[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[House]
[Pages 5494-5498]
[From the U.S. Government Publishing Office, www.gpo.gov]




   PROVIDING FOR CONSIDERATION OF H.R. 3763, CORPORATE AND AUDITING 
      ACCOUNTABILITY, RESPONSIBILITY, AND TRANSPARENCY ACT OF 2002

  Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 395 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 395

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 3763) to protect investors by improving the 
     accuracy and reliability of corporate disclosures made 
     pursuant to the securities laws, and for other purposes. The 
     first reading of the bill shall be dispensed with. All points 
     of order against consideration of the bill are waived. 
     General debate shall be confined to the bill and shall not 
     exceed one hour equally divided and controlled by the 
     chairman and ranking minority member of the Committee on 
     Financial Services. After general debate the bill shall be 
     considered for amendment under the five-minute rule. It shall 
     be in order to consider as an original bill for the purpose 
     of amendment under the five-minute rule the amendment in the 
     nature of a substitute recommended by the Committee on 
     Financial Services now printed in the bill. The committee 
     amendment in the nature of a substitute shall be considered 
     as read. All points of order against the committee amendment 
     in the nature of a substitute are waived. No amendment to the 
     committee amendment in the nature of a substitute shall be in 
     order except those printed in the report of the Committee on 
     Rules accompanying this resolution. Each such amendment may 
     be offered only in the order printed in the report, may be 
     offered only by a Member designated in the report, shall be 
     considered as read, shall be debatable for the time specified 
     in the report equally divided and controlled by the proponent 
     and an opponent, shall not be subject to amendment, and shall 
     not be subject to a demand for division of the question in 
     the House or in the Committee of the Whole. All points of 
     order against such amendments are waived. At the conclusion 
     of consideration of the bill for amendment the Committee 
     shall rise and report the bill to the House with such 
     amendments as may have been adopted. Any Member may demand a 
     separate vote in the House on any amendment adopted in the 
     Committee of the Whole to the bill or to the committee 
     amendment in the nature of a substitute. The previous 
     question shall be considered as ordered on the bill and 
     amendments thereto to final passage without intervening 
     motion except one motion to recommit with or without 
     instructions.

  The SPEAKER pro tempore. The gentleman from Texas (Mr. Sessions) is 
recognized for 1 hour.
  Mr. SESSIONS. Mr. Speaker, for purposes of debate only, I yield the 
customary 30 minutes to my friend, the gentlewoman from New York (Ms. 
Slaughter), pending which I yield myself such time as I may consume. 
During consideration of this resolution, all time yielded is for 
purposes of debate only.
  Mr. Speaker, the resolution before us today is a fair, structured 
rule providing for the consideration of H.R. 3763, the Corporate and 
Accounting Accountability, Responsibility, and Transparency Act of 
2002.
  The rule provides for 1 hour of general debate, equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on Financial Services. All points of order against consideration of the 
bill are waived.
  The amendment in the nature of a substitute recommended by the 
Committee on Financial Services now printed in the bill shall be 
considered as the original bill for the purposes of amendment and shall 
be considered as read. All points of order against the bill, as 
amended, are also waived.
  Only the amendments printed in the report of the Committee on Rules 
accompanying the resolution are made in order. These amendments shall 
be considered only in the order printed in the report and may be 
offered only by a Member designated in the report. They shall be 
considered as read and debatable for the time specified in the report, 
equally divided and controlled by the proponent and an opponent. They 
shall not be subject to amendment, and shall not be subject to a demand 
for division of the question in the House or in the Committee of the 
Whole. Points of order against the amendments are also waived.
  Finally, the rule provides one motion to recommit, with or without 
instructions.
  Mr. Speaker, I am pleased that today we are going to debate the 
Corporate and Auditing Accountability, Responsibility, and Transparency 
Act of 2002, known as CARTA. Two weeks ago, the House considered and 
passed the Pension Security Act, which focused on providing workers 
with new options and resources concerning their pensions. Today, we are 
considering legislation that affects the corporate accountability side 
of that issue.
  Mr. Speaker, currently, more than half of all U.S. households invest 
in mutual funds, pension funds, or 401(k) plans. The face of the 
American investor is younger and more diverse than ever today. I firmly 
believe that encouraging Americans to help secure their own future 
through savings is vitally important for their own success. While 
savings must begin with the individual, there are also ways that the 
government can, must, and will help to encourage people to save.
  The positive ripple effects of this bill are far-reaching. Restoring 
investor confidence in the financial stability of companies doing 
business in this country leads to more jobs and a stronger economy. 
Increasing accessibility of timely and accurate investment information 
helps American workers not only plan for retirement, but also better 
assures them of a secure retirement. For those of us who are still 
planning for our children's college educations, we can be assured that 
greater corporate responsibility will help protect these and other 
investments that, as American workers, we make.
  This legislation focuses on several principles, all designed to 
protect investors and employees.
  First of all, we must restore confidence in accounting. In order to 
ensure auditor independence, firms would be prohibited from offering 
controversial consulting services to companies that they are also 
auditing.
  Additionally, under CARTA, a new public regulatory board with strong 
oversight authority would be established, and under the direction of 
the Securities and Exchange Commission, they would work together. This 
bill recognizes that strong and healthy accounting companies that 
provide investors with accurate information are critical to ensuring 
the financial soundness of companies that investors rely upon.
  CARTA also contains provisions that increase corporate disclosure and 
responsibility. This bill increases the amount of information that 
would be made available to American workers, investors, and the general 
public. Instead of presenting this information using legal jargon, 
investors would receive increased information in real time English and 
in real time words, where they can understand the essence of not only 
financial accountability, but also the financial standing of a company.

