
  We have this extraordinary disparity in this country between 
hardworking people doing difficult and unpleasant jobs, 40 hours a 
week, for a pittance, $5.15 an hour, too little to support their 
families; and then we have CEOs getting tens and hundreds of millions 
of dollars when there is no connection between their work and the 
success of their companies that anybody has been able to measure.
  I will say, the majority is consistent. They do not want us to vote 
to raise the minimum wage, they do not want to vote to do anything 
about CEO salaries. By the way, we do not want Congress to set CEO 
salaries, we want to let the stockholders vote on them.
  Well, the majority is consistent. They do not think that Congress 
ought to vote on the minimum wage, they do not think that stockholders 
ought to vote on how CEOs get paid with the stockholders' money.
  I guess we should take some comfort from the fact that the majority 
does not want to allow a vote on this. The problem is that they 
understand that it is popular with the American people, and they are 
afraid that it might pass, or alternatively, it would fail only after, 
what, a 3-or-4-hour roll call, in which enough Members were pressured 
not to vote for it, so it would fail by one vote.
  We are really here talking about not just economic fairness, but 
democracy. This bill is the only opportunity we have to get a vote on 
the minimum wage because the majority has refused to allow democracy to 
function.
  Mrs. CAPITO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I find it rather ironic that the bill before us today is 
a bill that I think would help go a long way towards bringing more 
transparency and accountability to credit rating agencies. They agree 
with the principles behind the bill, which would avert and help the 
working people of America to make not only better investment decisions, 
but to know that the company that they are working for and entrusting 
their savings with is going to have a fair and balanced look at their 
books.
  We have no disagreement in terms of the rule. We have two different 
approaches to this, and I think we would really be well served to keep 
the debate looking towards how we can best protect those working people 
under the realm of the bill that we are discussing today.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I yield 4 minutes to the gentleman from 
Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Mr. Speaker, I am generally pleased that the passage 
of this rule will make in order a substitute to H.R. 2990. I 
nevertheless rise to express some concerns about the rule, as well as 
to articulate some of my apprehensions about the underlying bill.
  Regarding the rule itself, the 20 minutes of debate for the 
substitute should have been longer in considering H.R. 2990. We also 
have a classic debate here on quantity versus quality.
  At its core, 2990 seeks to promote competition among nationally 
recognized credit raters by increasing the quantity of approved 
agencies. Critics of the present designation system have raised 
legitimate concerns about competition. I agree with the supporters of 
2990 that increasing competition in the credit ratings used for 
regulatory purposes is a desirable goal.
  We, however, should not seek to increase quantity of raters by 
sacrificing the quality of their ratings. In this debate, the issue of 
quality of ratings is at least equally important as the issue of 
quantity of raters. We, therefore, should have had an equal amount of 
time to debate this quantity-quality question on the floor. An equally 
balanced debate between the substitute and the general debate on the 
bill would have allowed for a more thorough vetting of these important 
matters.
  Now, let me turn to the bill itself. I would like to use the 
remainder of my time to make some observations.
  First, a robust, free market for trading debt securities relies on an 
independent assessment of financial strength provided by credit rating 
agencies, entities like Moody's, Fitch and Standard & Poor's.
  I have deep concerns and reservations about considering H.R. 2990, 
because it dramatically alters the way in which we identify the bodies 
that issue the credit ratings used for essential regulatory purposes 
and undermines the integrity of credit ratings. More significantly, I 
am concerned that 2990 could allow history to repeat itself.
  Under the worst case scenario, the bill would allow financial 
institutions to hold debt instruments in their portfolios that would 
not truly be investment grade, causing another taxpayer

