[Congressional Record Volume 163, Number 203 (Wednesday, December 13, 2017)]
[House]
[Pages H9860-H9868]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 2396, PRIVACY NOTIFICATION
TECHNICAL CLARIFICATION ACT, AND PROVIDING FOR CONSIDERATION OF H.R.
4015, CORPORATE GOVERNANCE REFORM AND TRANSPARENCY ACT OF 2017
Mr. WOODALL. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 657 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 657
Resolved, That upon adoption of this resolution it shall be
in order to consider in the House the bill (H.R. 2396) to
amend the Gramm-Leach-Bliley Act to update the exception for
certain annual notices provided
[[Page H9861]]
by financial institutions. All points of order against
consideration of the bill are waived. The amendment in the
nature of a substitute recommended by the Committee on
Financial Services now printed in the bill shall be
considered as adopted. The bill, as amended, shall be
considered as read. All points of order against provisions in
the bill, as amended, are waived. The previous question shall
be considered as ordered on the bill, as amended, and on any
further amendment thereto, to final passage without
intervening motion except: (1) one hour of debate equally
divided and controlled by the chair and ranking minority
member of the Committee on Financial Services; (2) the
further amendment printed in the report of the Committee on
Rules accompanying this resolution, if offered by the Member
designated in the report, which shall be in order without
intervention of any point of order, shall be considered as
read, shall be separately debatable for the time specified in
the report equally divided and controlled by the proponent
and an opponent, and shall not be subject to a demand for
division of the question; and (3) one motion to recommit with
or without instructions.
Sec. 2. Upon adoption of this resolution it shall be in
order to consider in the House the bill (H.R. 4015) to
improve the quality of proxy advisory firms for the
protection of investors and the U.S. economy, and in the
public interest, by fostering accountability, transparency,
responsiveness, and competition in the proxy advisory firm
industry. All points of order against consideration of the
bill are waived. An amendment in the nature of a substitute
consisting of the text of Rules Committee Print 115-46 shall
be considered as adopted. The bill, as amended, shall be
considered as read. All points of order against provisions in
the bill, as amended, are waived. The previous question shall
be considered as ordered on the bill, as amended, and on any
further amendment thereto, to final passage without
intervening motion except: (1) one hour of debate equally
divided and controlled by the chair and ranking minority
member of the Committee on Financial Services; and (2) one
motion to recommit with or without instructions.
The SPEAKER pro tempore. The gentleman from Georgia is recognized for
1 hour.
Mr. WOODALL. Mr. Speaker, for the purpose of debate only, I yield the
customary 30 minutes to the gentleman from Colorado (Mr. Polis),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
General Leave
Mr. WOODALL. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. WOODALL. Mr. Speaker, I have had the opportunity, over the last
couple of weeks, to bring a number of bills from the Financial Services
Committee to the floor. We talk so much about regular order and having
a process where the committees are doing their work, where the
authorizers are deep into the details, and then we are bringing those
bills to the floor for the entire House to vote on. We have that
opportunity again today.
Mr. Speaker, the rule today brings two bills to the floor: H.R. 2396,
which is the Privacy Notification Technical Clarification Act, it
brings that under a structured rule, making in order the only amendment
that was offered, a bipartisan amendment, offered by Mr. Clay and Mr.
Trott; and it also brings H.R. 4015 to the floor, Mr. Speaker, which is
the Corporate Governance Reform and Transparency Act of 2017. We did
not have any germane amendments offered to that measure in the Rules
Committee last night, so we bring that under a closed rule today.
Mr. Speaker, I remind my colleagues--as is the way of my chairman on
the Rules Committee--notice was sent out to all Members, and will
continue to be sent out to all Members, for each set of bills that we
consider in the Rules Committee soliciting any amendments or ideas that
folks may have. We sent out that notification, but, for these two
bills, we received only one germane amendment.
Mr. Speaker, I won't go into great detail about these individual
bills because we are fortunate to have the sponsors here on the floor
for the rule today. But what I do want to say is that this is another
series in a line of commonsense, authorizing pieces of legislation,
things that move through committee in a bipartisan way, that are going
to make life just a little bit easier for the American people.
We have a chance today, if we support this noncontroversial rule, to
bring these two noncontroversial bills to the floor and make that
difference together, a difference we all came to Washington to make.
Mr. Speaker, I ask all of my colleagues to consider supporting this
rule as well as supporting the two underlying pieces of legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. POLIS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I thank the gentleman for yielding me the customary 30
minutes.
Mr. Speaker, I rise in opposition to this rule. This rule that we are
looking at today has two bills under it, and this is the 56th closed
rule allowing no amendments that we are bringing to the floor this
year. Over the past year, we have not considered any legislation under
an open rule that would allow Republicans or Democrats to bring forward
amendments here on the floor.
When the 115th Congress opened, Speaker Ryan promised regular order
bills would make their way to the floor after hearings and markups.
Instead, we have seen bill after bill rushed to the floor. Many bills
haven't even gone through committee or skipped hearings. That is true
for the failed healthcare bill, and it is also true for the tax bill
currently in conference, the major bill this Congress.
This tax bill, that somehow we understand there is a ``deal'' on
before the conference committee even met, was crafted behind closed
doors, and no Member was able to offer their ideas on the House floor.
I offered several bipartisan amendments in the Rules Committee, but
they were locked out, as were amendments from every other Democrat and
Republican that chose to offer amendments.
The tax legislation would explode our debt. It is a giveaway to
wealthy corporations and does nothing to help the middle class.
Now, the benefit of having an open process is creating better ideas:
having Democrats and Republicans bring forward those ideas, see who can
muster a majority of votes here on the floor of the House, and include
that in a tax bill. We are a legislature. That is how we are supposed
to work.