[[Page 5495]]

  This is good news for me, because it means we do not need an advanced 
accounting or legal degree in order to decipher the information. The 
average American investor will be able to obtain meaningful 
information, and they will be able to obtain it in a timely fashion.
  CARTA also creates parity between senior corporate executives and 
rank and file workers. During blackout periods, which are routine times 
when a plan must undergo administrative or technical changes, employees 
many times are unable to change or access their retirement accounts. 
What we saw from Enron was an egregious example of disparity, where 
corporate executives were able to sell off their investments and 
preserve their savings while rank and file workers were barred from 
making those same changes. CARTA would prohibit insider sales during 
blackouts for every single employee.
  I have also mentioned some additional responsibility that this bill 
requires of the Securities and Exchange Commission. However, this 
legislation also recognizes that we must make sure that the SEC has 
adequate resources and staffing in order to do an effective job.
  The SEC's budget would be increased by 62 percent, allowing them to 
perform its additional tasks and oversight duties. Among those duties 
would be regular and thorough reviews of the largest and most widely-
traded companies in America.
  One thing that has come out from the seven Enron-related hearings in 
the Committee on Financial Services alone is that investors are not 
receiving the necessary unbiased information needed to make responsible 
investment decisions. It is clear that Wall Street research practices 
are in need of reform. CARTA also addresses this by directing the SEC 
to study the new regulations and report back to Congress through annual 
updates on the effectiveness of current rules and standards. This is a 
critical step towards reducing and resolving conflicts of interest for 
analysts.
  Mr. Speaker, I would also like to today commend the chairman of the 
Committee on Financial Services, the gentleman from Ohio (Mr. Oxley), 
and the gentleman from Louisiana (Chairman Baker), for their efforts in 
putting together a carefully crafted and balanced approach. When 
something such as Enron happens, we as Members of Congress must fight 
the temptation to react by overlegislating, thus doing more harm than 
good. These two gentlemen, through their leadership, have made sure 
that this did not happen.
  I believe that the committee of the gentleman from Ohio (Chairman 
Oxley) has diligently worked to make sure that the bill we consider 
today is a balanced and appropriate step towards addressing issues 
which were highlighted and brought to bear to all Americans as a result 
of the collapse of Enron. I am pleased that this bill will help create 
more jobs and strengthen our economy by restoring confidence in 
corporate financial stability.
  I urge my colleagues to support this fair rule. I urge my colleagues 
to support the underlying legislation.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I thank the gentleman from Texas for yielding me the 
customary 30 minutes.
  This body is about to blow an extraordinary opportunity to address 
the erosion of trust between the American people and the financial 
institutions that wield enormous control over their lives.
  Make no mistake, the outrage of our constituents is real. They are 
fed up with corporate fraud and abuses that have produced massive 
layoffs and wiped out the life savings of thousands of working 
families. The American people have voiced their outrage to this body 
through every medium available: letters, e-mails, hearings, interviews, 
you name it. They have shared stories of devastation, of loss, and 
dreams deferred, all in the hope that Congress would act to prevent 
future scandals.
  Global Crossing's North American headquarters are located in my 
district in Rochester, New York. I am sure Members remember Global 
Crossing. The company was the darling of Wall Street, yet somehow it 
managed to plummet from a net worth of $22 billion to $750 million in 
the span of less than a year, not too far from AOL Time Warner, we hear 
this morning.
  In the wake of its collapse, the lives of thousands in my district 
were shattered, all because the promised safeguards failed at every 
level. My people got a hard lesson on how companies cheat, overstate, 
or obscure their financial disclosures in an effort to charm analysts 
and to manipulate investor expectations.
  On March 9, I hosted a public forum in Rochester where 250 people 
came to share their experiences. One Global Crossing employee noted, 
and I quote, ``Many former employees have been economically devastated 
as a result of corporate greed and the mismanagement of Global 
Crossing. People have spent their life savings and have had to cash in 
their deflated retirement/401(k) plans just to survive these last few 
months after Global Crossing abruptly ceased their promised severance 
payments. Some former employees are now forced to file bankruptcy 
themselves, while others may lose their homes, have had to drastically 
change their lifestyles, and are barely surviving.''
  Mr. Speaker, my constituents want real reform, not cosmetic changes, 
to correct the systemic flaws that brought about such havoc in our 
community. Quite simply, the market failed us, just as it did with the 
employees and shareholders of Enron.
  I had hoped to send good news back today. I had hoped to tell my 
constituents that this underlying bill is the real thing, that the 
measure before us will restore confidence and integrity to the markets, 
and produce tough and effective reforms. But this bill does none of 
that. Indeed, it creates merely the illusion of reform. In what has 
become standard operating procedure in this body, corporate interests 
are the winners.
  As for my colleagues, I wish I could say that what hit my community 
was an isolated event. I wish I could say that with the underlying bill 
in place, this would never happen in Members' communities. But even the 
sponsors of the measure acknowledge more Global Crossings and Enrons 
may come to light. In the months ahead, another Member of Congress will 
have to face thousands of panicked constituents wondering what happened 
to their future.
  Mr. Speaker, the underlying bill simply sidesteps the problem. It 
does not provide for a strong, independent regulator for the auditing 
industry, but simply punts Congress' job to the Securities and Exchange 
Commission. To be blunt, this job is much too important to delegate. We 
need to create a powerful regulatory board to set strict standards for 
auditor independence, with sweeping investigative and disciplinary 
powers over audit firms.

