[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[House]
[Pages 14487-14506]
[From the U.S. Government Publishing Office, www.gpo.gov]




       CONFERENCE REPORT ON H.R. 3763, SARBANES-OXLEY ACT OF 2002

  Mr. OXLEY. Mr. Speaker, pursuant to the previous order of the House 
of July 24, 2002, I call up the conference report on the bill (H.R. 
3763) to protect investors by improving the accuracy and reliability of 
corporate disclosures made pursuant to the securities laws, and for 
other purposes.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to the order of the House of the 
legislative day of Wednesday, July 24, 2002, the conference report is 
considered read.
  (For conference report and statement, see proceedings of the House of 
July 24, 2002 at page H5393.)
  The SPEAKER pro tempore. The gentleman from Ohio and the gentleman 
from New York (Mr. LaFalce) each will control 30 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).
  Mr. OXLEY. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, I bring to the floor today a tough, sensible conference 
report that responds in a measured way to the very real crisis of 
confidence among America's 85 million investors. I am proud of the 
result we have reached. We act with the assurance that Congress must do 
something, yet remain acutely aware of the dangers of overreacting to a 
genuine problem and making matters worse.
  Make no mistake, this is a difficult period for those who love and 
cherish the free enterprise system. Since early 2000, our capital 
markets, although still the most respected in the world, have 
unquestionably suffered a series of blows--mostly self-inflicted--which 
have truly damaged the public's faith in the integrity of corporate 
America. The Committee on Financial Services, and this body, have not 
sat idly by, however. Indeed, in response to Enron, Global Crossing and 
other bankruptcies, my committee was the first out of the gate, holding 
a series of hearings and passing a good, targeted bill on the House 
floor in April with the support of 119 of my Democratic colleagues. 
Nearly 3 months would go by before the Senate passed companion 
legislation.
  The Senate built on the House bill's chief objectives, strong 
oversight of accountants, increased corporate responsibility, and 
improved information for investors.
  The conference report before us today includes important provisions 
from both sides of the Capitol, but it also contains the following 
proposals offered only by the House: Disclosure of important company 
information to investors in real time, the inclusion of civil fines 
levied by the SEC in restitution funds for defrauded investors, tougher 
criminal penalties for a broad array of corporate crimes, and increased 
SEC supervision of the accounting oversight board. Though by no means a 
panacea, the conference report will help restore investor confidence in 
our markets. Investors can be assured that convicted corporate 
criminals will be sentenced to long jail time. In my view, the prospect 
of doing time, real time, will serve as an effective deterrent to 
wrongdoing in the corporate suite.
  We saw a little bit of that yesterday with the arrest of the Adelphia 
executives in New York. Investors will now get better information and 
will get it faster and they will have more faith in the numbers because 
the accountants will be more vigilant, as will audit committees.
  This legislation, combined with the truly substantive and far-
reaching reforms proposed by the industry's self-regulatory 
organizations and the brutal and unforgiving market forces, will help 
restore faith in the system. A strong dose of character, honesty and 
ethics would not hurt, either.
  For two decades in Congress, I have advocated a free market approach 
to regulation, but I also believe that capitalism can only flourish 
under the rule of law. Those views are not at odds. In fact, they are 
quite consistent. Government must be careful not to overreach and 
stifle the entrepreneurial spirit that has made the United States the 
most successful economy in the history of the world. At the same time, 
government has a responsibility to punish--and do so swiftly and 
severely--those who seek to cheat and steal from others.
  I believe the conference report crafts a careful and appropriate 
balance of these two philosophies. I am proud of the bipartisan process 
that produced this legislation. Corporate accountability is an investor 
and retiree issue. It is not a partisan issue, and those who would 
attempt to make it so do a real disservice to all of us.
  I urge all of my colleagues on both sides of the aisle to vote for 
this historic, pro-investor bill.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1030

  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it is with great pleasure that I rise today in strong 
support of the conference report on H.R. 3763. Our conferees have taken 
an already good bill passed by the Senate and have strengthened it 
further.
  The resulting legislation is a major step forward in reforming the 
operations of our financial markets and rebuilding our system of 
financial reporting in ways that will restore the confidence of 
investors at home and abroad.
  I am particularly gratified that the final bill includes many of the 
provisions that I first introduced in the House and called for as early 
as last year. The centerpiece of this bill is the creation of a strong 
independent oversight board for the accounting industry. As with the 
oversight board in my bill, the oversight board included in the final 
conference report will be independently funded and will have strong 
disciplinary, investigatory, and, most importantly, standard-setting 
powers. I thought this was extremely important. No longer will the 
accounting industry be able to set the rules for itself without regard 
for the interests of shareholders.
  Moreover, as in my original bill, auditors will no longer be 
permitted to perform consulting services that create conflict between 
their duties to shareholders and their self-interests. These measures, 
combined with the very important improvements in corporate governance, 
will strengthen audit committees and their oversight of both auditors 
and management. As a result, auditors will once again become the 
watchdogs for the shareholders, rather than the lap dogs of management.
  The requirements in the bill that CEOs and CFOs certify the financial

[[Page 14488]]

statements of their companies are again drawn from my original 
legislation and substitutes that I offered on the floor in motions to 
recommit. These requirements will ensure that executives will no longer 
be able to evade responsibility for the numbers that their companies 
put out. This requirement, combined with the tough criminal penalties 
established by the bill, will help to ensure that executives are held 
responsible if they seek to mislead and defraud investors.
  We should be clear, however, that this should not be the end of 
Congress' work in restoring the integrity of our financial reporting 
system and our markets. Auditor conflicts and weak corporate governance 
were significant contributors to the deterioration of our financial 
reporting system. But the conflicts created by stock options were 
another serious issue that we have yet to address. I regret that. So 
there is more that we can and should do to limit the conflicts faced by 
securities analysts, to strengthen corporate governance and to protect 
workers laid off by bankrupt companies along the lines of an amendment 
that the gentleman from Mississippi (Mr. Shows) had hoped to propose.
  I have said and believe that this bill is an enormous victory for 
workers and investors. But let me also say this: It is a victory for 
the thousands and thousands of honest accountants and honest corporate 
executives as well, the vast, vast preponderance of all accountants and 
all corporate executives. With the measures we put in place by this 
legislation, they now have the opportunity to reclaim their reputations 
from those few who have brought shame on American business. It is my 
hope that this legislation will begin to restore the reputation of 
American business and financial markets as the best in the world.


                             General Leave

  Mr. OXLEY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and include extraneous material on H.R. 3763.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 4 minutes to the 
gentleman from Louisiana (Mr. Baker), the chairman of the Subcommittee 
on Capital Markets, Insurance and Government Sponsored Enterprises.
  Mr. BAKER. Mr. Speaker, I thank the chairman for yielding me time.
  Mr. Speaker, this is indeed a very important moment in Congressional 
history, and I wish to express my appreciation to the gentleman from 
Ohio (Mr. Oxley), the ranking member, the gentleman from New York (Mr. 
LaFalce), and Chairman Sarbanes and ranking member Gramm in the Senate. 
They have done extraordinary work in bringing us to this point in time.
  Much has been said about bringing those to justice who have violated 
their corporate responsibility. I can think of no more sweeping change 
in the current body of law than the conference report this House will 
soon consider. It offers more change, breadth of change and 
significance of change, than any Congressional action since the 1933 
and 1934 Securities Acts themselves.
  It is appropriate, I think, to recount how we got to this point. Last 
year the Subcommittee on Capital Markets, Insurance and Government 
Sponsored Enterprises, at the direction of the gentleman from Ohio 
(Chairman Oxley) began its inquiry into the conduct of analysts and the 
apparent conflict between their recommendations and what they seemed to 
know about company performance. From that early beginning until now, 
there has been revelation after revelation as to corporate wrongdoing.
  Nothing perhaps made a more visual impact on American investors, 
shareholders, pensioners and employees than watching the news yesterday 
as corporate executives were handcuffed and hauled away. The people of 
America are not only expecting it, they are demanding it. How is it 
possible for a person to work all his life for a corporation, be given 
stock rather than salary increases, and, on the verge of retirement, be 
told that the stock is worthless, while the CEO of the corporation 
seeks to retire in a $15 million mansion in Florida where he is above 
and beyond the reach of the law? That is not acceptable. It is not 
acceptable to me, I do not believe it is acceptable to this Congress, 
and I know it is not acceptable to the working people of this country.
  This is an outrage. There is no more privileged position in America 
today than to be the CEO, CFO or leading manager of a Fortune 500 
company. Of those people we expect the highest level of ethical and 
moral conduct because of the extraordinary powers and opportunities 
which they are granted by this wonderful free enterprise system. Today 
we bring an end, I believe, to those abuses.
  You must sign that statement, and if you sign it and it is not 
accurate, there are consequences. If you misrepresent the material 
facts of your corporation, if you lie about what is going on, there are 
criminal consequences for that misrepresentation. If you choose simply 
not to tell the truth, there are consequences for that 
misrepresentation. In fact, the bill before us today doubles the 
penalties for violations of those responsibilities.
  But that is not enough. It is not enough to tell the truth. It is not 
enough that after we catch you we put you a way for a long time. We 
want to go after those ill-gotten gains, that profit you made by 
misrepresenting the material facts of your corporation while 
manipulating the books and profiting for your own best interests. We 
want to make sure those mansions, those benefits, those golden 
parachutes are collapsed, folded up neatly, put into a closet and sold 
off so that the shareholders back home can get their hands on their 
money. That is what has been lost in all of this.
  A corporate executive takes capital from individual investors, hard-
working investors saving for their first home, their child's education 
or their retirement, and has a fiduciary responsibility to manage that 
money for their mutual good. What has happened, they have taken that 
money and put it in their pocket.
  I do not know how we are going to ultimately get to all of the State 
bankruptcy protections that allow these corporate mansions to be built, 
the extreme levels of financial worth, to allow a CEO to escape all of 
his liabilities and move into the home, live there 6 months, sell it 
and take the money and move to the south of France, but we are going to 
get there. This bill does not go quite that far, but over the next 
Congresses we are going to continue the work to make sure that no one 
who is defrauded by an irresponsible act of corporate abuse does not 
get full recompense for the wrong.
  This is a great day, a great conference report. I salute the 
gentleman from Ohio (Chairman Oxley) and Chairman Sarbanes for their 
extraordinary work.
  Mr. LaFALCE. Mr. Speaker, it is my pleasure to yield 2\1/4\ minutes 
to the gentleman from Pennsylvania (Mr. Kanjorski), the distinguished 
ranking member of the Subcommittee on Capital Markets, Insurance and 
Government Sponsored Enterprises, who coauthored the original bill that 
we introduced early this year that forms the gravamen of this bill.
  Mr. KANJORSKI. Mr. Speaker, I thank the gentleman from New York for 
yielding time.
  Mr. Speaker, may I take the opportunity to say how pleased I am to be 
here in support of this conference report, because I, together with the 
gentleman from New York (Mr. LaFalce), opposed the bill originally 
passed in April by the House of Representatives for the simple reason 
that it was not sufficiently sound enough to meet the needs that were 
even evident in April, and have become far more evident now. But I dare 
say that as a result of the efforts of the gentleman from New York (Mr. 
LaFalce) in crafting the alternative Democratic proposal in the House 
that did not have the opportunity to go forth to the conference, it did 
strengthen the Senate's hands in the drafting of the Senate proposal, 
which ultimately is the basis for this conference report.

[[Page 14489]]

  Mr. Speaker, we have not solved everything, by a long shot. We have 
much to do. But I believe that we have now put teeth into the 
accounting process. I, for one, am a person that supports the 
marketplace and non-government regulation, when possible. But if there 
is anything we have learned over the last 9 or 10 months, it is the 
absence of regulation has allowed the fox to take control of the hen 
house at the corporate level at some of the financial institution 
levels, at the accounting level, and we have seen grievous harm done 
not only to these fine corporations, but to the investors in the 
corporations, to the employees of the corporations, and to all the 
pension funds and 401(k) fund investors across the country that took on 
the representation of accounting firms and CEOs and boards and all 
these people that things were done properly.
  We have addressed accounting irregularities, executive abuse and 
corporate governance malfeasance, but we must come back and do more, 
and this is only the beginning.
  I heard the chairman of my subcommittee, the gentleman from Louisiana 
(Mr. Baker), talk about something that I want to respond to. We have 
seen on television all these mansions in Texas and Florida. I would say 
to the gentleman from Louisiana (Mr. Baker), the answer is we do not 
have to do a special bill. We can take out the exemption in the 
bankruptcy law so every State in the Union has the same basic 
principle, a $750 deduction, nothing else. There is no reason in Texas 
and in Florida you can have a $25 million mansion, go into bankruptcy, 
and keep your mansion.
  Mr. OXLEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Wisconsin (Mr. Sensenbrenner), the distinguished chairman of the 
Committee on the Judiciary.
  Mr. SENSENBRENNER. Mr. Speaker, 9 days ago on this floor I stated we 
must crack down on the corporate criminals and rebuild America's 
confidence in our markets. I said the best way to do that is to punish 
the corporate wrongdoers and to punish them harshly. I am pleased to 
say that the conference committee report before us today accomplishes 
that goal.
  The House members of the conference committee insisted on and 
prevailed on all of the tougher penalties that were contained in H.R. 
5118, the Corporate Fraud Accountability Act of 2002, which passed the 
House overwhelmingly by a vote of 391 to 28.
  Under these penalty provisions, corporate criminals are going to do 
time; real time, real long time. The report increases the penalties for 
mail and wire fraud from the current 5 years to 20 years and creates a 
new securities fraud section that carries a maximum penalty of 25 
years. It also strengthens laws that criminalize document shredding and 
other forms of obstruction of justice and provides a maximum penalty of 
20 years for such violation. The legislation punishes top corporate 
executives that certify the financial statements of the company knowing 
they are false by subjecting them to fines of up to $5 million and 20 
years in prison, or both.
  The provisions of the conference report also increase the penalty 
criminal penalties for those who file false statements with the SEC to 
a maximum penalty of $5 million and 20 years in prison, and, if a 
corporation files a false statement, then the fines increase up to a 
maximum of $25 million.
  Mr. Speaker, the report also contains House language that makes it a 
crime for someone to knowingly retaliate against a whistle blower and 
provides a criminal penalty of up to 10 years for such offense. I would 
also point out that the restitution laws for all criminal activity are 
in place for these crimes as well, so the court can order restitution 
for those shareholders and employees who have been defrauded.
  By passing this conference committee report, America will know that 
those who abuse the law and tarnish corporate America's reputation will 
go to jail for a very long time. These are tough penalties that will 
crack down on the corporate crooks and go a long way to protecting the 
life savings of many Americans by making the price of such theft too 
high.
  I urge my colleagues to support this conference report.