Instead, a bill was crafted behind closed doors to raise taxes on 78
million Americans and add $1.7 trillion to the debt. When you add to
the debt, that is a tax on future Americans. Instead of taxing them
today, you are taxing them tomorrow. The tax-and-spend Republican Party
continues to add to the deficit and add to the debt day after day after
day.
Mr. Speaker, we only have a few legislative days left before the end
of the year, and we have very important work to do, like reauthorizing
the Children's Health Insurance Program and funding the government for
the remainder of the fiscal year.
There are millions of Americans who have been negatively affected by
devastating hurricanes and wildfires in Puerto Rico, Texas, Florida,
and the Virgin Islands, and Congress has not stepped up to the plate.
There are also over 800,000 aspiring Americans who are at risk of
being deported from the only country they have ever known as home
because of the reckless actions of President Trump. Congress needs to
act to find a real solution so DREAMers can continue to work legally in
the communities that they live in, and they continue to thrive and give
back to make our country even greater.
We have a lot of critical tasks ahead, which is why I am really
surprised, with all of this work to do, and only 7 or 8 days to do it,
that here we are considering two bills where we will have our debate,
but they are not bills of great importance. We are using our floor
time--very limited, 7 days before the end of the year--when we could be
debating tax reform and offering amendments, when we could be
addressing the needs of the DREAMers, where we could actually be doing
something about the deficit, reining in out-of-control wasteful
government spending. We are not doing any of that.
We are doing two minor bills that are favors for public companies, or
whoever they are. I am happy to talk about them. I am going to do my
role in debating them. One I am even fairly supportive of. But they are
completely separated from the actual concerns of the American people.
[[Page H9862]]
No wonder the approval rating of this institution is under 15
percent, because we continue to debate these minor bills under a closed
process, when, this very week, we could have had an open process for
tax reform. We could be voting on 10 or 20 amendments a day, passing
some and rejecting some. I have no problem if I bring forward some
Democratic amendment and it fails. That is the process. That is fair.
But we have bipartisan, commonsense amendments that should be part of
tax reform. Representative Schweikert and I have a bill to provide a de
minimis exemption on taxation for use of cryptocurrencies, to allow
them to be used for amounts under $600 in everyday purchases and to
remove the specter of IRS enforcement.
Let's put it in. Let's have a vote on it. Let's see if a majority of
Congress agrees with me. I hope they do. If not, I am a big boy. It is
my job. I can go home. But to not even be able to fight for the issues
that my constituents have hired me to fight for is not only the
frustration I have, and not only the frustration many Republicans have,
but it is the frustration the American people have with this
institution.
Now, let's get to these bills. Typically, the Financial Services
Committee did not hold a hearing on either of these rules. It is a
closed rule.
The first one, H.R. 2396, the Privacy Notification Technical
Clarification Act, would remove privacy notice requirements for
financial institutions to consumers that share or sell a customer's
personal information with third parties.
We are all for reducing unnecessary regulations. When I get to the
next bill, the Republicans are actually trying to add paperwork and
regulations. This one does, but it picks a very poor one to get rid of.
It gets rid of privacy notices for financial institutions that tell
consumers that they can share or sell their personal information. Of
all of the places to cut paperwork, why would you want to cut the one
piece that consumers and retail investors actually care about?
Back in September, 143 million Americans had their personal and
sensitive information shared widely, as a result of a data breach at
Equifax. Congress should be looking at ways to better secure our
sensitive information--a cybersecurity bill, better information
sharing--instead of actually making it easier for our personal
information to be shared more widely and giving you, as the consumer,
less ability to find out where it is being shared.
A hearing would be helpful to understand the full effects of this
legislation to see what the unintended consequences are. We do know
that it would eliminate clear disclosure to consumers about their
privacy rights--never a good thing, especially in these times--
including a consumer's ability to opt out from having their information
sold to certain third parties. We can do better.
The other bill, H.R. 4015, the Corporate Governance Reform and
Transparency Act, makes a change to how proxy advisory firms provide
information to shareholders. It would require that they make their
recommendations available to companies.
This bill is problematic from a number of perspectives. Here is what
it does. Proxy advisory firms provide independent advisory services for
investors and have fiduciary responsibility to their investors.
Under this legislation, they would actually have to open themselves
up to lobbying for companies and add additional paperwork. They would
have to register with the SEC, whereas they now don't, before trying to
issue vote recommendations or trying to change the corporate board.
Here is who the players are in this fight: On the one hand, you have
public companies; on the other, you have investors, which means your
pension fund, and mine, Mr. Speaker. It means university endowments. I
know you all don't like those, and you are going to tax them soon. It
means, perhaps, using an individual investor, through a mutual fund or
other vehicle. So investors on one side, public corporations on the
other.
But the problem is: it is not the shareholders of the public
companies, it is the insular governance and management structure of
those organizations. Many of them do need to be shaken up in the name
of efficiency.
There are many examples of investor pressure that has been applied to
good effect: to meaningful reforms and corporate governance; preventing
conflict of interest, making sure that the board oversees the CEO are
not just his golfing buddies, and he is on the board, or she is on the
board, of their companies, too.
I have generally been on the side of investor empowerment in that:
not to the extreme, not to make it impossible to be a CEO on a publicly
traded company, to run a publicly traded company. But, if anything, we
should make sure that the actual owners of the companies are empowered
to make the changes they need to increase efficiency.
{time} 1415
This bill goes the wrong way. It adds red tape and paperwork. It adds
regulations to investors and prevents them from being able to exert
influence in the same way they do today, adding one degree of
additional regulation and paperwork to allow them to do the kinds of
good governance activities in terms of running competitive fights for
boards of directors.
Now, I get that there is another side. There can be a steamy
underbelly to investor engagement as well. There are some investors who
only care about short-term gains, who try to institute practices or
bully management around in a way that is not conducive to long-term
value but, rather, just pump-and-dump schemes that they try to make
money off of, and I totally get that.