[[Page H5060]]

bailout similar to the savings and loan crisis. Moreover, the area of 
rating agency oversight is very technical. We should have thus worked 
with the experts of the Securities and Exchange Commission on these 
specialized matters.
  The failure to work with our Nation's primary securities regulator on 
H.R. 2990 is unexplainable, and a poor way to develop public policy. 
Instead of taking a hard approach with the Securities and Exchange 
Commission and guiding the legislation for the best interests of the 
public, we do neither.
  Mr. Speaker, this is important, not necessarily to the wealthiest or 
most sophisticated investors in America; this is important to the 
average investors in America, their pension funds and other investment 
instrumentalities. These nationally recognized statistical rating 
organizations are not just some dealership; they rate quality of 
portfolios that affect trillions of dollars in our economy.
  If we open up for purposes of quantity and competition this 
registration without addressing the question of quality, we run the 
risk that the misusers of this proposal will file, will register as a 
nationally recognized statistical rating organization, and will 
literally be able to sell their ratings to portfolios in the future and 
to instruments in the future.
  What will happen and what is the weakness here? This bill can pass 
today, open up those loopholes and the reality will not be known for 5, 
10 or 15 years, until the next financial crisis in this country.
  We have no need to make this rush today. We should do it right. I ask 
that the substitute be supported.
  Mrs. CAPITO. Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I yield 3 minutes to the gentleman from New 
Jersey (Mr. Holt).
  Mr. HOLT. Mr. Speaker, I thank the gentlewoman from California for 
yielding me time.
  Mr. Speaker, today we are considering legislation brought by the 
majority party that will help investors invest and help Fortune 500 
companies increase their bottom line. I want to talk about 15 million 
people who will not be affected by this bill, who will not be investing 
any money this year, the 15 million people trapped by the low level of 
the Federal minimum wage.
  Mr. Speaker, we should be discussing legislation today to increase 
the Federal minimum wage. The Federal minimum wage has not been brought 
to a vote on the House floor because the majority party will not allow 
it to be brought. And yet millions of people are stuck at a low minimum 
wage of $5.15 an hour.
  Just think about it. You do not have to have a vivid imagination to 
understand how hard it is for a family, and many families we are 
talking about, not just high school kids, many families trying to get 
by on $5.15 an hour, the lowest level in purchasing power in 50 years.
  We will have a recorded vote in a few minutes on the previous 
question. This is not an arcane parliamentary procedure. Every 
editorial board, every citizen group, every voter ought to understand 
what this vote means. It means, will we have a vote on the floor about 
raising the minimum wage to something that is tolerably humane?