                              {time}  1045

  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman 
from New York (Mrs. Maloney).
  Mrs. MALONEY of New York. Mr. Speaker, I rise in strong support of 
this conference report, the strongest reforms since FDR was President 
in corporate law. Our markets run on trust and this trust has been 
violated. This bill puts forward new tough standards based on old 
values to restore investor confidence.
  The overwhelming majority of the accountants in the U.S. are 
hardworking, honest people, but the self-regulation of their industry 
has failed. This bill responds with the Sarbanes-LaFalce proposal for 
the strongest possible new independent accounting oversight board. It 
also adopts the Sarbanes-LaFalce plan to put an end to the inherent 
conflict of interest of allowing the same firm to provide both audit 
and consulting services for the same client.
  Investors have lost faith in boards of directors and managers to look 
out for their interest. This legislation empowers independent members 
of boards to hire and fire auditors, prohibits trades during pension 
blackouts, requires CEOs and CFOs to certify the accuracy of their 
company's financial statements, and if there are misrepresentations, 
they face criminal penalties.
  More and more Americans depend on the markets for a secure 
retirement. Executives who take advantage of investors will now face 
serious jail time for securities fraud, up to 25 years.
  Importantly, the bill also authorizes $776 million for the SEC, 
including money for pay parity.
  Finally, I want to thank the gentleman from Ohio (Mr. Oxley) for his 
work on this legislation and the hearings he held. I especially want to 
thank the gentleman from New York (Mr. LaFalce) who recognized a crisis 
in financial reporting years before it became front page news. This 
legislation may be called the Sarbanes-Oxley Act, but much of it is the 
hard work and product of the gentleman from New York (Mr. LaFalce) and 
leader on the Committee on Financial Services, on the House floor and 
in the conference.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Ohio (Mr. Boehner), the chairman of the Committee on 
Education and the Workforce.
  Mr. BOEHNER. Mr. Speaker, I am pleased that the conference report 
before us contains two provisions that were in the Pension Reform Act 
passed here in April. These two provisions were in the Senate bill and 
were agreed to in the conference, one providing a 30-day notice of any 
potential blackout period and, secondly, a proposal to make sure that 
the top floor and the shop floor have the same rights when it comes to 
selling of stock during blackout periods, and there is a prohibition on 
16(b) employees, top-end employees, from selling stock during a 
blackout period.
  I am also pleased that contained in this legislation are new 
penalties for violations of ERISA. The penalties have not been 
increased or changed since 1974 when ERISA was first enacted. They are 
in this bill.
  Let me make it clear that the pension provisions that are in here 
which mirror proposals made by President Bush back in April come 
nowhere close to the comprehensive Pension Protection Act that the 
House passed on April 11. We are still waiting for the other body to 
act, and as the Washington Post noted this morning in their lead 
editorial, this bill that we are passing today is the first step, but 
if we are serious about restoring investor confidence, restoring the 
confidence of American workers in their own retirement plans, it is 
time for Congress to act on a pension bill.
  While there is a lot of rhetoric coming from the other body, there is 
no legislation and there is no opportunity to go to conference like we 
did on this bill and to bring about good policy.
  Several days ago, I described what was happening on this bill as a 
stampede, and I want to say that I am very

[[Page 14490]]

surprised, and I am very surprised because we have two adults in this 
body, the two people who chaired this conference, my good friend from 
Ohio (Mr. Oxley) and the gentleman from Maryland (Mr. Sarbanes), who 
stood up to say, slow down, let us try to make sure that we have sound 
policy here, and the gentleman from Maryland was under great political 
pressure to do nothing, but I have got to give him an awful lot of 
credit for his willingness to sit down and to fix what were glaring 
problems that many did not want to fix and wanted to pass in a rush to 
judgment. They both should be congratulated for their excellent work.
  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Speaker, I thank the gentleman for 
yielding time.
  Let me applaud the chair and ranking member of the House Committee on 
Financial Services for the job that they did starting the process. We 
had a bill that was a reasonable start, that has been significantly 
improved upon during the course of the conference, and one of the 
things that the bill does is ratchet up criminal penalties, but I want 
to take some time to say that I am not sure that just ratcheting up 
criminal penalties will do the job.
  But there are some things in the conference report which require us 
and the SEC and the GAO to do additional studies and report back to the 
committees of jurisdiction about either regulatory action that is 
recommended or legislative action that is recommended, and one of those 
things is an SEC study of violations and violators and whether we have 
been aggressively going after the violators civilly and whether we have 
undermined the ability of individuals to bring claims in civil court to 
enforce their rights and protect their status as investors.
  I do not want to overlook some of those studies that will be 
reporting back to us because I think this bill is really just the first 
step, and I applaud us for making that step.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Smith) a conferee and a member of the Committee on the Judiciary.
  Mr. SMITH of Texas. Mr. Speaker, I thank my friend from Ohio for 
yielding me time.
  Mr. Speaker, this conference report goes a long way in achieving two 
necessary goals. First, it helps us determine who those are who have 
abused the public trust, in general, and employees' trust and 
stockholders' trust, in particular.
  Second, this conference report makes sure that an appropriate level 
of punishment is available.
  In considering this conference report, though, we should remember 
that the proportion of corporate executives who are culpable is a very, 
very small fraction of the whole. The vast majority of executives are 
law-abiding who have contributed much to the prosperity of America.
  Finally, Mr. Speaker, I want to single out a business leader, Andy 
Grove, chairman of the board of Intel, for his constructive suggestions 
on how to increase corporate responsibility. Mr. Speaker, I have been 
happy to have been a part of the conference that produced this 
conference report. Mr. Speaker, I include in the Record two articles, 
one written by Andy Grove and one about him.

               [From the Washington Post, July 17, 2002]

                         Stigmatizing Business

                          (By Andrew S. Grove)

       I grew up in Communist Hungary. Even though I graduated 
     from high school with excellent grades, I had no chance of 
     being admitted to college because I was labeled a ``class 
     alien.'' What earned me this classification was the mere fact 
     that my father had been a businessman. It's hard to describe 
     the feelings of an 18-year-old as he grasps the nature of a 
     social stigma directed at him. But never did I think that, 
     nearly 50 years later and in a different country, I would 
     feel some of the same emotions and face a similar stigma.
       Over the past few weeks, in reaction to a series of 
     corporate scandals, the pendulum of public feeling has swung 
     from celebrating business executives as the architects of 
     economic growth to condemning them as a group of 
     untrustworthy, venal individuals.
       I have been with Intel since its inception 34 years ago. 
     During that time we have become the world's largest chip 
     manufacturer and have grown to employ 50,000 workers in the 
     United States, whose average pay is around $70,000 a year. 
     Thousands of our employees have bought houses and put their 
     children through college using money from stock options. A 
     thousand dollars invested in the company when it went public 
     in 1971 would be worth about $1 million today, so we have 
     made many investors rich as well.
       I am proud of what our company has achieved. I should also 
     feel energized to deal with the challenges of today, since we 
     are in one of the deepest technology recessions ever. 
     Instead, I'm having a hard time keeping my mind on our 
     business. I feel hunted, suspect--a ``class alien'' again.
       I know I'm not alone in feeling this way. Other honest, 
     hard-working and capable business leaders feel similarly 
     demoralized by a political climate that has declared open 
     season on corporate executives and has let the faults, 
     however, egregious, of a few, taint the public perception of 
     all. This just at a time when their combined energy and 
     concentration are what's needed to reinvigorate our economy. 
     Moreover, I wonder if the reflexive reaction of focusing all 
     energies on punishing executives will address the problems 
     that have emerged over the past year.
       Today's situation reminds me of an equally serious attack 
     on American business, one that required an equally serious 
     response. In the 1980s American manufacturers in industries 
     ranging from automobiles to semiconductors to photocopiers 
     were threatened by a flood of high-quality Japanese goods 
     produced at lower cost. Competing with these products exposed 
     the inherent weakness in the quality of our own products. It 
     was a serious threat. At first, American manufacturers 
     responded by inspecting their products more rigorously, 
     putting ever-increasing pressure on their quality assurance 
     organizations. I know this firsthand because this is what we 
     did at Intel.
       Eventually, however, we and other manufacturers realized 
     that if the products were of inherently poor quality, no 
     amount of inspection would turn them into high-quality goods. 
     After much struggle--hand-wringing, finger-pointing, 
     rationalizing and attempts at damage control--we finally 
     concluded that the entire system of designing and 
     manufacturing goods, as well as monitoring the production 
     process, had to be changed. Quality could only be fixed by 
     addressing the entire cycle, from design to shipment to the 
     customer. This rebuilding from top to bottom led the 
     resurgence of U.S. manufacturing.
       Corporate misdeeds, like poor quality, are a result of a 
     systemic problem, and a systemic problem requires a systemic 
     solution. I believe the solutions that are needed all fit 
     under the banner of ``separation of powers.''
       Let's start with the position of chairman of the board of 
     directors. I think it is universally agreed that the 
     principal function of the board is to supervise and, if need 
     be, replace the CEO. Yet, in most American corporations, the 
     board chairman is the CEO. This poses a built-in conflict. 
     Reform should start with separating these two functions. (At 
     various times in Intel's history we have combined the 
     functions, but no longer.) Furthermore, stock exchanges 
     should require that boards of directors be predominantly made 
     up of independent members having no financial relationship 
     with the company. Separation of the offices of chairman and 
     CEO, and a board with something like a two-thirds majority of 
     independent directors, should be a condition for listing on 
     stock exchanges.
       In addition, auditors should provide only one service: 
     auditing. Many auditing firms rely on auxiliary services to 
     make money, but if the major stock exchanges made auditing by 
     ``pure'' firms a condition for listing, auditing would go 
     from being a loss leader for these companies to a profitable 
     undertaking. Would this drive the cost of auditing up? Beyond 
     a doubt. That's a cost of reform.
       Taking the principle a step further, financial analysts 
     should be independent of the investment banks that do 
     business with corporations, a condition that could and should 
     be required and monitored by the Securities and Exchange 
     Commission.
       The point is this: The chairman, board of directors, CEO, 
     CFO, accountants and analysts could each stop a debacle from 
     developing. A systemic approach to ensuring the separation of 
     powers would put them in a position where they would be free 
     and motivated to take action.
       I am not against prosecuting individuals responsible for 
     financial chicanery and other bad behavior. In fact, this 
     must be done. But tarring and feathering CEOs and CFOs as a 
     class will not solve the underlying problem. Restructuring 
     and strengthening the entire system of checks and balances of 
     the institutions that make up and monitor the U.S. capital 
     markets would serve us far better.
       Reworking design, engineering and manufacturing processes 
     to meet the quality challenge from the Japanese in the 1980s 
     took five to 10 years. It was motivated by tremendous losses 
     in market share and employment. Similarly, the tremendous 
     loss of market value from the recent scandals provides a 
     strong motivation for reform. But let us not kid ourselves. 
     Effective reform will take years of painstaking 
     reconstruction.

[[Page 14491]]

       Our society faces huge problems. Many of our citizens have 
     no access to health care; some of our essential 
     infrastructure is deteriorating; the war on terror and our 
     domestic security require additional resources. Attacking 
     these problems requires a vital economy. Shouldn't we take 
     time to think through how we can address the very real 
     problems in our corporations without demonizing and 
     demoralizing the managers whose entrepreneurial energy is 
     needed to drive our economy?
       The writer is chairman of Intel Corp.

             [From the Wall Street Journal, July 22, 2002]

                           The Beltway Bubble

       Since President Bush unleashed the political furies on the 
     private sector with his speech on July 9, stocks on the Dow 
     have fallen by about 13.5%, including another 4.6% on Friday. 
     This can only mean that investors are demanding more 
     regulation, more punitive laws and more anti-business 
     rhetoric, right?
       Believe it or not, that's what some people with allegedly 
     above-average IQs are writing. The truth is closer to the 
     opposite, with investors now discounting not just for market 
     risk but for a new and dangerous element of political and 
     regulatory risk. With Congress in a stampede, and Mr. Bush 
     abdicating veto oversight, the law of unintended consequences 
     is in the saddle riding events.
       Consider the fine print now contained in legislation 
     sponsored by Joe Biden and Orrin Hatch that whooped through 
     the Senate last week. Time magazine made Intel Chairman 
     Andrew Grove its man of the year in 1997. But Senator Bush, 
     with his vast corporate experience, is now insisting on 
     language that would likely drive Mr. Grove and independent 
     chairmen like him out of the business.
       Here's the problem: The Biden-Hatch bill would require that 
     CEOs, chief financial officers and board chairmen all 
     certify, under threat of criminal sanction, the accuracy of 
     company financial statements. This makes sense for CEOs and 
     CFOs, who are actively managing the business. And for 
     companies that combine the CEO and chairman positions this is 
     also logical.
       But some companies prefer to divide the CEO and chairman 
     posts, with the CEO running the business but the chairman 
     playing the role of counselor or independent intermediary 
     with the board of director. It's one way of helping the board 
     supervise the CEO, which is supposed to be a main goal of the 
     latest corporate ``reforms.''
       Yet the Biden legislation would all but end this often 
     useful division of responsibility. Very few non-CEO chairmen 
     in their right mind are going to risk jail by certifying 
     results they are not actively managing. Mr. Grove, for 
     example, gave up his CEO duties at Intel in 1998 at age 61, 
     but he retains the chairman title that allows him to set the 
     agenda for board meetings and consult with CEO Craig Barrett.
       ``It's a very healthy thing,'' Mr. Grove tells us. ``The 
     power of setting the agenda is incredible. I basically 
     control what we are going to talk about at board meetings, 
     not Craig.'' Other companies that have non-CEO chairmen 
     include Cisco and Microsoft, where Bill Gates gave up his 
     chief executive role to Steve Ballmer but is obviously still 
     a valuable contributor to the company. Whatever else 
     investors are clamoring for, we doubt it's a high technology 
     sector without the skills and institutional memory of Andy 
     Grove and Bill Gates.
       By the way, the Biden-Hatch bill contains other troubling 
     provisions that someone at the White House should inspect. In 
     its language demanding that CEOs certify their financial 
     results, it uses words like ``appropriateness'' and 
     ``recklessly'' that are vague and legally undefined. This 
     will only invite prosecutorial abuse, not to mention a trial-
     lawyer field day, which may in fact be why those words have 
     quietly made their way into the Senate-passed bill. (Senator 
     Hatch, were you paying attention?) If Congress is going to 
     put CEOs in prison for a decade or more, doesn't it have an 
     obligation to make sure that what they get sent away for is 
     some specific and actual crime?
       The Biden language shows how in Washington's current mood 
     the zeal to punish business is trampling common sense. Any 
     House Member who raises any doubt about the wisdom of 
     anything in the Senate bill gets a media pounding as a lackey 
     of business.
       Obviously something is going to pass this year. But it 
     would help the economy, as well as corporate governance, if 
     the politicians burst their own bubble of righteousness and 
     first thought carefully about the real-world consequences of 
     what they're doing.
  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman 
from California (Ms. Waters), a distinguished member of the conference 
committee.
  Ms. WATERS. Mr. Speaker, I am very pleased to have been a part of the 
conference committee, and we are finally legislating a corporate 
responsibility bill. It is long overdue, and if, in fact, the gentleman 
from New York (Mr. LaFalce), our ranking member, had had his way on the 
House side, we would have had a tougher bill and we would have had it a 
long time ago.
  Unfortunately, even though I am very appreciative for the work that 
the gentleman from Ohio (Mr. Oxley) eventually did on this bill, if he 
had taken the leadership of our ranking member, we would have had this 
bill passed out a long time ago, and it would have been even tougher.
  This bill will make corporate CEOs and others responsible. They will 
have to sign the financial statements, and they will have to take 
responsibility. I participated in one aspect of the bill for 
disgorgement so that these people who are committing fraud will not be 
able to realize the gains that they would have, to put that money back 
into a disgorgement account.
  We are also, in this bill, curbing the practice of the insider loans. 
We are protecting whistleblowers. We are eliminating conflict of 
interest and setting up an independent board to oversee accounting 
firms.
  This is a good start. We are going to see more of the scenes that we 
are seeing with Adelphia where corporate giants who have committed 
fraud are going to be taken out in handcuffs.
  We are going to have to do more as the days roll along. We are going 
to find that there are more crimes being committed. I am very 
appreciative to the Democrats in this House for providing the strong 
leadership that was necessary to force the adoption of this conference 
report and this legislation.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from New York (Mrs. Kelly), the chairwoman of the 
Subcommittee on Oversight and Investigations of the Committee on 
Financial Services, and a member of the conference committee.
  Mrs. KELLY. Mr. Speaker, I thank the gentleman from Ohio for yielding 
me the time.
  Mr. Speaker, today we are here to approve the conference agreement 
for the corporate accountability legislation. With the Senate adoption 
of the House's top priorities of tougher penalties, openness, so the 
investor can evaluate a company before they invest and money back to 
defrauded investors, this conference agreement stands as a product that 
both sides can be proud of.
  This legislation punishes corporate crooks. It strengthens oversight 
of the accounting industry and empowers investors with much faster 
access to critical information about the companies in which they 
invest. This legislation will shine a bright light into the shadows of 
America's corporate board rooms so the public is not kept in the dark, 
and when they make an investment, that investment will be sound and 
based on truth and openness and honesty.
  The corporate executives, the heads of these businesses, need to know 
they are being watched and they will be put in jail if they use their 
company to line their own pockets at the expense of our investors.
  I applaud the gentleman from Ohio (Mr. Oxley) and his excellent staff 
and Senator Sarbanes and his fine staff. They need to be recognized for 
the conception of most of the provisions in this bill and the fortitude 
and the resolve to bring the legislation forward through this process 
in a very bipartisan and open manner.
  Last week, Chairman Greenspan spoke before the Committee on Financial 
Services about how strong our economy is and talking about that our 
economy is strong even though our corporate system is frayed. This 
legislation contains the tools necessary to mend the bonds which have 
been abused by the people who have been motivated by greed and 
strengthen others, which ensure a strong and vibrant economy.
  Chairman Greenspan also emphasized that the criminal penalties 
section in this legislation is the most important part of this 
legislation. With the Senate acceptance of the House's tougher 
penalties, we have ensured that the most important part of this 
legislation is the best possible.
  I look forward to our passing this conference report today so it can 
be sent to the White House so the President can enact this legislation 
giving employees and investors the needed

[[Page 14492]]

protections and confidence they require and they deserve.
  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from Texas (Mr. Bentsen) a distinguished member of the committee.
  Mr. BENTSEN. Mr. Speaker, I rise in strong support of this bill. I 
need to say to my colleagues I am actually surprised. I think this is a 
very good conference report. The recent declines in the U.S. equity 
markets are due in large part and have been exacerbated by the 
breakdown in corporate governance, and a lot of the shenanigans, quite 
frankly, that has been going on in corporate America, whether it is 
Enron, WorldCom, Adelphia, Xerox, you name it.
  This bill is really quite substantive because of the work of the 
gentleman from New York whom I think we all owe a great debt of 
gratitude for on this bill that really starts to address this, and 
Members have gone through the substantive aspects, the oversight body, 
the limitations on consulting, the new disgorgement rules, criminal 
penalties, bans on egregious practices and corporate loans, all of 
those items, and there are many in this bill, and I am surprised at how 
well it has been put together.
  I think what is also important about this legislation is that it 
sends a very clear message from the Congress, and I hope we have a 
strong vote today in the House on this bill, because it is not just the 
substantive factors or the interpretive factors of this bill.