But in general, it is the owners of a company to whom the fiduciary
responsibility of the directors and the CEO lie; and we should empower
them, for better or for worse, to make the changes to increase the
overall productivity of the company.
We should not burden investors with additional red tape, as
Republicans are doing, by creating more bureaucracy and paperwork and
compliance costs with this bill.
Frankly, I was surprised to see this bill come out of Financial
Services Committee because Republicans have been fairly consistent in
trying to remove regulations from Dodd-Frank. That has generally been
the approach. I supported the removal of some of those unnecessary
regulations. Others are important regulations, like this privacy
disclosure that I don't think is a good idea.
But here, they are actually adding reporting requirements above and
beyond Dodd-Frank. They are out ``Dodd-Franking'' Dodd-Frank.
Republicans are saying there is not enough reporting; there is not
enough paperwork; there is not enough money going to lawyers and
accountants. In Dodd-Frank, we are going to require that they file even
more paperwork with the SEC.
I think that is the wrong way to go, Mr. Speaker, and I urge my
colleagues on both sides of the aisle to resist this effort to burden
shareholders who actually own companies with additional costs and
paperwork and prevent them from making necessary management
improvements to the companies that, at the end of the day, are run for
them, not for the benefit of management.
That is why I oppose this bill. Shareholders should have a right to
impartial information about the company in which they have invested. We
should minimize paperwork where possible. I have been proud to support
a number of bipartisan proposals to do that. This bill goes the
opposite way.
Mr. Speaker, I reserve the balance of my time.
Mr. WOODALL. Mr. Speaker, I yield myself such time as I may consume
to say sometimes there is a lot of pressure on the Rules Committee. You
come down here and you have got some of the most knowledgeable folks on
both sides of the issue, on both sides of the Chamber, and you have got
to be prepared to refute detail after detail after detail that might
confuse folks back home.
It gives me great pleasure today to not have to spend any time
refuting anything that my friend just said because the important thing
about developing a reputation is that it is just laughable to suggest
that Republicans are coming to the floor today to undermine privacy. It
is laughable to suggest that Republicans are coming to the floor today
to increase paperwork and red tape. And it is not only laughable,
[[Page H9863]]
but it is inaccurate to suggest that it is Republicans coming to do
this, Mr. Speaker. These are bipartisan bills coming to the floor
today.
Mr. Speaker, I yield 5 minutes to the gentleman from Michigan (Mr.
Trott). His bill passed out of committee 40-20; a huge bipartisan vote
coming out of committee. It went through a hearing; it went through a
markup; it was everything that makes this institution work properly. I
appreciate him for bringing the issue forward to talk about the
tremendous bipartisan effort that he has put together.
Mr. TROTT. Mr. Speaker, I thank my friend from Georgia for yielding
and for his hard work on this rule.
Mr. Speaker, I rise in support of the rule today, which allows for
consideration of H.R. 2396, the Privacy Notification Technical
Clarification Act.
I would like to begin by thanking Chairman Hensarling for guiding
this bill through committee, and Chairman Sessions for his work on
bringing this rule to the floor. I also want to thank Mr. Clay for his
very helpful amendment.
One of the reasons I came to Congress was to reduce the regulatory
burden in our country so that businesses could have the freedom to
grow, thrive, and create jobs for hardworking Americans. This bill is
about modernizing one of those outdated regulations that has been a
burden to businesses and consumers alike, the privacy notification
rules.
Now, a couple of minutes ago, my friend from Colorado gave a very
nice speech about DACA, about tax reform, about the public opinion of
this institution; but the speech had nothing to do with consideration
of this rule today. When he finally got around to talking about the
rule, he said we should not allow the rule to move forward because the
underlying bill, H.R. 2396, in light of the Equifax scandal, we should
not be eliminating privacy notices and allow banks to circumvent those
rules because it is going to hurt consumers.
None of this is correct. This bill is a very simple bill. It deals
with auto finance companies and it relieves them from the burden of
having to send out privacy notices to consumers year after year when
the policy hasn't changed. If the auto finance companies change the
policy, they have to send out new privacy notices. If a consumer calls
up and says, ``I know the policy hasn't change, but I would like to see
the rule,'' they can go on the website or they can ask that the policy
be mailed to them. This bill in no way harms consumers.
Now, just last year, we passed the bipartisan bill that allowed banks
to stop sending privacy notices to consumers if nothing in the policy
had changed. This noncontroversial measure passed by voice vote, with
Members on both sides of aisle realizing that companies were wasting
enormous amounts of paper and money sending out duplicative and
unnecessary privacy notices year after year.
The bill achieved its goal. Millions of dollars that would have been
spent on paper and postage were instead put back into our local
communities. My bill builds on this success and extends the provision
to companies lending money to people buying vehicles.
This means that those who extend credit to consumers who buy vehicles
from Ford, GM, Harley-Davidson, and other iconic American companies
would receive the same benefit as banks, and, more importantly,
consumers would no longer be bombarded with a never-ending stream of
little print privacy notices and policies that haven't changed.
This is a bipartisan, commonsense measure. I encourage my colleagues
to support the rule and allow debate to begin on this legislation.
Mr. POLIS. Mr. Speaker, I yield myself such time as I may consume.
I include in the Record the Republican bill summary from the majority
on the Rules Committee for H.R. 4015.
Committee on Rules
Pete Sessions, Chairman--December 11, 2017
H.R. 4015--Corporate Governance Reform and Transparency Act of 2017
Purpose: To improve the quality of proxy advisory firms for
the protection of investors and the U.S. economy, and in the
public interest, by fostering accountability, transparency,
responsiveness, and competition in the proxy advisory firm
industry.