                              {time}  1045

  The underlying bill pays lip service to the issue of auditor 
independence, but provides no guarantees that an auditor will not be 
compromised by payments received from his client for his consulting 
services. It does not ban auditors from performing nonaudit services 
that create conflicts of interest. Moreover, the bill says nothing 
about the revolving door between auditors and their clients. Enron, for 
example, hired several Arthur Andersen auditors, even though auditors 
who are angling for jobs from their customers are unlikely to show much 
independence from them.
  The bill is also silent on the rotation of audit firms. If an auditor 
knew that after a few years a different outside auditor would 
scrutinize its efforts, this would create a strong incentive to keep 
the numbers honest. But the half-measures contained in the bill 
continue. For instance, the bill protects corporate wrongdoers by 
making it more difficult to go to court to stop officers and directors 
who engage in deliberate misconduct. The bill does not hold corporate 
CEOs accountable by requiring them to certify the accuracy of

[[Page 5496]]

their financial statements, as the Democrat substitute would do.
  The underlying bill allows Enron executives and other dishonest CEOs 
to keep their ill-gotten gains, rather than requiring them to surrender 
stock bonuses and other incentive pay, as the Democrat bill provides. 
The underlying bill would simply study the issue. Moreover, individual 
investors and victims of securities fraud who want to hold the industry 
accountable for wrongdoing will face major legal hurdles. The 
committee-reported bill also does nothing to prevent securities 
analysts' conflicts of interest, even after investigations by New York 
Attorney General Eliot Spitzer exposed numerous examples of analysts' 
false or misleading advice to investors.
  Mr. Speaker, I urge my colleagues to support real reform.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from California (Mr. Dreier), the favorite son from San 
Dimas, who is the chairman of the Committee on Rules.
  Mr. DREIER. Mr. Speaker, I thank my friend for yielding me time and I 
congratulate him on his superb management of this measure.
  Mr. Speaker, I would like to say that I believe it is important for 
us to realize that we faced what clearly was one of the most 
devastating and horrible business failures in our Nation's history with 
the collapse of Enron. I know that there was a temptation by many to 
politicize this issue and take what clearly was a business failure and 
somehow determine that it was a political failure and that there were 
some political figures to blame.
  I think that the work that the gentleman from Ohio (Mr. Oxley) and 
the Committee on Financial Services has done is a very clear 
demonstration that there is recognition in a bipartisan way of this 
substitution that there was a business failure. And the debate that we 
will proceed with today makes in order two substitutes from our 
Democratic colleagues and three amendments from our Democratic 
colleagues which will allow for a full airing of this question.
  I think that with the vote that came from the committee, Mr. Speaker, 
by a margin of 49 to 12, demonstrates that Democrats and Republicans 
alike have come together to deal with this very serious problem.
  As my friend, the gentleman from Dallas, Texas (Mr. Sessions) 
mentioned, there are tremendous numbers of Americans who are members of 
what is called the investor class. In fact, many believe that over half 
of the American people are involved in 401(k)s, individual retirement 
accounts, or some other kind of investments. And it is obvious that 
there have been some problems with accounting and auditing. That is 
clearly an understatement. We have seen some very serious problems come 
forth and we have seen some abuse that has been reported by executives 
juxtaposed to employees in companies when it has come specifically to 
the blackout period of time when executives have been able to sell 
their stock and employees have not been able to.
  This legislation is designed to address some of the very serious 
problems that exist in the area of accounting and auditing, and it is 
also designed to provide, once again, a level of confidence forever for 
those members of the American public who are part of the investor 
class.
  It is my hope that we will see more and more Americans participate as 
members of the investor class. Our goal is to try and make sure that 
there is enough opportunity for everyone to be part of what President 