                              {time}  1100

  For too long Congress has sent a very mixed message to the regulators 
of what they are supposed to do. All of us know we can pass laws to do 
lots of things, but unless they are enforced, they will be meaningless. 
This bill puts us on record of enforcing the laws with respect to 
public accounting, with respect to corporate governance; changing 
things that, quite frankly, a few years ago I would have been 
surprised. A few years ago, people were trying to get outsiders off of 
corporate boards. Now we are mandating them on corporate boards.
  So I want to commend the managers, the chairman and the ranking 
member, but particularly the gentleman from New York (Mr. LaFalce) for 
the work he has done on this bill. He deserves a great deal of credit.
  This is a good bill, it ought to get a large degree of support so 
investors will make decisions on economic issues and not lack 
confidence.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Royce), a member of the conference committee.
  Mr. ROYCE. Mr. Speaker, I thank the chairman for yielding me this 
time; and actually, this measure contains the best of both, some 
Democrat ideas and some Republican ideas. I think the final language on 
the independent accounting board was very close to the Sarbanes bill. 
But the provision put forward by House Republicans that we would now 
have 25 years hard time for securities fraud is important. It will be a 
deterrent.
  I am delighted to see the concept that we are going to criminalize 
shredding, the concept that we are going to increase penalties for wire 
fraud and mail fraud. The Republican idea also that when we get 
convictions, when this SEC brings back the resources from those who 
have committed corporate malfeasance, that money will then go back to 
the shareholders, the Baker's amendment, that is an important gain for 
this bill.
  I think Chairman Oxley, in including the provision to disclose 
material changes to financial conditions and in real time so that the 
public sees that as soon as any insider trader sees that is another 
important change that we brought in on the Republican side of the House 
bill.
  So this is the best of both Democrat and Republican concepts, and it 
will protect the shareholders in the future and offer deterrence.
  Mr. LaFALCE. Mr. Speaker, how much time do I have left?
  The SPEAKER pro tempore (Mr. Sweeney). The gentleman from New York 
has 17\3/4\ minutes remaining.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Oregon (Ms. Hooley).
  Ms. HOOLEY of Oregon. Mr. Speaker, I would like to congratulate 
Chairman Oxley and the gentleman from Louisiana (Mr. Baker) for finding 
the willingness to simply do what is needed to fix the problem in our 
accounting system and to restore investor confidence in corporate 
America.
  I also thank the gentleman from New York (Mr. LaFalce) and the 
gentleman from Pennsylvania (Mr. Kanjorski) for their foresight and 
early leadership. We needed to restore the public confidence in the 
market. Tens of millions of Americans invest in the market and tens of 
millions more work in publicly traded companies. It is these 
individuals and these individuals alone who this Congress must protect. 
After all, this is the people's body, not the Fortune 500 body.
  So I thank my colleagues for sitting down with the gentleman from New 
York (Mr. LaFalce) and Senator Sarbanes and delivering on a bill that 
puts the interest of the public first. My colleagues' actions prove 
that bipartisanship is a tangible commodity. I would hope that the 
consensus we were able to reach on this bill can be replicated in other 
badly needed measures.
  Before closing, I would like to point out that no one, no one has 
worked harder on this bill than our ranking member, the gentleman from 
New York (Mr. LaFalce). While we have not agreed on everything, the 
gentleman's efforts to protect consumers and investors has been 
unfailing and will be sorely missed in the 108th Congress.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from New Jersey (Mrs. Roukema).
  Mrs. ROUKEMA. Mr. Speaker, I rise in strong support of this 
legislation, and I certainly want to commend the Speaker of the House 
and the chairman of the committee for bringing it up before the August 
recess.
  Certainly there has been a lot of discussion, and I do not have to go 
over it again, about the crisis of confidence that there has been. That 
has been more than adequately stated. But the crisis of confidence in 
our economic system has been out there, and dealing with this 
legislation today takes us a giant step in the right direction to 
restoring that confidence in both our corporate leaders as well as our 
Congress and the free enterprise system, which we commend.
  I want to thank Chairman Oxley and certainly the gentleman from 
Louisiana (Mr. Baker) for making the point in the conference committee. 
As strongly as I supported the Sarbanes bill, they did add improvements 
to the bill, which deal with, but it is the FAIR fund to return the 
ill-gotten gains and the real time corporate disclosure provisions. And 
I thank the gentleman from Ohio (Mr. Oxley) and the gentleman from 
Louisiana (Mr. Baker) for including them in this conference report.
  However, I will say that it is not perfect. It is very good, but not 
perfect. I am disappointed, more than a little bit, in the fact that we 
did not deal with the accounting treatment of stock options. I was very 
disappointed in that, but I accept it as part of this agreement. And I 
also accept it because I am confident that Senator McCain will be 
advancing another form of this legislation in the future in the other 
body, and I believe that we will then be able to have a proper and full 
discussion.
  In conclusion, I would like to say that this is landmark legislation, 
a key element of Congress' effort to eliminate corruption in corporate 
America. The bill tells corporate criminals that they are no longer 
above the law, and it holds those executives who have defrauded the 
investors and harmed the American economic system, holds them 
accountable with tough new criminal penalties. It also helps to close 
the loopholes that have allowed them to continue these offenses in the 
corporate community.
  Mr. Speaker, once again, I certainly thank the chairman and the 
gentleman from Louisiana (Mr. Baker), as well as the ranking member, 
the gentleman from New York (Mr. LaFalce), and our other Democrat 
colleagues for their bipartisan cooperative effort.

[[Page 14493]]

  Mr. Speaker, I rise in strong support of the (H.R. 3763) Corporate 
and Auditing Accountability, Responsibility, and Transparency Act of 
2002, and I want to commend the Speaker of the House for showing clear 
vision and strong leadership in bringing this legislation to the Floor. 
I also want to commend the gentleman from Ohio, the Chairman Oxley of 
our Committee on Financial Services, for living up to his commitment to 
bring this important legislation back to the House before we begin our 
summer district work period. And I strongly commend Representative John 
LaFalce for his leadership and cooperation in structuring the 
bipartisan support.
  Mr. Speaker, over the last few months our economy has been damaged by 
the drip-drip- drip of newspaper stories, television accounts and press 
releases recounting the latest corporate accounting scandal, revenue 
over-projection, financial irregularity or out-and-out ``cooking of the 
books'' by our captains of industry.
  I agree with the President of the United States and the Chairman of 
the Federal Reserve, Alan Greenspan, who each said last week that the 
foundation of our economy is strong. And that we are continuing to 
recover from the financial downturn precipitated by the terrorist 
attacks of last September 11.
  But still, we face a crisis of confidence. Every public opinion poll 
shows that the American people have low-expectations when it comes to 
the economy, and they think that a majority of corporate leaders are 
crooks and that this is an area where Congress can and must act in a 
bipartisan manner.
  Indeed, irresponsible corporate leaders have forced us to act. The 
American people expect us to act. The American economy needs us to act. 
In fact, the mere prospect of our actions today helped produce a steep 
rise in the stock market yesterday. We must continue to restore 
confidence in the Congress and in our free enterprise system. And today 
we are taking a giant step.
  Last April, House passage of the Corporate and Auditing 
Accountability, Responsibility and Transparency Act was a giant step in 
the right direction. Senate passage of the so-called Sarbanes bill was 
another critical step forward. And today, we complete the Congressional 
journey by passing this legislation.
  The Chairman of the conference committee has outlined the major 
provisions of this bill. Suffice it to say that I am pleased that the 
conference report establishes a new, independent oversight board, 
funded by publicly traded companies, to monitor the accounting 
industry. The bill also forbids accounting firms from performing many 
other services for their public company audit clients, including 
consulting. It would also establish a host of new important reporting 
and disclosure requirements for public companies.
  I want to commend Chairmen Oxley and Baker for their contributions to 
this strong conference report. As noted by Chairman Oxley in his debate 
the House Committee added strong demands: real-time corporate 
disclosure to protect investors by giving them the information they 
need to safeguard their financial future; establishment of the FAIR 
fund to return ill-gotten corporate gains to investors; significantly 
increased criminal penalties for corporate crooks that defraud the 
public, shred documents or otherwise obstruct justice. Criminals can 
steal more money with a briefcase than with a gun. Businessmen who 
extort the American public should be punished like the common criminals 
they are. This bill ensures that corporate wrongdoers go to jail for 
their crimes.
  I would also add that the final legislative package includes two 
important pension-related provisions from our Education and Workforce 
Committee. One would bar company insiders from selling their own stock 
during ``blackout'' periods when workers can't make changes to their 
401(k)s; and the other would require pension plan administrators to 
notify workers 30 days before the start of any ``blackout'' period 
affecting their pensions.
  However, I have to say that I am disappointed that the conference 
agreement includes no provision to address the question of the 
accounting treatment of stock options. I believe this is a mistake. 
Congress should require the Federal Accounting Standards Board to deal 
with it. And I am confident that Senator McCain will be advancing 
legislation on options in the other body.
  In the final analysis, this is a landmark legislation--a key element 
of Congress' effort to eliminate corruption in corporate America. This 
bill tells corporate criminals that they are no longer `above the law.' 
it holds those executives who have defrauded investors and harmed the 
American economic system accountable with tough new criminal penalties. 
It helps to close the loopholes that have allowed for continued 
offenses in America's corporate community.
  Mr. Speaker, the American people expect us to act. The economy needs 
us to act. I urge my colleagues to live up to and now we are acting.
  Support the Conference report.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from 
Vermont (Mr. Sanders), a member of the committee.
  Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this 
time. This legislation is an important step forward, and I support it; 
but it should be clear that if we are serious about tackling corporate 
greed, much more needs to be done.
  We have seen in recent years that the heads of the largest 
corporations in this country have lied about their financial 
statements, they have cheated on their taxes, moved their companies 
abroad, and they have thrown loyal American workers out on the street 
as they move companies to China. They have cut the pensions and health 
care benefits of their workers. Now is the time for us to address that 
overall question of corporate greed.
  The most important thing that we can do is to pass real campaign 
finance reform, public funding of elections. So once and for all we end 
the scourge of big money dominating the White House and the United 
States Congress, and once and for all we begin to represent all 
Americans rather than the rich and the powerful.
  Mr. OXLEY. Mr. Speaker, I am pleased now to yield 1 minute to the 
gentleman from Delaware (Mr. Castle).
  Mr. CASTLE. Mr. Speaker, let me thank all those involved in putting 
this together.
  For all those individuals out there who shudder when they see the 
stock market reports, or like me, do not open any envelopes that 
contain any information about their own assets at this point, but let 
them pile up in a corner, this bill is for you. It takes a lot of 
strong and positive steps, as have been outlined here in terms of 
dealing with the corporate responsibility and the corporate governance 
issues we needed to address.
  I believe we have seen the clouds, I believe we have seen the rain in 
the form of Enron, WorldCom, and a few others. Now we are seeing the 
clearing someplace out there, as we search to get brighter. And, 
hopefully, it will get even brighter yet. This piece of legislation may 
be a first step, but it is a very large first step we have taken.
  Like others who have spoken today, I believe we do have to deal with 
other issues. I believe we have to look at the question of expensing 
options. I believe we have to look at separating analysts from the 
investment banking side of a number of firms in the United States of 
America. Perhaps we can go to less dependence on quarterly reports, 
more real-time reporting in terms of financial information coming from 
the corporations and a variety of other steps.
  But I think that Congress has stepped forward in a very responsible 
fashion, and I congratulate everybody. The gentleman from New York (Mr. 
LaFalce), I know, had a lot of ideas in this, as well as the gentleman 
from Ohio (Mr. Oxley), and the Senator from Maryland, Mr. Sarbanes, on 
the other side. They have done a wonderful job.
  This should start to give reassurance to our markets and to people 
across America.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Lee), a member of the committee.
  Ms. LEE. Mr. Speaker, I rise today in strong support of this 
conference agreement to H.R. 3763, which significantly reforms our 
current system to bring true responsibility and accountability to these 
major corporations who have used creative accounting and fraud to 
advance their own greed.
  I want to especially thank our ranking member on the Committee on 
Financial Services for all of his hard work, the gentleman from New 
York (Mr. LaFalce), for pushing these very strong reforms, and to 
Chairman Oxley for ensuring that this is a bipartisan plan.
  While I was extremely disappointed that the Republican leadership 
brought

[[Page 14494]]