Background and Legislative History: Each year, public
companies hold shareholder meetings at which the company's
shareholders vote for the company's directors and on other
significant corporate actions that require shareholder
approval. As part of this annual process, the Securities and
Exchange Commission (SEC) requires public companies to
provide their shareholders with a proxy statement before
shareholder meetings. A proxy statement includes all
important facts about the matters to be voted on at a
shareholder meeting, including, for example, information on
board of director candidates, director compensation,
executive compensation, related party transactions,
securities ownership by certain beneficial owners and
management, and eligible shareholder proposals. The
information contained in the statement must be filed with the
SEC before soliciting a shareholder vote on the election of
directors and the approval of other corporate actions.
Solicitations, whether by management or shareholders, must
disclose all important facts about the issues on which
shareholders are asked to vote.
In general, state corporate law governs shareholder voting
rights, including the types of corporate actions that require
shareholder approval. However, Section 14 of the Securities
Exchange Act of 1934 (Exchange Act) authorizes the SEC to
promulgate rules governing the solicitation of proxies for
most public companies. SEC Regulation 14A governs proxy
solicitations and sets forth the categories of information
that must be disclosed in proxy solicitations.
Largely as a result of the SEC's regulations, proxy
advisory firms now wield outsized influence in the U.S. proxy
system. In particular, regulators, market participants, and
academic observers have highlighted potential conflicts of
interest inherent in the business models and activities of
proxy advisory firms. For example, as indicated above, proxy
advisor firms may feel pressured by their largest clients--
many of whom are activist investors--to issue vote
recommendations that reflect those clients' specific agendas.
In addition, proxy advisory firms often provide voting
recommendations to investment advisers on matters for which
they also provide consulting services to public companies.
Mr. POLIS. Mr. Speaker, the reason I do this is, my colleague from
Georgia somehow said that it was laughable, this characterization that
it is adding paperwork.
That is exactly what this bill does. In fact, in this exhibit, this
is a Republican summary of their own bill. It says: ``The information
contained in the statement must be filed with the SEC. . . .''
The whole bill is about adding paperwork. That is what the bill does.
You can argue it is paperwork all you want because corporate CEOs want
it and many existing board members want it. Investors don't want it.
But we are talking about additional paperwork, and there is nothing in
that statement that you can refute because the Republican bill summary
explains that that is what they are doing. I mean, there is no
disagreement.
And he is correct. I am sure there are some Democrats who support
these bills, some Republicans who support them, some Republicans and
Democrats who might oppose these bills, but that is what the bill does,
it adds paperwork. That is why I mentioned I was surprised to see it
come out of the Financial Services Committee that, in general, had been
more interested in reducing paperwork. Here, they are interested in
adding compliance cost and paperwork to investors.
Mr. Speaker, I have to say that if we defeat the previous question, I
will offer an amendment to the rule to bring up Sean Patrick Maloney's
bill, H.R. 4585, which would block the FCC's rule rolling back net
neutrality from taking effect to ensure the internet remains open to
all Americans.
Mr. Speaker, I ask unanimous consent to insert the text of my
amendment in the Record, along with extraneous material, immediately
prior to the vote on the previous question.
The SPEAKER pro tempore (Mr. Mitchell). Is there objection to the
request of the gentleman from Colorado?
There was no objection.
Mr. POLIS. Mr. Speaker, I yield 4 minutes to the distinguished
gentleman from New York (Mr. Sean Patrick Maloney) to discuss the
proposal.
Mr. SEAN PATRICK MALONEY of New York. Mr. Speaker, I thank the
gentleman from Colorado for yielding.
Mr. Speaker, I rise today to urge my colleagues to defeat the
previous question so we can turn our attention to the issue that is so
critical for this body to address right now. I speak of the Federal
Communications Commission's decision and its assault on net neutrality.
The FCC is expected to vote tomorrow to eliminate the rules that
protect
[[Page H9864]]
our internet. They are about to fix something that is not broken.
Now, maybe the words ``net neutrality'' make your eyes glaze over,
but this issue is critical to anyone who uses the internet, which is
really all of us, and it is not that complicated.
We call the rules that protect the current internet ``net
neutrality'' because they, more or less, keep the internet neutral for
everyone. A neutral internet means we all have access to the same legal
content and services no matter where or how we get our internet.
These rules aren't new, and they are working. In fact, when you think
about it, one of the last places where quality really reigns in our
society is on the internet. We don't discriminate against the content
or the intellectual creations of one young entrepreneur versus a big
business or an established entity. It is one of the few places left in
America where we are all on equal footing.
That is the current net neutrality system that we must protect. The
folks who want to end net neutrality say they need to rewrite these
rules to spur innovation.
Really, Mr. Speaker?
It is hard to look at the internet as it has blossomed in America and
say we lack innovation. Innovation is everywhere. Look at all the new
apps, websites, devices, and services that we all rely on every day.
This innovation exists not in spite of net neutrality. This
innovation exists, in large part, because of net neutrality. Net
neutrality is not a bug, Mr. Speaker. Net neutrality is a feature, and
that is why we must protect it.
Of course, the real reason that people want to end net neutrality is
money and profitability. Getting rid of net neutrality would expose
consumers to all sorts of practices that, right now, are banned;
practices like throttling, which means the internet company doesn't
have to provide the same access to all companies. So they don't like
one company, they can slow down your access to that site. They could
block the site entirely.
They could tell a streaming service, like Netflix, that they have to
pay more or make their site work differently. These extra costs for
Netflix are going to get passed on to all of us, the consumers.
While some of us have a few choices when it comes to internet service
providers, most of us don't.
How many have more than one option when it comes to internet in your
home or office?
These companies have a functional monopoly, so many of them can do
basically whatever they want and not lose customers. That is why we
need some commonsense rules in place to protect consumers. These rules
are called net neutrality.