                              {time}  1130

  We have the time to do it. Mr. Frank pointed out, yesterday we 
finished legislative business midafternoon, today we will finish in the 
midafternoon. Friday we won't even be in. We have time. We could do it.
  But I ask the majority party, do you think we have no time? Has the 
majority party no heart? Have they no brain? The evidence is clear: 
Raising the minimum wage makes economic sense.
  It is not just a matter of compassion and heart, although that should 
be reason enough to raise the minimum wage, but it is also good 
economic practice.
  We have the opportunity to do it. The minimum wage has been frozen 
for nearly 9 years at this low, inhumane rate. The vote on the previous 
question is a very clear vote; it is whether or not we are going to 
leave these people stranded at the low, inhumane, minimum-wage rate, or 
whether we, on the floor, are going to consider raising it. That is 
what the vote means.
  Mrs. CAPITO. Mr. Speaker, it is my honor to yield 4 minutes to Mr. 
Baker of Louisiana, a champion of the Financial Services Committee.
  Mr. BAKER. I thank the gentlewoman for yielding time.
  Mr. Speaker, I rise today to express concern about where we are and 
where we have been with our current credit rating agency methodologies.
  Many have come to the well today to express concern that we will be 
sacrificing quality for the sake of quantity. Let us simply go back a 
few short months, a few short years, and think about the irate comments 
made on the floor of this House with the disclosures of WorldCom and 
Enron and Global Crossing; and you make your own list. Guess what, the 
keepers of the gate were on duty when all that happened.
  We can go back a little further to the tragic loss of taxpayer 
resources in the S&L crisis. Guess who was on duty.
  It is the structure that some stand before the House today to defend 
and decry that we are going to sacrifice quality. Well, gentlemen, if 
that is your definition of quality, we have had enough. It is time to 
make a change.
  What do we suggest? Just lightly opening the doors and let someone 
run down the hall and say, now I am an NSRSO, I am qualified? No, you 
have to be in business for 3 years. That is a pretty long internship to 
spend money and resources to establish you have the ability to issue 
credit ratings on which the market invests its confidence.
  Let us think one more step, Fannie Mae and Freddie Mac. Some may be 
surprised to know that after a multiyear, multibillion dollar 
restatement, Fannie Mae cannot issue financials that meet their 
auditing requirements for the public benefit. Today, they can't.
  Others may be surprised to learn that 43 percent of America's 
financial institutions have 100 percent of their tier one capital 
requirement invested in Fannies and Freddies. Now, some people rush to 
say, oh, no, it is not all Fannies and Freddies. Oh, great, it is Farm 
Credit System; that is even better.
  The point is, we have the financial security of our Nation and our 
financial system invested for the money in the sock drawer when things 
go bad, the tier one capital requirement, so if they hit a bump in the 
road, they can reach in the drawer and pull out a few bucks and pay off 
the loan. That money is tied up in Fannie and Freddie securities that 
this enterprise, S&P and Moody's, have said are great, they are fine, 
notwithstanding the fact that for 5 years corporate executives paid 
themselves $250 million in bonuses on financials where they cooked the 
books. Boy, we have got a great system; I am going to fight to the 
death over preserving this.
  Look at what it has done for America's taxpayers and American 
investors. Man, if there ever was a clear-cut case to make a change, 
why aren't we making the change? If you don't believe me, go to McGraw-
Hill's Web page. Go to McGraw-Hill's Web page and look at the income 
from S&P, which is a subsidiary of McGraw-Hill. In 2005, their 
operating revenue was 2.4 billion; their operating profit was 1 
billion. Now, friends, a 42.5 percent rate of return on your operating 
expense is a pretty hefty rate of return; it represents 68 percent of 
McGraw-Hill's entire operating profit. McGraw-Hill is only one of 34 
companies to have increased its dividend payments for 33 consecutive 
years.
  Put it in perspective. In looking at the first quarter performance in 
2005 versus the similar quarter in 2004, McGraw-Hill actually lost 
money in its educational activities. It had in its information and 
media arena, down 65 percent; but financial services, which is S&P, it 
was up $222,512,000.
  I think I figured out 222 million reasons why this bill is 
controversial. It is a fight about money. Let's get it right this time.
  Ms. MATSUI. I yield 5 minutes to the gentleman from Wisconsin, my 
friend, Mr. Obey.
  Mr. OBEY. Mr. Speaker, we are being asked why we are raising the 
issue of the minimum wage on this legislation. The answer to that is 
very simple: The way this House works, absolutely nothing can be 
brought to the floor for a House vote unless we have the permission of 
the majority party leadership to do so. And the fact is that for the

[[Page H5061]]