up such a weak bill earlier this year, one that I voted against, I am 
delighted that they agreed to a much stronger provision in the LaFalce 
legislation.
  This agreement protects employees and investors, separates auditing 
and consulting functions, which got Enron and the other corporations 
into the mess that they are in now, and sets up an independent board.
  Now, I hope that soon Congress can take the next step and provide 
restitution to laid-off workers and investors who lose their life 
savings. CEOs and high- ranking executives should forego their golden 
parachutes and multimillion-dollar-year bonuses while their companies 
are going bankrupt, and instead give workers and investors first rights 
to these funds.
  Once again I want to thank the gentleman from New York (Mr. LaFalce) 
for his leadership and Chairman Oxley for bringing such a responsible 
bill to the House floor.
  Mr. OXLEY. Mr. Speaker, may I inquire as to how much time remains on 
both sides.
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Oxley) has 11 
minutes remaining, and the gentleman from New York (Mr. LaFalce) has 
14\3/4\ minutes remaining.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Cox), a member of the conference committee.
  Mr. COX. Mr. Speaker, I thank the chairman for his extraordinary good 
work.
  Fraud and unfair dealing are the enemies of the free enterprise 
system. And as we can see from the turmoil in our markets, our country 
is paying a very high price because of the corporate fiduciaries who 
have broken faith with their employees and their investors.
  We have tough laws on the books to deal with all manner of crime, 
including corporate crime; but just as bacteria mutate to avoid the 
latest antibiotics, those who cook the books are constantly changing 
their recipes, and we have to keep our laws and our remedies up to 
date.
  Enron, Global Crossing, WorldCom, and the other cases that we have 
seen have all centered around accounting frauds. Abuses of accounting 
rules were central to each of these cases. Using the regulatory thicket 
of detailed accounting rules, the malefactors in these cases 
intentionally structured sham transactions to disguise their true 
financial condition. That is why the central reform in this legislation 
is the creation of an accounting oversight board to see to it that 
accounting standards once again make financial reports truthful, 
honest, and clear.
  As we raise the legal standard here today, we should bear in mind our 
obligations to do still more to raise ethical standards so that the 
best and the brightest will continue to want to join the accounting 
profession; so that our most experienced citizens, possessed of good 
judgment, are willing to undertake the significant oversight 
responsibilities on corporate boards of directors; and so that 
entrepreneurs will still take the risks and dream boldly without fear 
of being second-guessed if the race is not won.
  This is an important step we are taking today, Mr. Speaker. I am very 
happy to join in support of this conference report.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Ohio (Mrs. Jones), a member of the committee.
  Mrs. JONES of Ohio. Mr. Speaker, I know that this committee is very 
short of time, and so I will give my time back to the ranking member; 
but I want to say it is a shame that we were here in April doing 
legislation like this and ended up having to come back when we really 
realized that we needed to hold CEOs accountable.
  Mr. Speaker, I rise today in strong support of H.R. 3763, the 
Conference Report on Corporate Responsibility and I seek permission to 
revise and extend my remarks.
  The events of the past months have underscored the importance of 
transparency in corporate governance. While many believed that Enron 
was an isolated occurrence, the failures of Tyco, Global Crossing, and 
WorldCom have eroded confidence in the markets, both here and overseas.
  Investment in the stock market is important to our economy and as a 
wealth-creating tool for people of all income levels. Although the 
majority of companies are operated honestly, investors will not trust 
the market if they believe that their money is not safe. If investors 
don't invest--the economy will stagnate which hurts people at every 
level of our society. Recent drops in value of stock markets both here 
and around the world reflect uncertainty and a current lack of investor 
confidence.
  It is our responsibility to hold accountable those companies and 
individuals that act dishonestly and erode investor confidence. I 
support this bill and I commend the conferees because they have crafted 
a strong piece of legislation. This bill would remove conflicts of 
interest and strengthen corporate accountability by a number of key 
reforms such as: creating a strong and independent board to oversee the 
accounting profession; by requiring separation of the auditing and 
accounting functions of firms; by reforming the independence of stock 
analysts and decreasing the influence of investment banking firms over 
analysts; by authorizing $776 million to the Securities and Exchange 
Commission to enable them to achieve higher staffing levels to enforce 
the law.
  Although these reforms are needed, there are other, holistic changes 
that need to take place as well.
  Over the past decade, CEO tenure has dropped while salaries have 
risen dramatically. This has created a climate in which some dishonest 
CEO's may be tempted to ``take the money and run.'' This casts a pall 
on the majority of executives who operate honestly.
  When CEO's and others are compensated with stock options, the options 
are not shown as a business expense on a company's balance sheet. This 
distorts the cost of these options to shareholders, who are not 
provided a clear picture of a company's financial position. It may also 
provide an incentive to ``cook the books'' to achieve quick gains in 
stock price for an executives' personal benefit. This malfeasance has a 
clear effect on workers who lose their jobs and investors who lose 
their money.
  I support the Democratic proposal to allow stockholders to determine 
whether management is compensated with stock options. This change in 
corporate governance would ultimately reward companies that operate 
cleanly by restoring investor confidence in companies with transparent 
operations.
  Mr. Speaker, this week Congress has accomplished a great deal to help 
workers, investors, and the stability of markets the world over. We 
will continue to build our economy over the weeks and months to come.
  Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Toomey).
  Mr. TOOMEY. Mr. Speaker, I thank the chairman for yielding me this 
time.
  Mr. Speaker, the outright fraud of the recent accounting scandals 
constitutes theft that is appalling in nature and staggering in size. 
Millions of honest hardworking Americans who played by the rules, made 
sacrifices so that they could save and invest, saw those investments 
devastated when they were lied to by senior executives who cooked the 
books for their own personal gains.
  Fact is, we have been robbed; and the outrage is justified. But, 
today, Congress will pass tough legislation to begin to restore 
confidence, to start to provide new protections for small investors, 
workers and pension holders.
  Mr. Speaker, as you know, we passed a strong bill in this House last 
April. I am very happy that we finally got a product from the other 
body in July and we were able very quickly to reach a consensus and 
pass this tough historic legislation that will just take us closer to 
that vital goal that we are trying to accomplish, which is greater 
transparency and truthfulness in financial reporting.
  I would just want to remind my colleagues that despite the calamities 
that we have recently seen, our free enterprise system is still the 
greatest wealth- producing, poverty-destroying, opportunity-creating 
system in the history of the world. And with these reforms, our system 
will start to recover the confidence that it deserves from investors in 
America and all around the world.

                              {time}  1115

  Mr. Speaker, I want to congratulate the gentleman from Ohio (Mr. 
Oxley),

[[Page 14495]]

the gentleman from New York (Mr. LaFalce), and the other members of the 
conference committee for getting this job done quickly.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Indiana (Ms. Carson), a member of the Committee on Financial Services.
  Ms. CARSON of Indiana. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Mr. Speaker, I want to applaud the gentleman from New York (Mr. 
LaFalce), the ranking member, for staying the course and insisting that 
we protect America and American investors, and also to Senator 
Sarbanes.
  I rise in support of H.R. 3763 for many reasons. I realize that 
regardless of what we call it, there was passed by this Congress in 
1994 a bill called Private Securities Litigation Reform Act which 
opened up the floodgates for corporate greed. I appreciate the 
gentleman from New York (Mr. LaFalce) staying the course and giving 
more money to SEC so they have more resources to overseeing all these 
public companies, over 17,000 plus.
  Mr. Speaker, I rise to voice my support for the conference report on 
H.R. 3763, however today we are being asked to vote on the minimum that 
Congress should do and not the best.
  According to the U.S. Department of Labor, within the past year, from 
May of 2001 to May of 2002 the unemployment rate in my home district of 
Indianapolis, IN rose from just under 3% to 4.5%. Now, there are more 
than 39,000 people unemployed in the city of Indianapolis alone.
  This high rate of unemployment is severely straining my state's 
health care plan. According to the Indianapolis Star, enrollment in 
Indiana's Medicaid program will reach its highest level ever to cover 
nearly 800,000 residents, which is 56,000 more than are currently 
covered now. This increase in program participants has caused a $660 
million difference between the budget and actual Medicare costs and is 
playing a major role Indiana's budget crisis. This is a problem that 
more than 40 states have to deal with in this current economic crisis.
  Mr. Speaker, even though we have all of these impressive statistics, 
they really have very little meaning to the average American worker. 
What means something to them is when they see their retirement benefits 
and life savings going down the drain because some large corporation 
has misled their investors.
  Mr. Speaker, the corporate crisis has hit home in Indiana as well. 
Indiana has its own Enron in AES Corporation, the global power company 
and new owner of Indianapolis Power and Light. Like Enron, IPALCO 
management sold stock while employees were encouraged to keep investing 
in the company plan. After AES took control the value of employee stock 
fell from $180,000 to around $18,000.
  Now, as the Indianapolis Star reported last week, people like Joe 
Nelson, a coal-handling supervisor at IPALCO, who had saved almost 
$400,000 after 31 years of work can no longer retire. Joe has been 
forced to open up a lawn mowing business just to help pay for the 
bills.
  Joe and his family are not alone, Mr. Speaker, many Americans are 
being forced to postpone their retirement. In a recent Gallup pole 20% 
of those surveyed said they expect to delay their retirement by an 
average of 4.4 years because of the recent economic crisis.
  We are constantly told that the stock drops are rollercoasters, 
binges and economic hangovers that will disappear. However, it is the 
retirement dreams of hard working hoosiers and the pension fund of 
state governments that we see vanishing with little chance of 
reappearance.
  The Conference bill before us today provides the absolute minimum 
protections to protect investors and restore market confidence.
  Still, this measure could be stronger and certainly disgorging the 
ill-gotten gains of these criminals and redistributing profits to the 
victims must be the next step.
  We hear frequently that there is little that Congress should do and 
limit our interference. However, Congress passage of The Private 
Securities Litigation Reform Act of 1995 got us to where we are today. 
It repealed the civil RICO, thereby preventing defrauded investors from 
obtaining triple damages when they bring securities fraud claims.
  Mr. Speaker, if we are to restore market confidence, and investors 
and workers are to be made whole, Congress must pass a strong bill that 
sets penalties, protects whistleblowers, sends wrongdoers to jail, and 
ensures transparency.
  Assets required through fraud and betrayal of confidence should not 
be allowed to stand when countless Americans close to retirement must 
now rethink how they will downgrade their retired lives.
  Mr. Speaker, indeed, if crime does not pay. Congress must reaffirm 
that truth. We cannot, and must not, remain confused and weak in our 
response to this crime wave.
  We are a free market and American business interests but American 
business must begin to conduct itself like it is interested in 
Americans.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from New 
Jersey (Mr. Ferguson).
  Mr. FERGUSON. Mr. Speaker, I rise in strong support of this 
conference report. We have heard a lot of partisan posturing in the 
last several weeks about this issue and trying to use this issue for 
partisan gain. This issue is not about partisan politics, this is about 
people, hard-working Americans who play by the rules, working toward 
their own retirement and economic security.
  Today we can finally put the partisan bickering aside and pass real 
reforms that are going to save and protect the retirement security of 
millions of Americans. This is not a win for either side on the 
political aisle, this is a win for employees and investors and our free 
market system that is based on the concept of trust.
  Both the bill we passed in April and the bill that the Senate passed 
more recently had good provisions, and this bill before us today, the 
conference report, combines the strongest features of both bills. It 
incorporates strong accounting oversight and bans firms from offering 
services that create conflicts of interest. It establishes tough 
criminal penalties because corporate criminals should not be allowed to 
keep the money at the expense of hard-working Americans who wind up 
suffering. No more mansions, no more yachts, no more private jets or 
guaranteed cozy retirement packages for corporate executives who betray 
the public trust. By passing this legislation, we send a clear message 
to the corporate CEOs and to the accounting firms who monitor their 
companies, let me be very clear: If you violate the public trust, if 
you flush down the retirement security of millions of Americans, you 
will and you deserve to go to jail.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from New 
York (Mr. Crowley).
  Mr. CROWLEY. Mr. Speaker, I rise in strong support of this conference 
report as it represents real reforms to protect investors, and will 
lead to the first steps to restore investor confidence in our markets.
  In addition to strengthening the role of the audit committees, 
prohibiting executives from trading the stocks when employees cannot, 
and including strong language with respect to disgorgement, this bill 
also cracks down on the formerly unaccountable accountants. As every 
American with a 401(k) knows, working Americans saw new examples of 
accounting abuses almost daily, leading to a complete breakdown in the 
system of outside auditing of publicly traded firms.
  This bill prohibits these practices and I salute the ranking member, 
the gentleman from New York (Mr. LaFalce), for championing these types 
of reforms from day one, even when Democrats were being voted down on 
party line votes in the committee to pass these types of reforms. This 
bill strengthens audit committees, punishes criminal acts by greedy 
CEOs and, most importantly, will ensure the independent auditors of 
America's publicly traded corporations are actually independent.
  I think that this landmark legislation serves as a great tribute to 
our departing colleague, the gentleman from New York (Mr. LaFalce). 
This House and all American investors owe a deep debt of gratitude to 
the gentleman. This is a good bill, and I salute the gentleman from 
Ohio (Mr. Oxley), Senator Sarbanes, and especially the gentleman from 
New York (Mr. LaFalce) for their hard work.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentlewoman from New 
Mexico (Mrs. Wilson).

[[Page 14496]]


  Mrs. WILSON of New Mexico. Mr. Speaker, we have had some greedy 
people who cooked the books, aided by accountants who dishonored their 
profession. That is fraud, and they should go to jail for it. Now we 
are going to tighten down some of the rules of the system to make sure 
that this cannot happen again, and to restore confidence in the 
American system of free enterprise.
  I support American free enterprise, and because I support free 
enterprise, we need to crack down on people who would break the law and 
steal people's retirement security and the amount of money they are 
saving for their kids' education.
  It is a good step forward, and I commend the committee for their hard 
work and for sending a clear message to the American people. We are a 
country of free enterprise, and we will not tolerate people who break 
the law.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from New 
York (Mr. Israel), a member of the Committee on Financial Services.
  Mr. ISRAEL. Mr. Speaker, I rise to support this conference report, 
but with a word of caution. This bill offers new rules and regulations. 
The fact is that we had rules, and they were ignored. We had laws and 
they were broken. We had regulations and they were worthless. We had 
laws on the books, and the books were cooked.
  Now we have new laws, and I am sure we have plenty of lawyers already 
parsing the words and figuring out ways around them.
  Mr. Speaker, all of the new rules and regulations will not be 
effective if the fox continues to guard the henhouse. The words in this 
bill will be no more than words if regulators continue to look the 
other way. With this bill has to come true reform in how the White 
House and the SEC and the Justice Department enforce those laws. The 
American people played by the rules. They have seen their retirements 
delayed, their college tuition funds depleted, their downpayments 
disappear. Now they will be watching how serious Washington is, not on 
the day that we pass this bill, but in the years going forward when it 
must be enforced. We will be judged not by what we pass today, but by 
how it is enforced tomorrow.
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Gekas).
  Mr. GEKAS. Mr. Speaker, I rise in strong support of this legislation, 
and one of the strong elements in it is what attracts me to a positive 
vote for all of us in this measure. That is the tougher penalties that 
are built into the new system that we are about to embark upon. The 
deterrent value of that by itself makes it worthwhile for us to support 
this legislation.
  But as a passing glance on this whole scene, the American public 
ought to take some satisfaction from the fact that the current law, the 
law that is now on the books, has brought to justice the Arthur 
Andersen firm, has brought to justice others in the various schemes 
that have come to light, indictments are pending, and just recently we 
had a picture in the Washington Post of the Adelphia CEOs being brought 
to justice.
  Mr. Speaker, as we are about to make the penalties tougher, we should 
feel a little bit better about the current system because it is 
bringing some of these people to justice.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from 
Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, surely it is a true mark of success when 
the same Republican leadership allows this bill to reach the floor 
after they refused to respond years ago with genuine change, and, even 
after the Enron fiasco, they rejected strong new laws, and who only a 
few hours ago this very week were trying to mangle the determined 
reform efforts of the gentleman from New York (Mr. LaFalce) and Mr. 
Sarbanes. ``Success,'' by this measure, yes.
  But for those who are about to retire and now see their retirement 
account vanished, for those who saved to support a young person 
obtaining a worthwhile college degree and now have only worthless 
securities, for those who labored in their jobs and find themselves 
jobless, this success comes a little too late to celebrate. They cannot 
even afford the champagne cork to pop. For thousands of Americans, an 
ounce of prevention from Congress that would have truly ensured a 
vigilant public watchdog instead of a toothless lapdog for corporate 
wrongdoers would have been worth much more than this belated pound of 
cure that comes long after so many have suffered so very severely. They 
can justifiably ask this Congress, ``Where were you when we needed 
you?''
  Mr. OXLEY. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Pennsylvania (Ms. Hart), a valuable member of our committee.
  Ms. HART. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  The House's decision to bring this bill to a conference with the 
Senate was much derided, especially by those on the other side of the 
aisle. But I am here to support this conference report and bring up a 
couple of points that are very important in the bill that would not 
have been included but for the decision of the gentleman from Ohio (Mr. 
Oxley) and others to bring this bill to a conference.
  The most important is that many people lose money when these 
corporate criminals steal money. Those people are the investors, the 
employees of those companies. The Senate bill did not include any 
provision for those people to recover their money. That was placed into 
the bill in conference placed in by the Republican House. This is one 
of the most important issues to those who have invested in 401(k)s for 
their retirement, and those saving money for their children's 
education. Those people will be able to recover monies as a result of a 
decision by the House to go to conference as a result of this fine 
conference report that we will vote on today.
  Mr. Speaker, the adoption of real-time disclosure will help people 
make better decisions, and as a result of this conference report, we 
will have much better enforcement.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from 
North Carolina (Mr. Price), a former member of the Committee on 
Financial Services.
  Mr. PRICE of North Carolina. Mr. Speaker, I rise in strong support of 
the conference report on the Corporate Accountability and Accounting 
Reform bill. I particularly want to commend the ranking member, the 
gentleman from New York (Mr. LaFalce), for his steadfast leadership. I 
also want to congratulate our House Republican conferees who, after 
opposing the House counterpart of the Senate bill, offered by 
Democrats, have finally read the economic tea leaves and capitulated to 
the Senate on the bill's major provisions.
  We now have a bill that creates a strong accounting oversight board, 
restricts the nonaudit services that accounting firms can provide to 
audit clients, implements tough new corporate responsibility standards, 
requires public companies to disclose financial information quickly and 
accurately, prohibits stock analysts' conflicts of interest, and 
authorizes the SEC to enhance its investigative and enforcement 
capabilities.
  At last we have a serious reform bill. I urge my colleagues to 
support it.
  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Bonior), the distinguished former minority leader.
  Mr. BONIOR. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, if Americans work hard, they deserve a good wage. If 
they get sick, they deserve health care. If they put a lifetime of 
service into a company or government, they deserve a pension that 
nobody can take away.
  Over the last several months, we have witnessed despicable acts of 
corporate irresponsibility by some of our Nation's largest 
corporations. Workers and investors in Enron and DCT and WorldCom and 
others, they have seen their life investments, their life savings, 
disappear, their pensions wiped out, their health care benefits stolen, 
their lives destroyed in many instances.