So what can we do to stop the FCC from harming this free internet?
Well, I have introduced legislation in just the last couple of days
that would block this proposal and protect the internet. H.R. 4585, the
Save Net Neutrality Act, would simply prevent the FCC from relying on
this process they have used to roll these rules back. It is really that
simple. And we know the FCC's rulemaking process was so messed up, so
corrupted, so screwed up that it is being investigated right now by the
New York attorney general.
So I urge all of my colleagues on both sides of the aisle to defeat
the previous question so we can move to debate my bill, the Save Net
Neutrality Act, and address this critical issue. This is our chance to
protect the internet, as it has always existed, an internet that is
working fine as it is.
To the FCC, we say: If it ain't broke, don't fix it.
Mr. WOODALL. Mr. Speaker, I yield myself such time as I may consume
to say that I agree with my friend. I, too, said to the FCC in 2015: If
it ain't broke, don't fix it.
I thought the first 20-plus years of the internet were marked by
innovation and freedom, and I wanted to keep that innovation and
freedom flowing.
The Obama administration wanted to insert itself into the internet
infrastructure in ways that it had never inserted government in
infrastructure before. And from the numbers that I have seen--my friend
may have different numbers--suggests that infrastructure investment has
declined over those 2 years, first time in the history of internet
infrastructure investment.
Mr. Speaker, reasonable men and women can disagree, but, understand,
internet freedom and innovation is exactly what we all want to protect.
Unfortunately, it is not what this rule is focused on today. This rule
today is focused on simplification and expansion coming out of the
Financial Services Committee.
Mr. Speaker, one of the gentlemen I had the pleasure of being elected
with in 2011 is the gentleman from Wisconsin (Mr. Duffy). He is one of
the sponsors of one of these bills we have before us today. He has been
a leader in the financial services field in his 7 years here.
Mr. Speaker, I yield 5 minutes to the gentleman from Wisconsin (Mr.
Duffy) to talk about the impact that his legislation will have on the
process today.
Mr. DUFFY. Mr. Speaker, I appreciate the gentleman yielding me this
time.
Before I get to my bill, if I could just address a few points that
have been brought up in this debate, which I am surprised at the fact
that the Rules Committee doesn't actually talk about the rule. We talk
about a whole bunch of different issues, but maybe I am new to this
game.
I have to say that the gentleman from Georgia is correct.
Infrastructure investment in the internet has gone down over the last 2
years.
I would agree: If it is not broken, why did President Obama try to
fix it?
It was working really well for 20 years, and we had great innovation.
In regard to the tax bill, that is being debated. I think we are
looking at some unique arguments that are being made. The Democrats are
over there and they are fighting for the poor middle class American,
and all Republicans are fighting for the rich. It is a great line. I
love the line. But let's look to the wealthiest communities in America.
{time} 1430
Go look right outside of D.C. Look in Northern Virginia. Are those
wealthy communities, those counties in Virginia, are they Republican or
Democrat? They are Democrat. L.A., San Francisco, Chicago, Boston, New
York are all really rich communities that elect Democrats.
The wealthiest and biggest corporations, think of the tech industry
in California or the biggest in America. What are they? They are
Democrats. And that is why. When the tax debate comes up, you see
Democrats fighting for loopholes and preferences for their big, wealthy
friends.
And that is why, when Republicans here in this House said maybe to
write off the mortgage interest on a $1 million home, that might be a
little too much, maybe we should lower it to $500,000 of mortgage
interest deductions, my Democratic friends freaked out.
Oh, no, the poor, middle class people in my community who have a $1
million mortgage, they are just having a tough time getting by--that
was the argument that was made, fighting for the loopholes and
preferences for the wealthiest Americans, while we are fighting for the
middle class.
You talk about investment in my bill? You want to talk about pension
funds? What has happened to pension funds in America? What has happened
to American 401(k)'s? They have gone through the roof because we are
lowering rules and regulations in a smart way, and we are going to
reform our Tax Code to let families and businesses keep more of their
income because they can spend it better than anyone in this town. They
do it well.
So if you want to tank the markets, do what you have been doing and
tank tax reform.
I want to get to my bill. This is on proxy advisory firms. I have
taken awhile to get here, but the role of proxy advisory firms in the
U.S. economy and shaping corporate governance is profound. These firms,
they counsel pension funds and mutual funds and institutional investors
on how to vote the shares of the corporations that they own.
You think, well, that is pretty benign. That is not a big issue.
Well, the shares of institutional investors' ownership in 1987 was 46
percent. Today, institutional investors own 75 percent of American
corporations, billions of shares institutional investors control and
look to proxy advisers for advice.
[[Page H9865]]
There are just two firms that control 97 percent of the market. So
two companies, basically, are having a huge influence on American
corporate governance, and they are involved in the writing and analysis
and reports and voting recommendations that affect fundamental
corporate transactions like mergers and acquisitions, approval of
corporate directors and shareholder proposals--a huge impact on
corporate governance.
And they are not immune from conflicts of interest. For example, in
addition to providing recommendations to institutional investors about
how to vote, proxy advisory firms may also advise companies about
corporate governance issues, rate companies on corporate governance,
help companies approve those ratings, and advise proponents about how
to frame proposals to get the most votes.
I am going to come back to that in a second, but there was a Stanford
University study that said institutional investors with assets under
management of $100 billion or more, they only make 10 percent of the
voting decisions, which means they offload 90 percent to proxy advisory
firms.
So I don't know if you are familiar with the Mafia, but you have got
the old storekeeper on the block, and he is robbed one night--right?--
gets beaten up and robbed, and the next day, the thugs come in and go:
Hey, hey, I hear you were robbed last night. You pay a little fee,
we'll take care of you and make sure you are not robbed anymore.