last month they have been absolutely stonewalling every single effort 
to bring an increase in the minimum wage to this floor. So that is why 
we are raising this question on this rule.
  This President and this Congress, this year, are going to provide $50 
billion in tax cuts for people who make more than $1 million a year. 
This year, the Congress has virtually voted to repeal the inheritance 
tax on the wealthiest 1 percent of people in this society. This year, 
the Congress has also voted to make further cuts in capital gains, a 
huge portion of which go to the wealthiest 10 percent of the people in 
this country. This year, the Congress is apparently willing to allow 
the cost-of-living increase to go through for Members of Congress, but 
for those stuck at the bottom of our economy on the minimum wage, they 
are being told, ``sorry, suckers, you have got to wait for the ninth 
year in a row without an adjustment in your wages.''
  That is not right, it is not fair, and it is not moral.
  The value of the minimum wage is at a 51-year low. The gap between 
the wealthiest 1 percent of people in this society and everybody else 
has never been broader than it is today. It is far worse than it is in 
merry olde England with its monarchy and its House of Lords and its 
House of Commons.
  This economy is working fabulously well for the Shaquille O'Neals of 
this society or the CEOs of our Fortune 500 corporations. They are 
making at least 200 times as much as the average workers do in this 
country. Under Jack Kennedy, that ratio was about 16 times as much. 
That shows you what has happened over the past generation.
  A minimum-wage increase can help make this economy work for 
everybody, not just those at the top of the ladder. It can help lift 
all boats, not just the yachts.
  This Congress has had time to name dozens of post offices, it has 
found time to tell Terry Schiavo's family in Florida how to handle 
their own private business, but somehow the Republican leadership of 
this House can't find the time to respond to the needs of people on 
life's underside.
  It is about time we have a change in direction on that score in this 
country. It is about time we have a change of heart in this place. It 
is about time that we do something about the wage needs of the poorest 
people in this society. And that is why I would urge people to vote 
against the previous question in protest to the Republican leadership's 
stonewalling of this issue.
  Mrs. CAPITO. Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland, the Democratic whip, Mr. Hoyer.
  Mr. HOYER. Mr. Speaker, I thank the gentlewoman for yielding, and I 
rise and I certainly adopt the remarks of Mr. Obey from Wisconsin.
  We are talking about a credit bill. We are talking about making it in 
order. In order to have credit, you have to have resources. In order to 
have resources in our country, we think you need to work. And when you 
work, we ought to pay you. We ought to pay you a decent, fair wage for 
working hard and playing by the rules.
  Now, some would say, well, we ought not to put this on this credit 
bill. If we defeat the previous question, we are going to offer an 
increase in the minimum wage to $7.25 over three increments starting 
with January 1, the Miller-Owens bill. We are going to offer that 
because we think it is the right thing to do. We are going to offer it 
because we think the overwhelming majority of Americans think it is the 
right thing to do. In fact, in polling data, they show that 86 percent 
of Americans think it is fair and right and timely to increase the 
minimum wage.
  If, in 1968, we applied simply the same cost-of-living adjustment we 
provided for Social Security recipients, minimum-wage workers would be 
earning $9.05 today. Now, what would that do? That would take them 
above the poverty line. Right now, if you work hard and play by the 
rules and you are one of 6.6 million Americans, 75 percent of whom are 
adults, and you take them and pay them fully the minimum wage, they are 
living in poverty. That is not right in America.
  In Florida, they put this issue on the ballot, and 72 percent of 
Floridians went to the polls and not only increased the minimum wage, 
but included in it a cost escalator for inflation, 72 percent of 
Floridians.
  Ladies and gentlemen, this is the fair thing to do, it is the right 
thing to do, it is the timely thing to do.
  And, very frankly, those on the minimum wage, mired in poverty and 
hopelessness, we talk about an opportunist society. There is no 
opportunity living in poverty. If you believe in an opportunist 
society, you believe in paying people a decent wage so in the richest 
Nation on the face of the Earth they have an opportunity to survive.
  This President talks about an ownership society. Which one of you 
thinks that on $5.15 an hour you can own anything, your car, your home, 
your hope?
  What defeating the previous question will do is it will give hope to 
6.6 million people, and indeed many more, because those 6.6 million 
people live in families that are struggling as well, and they are 
participating in trying to make it with those families.
  Ladies and gentlemen, defeat the previous question. Let us pass the 
minimum wage. It is far past the time when we should have done that, 
but it is time today that we do do that. Let's be fair. Raise the 
minimum wage.
  Mrs. CAPITO. Mr. Speaker, I reserve the balance of my time.
  Ms. MATSUI. Mr. Speaker, I have no further speakers. And since the 
gentlewoman has no further speakers, I will go to closing.
  The SPEAKER pro tempore. The gentlewoman from California has 3\1/2\ 
minutes remaining.
  Ms. MATSUI. Mr. Speaker, I will be asking Members to vote ``no'' on 
the previous question so I can amend the rule and provide this House 
with an opportunity to vote on legislation to increase the Federal 
minimum wage, something that has not happened in almost 10 years.
  I ask unanimous consent to insert the text of the amendment and 
extraneous materials immediately prior to the vote on the previous 
question.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  There was no objection.
  Ms. MATSUI. Mr. Speaker, my amendment to the rule provides that 
immediately after the House adopts this rule, it will bring H.R. 2429 
to the House floor for an up-or-down vote. This bill will gradually 
increase the minimum wage from the current level of $5.15 an hour to 
$7.25 an hour after about 2 years.
  This bill has 136 cosponsors and a discharge petition to bring to the 
House, the bill to the floor, and has the signatures of 190 Members of 
the House. This bill is also identical to language as included in the 
Labor-HHS appropriations bill that was blocked by the leadership just 
last month.
  Mr. Speaker, it is unconscionable that this Congress has refused to 
help America's low-income workers and their families by increasing the 
minimum wage. Somehow there is always time for another tax break for 
multimillionaires who don't need the money, but nothing to ease the 
financial struggle that low-income families face each day.
  The minimum wage is now at its lowest level in 50 years. A full-time, 
minimum-wage earner earns just $10,700 a year, an amount that is $5,000 
below the poverty line for a family of three. It takes a full day's pay 
just to pay for a tank of gas.