[[Page 14497]]



                              {time}  1130

  Those at the top have refused to take responsibility while everybody 
else has taken the fall.
  We are here today to send a message loud and clear that if somebody 
breaks the security laws, if they rob hard-working people of their 
pensions, they will go to jail just like they would if they would rob a 
bank. We are standing here to today and we are standing for the rights 
of working people to know that their wages and their pensions and their 
benefits are secure.
  Mr. Speaker, this is a good effort and a good work by the gentleman 
from New York (Mr. LaFalce) and Mr. Sarbanes and others in this body. I 
commend it to my colleagues, and I urge them to vote yes on this 
conference report.
  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from New York (Mr. Hinchey).
  Mr. HINCHEY. Mr. Speaker, beginning in 1995, the leadership of this 
Congress was successful in the following deregulatory efforts. They 
shielded accountants and corporations from shareholder lawsuits. They 
killed new Securities and Exchange Commission proposals to increase 
standards to ensure that auditors are independent and objective in 
certifying corporate numbers. They cut the Securities and Exchange 
Commission budget, essentially limiting their ability to protect 
investors from security scam artists. They passed deregulation of 
energy derivatives, which enabled Enron to run wild, and they opposed 
President Clinton's efforts to participate in international efforts to 
check offshore tax havens. In other words, they created the climate and 
increased the incentives to commit the kind of corporate fraud that has 
robbed millions of Americans of their pensions and financial security.
  This bill corrects some of those, let me call them, mistakes. But it 
does not do all that needs to be done. It does not deal with the issue 
of corrupt manipulation of stock options. It does not deal with the 
problem of fraudulent IPOs. Yes, this bill is a good bill as far as it 
goes. It is certainly better than that cream puff legislation that was 
out here last April or the fraudulent piece that came out here last 
week. This is a much better effort and deals to some extent, to a 
significant extent, with the real problems that were created as a 
result of the deregulation mania that swept through this House and the 
other House as well beginning in 1995. So let us pass it but let us not 
kid ourselves. This was created here. It needs to be corrected here and 
the job is not yet done.
  Mr. LaFALCE. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman 
from Texas (Ms. Jackson-Lee), a member of the Committee on the 
Judiciary.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman from New 
York (Mr. LaFalce) and the gentleman from Ohio (Mr. Oxley) as well who, 
as he will recall in the early days of the Enron debacle, I joined him 
in his hearings and I thank him for the kindness extended. And for 
those of us in Houston, we thought that the world had collapsed and it 
was only us.
  I remember a teaming town hall meeting that I held with the interim 
leadership of Enron, and one of those laid-off employees stood up and 
said that he budgets his shaving cream and his toothpaste because he 
was barely left with 75 cents. Those employees were laid off within 24 
hours after Enron had filed bankruptcy, within 72 hours of giving 
retention bonuses of $105 million to corporate execs.
  But then we found out there was a roll call of corporate failures in 
America. We knew it was not us, but we realized that on behalf of 
America we had to do something. And I am glad that Mr. LaFalce stayed 
strong on the strength and the toughness of these legislative 
initiatives that would bring us now to the point where we do have 
criminal penalties for securities fraud, and though I have an omnibus 
bill that includes many of these features, and I am delighted that they 
are incorporated in this legislation, we needed to speak now and we are 
speaking now because we have legislation that penalizes those who would 
alter or destroy documents.
  It unfolded again in Houston as the Andersen trial proceeded. We give 
shareholders the right to sue and most of all we require reports when 
corporate insiders dump their stock. But, Mr. Speaker, we have yet one 
more thing to do and I hope we will do it, and that is, to give secured 
status to those unemployed workers who suffer when a company files 
bankruptcy, and I hope we will pass that legislation in the near 
future. I ask my colleagues to vote for this bill that will send a 
strong message to the corporate markets of America.
  This has been a year when the faith of ordinary Americans has been 
badly shaken. The restatements of corporate earnings have been followed 
by accusations of corporate wrongdoing at some of the country's largest 
and most touted corporations, including Global Crossing, Bristol Myers 
Squibb, Tyco International, and Worldcom Inc. The billions of dollars 
in losses in shareholder equity are mounting every day.
  The string of recent corporate disclosures undermines investor 
confidence, scares off foreign investment, and slows down an already 
shaky recovery. To me, it is not enough to talk about accountability, 
you have to act to ensure it. Innocent investors have been betrayed by 
the abuses of creative accounting practices and financial disclosure or 
more appropriately non-disclosure. I am appalled at what has happened 
to them as a result of this tragic event.
  In today's economy, there is an emerging crisis of a lack of 
universal confidence in our markets. What has failed is nothing more 
than the system of overseeing our capital markets. We have an 
opportunity and obligation to repair the trust of investors. It's 
tempting to brush aside business ethics as a nebulous, well-intentioned 
subject suitable for business school, with little practical value in 
the real world. That is a big mistake. A 2000 survey by the Ethics 
Resource Center found that 43 percent of respondents believed their 
supervisors don't set good examples of integrity. The same percentage 
felt pressured to compromise their organization's ethics on the job. 
That's a startling number, two years before Enron imploded.
  A crucial feature of corporate ethics is the understanding of the 
business organization as a moral actor. Moral actor means that the 
company can be held responsible and accountable from an ethical 
perspective.
  It is important to recall that the insistence on corporate ethics 
does not diminish the importance of the ethics of individuals and 
institutions. Corporate ethics fills a gap and recognizes the crucial 
roles which business organizations play in modern societies. When moral 
actors are held responsible for what they can do the usual games of 
finger-pointing and blaming each other can be reduced. It has become 
common practice for corporations to prepare an ethics code for the 
guidance of their officers and employees. However, one corporate C.E.O. 
has argued that this is simply an empty gesture since, ``those 
corporations with a sound moral base do not need it and for the others 
it is just a fig leaf.'' This is supported by the fact that the 
introduction of corporate codes did not prevent the recent white collar 
scandals.
  There is a tendency in many corporate ethics codes not to make the 
same clear cut demands of its directors as are made of its employees. 
Consequently, it is difficult for employees to refrain from full 
disclosure when managerial pressure is constantly brought upon them to 
make a sale at any price. Moreover, corporate ethics codes which 
promote whistle blowing, must in all fairness provide protection 
(financial, moral and job security) for the whistle blower. No 
corporate ethical code can operate when management policy seeks to find 
legal loopholes in the requirements of the fiscal or regulatory 
authorities. Just as the codes require individual conscience and 
morality so do they require corporate management understanding that to 
be law abiding is not enough.
  I believe this is the time for immediate action by Congress as 
thousands of employees and families are counting on congressional 
leadership to rise up against corporate failures. Congress has a 
responsibility to working class citizens of this country to provide 
legislation that (1) ensures plan protection of retirement accounts, by 
requiring plan diversification; (2) provides employees with investment 
advice about plan assets; and (3) expands and imposes both civil and 
criminal liability for pension plan fiduciaries and administrators. I 
think that Congress has failed to enact the reforms needed to curb 
these corporate accounting scandals.
  The Enron debacle stands as a corporate wrong. The Enron fiasco has 
established beyond a shadow of a doubt that white collar

[[Page 14498]]

fraud can be incredibly damaging and costs innocent Americans billions 
of dollars of their hard earned money. Enron employees worked hard to 
build Enron into one of America's largest and most profitable 
corporations, and they should not be punished for what their corporate 
managers did.
  Employees are fearful of losing their jobs. Investors are worried 
whether they should continue to hold stocks in these failing 
corporations and the stock market. Retirees are concerned about the 
safety of their pensions. All these concerns undermine confidence in 
our financial markets and have the potential to derail our economic 
recovery. Because of all the corporate scandals that we have seen, 
thousands of workers have been hurt, and millions of investors and 
retirees have seen their 401(k)s gutted. I have introduced a bill that 
protects workers, protects shareholders, and protects pensions, H.R. 
5110, the Omnibus Corporate Reform and Restoration Act of 2002.
  H.R. 5110 prioritizes employees by allowing them to make claims on 
their corporation, after the corporation has filed for bankruptcy 
protection, for wages or severance of up to $15,000. This is important 
because workers have worked hard to build profitable corporations, and 
should not be penalized by the fraudulent behavior of their corporate 
managers.
  Moreover, H.R. 5110 provides oversight of Boards of Directors, and 
prohibits loans to company officers and directors, and creates criminal 
penalties for destroying or altering documents. In addition, the bill 
effectively prevents plan administrators from engaging in unlawful and 
unethical practices, and ensures that plan participants who are allowed 
to diversify their interest are adequately represented on pension 
boards and receive adequate independent investment advise. In addition, 
H.R. 5110 punished those who destroy or manipulate evidence of fraud. 
H.R. 5110 provides prosecutors with better tools to effectively 
prosecute and punish those who defraud investors and provides for tough 
criminal penalties to make them think twice before defrauding the 
public.
  H.R. 5110 toughens criminal penalties for altering or destroying 
documents. It also prohibits loans to officers and directors, which are 
authorized by the Board of Directors. It establishes a 20 percent 
Limitation on Employer Stock and Real Property held by Participant in 
Certain Individual Account Plans. In addition, H.R. 5110 allows for 
plan participants to ``opt out'' of the 20 percent limitation provided 
that they give signed and written notice of such waiver. H.R. 5110 
improves Accounting Standards for Special Purpose Entities [SPE]. It 
compels the SEC to direct the Financial Accounting Standards Board to 
revise applicable SPE accounting language, by increasing the 3 percent 
rule to 10 percent. The 3 percent rule currently calls for an owner 
independent of the would-be-parent to make a substantive equity 
investment of at least 3 percent of the SPE's total capital.
  The Senate has passed S. 2673, Public Company Accounting Reform and 
Investor Protection Act of 2002 sponsored by Senator Paul Sarbanes. 
This makes key improvements over our current system. It creates a 
strong independent audit oversight board to audit the auditors. It 
restricts the non-audit services that an accounting firm can provide to 
public companies it audits. What this means is that auditors will not 
have conflicts of interest which would interfere with their auditing. 
In addition, it says that CEOs and CFOs must certify the accuracy of 
financial statements and disclosures. Also, S. 2673 requires CEOs and 
CFOs to relinquish bonuses and other incentive-based compensation and 
profit on stock sales in the event of an accounting restatement 
resulting from fraud. And most importantly, it authorizes funding for 
the SEC to $776 million, as compared to the $469 million in President 
Bush's budget request for the SEC.
  It appears that the Republicans are trying to slow down the progress 
of the Sarbanes bill, by bringing a bill that would impose tougher 
criminal penalties on fraudulent corporate executives. They have passed 
H.R. 5118, Corporate Fraud Accountability Act of 2002. Most troubling 
about H.R. 5118 is the lack of whistleblower protection and the 
extension of the statute of limitations for investor lawsuits.
  S. 2673 extends whistleblower protections to corporate employees, 
thereby protecting them from retaliation in cases of fraud and other 
acts of corporate misconduct. Whistleblowers in the private sector, 
like Sharron Watkins, should be afforded the same protections as 
government whistleblowers. The Republican bill omits this provision.
  Consequenlty, S. 2673 amends the unnecessarily restrictive statute of 
limitations governing private securities claims. Under current law, 
defrauded investors have only one year from the date on which the 
alleged violation was discovered or three years after the date on which 
the alleged violation occurred. Because these type of violations are 
often successfully concealed for several years, the Senate increased 
the time period to 2 years after the date on which the alleged 
violation was discovered or 5 years after the date on which the alleged 
violation occurred. This protects investors, but the Republican bill 
lacks this provision.
  Alan Greenspan, the Federal Reserve chairman, pointed out, in his 
testimony to the Senate Banking Committee on July 17th, that a 
corporate culture blighted by infectious greed was the cause of the 
breakdown in confidence among investors. Chairman Greenspan, who has 
been an advocate of deregulation and reliance on market forces to 
police good business practices, acknowledged that he had been mistaken 
in initially opposing government involvement in oversight of auditing. 
``My view was always that accountants knew or had to know that the 
market value of their companies rested on the integrity of their 
operations'' and that government regulation of accounting was therefore 
``unnecessary and indeed most inappropriate, but I was wrong''.
  If the Chairman of the Federal Reserve says that his opinion was 
wrong concerning oversight of auditors, then change is needed. We must 
restore confidence in our financial markets by establishing sound 
guidelines for corporate governance and auditing that investors can 
trust and feel confident with their investments. I ask my colleagues to 
support H.R. 2763, the corporate accountability report which includes 
many of the provisions of my Omnibus Corporate Responsibility Act, H.R. 
5110, and is now much stronger with whistleblower protection and 
criminal penalties for document destruction and bad decisions by 
corporate executives.
  Mr. LaFALCE. Mr. Speaker, I yield myself the balance of my time.
  This has been a long journey. I remember when we assumed jurisdiction 
for the first time in the House Committee on Financial Services over 
the field of securities. That was January of 2001. And one of the very 
first things I did was to begin meeting with representatives from the 
SEC, the Securities and Exchange Commission; and most especially with 
the acting chairman at the time, Laura Unger, former staff assistant to 
Senator D'Amato; and also with the chief accountant at the time, Mr. 
Lynn Turner.
  And from Ms. Unger I learned how grossly understaffed the SEC was. I 
learned from her how much more money they believed they needed than 
they were able to get out of OMB. I learned how limited their staff 
resources were in comparison with the enormous increase in their work 
load and I brought this to the attention of the House Committee on 
Financial Services during hearings and during markups. We really should 
have increased the authorization for the SEC much, much earlier.
  From Mr. Turner I learned about the enormous number of earnings 
restatements that the SEC was mandating. As a matter of fact, they were 
tripling in 6 months what they had done the prior entire year. And I 
learned about the earnings manipulation that was taking place in 
corporate America, the earnings manipulation that was being done by 
corporate officers, acquiesced in either knowingly, or unknowingly in a 
great many instances--probably in most--by corporate directors, and 
acquiesced in, either knowingly or unknowingly, but complicitly by 
auditors, oftentimes with a conflict of interest.
  I learned, too, about the enormous conflicts of interest that 
research analysts had. That alarmed me so much so that I sent a 
newsletter out to each and every one of my constituents in early 2001 
called ``Protecting Your Investments'' where I talked about earnings 
manipulation, where I talked about the desire of corporate officers, 
directors, et cetera to increase market capitalization because their 
compensation was based, in large part, on stock options and how we 
needed to do something about that.
  I talked in that newsletter about the conflicts of interest that 
research analysts have because they have become hypesters, spinsters in 
order to obtain investment banking business for their securities firms.
  And I was disappointed when the only bill we took up was a bill that 
would reduce the SEC fees. We did have

