[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[Senate]
[Pages 12639-12652]
[From the U.S. Government Publishing Office, www.gpo.gov]




  PUBLIC COMPANY ACCOUNTING REFORM AND INVESTOR PROTECTION ACT OF 2002

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 2673, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 2673) to improve quality and transparency in 
     financial reporting and independent audits and accounting 
     services for public companies, to create a Public Company 
     Accounting Oversight Board, to enhance the standard setting 
     process for accounting practices, to strengthen the 
     independence of firms that audit public companies, to 
     increase corporate responsibility and

[[Page 12640]]

     the usefulness of corporate financial disclosure, to protect 
     the objectivity and independence of securities analysts, to 
     improve Securities and Exchange Commission resources and 
     oversight, and for other purposes.

  Pending:
       Edwards modified amendment No. 4187, to address rules of 
     professional responsibility for attorneys.
       Gramm (for McConnell) amendment No. 4200 (to amendment No. 
     4187), to modify attorney practices relating to clients.

  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. REID. Mr. President, this has been cleared by both managers of 
the bill. We have had a number of inquiries about the need for more 
time to talk on various issues. As the Chair knows, from 12:30 until 2 
o'clock, we have our policy luncheon, and normally we don't have votes.
  I ask unanimous consent that the previously scheduled order, which 
provided that Senator Enzi be recognized at 12 noon today to make a 
motion to table the McConnell amendment No. 4200, be modified to 
provide that the recognition of Senator Enzi occur at 12:45 today, with 
the additional 45 minutes, from 12 to 12:45, equally divided and 
controlled between Senators Sarbanes and Gramm, or their designees, and 
that all other provisions of the previous order remain in effect.
  Mr. DORGAN. Mr. President, reserving the right to object, I would 
like to engage in a brief discussion with my colleague from Nevada 
under my reservation of an objection, if I might. I shall not object to 
the specific request of the Senator, but I have just visited with the 
chairman of the committee and you know there exists a list of 
amendments that Members of the Senate wish to offer to this 
legislation.
  As I have watched this process over the last couple of days, it 
appears to me that we have set up a gatekeeper of sorts for determining 
who will offer amendments and whether there will be votes on the 
amendments, and it appears to me we are not making very much progress. 
I would like to get some sense of whether we have a clear process 
beginning this afternoon, so that this afternoon and this evening we 
might be able to move through 6, 8, 10 amendments and get time 
agreements so Members of the Senate have the opportunity under the 
rules to offer and have considered amendments that they consider 
important in this legislation.
  Mr. REID. Mr. President, I say to my friend, the chairman of the 
committee has worked for hours and hours trying to get movement so 
people could offer relevant amendments. We have been not very 
successful, to be very candid with the Senator from North Dakota. I 
have stood by the Senator from Maryland and coerced, urged, and we 
haven't gotten to the debating point yet. We have done everything we 
can.
  There are a number of Senators, not the least of whom is the Senator 
from North Dakota, who have amendments. There is the Senator from 
Michigan, the Senator from New York, and others who have spent a lot of 
time wanting to offer amendments. We are doing everything we can. We 
hope the Enzi motion to table will break some of this loose.
  I say to my friend from North Dakota that we understand how he feels. 
The only thing I will say is there is no gatekeeper. On one bill the 
two managers said they would oppose any amendment that was not 
relevant, but that is not the case now. The Senator from Maryland has 
expressed to me that there are some relevant amendments which should be 
offered. He has done everything he can to----
  Mr. BYRD. Mr. President, who controls time?
  The PRESIDING OFFICER. Under the previous order, the Senator from 
West Virginia controls the next 45 minutes. There is a unanimous 
consent request pending.
  Mr. BYRD. Mr. President----
  Mr. DORGAN. Mr. President, reserving the right to object.
  Mr. REID. If I can ask my friend to let me finish. I ask unanimous 
consent that the time in the colloquy between the Senator from North 
Dakota and the Senator from Nevada not take away from the time of the 
Senator from West Virginia.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, continuing on my reservation--and it is 
not my intention to delay the Senator from West Virginia--I want to try 
to understand what is happening.
  First, my comments should not in any way suggest that the chairman of 
the committee hasn't done an extraordinary job. I have great respect 
for him. But it has been difficult to get amendments up and get votes 
on them in the last day or two. There are a good number of very 
important amendments.
  Under the reservation, I say that we know what has happened to the 
stock market in the last few days. We know this is a critically 
important issue--this legislation and the amendments to it. We ought 
not to treat this lightly. This piece of legislation ought to be on the 
floor and open for amendment, having a robust discussion on the very 
important issues dealing with corporate responsibility.
  Instead, what is happening is we have a couple people on the floor 
who seem to want to stall this process and prevent amendments from 
being considered in order. I hope--and I will come back after lunch 
today--to offer at least two amendments. I want to debate them and get 
them voted on. At least as a Senator I have a right to do that.
  It is very important to me that I be able to add these amendments. If 
the Senate doesn't like them, fine, we will vote. But it is important 
to me to have that opportunity. I shall not object to the unanimous 
consent request with respect to the tabling motion.
  I wanted to say to the Senator from Nevada and the Senator from 
Maryland, who have done everything humanly possible to try to make this 
process work, that there are others in the Chamber who are trying to 
drag this process out and prevent others from offering amendments. I am 
going to assert my rights, to the extent I can, to say that before this 
bill is completed we need to have the best ideas everyone in the Senate 
has to offer about how to do this job.
  The economy in this country is in significant trouble. We know it. 
The confidence the American people have in this economy and corporate 
governance has been shattered in many ways. It rests upon the shoulders 
of this institution to pass this legislation and do everything we can 
to make it the best piece of legislation possible to restore that 
confidence and give some lift to this economy. I wanted to make that 
point.
  I appreciate the indulgence and the patience of the Senator from 
Nevada. If the Senator from Maryland will give me a chance to say this 
once again: In no way am I saying the chairman hasn't done everything 
humanly possible to move this along. He wants to move quickly. I shall 
not object.
  Mr. GRAHAM. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, I express my great admiration for what 
Senator Sarbanes has done in presenting to America such a meaningful 
piece of legislation to deal with one of the great scandals that has 
occurred in the history of our free enterprise system, and taking a 
step toward restoring the confidence of the public in the investment 
community.
  But as Senator Dorgan, I have an idea which, in fact, in one 
instance, is parallel to Senator Dorgan's; that is, I believe we need 
to be very clear that we are applying the same standards to 
corporations that have their corporate headquarters inside the United 
States as we do to corporations that take advantage of our capital 
markets and have chosen to locate or relocate their headquarters 
outside of the United States.
  Mr. REID. Mr. President, I am reclaiming my time.
  Mr. GRAHAM. Reserving the right to object, there are enough 
incentives to do that already in the Tax Code and otherwise. We should 
not be creating additional incentives for companies to run from their 
responsibilities within the United States. My specific----
  Mr. REID. Mr. President, I want the floor back.