                              {time}  1145

  Mr. Speaker, I urge all Members to vote ``no'' on the previous 
question so that we can help millions and millions of American workers 
who would directly benefit from an increase in the minimum wage.
  I yield back the balance of my time.
  Mrs. CAPITO. Mr. Speaker, let me conclude my remarks by reminding my 
colleagues that defeating the previous question is nothing more than an 
exercise because the minority wants to offer an amendment that would 
otherwise be ruled out of order as nongermane. So the vote is without 
substance.
  The previous question vote itself is a procedural motion to close 
debate on this rule and proceed to a vote on its adoption. The vote has 
no substantive policy implications whatsoever.
  At this point in the Record, Mr. Speaker, I insert an explanation of 
the previous question.

             The Previous Question Vote: What Does It Mean?

       House Rule XIX (``Previous Question'') provides in part 
     that:

[[Page H5062]]

       There shall be a motion for the previous question, which, 
     being ordered, shall have the effect of cutting off all 
     debate and bringing the House to a direct vote on the 
     immediate question or questions on which it has been ordered.
       In the case of a special rule or order of business 
     resolution reported from the House Rules Committee, providing 
     for the consideration of a specified legislative measure, the 
     previous question is moved following the one hour of debate 
     allowed for under House Rules.
       The vote on the previous question is simply a procedural 
     vote on whether to proceed to an immediate vote on adopting 
     the resolution that sets the ground rules for debate and 
     amendment on the legislation it would make in order. 
     Therefore, the previous question has no substantive 
     legislative or policy implications whatsoever.

  Mr. Speaker, I would like to say that the underlying legislation is 
an important step towards improving transparency in the credit rating 
industry and the quality of information provided by the agencies. The 
industries receiving credit ratings are wide-ranging, from information 
technology, healthcare, manufacturing, financial services, and the list 
goes on.
  I would also like to remind my colleagues that many, many workers in 
America and investors in America are heavily reliant on the full health 
of the companies that they work for and invest in, all up and down the 
economic ladder. Allowing smaller industry specific credit rating 
agencies to enter the market will improve the information provided to 
investors.
  We cannot forget those workers of Enron and WorldCom who were saving 
for colleges, saving for retirement, and basically left penniless. With 
the ever-increasing importance placed on these ratings by investors, it 
is important that clear requirements for registration of credit rating 
agencies be created, and this legislation is a giant step towards that 
goal.
  I would like to remind my colleagues that this fair rule makes in 
order all germane amendments that were presented to the Committee on 
Rules.
  The material previously referred to by Ms. Matsui is as follows:

  Previous Question on H. Res. 906, Rule for H.R. 2990 Credit Rating 
                       Agency Duopoly Relief Act

       At the end of the resolution add the following new section:
       ``Sec. 2. Immediately upon the adoption of this resolution 
     it shall be in order without intervention of any point of 
     order to consider in the House the bill (H.R. 2429) to amend 
     the Fair Labor Standards Act of 1938 to provide for an 
     increase in the Federal minimum wage. The bill shall be 
     considered as read for amendment. The previous question shall 
     be considered as ordered on the bill to final passage without 
     intervening motion except: (1) 60 minutes of debate equally 
     divided and controlled by the chairman and ranking minority 
     member of the Committee on Education and the Workforce; and 
     (2) one motion to recommit with or without instructions.''
                                  ____


        The Vote on the Previous Question: What It Really Means

       This vote, the vote on whether to order the previous 
     question on a special rule, is not merely a procedural vote. 
     A vote against ordering the previous question is a vote 
     against the Republican majority agenda and a vote to allow 
     the opposition, at least for the moment, to offer an 
     alternative plan. It is a vote about what the House should be 
     debating.
       Mr. Clarence Cannon's Precedents of the House of 
     Representatives, (VI, 308-311) describes the vote on the 
     previous question on the rule as ``a motion to direct or 
     control the consideration of the subject before the House 
     being made by the Member in charge.'' To defeat the previous 
     question is to give the opposition a chance to decide the 
     subject before the House. Cannon cites the Speaker's ruling 
     on January 13, 1920, to the effect that ``the refusal of the 
     House to sustain the demand for the previous question passes 
     the control of the resolution to the opposition'' in order to 
     offer an amendment. On March 15, 1909, a member of the 
     majority party offered a rule resolution. The House defeated 
     the previous question and a member of the opposition rose to 
     a parliamentary inquiry, asking who was entitled to 
     recognition. Speaker Joseph G. Cannon (R09Illinois) said: 
     ``The previous question having been refused, the gentleman 
     from New York, Mr. Fitzgerald, who had asked the gentleman to 
     yield to him for an amendment, is entitled to the first 
     recognition.''
       Because the vote today may look bad for the Republican 
     majority they will say ``the vote on the previous question is 
     simply a vote on whether to proceed to an immediate vote on 
     adopting the resolution * * * [and] has no substantive 
     legislative or policy implications whatsoever.'' But that is 
     not what they have always said. Listen to the Republican 
     Leadership Manual on the Legislative Process in the United 
     States House of Representatives, (6th edition, page 135). 
     Here's how the Republicans describe the previous question 
     vote in their own manual: Although it is generally not 
     possible to amend the rule because the majority Member 
     controlling the time will not yield for the purpose of 
     offering an amendment, the same result may be achieved by 
     voting down the previous question on the rule * * * When the 
     motion for the previous question is defeated, control of the 
     time passes to the Member who led the opposition to ordering 
     the previous question. That Member, because he then controls 
     the time, may offer an amendment to the rule, or yield for 
     the purpose of amendment.''
       Deschler's Procedure in the U.S. House of Representatives, 
     the subchapter titled ``Amending Special Rules'' states: ``a 
     refusal to order the previous question on such a rule [a 
     special rule reported from the Committee on Rules] opens the 
     resolution to amendment and further debate.'' (Chapter 21, 
     section 21.2) Section 21.3 continues: ``Upon rejection of the 
     motion for the previous question on a resolution reported 
     from the Committee on Rules, control shifts to the Member 
     leading the opposition to the previous question, who may 
     offer a proper amendment or motion and who controls the time 
     for debate thereon.''
       Clearly, the vote on the previous question on a rule does 
     not have substantive policy implications. It is one of the 
     only available tools for those who oppose the Republican 
     majority's agenda to offer an alternative plan.

  Mrs. CAPITO. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. MATSUI. 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, further 
proceedings on this question will be postponed.

                          ____________________