Kennedy loved to call that rising tide that lifts all ships.
  I think that this bill will go a long way towards instilling that 
level of confidence that is necessary. The rule, as has been 
acknowledged by both sides, is very fair. We in the majority have again 
turned ourselves inside out to make sure that we provide an opportunity 
for those in the minority to be heard on this, and they clearly will 
have that opportunity as we proceed with debate today.
  I urge my colleagues, Mr. Speaker, to vote for the rule and for the 
underlying legislation and we will have a full and rigorous debate on 
all of the amendments that will take place between now and then.
  Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentlewoman from 
Ohio (Mrs. Jones).
  Mrs. JONES of Ohio. Mr. Speaker, I rise this morning in opposition to 
this rule and the current legislation.
  I have the privilege of serving on the Committee on Financial 
Services as well as serving on the Committee on Small Business. I had 
the privilege and opportunity to ask questions of Harvey Pitt, the SEC 
chairman. I had the privilege and opportunity to ask questions of the 
CEO of Arthur Andersen, CEO of Enron, and the CEO of Global Crossing. 
And what I have to say to the American public this morning is, in the 
course of that questioning I have never seen any men more arrogant in 
my life. I have never seen any men who believe that they did not need 
to respond to the questions of the American public on their conduct. 
If, in fact, the exhibition of the questions and answers before that 
committee are any indication of the conduct of the CEOs of large 
companies, then clearly this legislation that we put on the floor this 
morning does not go far enough to deal with the issue of CEO 
responsibility.
  I stand in support of a Democratic substitute that would strengthen 
corporate responsibility and executive accountability by requiring CEOs 
and CFOs to certify the accuracy of their firm's financial statements, 
subjecting them to criminal penalties for lying. If the rest of us are 
subject to criminal penalties for lying, why should they not be?
  I will give you a perfect example. When I asked the Global Crossing 
CEO what his salary is, he said, Mrs. Jones, it is a matter of public 
record. And I said, sir, it may well be, but I want you to answer my 
question for the record. He said it was $3.5 million. He failed to 
disclose at that point that he got a $10 million loan forgiveness to 
become the CEO of Global Crossing.
  Let us go on to say that it is important as Members of this Congress 
that we restore the public's trust in the CEOs and CFOs of large 
companies in which we invest. Clearly, not everyone is an investor, but 
there are those, like those who are members of the Public Employees 
Retirement System of the State of Ohio, who lost their compensation as 
a result of the Enron situation or the California Public Employee 
Retirement System. I believe we need greater accountability. And while 
we are doing this, let us not just sit back and give something to the 
public where we say we are doing something when in reality the bill 
does not go far enough.
  I think it is important that we look to auditor independence and 
industry oversight. When I questioned the Arthur Andersen head, as well 
as Mr. Pitt, it was clear that in the past we have not done a good job 
of distinguishing between auditor and the consultant. And this 
legislation, in my opinion, does not go far enough to distinguish and 
keep them from being in the position of saying, oh, your company is in 
great shape, when in reality it is not.
  Mr. Speaker, it is clear that we need to be in a position to 
distinguish between those two roles so that never again do we find 
ourselves in the position of having the possibility of an Arthur 
Andersen, being the accounting firm that is looked upon as the greatest 
accounting firm in the world upon which all of us rely, when in fact, 
behind the scenes, and I am not saying all Arthur Andersen employees 
were involved in the process, but in fact the name Arthur Andersen was 
consistent with who you invested in.
  Mr. Speaker, again, I believe it is important that any legislation 
that we deal with this morning deals with the independence in the 
auditor industry as well as dealing with issues of conflict of 
interest. And so, therefore, I again rise in opposition to the rule, 
and with all respect to the chairman and this great effort in dealing 
with this legislation, we need greater corporate accountability and CEO 
accountability. And we do not need just a study about what CEOs do in a 
possible