[[Page 14499]]

one good provision in that bill, and that was pay parity, but I thought 
we needed to give attention in 2001 to all of those issues. I was also 
disappointed when President Bush, at the end of 2001, did sign that 
bill and could not bring himself to even mention pay parity and the 
need for pay parity. All he talked about was how wonderful it is to cut 
the fees that individuals have to pay before the SEC.
  I was disappointed when, even after Enron, which was at the very end 
of 2001, when this should have been a matter that everybody was 
concerned about. Wanting to do something, the President barely 
mentioned the problems in corporate America and could not bring himself 
to mention the problems of Enron. I was further disappointed because I 
was writing the President letter after letter that his budget in 
February of 2002 called for a minuscule increase of 6 percent, which 
was not enough to do anything. We needed so much more, as Chairman 
Oxley knows, because in 2002, we did pass a bill significantly 
increasing the authorization, although not the appropriations, for the 
SEC.
  It has been a long journey. There have been good and bad ideas from 
both Democrats and Republicans. I introduced the best bill that my 
staff and I could think of early in 2002. I wish it had passed earlier. 
It did not. I think an awful lot of its best ideas are in this 
conference report, as are an awful lot of the best ideas of the 
gentleman from Ohio and others, and I think we can stand proud today on 
this product. I just wish we would have acted upon it earlier. There 
are lessons to be learned from this for the future. This could fade 
from memory.
  Mr. Speaker, how much time do I have left?
  The SPEAKER pro tempore (Mr. Sweeney). The gentleman's time has 
expired.
  Mr. LaFALCE. Let us vote for the bill. And we know what those lessons 
are. Let us heed them in the future.
  Mr. Speaker, I ask unanimous consent for 1 more minute.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  Mr. LaFALCE. We would not be here today without the tremendous work 
of staff. Staff really does it all. We put our names on legislation, 
but staff really does the work. I have had a great staff. My staff 
director, Jeanne Roslanowick, who is also my general counsel, is 
magnificent. I have had so many individuals I cannot mention them all, 
but Lawranne Stewart and Michael Paese of my staff have devoted almost 
all their time from the day they came with me in drafting this 
legislation. They gave it to the Senate, they worked with the Senate 
staff basically, and Senator Sarbanes and his staff basically took our 
work product. It is their work product, not mine, and they should be 
recognized. If there are any names on this bill, it should be the names 
of the staffers who really drafted it.
  Mr. OXLEY. Mr. Speaker, I yield myself the balance of my time.
  The SPEAKER pro tempore. The gentleman from Ohio is recognized for 
3\1/2\ minutes.
  Mr. OXLEY. Mr. Speaker, we indeed, I would say to my friend from New 
York, have come a long way. This has been quite a journey. The 
gentleman from New York pointed out that we had first gotten that 
jurisdiction in the new Committee on Financial Services last January, 
and what a ride it has been on a number of very important issues, but 
nothing is more important really than restoring investor confidence in 
our system, and that is really what brings us here today in this 
legislation.
  Our committee was the first to have a hearing when Enron became an 
issue. That was back last year, in December. We were the first 
committee to have a hearing on the WorldCom bankruptcy. We then passed 
meaningful legislation, known as CARTA, back in April when nobody 
thought we could do it, passed it out of the committee on a bipartisan 
vote, came to the floor, it passed by a 3-to-1 margin with 119 
Democrats voting for that legislation, and the heart and soul of what 
we have today was embodied in the CARTA legislation.
  There is a lot of misinformation out there that that is not the case. 
Believe me, the idea of having an oversight board, an independent 
oversight board, tightening the rules through the SEC, providing more 
penalties and more transparency all were embodied in the CARTA 
legislation and that is why it enjoyed such wide bipartisan support. 
And then 3 months later, the Senate acted when the WorldCom situation 
blew up, and I give them a great deal of credit. That is what brings us 
here today, to adopt this conference report.
  We have made enormous progress. The SEC is strengthened 
substantially. The gentleman from New York mentioned the analyst issue. 
Chairman Baker, at my direction last year, started hearings on analyst 
conflicts and it brought us to a press conference in February in which 
we announced that the SEC and the SROs were getting together and 
drafting regulations. Those regulations have been in effect now for 2 
weeks. Nobody knows about it because everybody is paying attention to 
what is going on here in the Congress, but those are very important 
rules that are going to be very effective in dealing with analysts and 
their conflicts. The New York Stock Exchange, the NASDAQ, announced 
listing requirements, again, virtually ignored in the media but really 
have teeth in terms of corporate governance. They are saying to these 
folks, ``If you don't get your act together, you're not going to be 
listed on the NASDAQ or the New York Stock Exchange.''

                              {time}  1145

  The Business Roundtable stepped forward with best practices.
  So we are here today to celebrate, I think, a very strong bipartisan 
bill. This is how the process works. We had great consultation and work 
with the Senate. I want to pay tribute to my good friend from New York, 
the ranking member of our committee, who I worked with on a number of 
issues, and also in particular Senator Sarbanes, the chairman of the 
Banking Committee in the Senate. I cannot think of anybody that I have 
worked with in my 21 years in the Congress who has been more open to 
ideas and suggestions and has been more professional in the way he has 
handled himself on this important legislation, and he deserves a great 
deal of credit for getting us where we are today.
  Sometimes in the world of Washington politics it is all about who is 
up, who is down, who has won, who has lost. The bottom line here is the 
American people have won. We have restored or are beginning to restore 
investor confidence with what we have done, as well as what happened in 
the private sector and among the regulators.
  Yes, we strengthened the SEC, and, yes, even with the increased 
authorization, I would say to my friend from New York, the SEC will 
still be getting twice the amount of fees that it will take to run the 
organization.
  This has been a wonderful experience I think for all of us, and I 
would encourage and urge all of the Members to support this very strong 
conference report. Let us get this bill to the President for his 
signature, hopefully as early as next week.
  I think all of us can take a great deal of pride in what we have been 
able to accomplish today.
  Mrs. MINK of Hawaii. Mr. Speaker, I rise in strong support of H.R. 
3763, the Accounting Industry Reform Act. It represents an important 
step to restoring the integrity of our corporate system. I commend the 
conferees for producing a strong and effective piece of legislation.
  At Enron, Adelphi, and WorldCom, executives and auditors cooked the 
books in order to fatten their bank accounts while placing the 
interests of their companies, their employees, and their shareholders 
at risk. The public has responded to these accounting lapses with 
understandable outrage. Thousands lost their savings. Even more lost 
their retirement accounts. Thousands are without work, and companies 
are facing bankruptcy.
  H.R. 3673 imposes tough criminal penalties for corporate wrongdoing. 
Many will serve time in jail. Among other things, it punishes those who 
defraud shareholders of publicly traded companies and those who destroy 
or create evidence with the specific intent of obstructing

[[Page 14500]]

justice. The bill also gives shareholders adequate time to pursue 
securities-fraud cases, protects those who disclose information that 
help detect and stop fraud, and compensates victims of securities 
fraud.
  H.R. 3673 provides that corporate executives must certify their 
financial reports and forces those found guilty of noncompliance to 
forfeit profits and bonuses they may receive. It prevents officers and 
directors who engage in wrongdoing to move from one company to another. 
And, the bill prohibits corporations from providing ``sweetheart'' 
loans--that is, direct or indirect personal loans--to or for any 
director or executive officer.
  I strongly urge my colleagues to support H.R. 3673 and send a strong 
message to executives, auditors, stock analysts, and directors that we 
will no longer tolerate a corporate culture of greed that places entire 
companies, thousands of jobs, and billions of dollars worth of private 
investments at risk.
  Mr. ETHERIDGE. Mr. Speaker, I rise in support of this corporate 
reform bill to crack down on crooked business executives. This Congress 
must take action to rein in these crooks and restore confidence in 
American corporations.
  Mr. Speaker, we must all remember that this bill regulates public 
corporations, not privately-held companies. By accepting money from 
private citizens, these corporations bear a special responsibility to 
their investors and need to be held accountable.
  The American financial system has been the envy of the world because 
of its long history of integrity. Both individuals and corporate money 
managers around the world have long believed that they could invest in 
American stocks with confidence. They believed that the information 
they received from public companies was timely and accurate.
  Lately that trust has been sorely tested, and the plunging stock 
market is a clear indicator of investor fears.
  H.R. 3763, the Accounting Industry Reform Bill, will help restore 
investor confidence in America's financial markets by instituting a 
series of reforms that will increase corporate responsibility 
standards, improve regulatory oversight and toughen criminal penalties.
  With this legislation Congress sends a clear message to the American 
people that we will not tolerate skirting securities laws in order to 
obscure or cover-up financial mismanagement and mask corporate greed. 
This bill will enact common-sense reforms for publicly traded companies 
to keep investors safe and restore faith in our economic institutions.
  The American people put their trust and their money into the stock 
market as a savings vehicle for their children's education, their 
retirements and their financial stability. We owe it to them to make 
sure everyone, not just corporate insiders and rich investors, has 
access to the same accurate, clear and timely information on which to 
base their financial decisions. I urge America's business leaders to 
work with Congress and regulatory authorities to successfully implement 
these new reforms, punish corporate criminals and restore confidence in 
our financial markets.
  Mr. GEORGE MILLER of California. Mr. Speaker, I rise in support of 
the conference report on H.R. 3763, the ``Corporate and Auditing 
Accountability, Responsibility, and Transparency Act of 2002.'' The 
fact that the U.S. Congress is responding so quickly and strongly to 
the corporate scandals that are unfolding each day demonstrates how 
serious the problem is and the danger to the entire U.S. economy. Much 
of the focus has been on the huge salaries, giant golden parachutes, 
and obscene loans, all for the executives who were mismanaging many of 
these corporations.
  But that relentless greed has led to financial ruin for tens of 
thousands of employees and shattered the retirement security of 
hundreds of thousands of others. Throughout the 1990's, Wall Street 
kept telling everyone that the stock market could be an ever expanding 
pie and everyone would be a winner. People who had never bought a stock 
in their lives were convinced to invest, and often, invest with 
inadequate information about how to do so and protect their economic 
security at the same time.
  But little by little, many companies had to lie and steal to keep the 
myth going. And now we are all paying the price. I hope the bill before 
us will stem the tide. I hope Wall Street and Main Street will wake up 
and learn to play by the rules once again. And let's be clear: this 
bill establishes much tougher rules. There is no magic way to make 
money. Companies have to earn it. They have to make products that 
people want to buy. They have to treat people fairly. You can't cook 
the books and pretend you have profits. Corporate America has to go 
back to the basics and earn the trust of the American people again.
  I particularly want to comment on the effect the still-unfolding 
corporate scandals have had on our pension system and the work still 
before Congress. Part of today's problem has also involved companies 
using their pension plans like company bank accounts. That behavior 
must stop, and Government regulators must do a better job to ensure it 
has stopped. Pension plans are the employees' money. Workers should 
have involvement and be provided full information on how their pension 
plan is operated.
  The bill before us requires pension plans to provide 30 days advance 
notice of any restrictions on the sale of employer stock or other plan 
investments. A proposal first included in the pension reform bill 
proposed by Democrats on the Committee on Education and the workforce. 
I am glad that the bill toughens current ERISA criminal penalties for 
ERISA violations.
  I am glad the bill cracks down on insider trading and loans to 
corporate officers, a provision first proposed in legislation I 
recently introduced.
  But, we need to go even further. It is time for the Congress to pass 
strong pension reform to protect the retirement security of all 
employees. We need to give workers a right to control their own pension 
funds. We need pension funds and mutual funds to demand better 
corporate governance. We need to look more aggressively at the adequacy 
of our retirement system. American workers will not be able to retire 
if their 401(K)s continue to be treated as piggy banks for Wall Street.
  We have a lot of work still ahead of us, but today is a great step 
forward. I urge the Congress to continue to be vigilant and ensure that 
corporations play by the rules and act fairly.
  Mr. OXLEY. Mr. Speaker, it is my understanding that the Board will 
have discretion to contract or outsource certain tasks to be undertaken 
pursuant to this legislation and the regulations promulgated under the 
Act. Examples of tasks suitable for contracting or outsourcing would 
include maintenance of computer databases and registration records. Of 
course, an exercise of discretion in this manner does not absolve the 
Board of responsibility for the proper execution of the contracted or 
outsourced tasks.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
strong support for the conference report on H.R. 3763, the Public 
Company Accounting and Investor Protection Act of 2002. This bill is 
necessary to protect investors by ensuring auditor independence in the 
accounting of publicly traded companies.
  Recent corporate scandals, such as Enron, Arthur Andersen, WorldCom, 
Global Crossing, and Tyco, have shaken investor confidence in the U.S. 
stock market. The ``looting'' of businesses for unreasonable personal 
gain and the flagrant deception of stockholders and investors by top 
executives in some instances has been outrageous. This Member believes 
that a renewed sense of corporate responsibility in America is needed 
in order to restore the trust of investors. Guilty corporate leaders 
should serve prison terms and not in ``country club'' prisons. As a 
result of these recent corporate scandals, Congress is voting today on 
this conference report in order to strengthen the laws which govern 
publicly held corporations and accounting firms.
  This Member would like to first express his appreciation to the 
distinguished gentleman from Illinois (Mr. Hastert), the Speaker of the 
House, and the Distinguished gentleman from Texas (Mr. Armey), the 
Majority Leader of the House, for bringing this conference report to 
the House Floor before the August recess and thereby sending a strong 
signal--that corporations, and those individuals who run such 
corporations, must be responsible, and if they are not responsible, 
then this legislation will ensure that they pay a stiff price for such 
arrogance and deception.
  This Member would also like to express his appreciation to the 
distinguished gentleman from Ohio (Mr. Oxley), the Chairman of the 
House Financial Services Committee, for his steadfast efforts to bring 
this conference report to the House Floor. In addition, this Member 
would like to express his appreciation to the distinguished gentleman 
from Louisiana (Mr. Baker), the Chairman of the Financial Services 
Subcommittee on Capital Markets, Insurance, and Government Sponsored 
Enterprises, for his innovative efforts, which are included in this 
conference report. Lastly, this Member would also like to give 
recognition to the distinguished gentleman from Maryland (Senator 
Sarbanes), the Chairman of the Senate Banking Committee, for his good 
faith efforts in negotiating this conference report.
  It is very important to note that in April the House acted first in 
response to this crisis of confidence in corporate responsibility when 
the House passed its original version of corporate accounting reform 
(H.R. 3763) on April

[[Page 14501]]

24, 2002, by a bipartisan vote of 334-90. The Senate later passed its 
legislation (S.2673) on July 15, 2002, by a vote of 97-0. However, 
subsequent to the House and Senate's passage of their respective bills, 
many more corporate accounting scandals have been brought to the 
public's attention. Therefore, to address these increasingly serious 
matters, the House passed the Corporate Fraud Accountability Act of 
2002 (H.R. 5118) on July 16, 2002, to further strengthen criminal 
penalties and provide jail terms for accounting and auditing 
improprieties at publicly traded companies. As such, this Member is 
pleased that the conference report for H.R. 3763 properly takes the 
best provisions from each of the House-passed bills and the Senate-
passed bill in order to give maximum future protection to American 
investors.
  Therefore, this Member would like to discuss the following important 
provisions of the conference report for H.R. 3763, which provide the 
following: (1) creates a public company accounting oversight board; (2) 
increases auditor independence; (3) stiffens criminal penalties; (4) 
holds corporate executives accountable; and (5) provides for enhanced 
corporate disclosures to investors.


              1. public company accounting oversight board

  First, the conference report creates a public company accounting 
oversight board consisting of five members whom are independent of the 
accounting industry. Three of the five members must never have been 
practicing accountants and the other two members may only be 
accountants who have not practiced activiely for the past five years. 
This oversight board is authorized to set auditing, quality control and 
independence standards and it has disciplinary powers to impose 
sanctions including a finding that a firm is not qualified to audit 
publicly held companies.
  Under current law, accountants for publicly held corporations are 
subject to partial oversight by both their professional organizations 
and governmental agencies, including the American Institute of 
Certified Public Accountants, the Federal Accounting Standards Board, 
the Securities and Exchange Commission, and the state boards of 
accountancy which license accountants at the state level.


                        2. auditor independence

  The H.R. 3763 conference report also addresses the problems of 
auditor independence which, for example, were evident in Arthur 
Andersen's disputed accounting of Enron. This Member would like to 
focus on the following three auditor independence provisions of this 
legislation which: makes the audit committee of the board of directors 
of a publicly held corporation responsible for the hiring, 
compensation, and the oversight of the independent auditor; prohibits 
accounting companies from providing enumerated consulting and auditing 
services to publicly held companies (This addresses an obvious conflict 
of interest. It is important to note that this conference report states 
that auditors may provide permitted consulting services, such as tax 
preparation, for their publicly held auditing clients with the approval 
of the audit committee of the client's board of directors.); and 
requires the rotation of the chief audit partner after auditing a 
publicly held company for five consecutive years.


                   3. Strengthens Criminal Penalties

  The H.R. 3763 conference report appropriately increases the criminal 
punishment for those corporate crooks who defraud their investors. For 
example, the conference report creates a new crime of ``securities 
fraud'' whereby whoever knowingly executes a scheme or artifice to 
defraud any person in connection with any security shall be fined and/
or imprisoned for not more than 25 years. In addition, this conference 
report also increases the criminal maximum prison term for mail fraud 
and wire fraud violations from 5 to 20 years.
  Furthermore, the conference report for H.R. 3763 strengthens the laws 
that criminalize document shredding and other forms of obstruction of 
justice. This conference report allows a maximum prison term of 20 
years for tampering with evidence and a maximum prison term of up to 10 
years for destruction of audit records. It is important to note that 
the criminal penalties in this conference report are very similar to 
those found in the Corporate Fraud Accountability Act of 2002 (H.R. 
5118) which the House passed on July 16, 2002.


               4. Holds Corporate Executives Accountable

  As is well documented, recently a number of corporate executives have 
abused their power to the great detriment of their shareholders. For 
example, some corporate executives, who defrauded their investors of 
their savings, are still able to live in their extravagant mansions. 
The conference report for H.R. ??36763 addresses these abuses, as the 
agreement requires chief executive officers and chief financial 
officers of publicly held companies to certify the accuracy of 
financial reports and holds them liable if they knowingly deceive the 
public with such reports. Furthermore, the measure also mandates that 
chief executive officers and chief financial officers of publicly held 
companies must return bonuses received within one year of any company 
report that requires a correction because of misconduct.
  Additionally, it is important to note that this conference report 
further addresses corporate executive impropriety by including a 
provision known as the Federal Account for Investor Restitution (FAIR), 
which was initiated by the distinguished gentleman from Louisiana (Mr. 
Baker). The FAIR provision requires that funds be returned from these 
fraudulent corporate executives to investors who have lost money in the 
markets as a result of corporate executive malfeasance.