That is exactly what proxy advisory firms are doing. They are like:
Oh, you got a bad recommendation. Let me tell you what. You buy our
services, and we can help you in the future. Just pay the ransom, and
we will help take care of you in future recommendations.
This is not the way corporate governance should work. So my bill
brings transparency and accountability to proxy advisory firms.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. WOODALL. Mr. Speaker, I yield an additional 2 minutes to the
gentleman from Wisconsin, the sponsor of this legislation.
Mr. DUFFY. I thought that is what Democrats want: making them more
responsive; bringing more competition into the industry; making it
better for investors; specifically, again, a bipartisan bill.
Republicans and Democrats voted for this legislation.
But we will ensure that proxy advisory firms are registered with the
SEC. Oh, how bad is that, registering with the SEC, a little oversight?
We are going to disclose potential conflicts of interest. How radical
is that idea?
Shouldn't we tell people that we have a conflict of interest, and
shouldn't all parties be aware of it?
I don't know why my friends across the aisle, or the gentleman from
Colorado would be opposed to that.
Maintain a code of ethics. That is not shocking. I think most people
would agree to that point.
And make publicly available the methodologies for formulating proxy
recommendations and analysis.
Again, this is transparency. This is a commonsense bill that both
Republicans and Democrats have voted for because we have recognized--
and again, I am not a big regulation guy, as the gentleman from
Colorado had pointed out. But when you consolidate a great deal of
power in two companies that have a huge impact on American corporate
governance, that makes a lot of people uncomfortable; and to have a
little more oversight, to have a little more transparency, to have a
little more accountability is a really, really good thing.
Some of the smallest companies have been the biggest complainers
about how these proxy advisory firms have held them hostage. So let's
support the small innovators, the big job creators in America that are
complaining about the big proxy advisory firms. Let's stand with them
and the families that they employ, and the future families, if they are
successful, that they will employ, and let's give a little more control
to proxy adviser firms.
I ask all to support this great bill.
Mr. POLIS. Mr. Speaker, I yield myself such time as I may consume.
I can see my good friend, Mr. Duffy, is very excited about this, very
engaged. It is a hard issue. I don't think many Democrats are that
excited either way. They are all going to decide where they stand
because it is just a fight between corporate CEOs and big institutional
investors. They are both fine. I mean, you have got to pick one or the
other in voting ``yes'' or ``no'' on this bill.
I think, as Democrats, we are more interested in how the people are
doing who are working for those companies. How are we doing about
sustainable practices over time?
Yes, every Democrat and Republican will cast their vote here either
for institutional investors or for corporate CEOs and insular boards.
Fine.
It does add paperwork. We talked about that. Mr. Duffy said: Oh, it
adds paperwork. Democrats should like it.
Yes, maybe there are some. I think some Democrats voted for it in
committee. There are Democrats that want to increase paperwork. I am
not one of them. I want to decrease paperwork and streamline it.
But, no, I am sure there will be some Democrats who support it. There
are probably Democrats who, themselves, agree with the corporate CEOs
over the institutional investors.
I have taken a company public. I have run private companies. I have
seen this world. I think it is a good thing that the share of
institutional investment has increased. I don't have the statistics in
front of me. The gentleman from Wisconsin said something along the
lines of 46 to 75 percent of the capital is institutional.
The big problem in public corporate governance is not too much
shareholder engagement; it is not enough. When you have a diffuse
shareholder base, when you don't have institutional investors, when you
have, proverbially, 200 people who each own half a percent of the
company or even more and they never talk and don't know each other, the
ability of management to run amok in their own interests, to the
detriment of the shareholders, plagues our public marketplaces.
So to have sophisticated, active investors who own enough and can
work together, sometimes through these proxy fights when it comes to
it, to be able to maximize long-term value is a good thing. It is a
good thing.
Of course, everybody can point to times that it has been good for
companies and times it has been bad. Generally speaking, this bill is
adding paperwork to move the bar the wrong way, to move it towards
management, away from shareholders.
I agree you need a balance. I wouldn't support a bill that moved it
all the way to shareholders either. You are just encouraging agitators
to get in on a short-term basis and speculative basis.
But I think we are close to the right place; and if you ask me where
I would move it, I would move it a little the other way to empower
shareholders. In fact, I have a bill that does that. It is part of a
bigger bill, but it is a bill that gives shareholders more of a direct
say over the pay of top executives because, again, there is a problem
with insular corporate boards. Part of the answer is empowering
institutional investors and empowering individual investors.
So, look, Democrats will hold their nose and vote for either
corporate CEOs or for big investors, and that is fine. I firmly think
that the best interests of our economy and the people and
sustainability lie in moving it toward the investors.
This bill moves it the wrong way and adds paperwork and costs to the
investors. So I really think it moves the wrong way, which is why I
oppose this bill, and I urge my colleagues to vote ``no.''
There was also a discussion, Mr. Duffy mentioned why aren't we just
talking about the rule. It is because, Mr. Speaker, like 56 other
rules, it is a closed rule.
What else can we say about closed rules? We have said everything.
There are no amendments. I could spend an hour complaining about how
they are not allowing amendments in and it is closed and so are 56
other rules, but it is more productive to get to the underlying issues
because we have had the debate on closed rules 56 times just in the
last 10 months.
That is a record, Mr. Speaker. You should be proud of presiding over
a record number of closed rules for a United States Congress. But it is
not very interesting to talk about for another hour.
[[Page H9866]]
So they will talk about an interesting bill, a minor bill. I think I
discussed that. I mean, we have a government shutdown; we have an issue
with tax reform; we have DREAMers; we have a million things we could be
doing. This is a minor bill.
Okay. Let's talk about the merits of giving the current corporate
boards that might be too insular and the current CEOs and management a
little more power, like this bill does, by increasing red tape and
paperwork on investors versus the merits of empowering investors. Fine,
we will have that discussion. We will cast our ballots. We will see
what happens.