[[Page 5497]]

conflict of interest, we need some legislation that addresses the 
conflict.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, we have heard a lot of political rhetoric about how the 
Federal Government should be engaged in the oversight of companies, the 
oversight of CEOs. We hear about how CEOs are arrogant and think that 
what they want to think should not fall into compliance of what many of 
us others think. But the fact of the matter is that we live in an 
environment where the free market has an opportunity to have success 
and have failure. The free market has that balance which they have to 
follow, and, in fact, we did; we have learned something as a result of 
the circumstance with Enron. But that balance continues to come back to 
us, and we as Republicans, while listening to the exact same words and 
the questions that were spoken throughout these committee hearings, 
also heard something that the Federal Reserve Chairman Alan Greenspan 
said, and I would like to quote him at this time. He said,

       We have to be careful, however, we have to be careful with 
     how the Congress and the American public react. We should not 
     look to a significant expansion of regulations as the 
     solution to current problems.

  I believe that perhaps this statement made by the Federal Reserve 
Chairman is among the most important, and one that Members of Congress 
should take seriously as our duties as Members of Congress, and 
understand that while we saw, and many of us sat by helplessly and 
watched as the Enron problem began and then got worse, and then we 
watched the fall-out from it, we should learn lessons from what 
happened and not overreact. We should not go out and place rules and 
regulations across the entire industry, not only in accounting 
practices but also across CEOs at other companies, that will cause them 
to do the wrong things, which will cause them to not share information.
  That is where this carefully crafted legislation by the gentleman 
from Ohio (Mr. Oxley) and this fabulous committee are not going to 
overreact. They are going to look at what will be the essence of a 
comeback for America, confidence that people will have. And our message 
is very clear today. We want more jobs and create a stronger economy. 
We want to make sure that confidence in financial services is what we 
get, not overregulation. We want to make sure that there is more secure 
retirement in retirement plans by providing investor information and 
accountability, not rules and regulations that will inhibit people and 
give them another skirt to hide behind.
  We want to make sure that savings is available for people who are 
just like my wife and I, who are saving for college for our children, 
and we want to make sure that the corporate responsibility becomes a 
part of a person's own financial plan also. That is why we are not 
going to fall victim to believing that emotions should override common 
sense.
  This plan that the gentleman from Ohio (Mr. Oxley) and the Committee 
on Financial Services put together on the floor today is not only 
common sense but is something that will provide confidence for our 
future.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 4 minutes to the gentleman from 
Texas (Mr. Bentsen).
  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, on the underlying bill, let me say first of 
first off that I think the rule is a pretty good rule. There have been 
a lot of rules in this House that were not particularly good. This time 
the Committee on Rules saw fit to make a number of amendments in order. 
I wish that was the norm rather than the exception, but I appreciate 
the fact that that was the case on this bill.
  A lot is going to be said about the underlying bill, the substitutes, 
and the amendments in today's debate. I just want to say, having sat 
through a number of the hearings on Enron and looked at the other 
issues, the underlying bill is a good bill and I supported it in 
committee. I do not think we should view the underlying bill as a 
panacea. And I think if there is anything that we get out of this 
debate today, it is going to be that the Congress has to very clearly 
put itself on record, both to the public, including the investor class 
as one of our colleagues mentioned, as well as to the regulators, and 
particularly the Securities and Exchange Commission, exactly what it is 
we expect them to do.