            5. enhanced corporate disclosures for investors

  Finally, in order to keep investors fully apprised of the activities 
of a publicly held corporation, a provision in the conference report 
requires companies to make real-time disclosures of financial 
information that is important to investors, such as material changes in 
a company's financial condition. This provision is an initiative of the 
House and this Member is pleased that the Senate agreed that this was 
an important provision to include in this measure.
  Mr. Speaker, on a different note, it should be noted that this Member 
is a cosponsor of H.R. 5147, which was introduced by the distinguished 
gentlelady from California (Ms. Bono) and the distinguished gentleman 
from Nebraska's 2nd Congressional District (Mr. Terry). This 
legislation would require that the value of stock options granted by a 
public corporation to an officer or employee must be recorded as an 
expense in a corporation's financial statement. However, this Member 
believes that it is very unfortunate that the concept behind H.R. 5147 
is not included in the conference report of H.R. 3763.
  This Member also believes that it is necessary to count stock options 
as corporate expenses. Publicly held companies currently are able to 
hide billions of dollars of costs and thus inflate profits through the 
loophole of not counting the cost of stock options as an expense. A 
distinguished Nebraskan, Mr. Warren Buffet, has been a strong advocate 
of counting stock options as expenses. In fact, he serves on the 
corporate boards of Coca-Cola and the Washington Post, both of which, 
on their own initiative, have decided to count their stock options as 
expenses. This Member would encourage other corporations to follow 
their example and would also encourage his distinguish colleagues (Mr. 
Terry and Ms. Bono) to continue their pursuit of H.R. 5147's passage 
into law.
  Mr. Speaker, in conclusion, this Member would note that the 
conference report for H.R. 3763 is a giant step forward in providing 
further protection for investors of publicly held corporations in the 
future. In addition, this Member firmly hopes that the corporate 
executives at Enron, Arthur Andersen, and WorldCom are punished in the 
proper manner for their grossly irresponsible, probably illegal, 
corporate behavior.
  In closing, this Member urges his colleagues to support the 
conference report for H.R. 3763.
  Mr. LUTHER. Mr. Speaker, today represents what this Congress can 
accomplish when we work together in a bipartisan manner. Today this 
Congress is poised to pass legislation that will go a long way toward 
restoring the integrity of the equity markets and, consequently, 
investor confidence in those markets.
  It took us far too long to get here. In late April, this House passed 
a bill that represented a start, but was still wholly inadequate in 
addressing the deficiencies that currently plague corporate auditing 
and securities regulations. Those deficiencies have now largely been 
addressed in this Conference Report. By creating a truly independent 
accounting oversight board, mandating true auditor independence, 
requiring CEO certification of the accuracy of financial statements, 
imposing stiff criminal penalties for fraud, and initiating a 
rulemaking procedure for the conflicts of interest of stock analysts, 
this Conference Report represents a promising legislative response to 
jittery investors who understandably have lost faith in the financial 
information on which they rely.
  Most importantly, this legislation substantively addresses the type 
of massive and egregious corporate fraud that has hurt so many ordinary 
Americans. Thousands of hard working employees have been mercilessly 
punished for the deeds of rich executives who enriched themselves by 
pushing the envelope on accounting standards, sometimes to the point of 
criminal culpability. If there is one outcome to this bill that we can 
all be particularly proud of, it is the knowledge that we are 
protecting millions of hard-working Americans--

[[Page 14502]]

their jobs, their investments and their pensions--from unethical 
corporate behavior. This impact on the lives of ordinary citizens 
cannot be understated, and I am very pleased that we have finally come 
together as a Congress to address their needs and not the needs of 
entrenched corporate interest groups that too often dominate the 
political deliberations of this Congress.
  Mr. SHOWS. Mr. Speaker, today I rise in favor of the bipartisan 
conference report on Corporate Accountability that provides necessary 
reform and the appropriate reaction to the current business climate of 
scandal and fraud.
  Although many honest corporate officers and executives abide by sound 
business principles, we now have the framework in place to prevent 
wrongdoing and punish those who refuse to play by the rules.
  Consumers, employees, and investors affected by the recent revelation 
of widespread financial misrepresentation and fraud deserve both 
answers and solutions so that confidence in accounting independence, 
objectivity, and integrity is restored.
  In my district, the work of honest, hard-working employees and the 
reputation of a home grown Mississippi company has been infected by 
corporate greed, as executives cooked the books, deceiving the 
investing public and company employees.
  In fact, in the few days since this conference began, WorldCom, the 
second largest long distance provider in the U.S. and the only Fortune 
500 company in Mississippi filed for bankruptcy.
  I was disappointed that the Shows-Leahy provision, which would have 
increased the amount of severance pay that WorldCom employees would 
receive under the bankruptcy filing, was not included in the conference 
report. Unfortunately, although House Republicans accepted almost all 
of the tough, Senate Democratic provisions, they refused to accept this 
important worker protection provision. WorldCom employees faced 
unexpected job loss through no fault of their own. They deserve fair 
treatment and due severance. As the Congressman who represents 
WorldCom's headquarters and the many employees and investors who have 
suffered from the revelation of accounting improprieties at WorldCom, I 
will continue to push this issue and to call on my colleagues in 
Congress to support commonsense worker protection.
  Investors and employees charged the conference committee to look at 
the systemic issues that have encouraged executives in the corporate 
world to ignore sound business principles.
  We have answered this call and delivered a strong bill. This reform 
package establishes a new independent, regulatory body--the Public 
Accounting Oversight Board--that will oversee the auditing of publicly-
traded companies. Under these reform provisions, CEOs will be required 
to certify the accuracy of company financial reports. Company loans to 
corporate officers will be prohibited, and auditors will be required to 
maintain true independence from the company under review. The bill also 
requires the forfeiture of bonuses and other incentives in the event of 
an accounting restatement and serious misconduct by an executive 
officer.
  Victims whose savings and retirement was lost at the hands of greedy 
corporate executives should be compensated. The Corporate 
Accountability package requires the Securities and Exchange Commission 
to establish the ``FAIR'' fund. This fund would be used to compensate 
victims who lost money because of corporate wrongdoing. Funds for FAIR 
would come from civil penalties collected from corporate executives 
through administrative or judicial fines.
  I appreciate the opportunity to serve as a member of the Conference 
Committee. I am proud of the product reached through bipartisan 
negotiations. I fully support the strong measures in the Public Company 
Accounting Reform and Investor Protection Act because, although we 
cannot legislate corporate morality, provisions in this bill will deter 
and severely penalize those who lie, cheat, and steal by falsifying a 
company's financial statements to pad executives' pockets on the backs 
of its employees and shareholders. U.S. investors and employees deserve 
no less.
  Mr. CHAMBLISS. Mr. Speaker, I rise today in support of H.R. 3763, the 
Corporate Accountability Act of 2002. I congratulate my good friends 
Congressman Oxley and Congressman Baker not only for their leadership 
on this legislation but for the leadership they have provided to this 
body in passing real reforms for corporate accountability.
  Whether it is Global Crossing, Arthur Anderson, WorldCom, Enron, Tyco 
or Adelphia the story is the same. Some executives are cooking the 
books and employees and public stock holders are left holding the bag. 
Mr. Speaker, a crook is a crook, and it doesn't matter if you use a .38 
special or a golden pen, if you steal you should go to jail.
  I urge my colleagues to support this legislation, so when I go home 
to Georgia next week I will be able to look folks in the eye knowing 
that we passed legislation today which will provide stiffer penalties 
and greater oversight, so corporate crooks will no longer be able to 
prey on hardworking Georgians who play by the rules.
  Mr. ROYCE. Mr. Speaker, thank you for this opportunity to voice my 
support for this important legislation. Last Friday, during the first 
hearing called for this conference committee, I stated my belief that 
the similarities between the House and Senate versions of this bill 
were greater than the differences between them. My belief has been 
vindicated here today, proven by the speedy conclusion reached between 
the House and the Senate on this conference report.
  Last Friday, I also spoke of my desire to work with my colleagues 
from the other body, and from the other side of the aisle, to send 
President Bush the strongest, most sensible bill possible so that we 
could restore investor trust in the fairness of our capital markets. I 
believe that this legislation does precisely that, and I would like to 
compliment Chairman Oxley and Chairman Sarbanes for their hard work, 
dedication and willingness to compromise to reach a quick conclusion on 
this bill on behalf of the American people. The American investors who 
have lost their hard-earned savings, and those hard-working employees 
who have lost their jobs because of corporate malfeasance deserve quick 
and decisive action from their elected officials. Today, we have risen 
above partisanship and helped to restore confidence in the American 
capitalist system.
  Last week I described the bi-partisan, anti-fraud sentiment that I 
believe is motivating each of us to reform American corporate 
governance and auditing standards by passing this legislation. Many of 
us here recognized a shortcoming in our legal system--the reticence to 
treat corporate criminal behavior as seriously as we treat common 
criminal behavior--and resolved that this bill should reflect the true 
seriousness of white-collar crime.
  I believe that this legislation accomplishes this task. By including 
the House-passed language to increase the criminal penalties for 
securities fraud, document-shredding and mail and wire fraud, I believe 
that we have acted wisely and swiftly to prevent other Enrons, 
WorldComs and Global Crossings from happening. By including Chairman 
Baker's FAIR language, we have ensured that wronged shareholders whose 
hard-earned savings are stolen from them by pinstriped crooks have 
those funds returned to their retirement accounts, and not used to 
build a $100 million retirement mansion in Bermuda for an expatriate 
executive. By ensuring that companies disclose material changes to 
their financial condition to the public on a rapid and current basis, 
we have ensured that everyone, not just corporate insiders, has access 
to it.
  I would like to congratulate all of my colleagues here today on their 
excellent work in producing this legislation, and I look forward to 
seeing President Bush sign it into law. The American people deserve 
nothing less.
  Ms. ESHOO. Mr. Speaker, I rise in strong support of this Conference 
Report. Our markets have traditionally been the deepest, broadest and 
most transparent in the world. This transparency has given Americans 
confidence in those markets. Today, tragically that confidence has been 
shaken to the core. Innocent investors and employees have been 
decimated because of the collapse of once Fortune 500 companies.
  This legislation will take a major step toward restoring confidence 
in corporate America, confidence in our markets, and confidence in our 
government's ability to protect investors from fraudulent activity. 
This bill gives the SEC the tools it needs to prevent future Enrons, 
Worldcoms, and other corporate scandals.
  The bill we're voting on today: requires the SEC to appoint a full-
time board to oversee and discipline if necessary auditors of publicly 
traded companies; prevents audit firms from providing consulting 
services to companies they audit, putting a stop to what was a major 
conflict of interest; require CEOs and CFOs of public companies to 
certify the accuracy of financial reports and be held liable for 
knowingly deceiving the public; and greatly increases the prison 
sentences for fraudulent activity. We've witnessed daily one corporate 
scandal after another so we know corporate self-governance has failed.
  This bill responds to that failure with tough measures that ensure 
U.S. corporations, their executives, and the companies that audit them 
are fully accountable for the financial information they provide to 
investors.
  I salute the work of Senator Paul Sarbanes, who's tireless effort led 
to this strong

[[Page 14503]]

and solid bill. No matter what the criticisms have been to roll back or 
roll over, he stayed the course and now we will finally have the 
largest reforms to the SEC since the Great Depression.
  Decent Americans deserve these protections. I urge my colleagues to 
support this measure.
  Mr. BLUMENAUER. Mr. Speaker, today Congress will approve the Public 
Company Accounting Reform and Investor Protection Act of 2002 
Conference Report, which will likely be signed into law by the end of 
this week. Like families nationwide who have seen investment savings 
deteriorate and have lost confidence in our markets and business 
leaders, I have been concerned with revelations about inaccurate 
corporate accounting and inappropriate and in some cases illegal 
corporate practices. Recent events have had tragic consequences in my 
district where employees of Portland General Electric had little 
control over the company's association with Enron.
  I support this legislation that will provide funding and regulations 
that will improve the integrity of the corporate world and help 
alleviate the anxieties of employees and investors. I trust that this 
is an incremental step in the process to bring about accurate financial 
statements and independent relationships among corporate management, 
auditors, and investment analysts. The marketplace or Congress will 
need to address the issue of stock options to ensure meaningful 
reporting and eliminate perverse incentives, while not preventing 
companies from offering this important incentive to compensate 
employees and give them ownership opportunities.
  While reforms are absolutely necessary, witness the 270 public 
companies that restated their financial statements in 2001, I'm also 
concerned that Congress does not turn this into a witch hunt or pass 
ill-conceived legislation. I will continue to work to ensure that we do 
not overreach our objective of a sound economy, ethical management and 
arms-length transactions. We will not be helping families and the 
economy be implementing unnecessarily stringent regulations that are 
costly and burdensome.
  This legislation begins the process of putting in place the reforms 
needed to prevent future tragedies that are so devastating to the 
savings and lives of American workers and families. As we move forward, 
I urge my colleagues to continue to develop fair provisions that will 
both protect investors and employees while allowing the economy to 
thrive.
  Mr. CONYERS. Mr. Speaker, I am very pleased that the conferees have 
reached an agreement on accounting reform, and I want to congratulate 
Chairman Sarbanes and Chairman Oxley for their work on this issue. I 
also want to thank Chairman Leahy and Ranking Member LaFalce for their 
stellar leadership in the area of corporate fraud.
  The proposed agreement includes nearly all of the important 
safeguards from the legislation Senator Leahy introduced in the Senate 
and that I introduced in the House in April. Among other things, the 
agreement includes language lengthening the statue of limitations for 
securities fraud, mandating document retention for auditors, civil 
whistle blower protection, and sentencing enhancements for document 
shredding. Some made no secret of the fact that they would have 
preferred to gut these safeguards. But in the end, Senate Democrats 
stood their ground, and this legislation represents a major win for the 
American public.
  I wish House Republicans would have been able to agree to these 
critical reforms earlier, but in the end I believe we have strong 
legislation that will provide defrauded investors with a greater 
ability to recoup lost assets, afford prosecutors with increased tools 
to pursue corporate wrongdoers and impose harsher penalties for those 
accused of committing securities fraud.
  As good as this bill is, it's important to note that the agreement is 
just a first step toward protecting American investors and workers. We 
still need to fix the many, many giveaways enacted by Congress in the 
1995 Securities Litigation bill. For example, we need to restore civil 
liability against those that aid and abet securities fraud violators, 
and make sure that civil RICO applies in full to securities fraud. 
Measures such as this will make it abundantly clear that we will not 
tolerate future Enron or Worldcom situations.
  With nearly 80 million citizens either directly or indirectly 
invested in the stock market, it's incumbent upon us, as Members of 
Congress, to provide hardworking Americans with the necessary 
protections to safeguard the money they'll depend on in their 
retirement. Hopefully, the actions taken today will be the first step, 
of many, toward achieving this goal.
  Mr. FORD. Mr. Speaker, I rise in strong support of the conference 
report on H.R. 3763. This agreement is a great victory for investors, 
and for our economy.
  Of course, it will take much more than legislation to restore the 
confidence in the markets that has been lost. But this bill puts in 
place a framework to restore confidence and ensure the integrity of the 
markets.
  I salute Chairman Oxley for his willingness to compromise on such 
important issues, and Ranking Member LaFalce for his steady leadership. 
This legislation will crown his legacy in Congress and on the Financial 
Services Committee.
  I am pleased that the conference report includes every substantive 
provision of the comprehensive reform bill written by Senator Sarbanes. 
These include: establishing a strong and independent oversight board 
for the accounting industry to enforce high standards for auditors of 
public companies; ensuring that the independence of public auditors 
isn't compromised by consulting fees from their clients; separating 
Wall Street research form investment banking--so that small investors 
have access to the same unbiased research as insiders; imposing tougher 
criminal penalties for corporate fraud--while at the same time 
establishing a victims' restitution fund to disgorge the ill-gotten 
gains of corporate executives, white-collar thieves should not be 
allowed to walk off with the money they have stolen from investors and 
employees; disclosing insider stock transactions in real-time, not days 
after the fact; and at long last providing the SEC with the resources 
it needs to do its job. It may not give Commissioner Pitt the raise or 
the new limousine he has asked for. But it will allow the SEC to 
upgrade its computer systems and hire new investigators.
  Mr. Speaker, more than half of all Americans invest in the stock 
market. They have entrusted public companies with their retirement 
savings and their children's college funds. And too often, they have 
been betrayed by those in positions of leadership and responsibility.
  With this legislation, we cannot ensure the honesty and integrity of 
every individual, but we go a long way in strengthening the honesty and 
integrity of our system.
  Mr. TIAHRT. Mr. Speaker, I rise in strong support of the accounting 
reform and corporate accountability conference report before us today. 
I commend my colleague, Chairman Oxley, for the outstanding work he has 
done in crafting a final bill which will fully prosecute those who have 
violated the law and restore confidence in America's financial markets.
  Like all Americans, I have been outraged at the revelations which 
have come to light in recent months concerning the practices of a 
number of public companies such as Enron and WorldCom, as well as the 
auditing practices of companies such as Arthur Andersen. While the list 
of affected companies pales in comparison to the more than 11,000 
publicly traded U.S. companies, even a few transgressions are too many.
  The bill before us would increase the maximum jail terms for mail and 
wire fraud from five years to 20 years, and create a new 25-year 
maximum jail sentence for securities fraud. Under the bill, securities 
fraud is defined as intentionally defrauding an individual in 
connection with a security or obtaining money from the purchase or sale 
of a security based on false pretenses. Additionally, the Conference 
Report strengthens laws which criminalize document shredding and other 
forms of obstruction of justice by providing a maximum penalty of 
twenty years for such a violation. Criminal penalties for pension law 
violations would be increased from a fine of $5,000 to $100,000 and 
from maximum jail time of one year to ten years.
  As the recent improprieties have shown, corporate leaders, including 
CEOs, have been implicated in wrongdoing. Those who have the privilege 
of leading America's corporations have a responsibility to their 
investors, employees, and the public, to set ethical standards under 
which their companies operate. This legislation requires top corporate 
executives to certify that the financial statements of the company 
fairly and accurately represent the financial condition of the company 
and calls for penalties of up to ten years in prison and/or a $1 
million fine. In general, willful and criminal violations of securities 
laws would carry a new maximum fine of $5 million--up from $1 million--
and a new maximum prison-term of 20 years, up from ten years. If the 
violator is not an American citizen, the fine would increase to $25 
million. Any attempts to retaliate against informants would carry a 
maximum ten-year prison term and/or fines under SEC laws.
  One important area which this bill does not address is the issue of 
returning ill-gotten corporate gains to investors. I believe Congress 
must act to ensure that investors are able to reclaim their losses 
which are due to corporate fraud. And after the corrupt executives