Another issue that is very important and timely that this Congress
should get to is the one my good friend Mr. Sean Patrick Maloney
raised. When we defeat the previous question, we can bring up an issue
that, again, is not a partisan issue.
As the cofounder of Apple, Steve Wozniak, said, the end of net
neutrality would end the internet as we know it. It is an issue every
American citizen is looking to us to take leadership on.
In my time in office, I have had to make a number of controversial
votes, whether it is for the Affordable Care Act or repeal of this or
that, and oftentimes I hear from constituents on both sides. I remember
we got thousands of letters for the Affordable Care Act, thousands of
letters against it--very typical.
Net neutrality has been a unique and singular experience in my 9
years in Congress. We received 1,500 calls and over 5,000 emails about
the issue, and I asked my staff to double-check this because I didn't
believe this, and they did. One hundred percent of the emails and calls
were for net neutrality. That is right. Not a single constituent of
mine contacted me on the other side.
In a district that has a plurality of unaffiliated voters and a
similar number of Republicans and Democrats, they are never shy to
contact me. So it is not partisan. It certainly united Republicans,
unaffiliated voters, and Democrats in my district to be unanimously for
net neutrality, which surprised me. But it also means that Congress
should not be tone deaf to that, and that is why it is important to
defeat the previous question.
Republican Senators like Senator Thune have come together to call on
colleagues to come together and protect net neutrality. My good friend
and colleague from Colorado Mike Coffman announced that we should--the
FCC should delay their vote and that we should protect net neutrality.
It is common sense, Mr. Speaker, and by defeating the previous
question, we can get on to an issue that the American people care about
rather than a fight between CEOs and investors and which side you take.
It is about protecting your internet in your home so you can access the
content of your choice--a consumer issue and an issue for small
businesses.
We had a digital roundtable last night, Mr. Speaker. I think
thousands of people from my district watched as I had several experts,
including several small businesses from Colorado, talk about the
importance of net neutrality to them in creating jobs and being able to
have a predictable and sustainable business model, and then being able
to compete with large, entrenched companies and be disruptive with new
innovation.
So I hope that we can defeat the previous question and get on to
that. If we don't, I am going to ask my colleagues to vote ``no'' on
the bill that adds paperwork and costs, requiring SEC filings for the
investors who are fighting bills, who are fighting proxy fights, and
then I urge my colleagues to look closely at the privacy bill.
That one, again, I would not characterize as a major bill. I will be
voting ``no.'' I understand there might be some Republicans and
Democrats voting ``yes'' on that one as well. But, you know, whether
they delete that clause or not is hardly the game changer for the
economy that tax reform will be.
I have ideas, bipartisan ideas, bills that I have sponsored with my
Republican colleagues that should be part of tax reform, that would
help the economy go, that would create far more jobs than a two-
sentence disclosure, whether it is there or not, and, frankly, more
important, also, than this, whether the proxy fight people have to file
with the SEC. I mean, I am sure they will be able to do it. I mean,
yes, you Republicans want to give them more paperwork and create more
bureaucracy, but I am sure they will survive.
{time} 1445
But let's do something important like open process tax reform. We
could be debating amendments right now and voting on them like our
job--you know, like 100 amendments from Republicans and Democrats. I
would even be open to let's just consider bipartisan amendments, throw
out amendments that only Republicans support or only Democrats support.
To be fair, you are in the majority, Mr. Speaker, how about just
amendments that Republicans alone support or are bipartisan? You don't
have to do any Democratic amendments only because let's just have an
open process. Let's allow some amendments.
Every amendment was locked out of tax reform. I offered like, what,
16 myself? I remember my colleague Mr. Woodall was there. They were
commonsense ideas. There was a little fix I did with Mr. Tipton from
Colorado for Kombucha, that is fermented tea, and it had to do with the
tax treatment, de minimis. Senator Cory Gardner supports it in the
Senate, our Republican Senator. Noncontroversial, next-to-no fiscal
impact, and the Rules Committee still didn't even allow me to debate
the amendment on the floor for 10 minutes, for 5 minutes, for 1 minute.
Mr. Speaker, enough with these closed rules, and I reserve the
balance of my time.
Mr. WOODALL. Mr. Speaker, I am prepared to close, and I reserve the
balance of my time.
Mr. POLIS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, we have a couple problems with this rule. First of all,
the rule brings to the floor the wrong bills. These are minor bills. I
will give a recap in a moment, but oh, my goodness. Two sentences of a
disclosure and a little more filing costs for pensions and investors.
Okay. We will get past that. They probably won't become law anyway. You
can blame it on the Senate, you can blame it on the House, but most of
these things we do don't become law.
I understand that many of my colleagues are frustrated with the
Senate, but whatever the case, we just do these things.
But there is stuff that might become law, that could become law, like
tax reform; like the fact that the government is shutting down next
week if we don't continue the funding. We have a clock ticking on our
debt ceiling. We have 800,000 aspiring Americans who don't even know if
they can go to work legally, like they can today, in another few months
because of President Trump's decision to end their provisional status.
These are real issues--the cost of healthcare going up for my
constituents and yours. But we are not doing that. We are bringing up
two bills. I will give you the summary of them. Even these two bills,
closed process, no amendments. If I was able to offer floor amendments,
as I said, I could offer an amendment that would actually move the
balance the other way toward investors and empowering investor
activism, perhaps even look at giving them a safer pay, if you will,
over executive pay, and reining in some of the problems of this bill.
But we are not allowed. We are not allowed to offer any amendments here
on the floor.
Again, again, again, again, again, again, again, again, again, again,
again, again, again, again, again, again, again, again, again, again,
again, again, again, again, again, again, again, again, again, again,
again, again, again, again, again, again, again, again, again, again,
again, again, again, again, again, again, again, again, again, again,
again, again, again, again, again, again. That is 56, by my count.