                              {time}  1100

  I think all of us believe in the sanctity of free markets. We have 
the most efficient markets in the world in the United States, but one 
of the reasons why the markets are so efficient is because we have a 
very strong disclosure system so that investors have an understanding 
of what it is they are buying. Anytime we have corporate managers or 
their advisers who disguise or withhold information from the market, we 
are distorting those markets; and we put at risk not just investors who 
are abused or hurt by that, but we put at risk the entire market system 
itself.
  So I think, on the one hand, the gentleman from Texas is correct, we 
do not want to overregulate; but on the other hand, I think we should 
be very cautious not to underregulate because if we do, we will not 
have efficient markets, we will not have the efficient distribution of 
capital at a reasonable price, and the economy as a whole will suffer 
and we will not have confidence in the markets from investors, which is 
a growing group of people, including a lot of pensioners in my district 
who lost their savings because of what happened at Enron.
  I think that the House should look at the legislation, whatever it is 
we end up passing, which I have my ideas of what exactly will pass and 
will not pass, as a start and not a finish because our goals should be 
to ensure that there is fair and sufficient disclosure in the markets, 
that there is a level playing field in the markets for all investors, 
not just some investors. I think there is a lot to be offered on all 
sides, and I want to commend the committee for at least having some 
sense of an open rule today to allow a number of amendments to be 
offered.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  I appreciate the comments of the gentleman from Texas (Mr. Bentsen). 
His service not only to this body but also to this Nation has been well 
deserved and done well, and I believe what he speaks about is the 
fairness of not only what the Committee on Rules has done today to make 
sure that there are two substitutes and other actions that will be 
available so the minority can be debated today, can be brought for full 
debate on the floor but also about our ability to not overregulate.
  By not overregulating means that we will in essence bring the light 
of day, which is the best of all standards. The light of day will now 
be available not only to the SEC for them to have the ability to come 
and look at companies with that authority and responsibility of the 
Federal Government but also some changes of the things that we have 
learned as a result of the Enron circumstance with accounting firms.
  I believe that what the gentleman from Texas (Mr. Bentsen) has talked 
about means that this is a fair opportunity today on this floor to talk 
about problems that have been seen, and this is yet another opportunity 
for this body to address things that we see; and I am proud of what we 
are doing here.
  Mr. Speaker, I would like to inquire how much time is remaining on 
both sides.
  The SPEAKER pro tempore (Mr. Shimkus). The gentleman from Texas (Mr. 
Sessions) has 13\1/2\ minutes. The gentlewoman from New York (Ms. 
Slaughter) has 18 minutes remaining.
  Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  We have had a vigorous debate about this important rule that is in 
front of us. I would ask the Members to give due consideration to 
supporting this bill.
  Mr. LaFALCE. Mr. Speaker, the bill before us today presents an 
opportunity to restore

[[Page 5498]]