[[Page 14504]]

return the hard earned money of employees and investors, they need to 
get out of their mansions and yachts, and get into a jail cell.
  Corporate officers who steal the retirement savings of hard-working 
Americans are no better than common purse snatchers on the street. In 
fact, they are worse given the position of trust and responsibility 
with which they are entrusted. If they ``cook the books'' in order to 
show a better bottom line, there will be a heavy price to pay.
  I believe this bill sends a strong message to corporations throughout 
America that those who break the law will be severely punished. By 
dramatically increasing maximum prison terms and strengthening 
accountability and oversight, we have begun working toward the goal of 
reforming corporate America in a way which will enable citizens to have 
confidence in our financial markets.
  I urge my colleagues to pass the Sarbanes-Oxley Conference Report.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, this has been a year when the 
faith of ordinary Americans has been badly shaken. The restatements of 
corporate earnings have been followed by accusations of corporate 
wrongdoing at some of the country's largest and most touted 
corporations, including Enron, Global Crossing, Bristol Myers Squibb, 
Tyco International, and WorldCom Inc. The billions of dollars in losses 
in shareholder equity are mounting every day.
  The string of recent corporate disclosures undermines investor 
confidence, scares off foreign investment, and slows down an already 
shaky recovery. To me, it is not enough to talk about accountability, 
you have to act to ensure it. Innocent investors have been betrayed by 
the abuses of creative accounting practices and financial disclosure or 
more appropriately non-disclosure. I am appalled at what has happened 
to them as a result of this tragic event.
  In today's economy, there is an emerging crisis of a lack of 
universal confidence in our markets. What has failed is nothing more 
than the system of overseeing our capital markets. We have an 
opportunity and obligation to repair the trust of investors. It's 
tempting to brush aside business ethics as a nebulous, well-intentioned 
subject suitable for business school, with little practical value in 
the real world. That is a big mistake. A 2000 survey by the Ethics 
Resource Center found that 43 percent of respondents believed their 
supervisors don't set good examples of integrity. The same percentage 
felt pressured to compromise their organization's ethics on the job. 
That's a startling number, two years before Enron imploded.
  The Enron debacle stands as a corporate wrong. The Enron fiasco has 
established beyond a shadow of a doubt that white collar fraud can be 
incredibly damaging and costs innocent Americans billions of dollars of 
their hard earned money. Enron employees worked hard to build Enron 
into one of America's largest and most profitable corporations, and 
they should not be punished for what their corporate managers did.
  Employees are fearful of losing their jobs. Investors are worried 
whether they should continue to hold stocks in these failing 
corporations and the stock market. Retirees are concerned about the 
safety of their pensions. All these concerns undermine confidence in 
our financial markets and have the potential to derail our economic 
recovery. Because of all the corporate scandals that we have seen, 
thousands of workers have been hurt, and millions of investors and 
retirees have seen their 401(k)s gutted. I have introduced a bill that 
protects workers, protects shareholders, and protects pensions, H.R. 
5110, the Omnibus Corporate Reform and Restoration Act of 2002.
  H.R. 5510 priorities employees by allowing them to make claims on the 
corporation, after the corporation has filed for bankruptcy protection, 
for wages or severance of up to $15,000. This is important because 
workers have worked hard to build profitable corporations, and should 
not be penalized by the fraudulent behavior of their corporate 
managers.
  Moreover, H.R. 5510 provides oversight of Boards of Directors, and 
prohibits loans to company officers and directors, and creates criminal 
penalties for destroying or altering documents. H.R. 5110 punishes 
those who destroy or manipulate evidence of fraud. It provides 
prosecutors with better tools to effectively prosecute and punish those 
who defraud investors and provides for tough criminal penalties to make 
them think twice before defrauding the public.
  The conference report, H.R. 3763, Corporate Accountability Conference 
Report, hoping to restore confidence in the scandal-tainted corporate 
world, has agreed to new regulation of corporation and their auditors. 
The conference report also establishes stiffer penalties for those 
corporate managers who commit financial fraud. The report holds 
corporate executives criminally liable for cooking their books if they 
knowingly and willfully certify them.
  The Conference report establishes a new broad to oversee the auditors 
of companies traded on the stock markets. The conferees limited 
accounting firms' ability to profit as both auditors and consultants to 
the companies they audit. The conferees also gave shareholders more 
time to sue companies that mislead them. The conference committee also 
increases the maximum fines and jail sentences for corporate managers 
who violate new and existing corporate laws.
  The report also says that CEOs and CFOs must certify the accuracy of 
financial statements and disclosures, and it requires those CEOs and 
CFOs who certify their corporate statements are accurate, they must 
relinquish bonuses and other incentive-based compensation and profit on 
stock sales in the event of an accounting restatement resulting from 
fraud. To ensure that these new laws are effectively regulated, the 
conference report increases the funding of the SEC to $776 million.
  The Federal Reserve Chairman, Alan Greenspan, pointed out, in his 
testimony to the Senate Banking Committee on July 17th, that a 
corporate culture blighted by infectious greed was the cause of the 
breakdown in confidence among investors. Chairman Greenspan, who has 
been an advocate of deregulation and reliance on market forces to 
police good business practices, acknowledged that he had been mistaken 
in initially opposing government involvement in oversight of auditing. 
``My view was always that accountants knew or had to know that the 
market value of their companies rested on the integrity of their 
operations'' and that government regulation of accounting was therefore 
``unnecessary and indeed most inappropriate, but I was wrong''.
  If the Chairman of the Federal Reserve says that his opinion was 
wrong concerning oversight of auditors, then change is needed. We must 
restore confidence in our financial markets by establishing sound 
guidelines for corporate governance and auditing that investors can 
trust and feel confident with their investments.
  We stand at the brink of the most significant financial regulations 
in more than 60 years. We must do all that we can to help the thousands 
of employees and retirees, who have suffered greatly by these events, 
feel that will not be punished for the fraudulent behavior of their 
corporate managers. Therefore, I rise to support the conference report 
on corporate accountability, H.R. 3763.
  Mr. MALONEY of Connecticut. Mr. Speaker, I want to thank Senator 
Sarbanes and Chairman Oxley, and their staffs, for all of their work in 
bringing this important bill to the floor. I especially want to thank 
Ranking Member LaFalce for his work on this important bill, and note 
that he will be sorely missed.
  Over the past few months investors have indicated, as reflected by 
the events on Wall Street, that they lack the confidence to continue 
investing in the U.S. capital markets. Corporations such as Enron and 
WorldCom have submitted fraudulent financial statements to 
intentionally mislead investors. Other corporations such as Stanley 
Works are attempting to abuse the tax code to evade their fair share of 
taxes. This Congress must make a strong statement that corporations and 
top executives have a responsibility to their communities to behave 
honestly and in keeping with the public trust. The legislation we pass 
today will send a strong message that corporations and their leadership 
have responsibilities to their investors and our nation that they 
cannot fail to fulfill.
  The Congress has a duty to help restore the public's confidence in 
the marketplace and take steps to eliminate the ability of individuals 
or corporations to manipulate the information that investors need to 
make informed decisions. This bill puts corporate executives and 
auditors on notice. If you commit corporate malfeasance, defraud 
investors, take advantage of workers, or abuse the public's trust, you 
will spend time in jail. We also need to take the next step and stop 
corporate expatriates by shutting down the tax-haven loophole. Today's 
bill is not the final word, but it does well begin a process of reform 
that is urgently needed.
  The accounting and corporate management issues before us are 
complicated. They are, however, critical to the proper function of our 
markets. As we all know, the availability of timely, accurate, and 
truthful data are the linchpins that allow for the free flow of 
capital. Unfortunately, events have highlighted that the existing 
structure of our Nation's accounting regime is vulnerable to 
manipulation and fraud. This legislation will go a long way to 
addressing those problems. But now we also

[[Page 14505]]

need to make sure that this new legislation is properly enforced. 
Corporate wrongdoers must be held accountable for their actions. If 
they make money from their malfeasance, that money should be recovered 
for the investors. If they commit fraud, they should go to prison. Our 
legislation today makes strong enforcement possible.
  Our next step in restoring corporate accountability should be to 
close the Bermuda loophole in our tax code and stop corporate 
expatriates. The tax code should be reformed to prohibit this scheme. 
And we must not allow companies who abandon their corporate 
responsibilities to our country to continue to be awarded federal 
contracts. Corporate expatriates benefit from over $2 billion in 
lucrative government contracts, from large consulting deals with U.S. 
government agencies, to equipping airport screeners, to providing tools 
and equipment to the Department of Defense. Corporate expatriates turn 
their backs on America at the same time that they reach their hands out 
for the hard-earned money of American taxpayer. Mr. Speaker, this is 
outrageous, and we must stop it! I introduced legislation, along with 
Congressman Neal of Massachusetts, that would do just that.
  Today, Mr. Speaker, I urge my colleagues to support this bill, and 
help restore investor confidence in our nation's capital markets. Later 
in this session, I will be asking for your support of the Neal-Maloney 
legislation to take the next step in restoring corporate 
accountability.
  Mr. KIND. Mr. Speaker, I rise in strong support of the conference 
report on H.R. 3763, the Public Company Accounting Reform and Investor 
Protection Act. This measure is an important first-step in restoring 
public trust and consumer confidence in our domestic economy.
  The measure's passage comes none too soon; as we all know, as 
investors have become more and more disenchanted with stock equities 
and the market continues to suffer vicious sell-offs. The NASDAQ and 
Standard & Poor's 500-stock index are back to 1997 levels, wiping out 
$7 trillion in value from the market's peak. The Dow Jones Industrial 
Average has dropped to the lows reached immediately following the 
September 11, 2001 terrorist attacks.
  The free market system that has made our nation great still works. It 
is, however, based on trust. That trust is only as reliable as the 
information that is available to the public. When that information is 
fraudulent, the trust in our economic system collapses. Until that 
trust is restored our economy will not grow. Corporate officials have a 
responsibility to restore that trust but so do Congress and the 
President.
  Therefore, as legislators, we must remember that the mere passage of 
this one bill will not cure the ills that currently plague our economy. 
Complete reform will also require the cooperation of the corporate 
community, working with Congress to reverse the resounding effects of 
the actions of shady executives and unresponsive auditors.
  However, as I mentioned earlier, this bill is a good beginning, and I 
am pleased that the measure before us establishes a new, five-member 
independent oversight board with the power to establish and enforce 
auditing independence and to establish higher corporate ethical 
responsibilities. The independent board will have subpoena authority as 
well as disciplinary and standard-setting authority. The measure also 
places broad statutory restrictions on auditors, including on the 
nonauditing or consulting services that accounting firms currently 
provide to publicly traded companies.
  Importantly, the bill attempts to improve the ethical standards of 
top corporate officers. Chief Executive Officers and Chief Financial 
Officers must certify the accuracy of their corporation's financial 
reports. If executives do not comply, they face stiff criminal 
penalties, including as many as 20 years in prison.
  Again, let us remember, this bill is just the first step. In order to 
restore the public's trust, Congress, upon our return from the August 
recess, must consider and pass legislation that protects workers' 
retirement savings and strengthens investor rights. Until we do this, 
the American public will not be adequately protected.
  For our capitalist economy to function successfully, corporate 
responsibility must remain paramount. In its absence, capitalism and 
the free market system ultimately fail.
  The SPEAKER pro tempore (Mr. Sweeney). All time has expired.
  Without objection, the previous question is ordered on the conference 
report.
  There was no objection.
  The SPEAKER pro tempore. The question is on the conference report.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. OXLEY. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 423, 
nays 3, not voting 8, as follows:

                             [Roll No. 348]

                               YEAS--423

     Abercrombie
     Ackerman
     Aderholt
     Akin
     Allen
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barr
     Barrett
     Bartlett
     Barton
     Bass
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilirakis
     Bishop
     Blagojevich
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Boozman
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clayton
     Clement
     Clyburn
     Coble
     Combest
     Condit
     Conyers
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cummings
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Fattah
     Ferguson
     Filner
     Fletcher
     Foley
     Forbes
     Ford
     Fossella
     Frank
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (TX)
     Green (WI)
     Greenwood
     Grucci
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hilliard
     Hinchey
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Honda
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inslee
     Isakson
     Israel
     Issa
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kerns
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kingston
     Kirk
     Kleczka
     Kolbe
     Kucinich
     LaFalce
     LaHood
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Latham
     LaTourette
     Leach
     Lee
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Lucas (OK)
     Luther
     Lynch
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDermott
     McGovern
     McHugh
     McInnis
     McIntyre
     McKeon
     McKinney
     McNulty
     Meek (FL)
     Meeks (NY)
     Menendez
     Mica
     Millender-McDonald
     Miller, Dan
     Miller, Gary
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Neal
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Osborne
     Ose
     Otter
     Owens
     Oxley
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Roukema
     Roybal-Allard
     Royce
     Rush
     Ryan (WI)
     Ryun (KS)
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Saxton
     Schaffer
     Schakowsky
     Schiff
     Schrock
     Scott
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Solis
     Souder
     Spratt
     Stark
     Stenholm
     Strickland

[[Page 14506]]


     Stump
     Stupak
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tiberi
     Tierney
     Toomey
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Visclosky
     Vitter
     Walden
     Walsh
     Wamp
     Waters
     Watson (CA)
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NAYS--3

     Collins
     Flake
     Paul

                             NOT VOTING--8

     Andrews
     Clay
     Gordon
     Knollenberg
     Meehan
     Miller, Jeff
     Stearns
     Watkins (OK)

                              {time}  1209

  Mr. DOOLITTLE changed his vote from ``nay'' to ``yea.''
  So the conference report was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mr. JEFF MILLER of Florida. Mr. Speaker, on rollcall No. 348, I was 
detained from returning for the vote.
  Had I been present, would have voted ``Yea.''
  Mr. CLAY. Mr. Speaker, on rollcall No. 348, I was unavoidably 
detained. Had I been present, I would have voted ``Yea.''

                          ____________________