That is 56 times Republicans have brought bills to the floor and
haven't allowed Democrats or Republicans to offer amendments.
Look, my colleagues can say: Oh, Democrats weren't great on this, and
they had too many when they controlled it. You know what? First of all,
Republicans set a record. This is the most number of closed rules ever.
Secondly, I am not here to defend the Democrats. If the Democrats
were in
[[Page H9867]]
charge, they should offer more open amendments. There is no question.
But Republicans, whatever they complained about the Democrats, they
outdid them by a big factor. Ten months, 56 bills that no single Member
of the House is allowed to offer an amendment on just to have a fair
up-or-down vote. It is wrong. It is wrong.
That is why I hope my colleagues can defeat this rule to say: Enough
is enough.
Mr. Speaker, we have to defeat this rule and move on to the issues
important to the American people, and I yield back the balance of my
time.
Mr. WOODALL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, my friend from Colorado is right. Time management is an
important issue here on the floor, and we have got to manage it,
whether it is closing statements or whether it is floor time throughout
the day.
Every bill we bring to the floor is not going to be the most
important bill that we bring to the floor, Mr. Speaker, by definition.
I hope that my colleagues were listening intently to my friend from
Colorado, not necessarily during his opening statement, and certainly
not during his closing statement, but during the middle statement where
he was talking about his vast knowledge of corporate boards and
corporate structures.
I have the pleasure of serving on the Rules Committee with Mr. Polis,
Mr. Speaker, and there are not going to be many Members of this
institution who have either been more successful in their private life,
not just talking about it, but doing it, when it comes to leading
institutions, and Members who work harder to try to find some common
ground to move things forward.
I was just telling Ms. Rossi on my staff, Mr. Speaker, that it
troubles me more when Mr. Polis is on the floor and we can't find
agreement, because I believe very often he tries harder than most to
find that agreement here. Mr. Speaker, you see it on the front page of
the newspaper day after day after day, folks talk about this
institution as if we will never find agreement with each other.
There are some issues of principle where finding agreement is hard,
where we just fundamentally disagree with one another.
It is not the case today, though, Mr. Speaker. Today, the case is
that we have two bills that moved through regular order in the
Financial Services Committee. That means, Mr. Speaker, that the
committee took up the legislation first, that the committee sorted out
the legislation first, and, Mr. Speaker, these bills, both of them,
passed the Financial Services Committee with big bipartisan votes.
There are many opportunities for us to come to the floor and talk
about things that divide us that we will never find agreement on. That
is not today. Today, we have a chance to come to the floor and talk
about differences that we can make together. Differences that are not
just bipartisan, but differences that are nonpartisan; good ideas that
can make a difference one life, one bill at a time.
Mr. Speaker, these bills are coming today under a closed rule for
one, under a structured rule for the other. That is true. For the
uninitiated, Mr. Speaker, that means that amendments aren't going to be
offered. It doesn't mean that amendments weren't allowed, Mr. Speaker.
We sent out the call to the entire House of Representatives, 435
Members. We said we have two bills coming before the Rules Committee;
we want you to send us all of your ideas, all of the different ways
that you think these two bills can be improved.
We got back one idea. One. And we made it in order for a vote on the
floor of the House. Dadgummit, Mr. Speaker, I think it is going to make
the bill better. I intend to support that amendment that we made in
order. It is a Democrat amendment. It came from my friend Mr. Clay on
the other side of the aisle. I intend to support it because I think it
is going to make the bill better.
Are there issues that are complex, that are partisan, that are
structured in such a way that having an open rule isn't the choice that
gets made? Of course there are. Of course there are.
I think my friend is right to criticize the majority when the process
gets closed down in this way. But today, Mr. Speaker, I think my friend
is wrong to suggest that the process is being closed down. The process
was opened up to the entire institution. One amendment was received,
one amendment was made in order. I hope, Mr. Speaker, that will be a
practice that we continue going forward. Two good bills today, Mr.
Speaker, if my colleagues support this rule: one from my friend Mr.
Trott, one from my friend Mr. Duffy, and the bipartisan amendment
offered by my friend Mr. Clay.
Mr. Speaker, I urge all of my colleagues to support this rule, and
then I hope they will come back to the floor and support the underlying
bills as well.
The material previously referred to by Mr. Polis is as follows:
An Amendment to H. Res. 657 Offered by Mr. Polis
At the end of the resolution, add the following new
sections:
Sec. 3. Immediately upon adoption of this resolution the
Speaker shall, 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.
4585) to prohibit the Federal Communications Commission from
relying on the Notice of Proposed Rulemaking in the matter of
restoring internet freedom to adopt, amend, revoke, or
otherwise modify any rule of the Commission. 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 chair and ranking
minority member of the Committee on Energy and Commerce.
After general debate the bill shall be considered for
amendment under the five-minute rule. All points of order
against provisions in the bill 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. 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. If the
Committee of the Whole rises and reports that it has come to
no resolution on the bill, then on the next legislative day
the House shall, immediately after the third daily order of
business under clause 1 of rule XIV, resolve into the
Committee of the Whole for further consideration of the bill.
Sec. 4. Cause 1(c) of rule XIX shall not apply to the
consideration of H.R. 4585.
____
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 Democratic minority 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
of 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 (R-Illinois) 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.''
The Republican majority may 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.''
In Deschler's Procedure in the U.S. House of
Representatives, the subchapter titled ``Amending Special
Rules'' states: ``a refusal
[[Page H9868]]
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
have substantive policy implications. It is one of the only
available tools for those who oppose the Republican
majority's agenda and allows those with alternative views the
opportunity to offer an alternative plan.
Mr. WOODALL. 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.
Mr. POLIS. 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.
____________________