confidence and integrity to our markets and right the wrongs 
demonstrated by the dramatic failure of Enron and Global Crossing. 
Unfortunately, the Rules Committee has seen fit to close off debate on 
most of the critical issues that plague our capital markets. The House 
should have had the opportunity to discuss the modest and reasonable 
package of amendments I put before the Rules Committee to strengthen 
this woefully inadequate bill.
  This House should have the opportunity to consider and debate 
thoughtfully proposals to strengthen H.R. 3763, the so-called Corporate 
and Auditing Accountability, Responsibility, and Transparency Act of 
2002. This bill claims to address many of the financial disclosure and 
accounting issues raised by the collapse of Enron. Unfortunately, the 
kinds of financial abuses that led to this unprecedented debacle will 
not be stopped--or even very much impeded--by this Republican bill. It 
is cosmetic and simply pretends to bring about reform. ``Don't look for 
a major overhaul of the accounting industry soon,'' says the Wall 
Street Journal in a recent article criticizing the Oxley bill because 
it ``punts'' overhaul ``to just where the industry would like it--the 
Securities and Exchange Commission.''
  This bill does virtually nothing to correct the systemic flaws in our 
financial reporting system. It fails to strengthen oversight of 
auditors and accountants, and fails to hold corporate executives fully 
accountable for their misdeeds. Unless major improvements are made, 
H.R. 3763 will do nothing to restore integrity to our financial markets 
and will not protect the savings and pensions plans of millions of 
Americans that remain threatened by future Enrons.
  The House should have had the opportunity today to work its will on 
several key areas.
  First, I offered an amendment in the Rules Committee to create a 
powerful new regulatory board to ensure that auditors will be truly 
independent and objective. My amendment provided for a regulator that 
(1) sets audit and quality standards for auditors of public companies; 
(2) possesses sweeping investigative and disciplinary powers over audit 
firms; and (3) is controlled by a board comprised of public members--
not the accounting industry. My amendment took a decidedly different 
approach than H.R. 3763, which punts almost all of the functions and 
powers of the regulator to the SEC. Only a regulator with explicit 
powers and duties, and a defined composition, such as the one I 
proposed, will ensure that the abuses we witnessed in the Enron debacle 
will not be repeated.
  In addition, the Republican bill purports to prohibit auditors from 
providing their audit clients with two consulting services: financial 
reporting systems design and internal auditing. In fact, the bill 
prohibits nothing. Instead, it simply codifies existing SEC rules that 
provide only very limited restrictions on these services. In contrast, 
my amendment clarifies the definitions of these two services in a way 
that will actually ban them. In the case of any non-audit consultant 
services that are not prohibited, my amendment requires approval by the 
audit committee of the firm's board of directors.
  Second, in a spirit of bipartisanship and comity with our Republican 
friends. Mr. Kanjorski and I have taken President Bush's proposals on 
corporate responsibility and executive accountability and prepared an 
amendment to give them legislative substance and real teeth. Rather 
than implement the President's proposals, the GOP bill either regresses 
from current law or does nothing to hold CEOs accountable. It amazes me 
that the Republican bill summarily rejected the President's own plan to 
promote corporate responsibility.
  So our amendment, also rejected by the Rules Committee, did three 
things to implement the Bush plan. First, it requires CEOs and CFOs to 
certify the accuracy of their firms' financial statements. Violation of 
this provision would carry with it criminal (in the event that the 
violation is willful), civil, and other penalties provided for under 
the securities laws. H.R. 3763 contains no similar provision. It is 
essential that Congress require officers of public companies to stand 
behind their public disclosures. That is the absolute minimum we should 
require.
  Second, this amendment required corporate officers who falsify their 
financial statements to surrender their compensation, including stock 
bonuses and other incentive pay. it empowered the Securities and 
Exchange Commission (SEC), in an administrative proceeding, or in 
court, to seek such a disgorgement. H.R. 3763 requires only a study of 
the question: should guilty CEOs forfeit their stock bonuses.
  Third, this amendment empowered the SEC to bar officers and directors 
from serving in that capacity for a public company if they are found 
guilty of wrongdoing and determined to be unfit. It would also remove 
judicial hurdles to seeking such a bar in court. Incredibly, the 
Republican bill actually makes ti harder to obtain officer and director 
bars. It codifies restrictive judicial standards that would make it 
substantially more difficult for the SEC to obtain officer and director 
bars--a change which the head of the SEC's Enforcement Division has 
stated publicly is highly problematic. In this regard, H.R. 3763 is a 
serious step backward.
  The Rules Committee even refused to allow debate on my amendment that 
gave shareholders a voice in executive compensation decisions by 
requiring that a majority of shareholders approve any stock options 
plan for an officer or director. H.R. 3763 does not include a similar 
provision. Would anyone argue on this floor that shareholders should 
not have a voice in the lucrative stock option plans of officers and 
directors. After all, it is the shareholders who own public companies, 
not management.
  Finally, the Rules Committee refused to give this body an opportunity 
to debate and vote on an amendment to ensure that stock analysts are 
truly independent and objective. My amendment achieved this by (1) 
barring analysts from holding stock in the companies they cover; (2) 
prohibiting analysts' pay from being based on their firms' investment 
banking revenue; and (3) barring their firm's investment banking 
department from having any input into analysts' pay or promotion. As 
with other important issues in this legislation, H.R. 3763 only 
requires a study.
  Today we are on the verge of squandering an opportunity for real 
reform. I urge my colleagues to consider our substitute and do 
something real to prevent the next Enron.
  Mr. SESSIONS. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.

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