[[Page 12641]]


  Mr. GRAHAM. I am raising this today----
  Mr. REID. Mr. President, I have the floor.
  The PRESIDING OFFICER. The Senator from Nevada has the floor.
  Mr. GRAHAM. Mr. President, I am reserving my right to object.
  Mr. REID. Mr. President, I have the floor.
  Mr. GRAHAM. I will conclude my comments in short order.
  The PRESIDING OFFICER. The Senator can either object or not. 
Reserving the right to object occurs at the indulgence of those who 
have the floor.
  Mr. REID. Mr. President, we have built in time for people to speak. 
It is not fair to Senator Byrd and others who have been waiting to 
speak. I have no problem with Senator Graham coming. I agree with his 
position. There is time to be allowed under this unanimous consent 
agreement. Otherwise, the time will be all gone, and there are two 
Senators who have an hour and a half, by virtue of a unanimous consent 
agreement entered into last night.
  It is not fair to use the extra half hour with these speeches that 
are taking away from Senator Byrd and Senator McConnell.
  The PRESIDING OFFICER. Is there objection?
  Mr. GRAHAM. Reserving the right to object, just for the purpose of 
concluding my remarks.
  Mr. BYRD. Mr. President, I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. BYRD. Mr. President, I will be happy to yield to the Senator when 
I get the floor. We cannot make long speeches on reservations to 
object. We either object or we don't. I object and then I will be happy 
to yield to the Senator. I want to be fair. Am I recognized?
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. BYRD. How much time does the Senator wish?
  Mr. GRAHAM. Just 1 minute.
  Mr. BYRD. Mr. President, I yield to the distinguished Senator from 
Florida for 1 minute, reserving my right to the floor.
  Mr. GRAHAM. I appreciate the courtesy of the Senator. I want to bring 
to your attention an article from the Washington Post today. I ask 
unanimous consent that this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

       SEC Chairman Pitt a Potential Liability to Administration

                           (By Dana Milbank)

       While President Bush was delivering his long-awaited speech 
     on corporate governance Tuesday, Securities and Exchange 
     Commission Chairman Harvey L. Pitt was exactly where many 
     Bush aides wanted him to be: on a week-long beach vacation.
       ``We were not surprised that the chairman was not included 
     in administration plans for public appearances,'' SEC 
     spokeswoman Christi Harlan said. ``The commission is an 
     independent agency.''
       White House officials, though calling it a coincidence, 
     acknowledged they had no desire for Pitt's presence.
       The arms-length treatment of Pitt underscores a dilemma for 
     Bush and his radioactive SEC chairman. Many Democrats and 
     even a few Republicans have called for Pitt's resignation 
     because of his alleged conflicts of interest and ties to the 
     accounting industry. There is no sign that Bush is even 
     thinking of dropping Pitt. But whether Pitt stays or goes, he 
     is a potential liability.
       Dismissing Pitt would violate the Bush code of loyalty and 
     would be viewed as validating Bush's critics, from Senate 
     Majority Leader Thomas A. Daschle (D-S.D.) to Bush's 
     Republican nemesis, Sen. John McCain (Ariz). ``Dropping 
     Harvey Pitt right now would be an acknowledgment of 
     wrongdoing where there's been no wrongdoing,'' said GOP 
     lobbyist Ed Gillespie, a former Bush campaign aide.
       Forcing Pitt out would also open the White House to charges 
     of interfering in the SEC's investigation of Halliburton 
     Co.'s activities when Vice President Cheney was its chief 
     executive Underscoring that danger, Halliburton shareholders 
     yesterday filed a fraud lawsuit in Dallas against the company 
     and Cheney. White House press secretary Ari Fleischer said 
     the suit is ``without merit.'' That prompted Larry Klayman, 
     whose group, Judicial Watch, represents the shareholders, to 
     accuse the White House of seeking to influence the SEC's 
     investigation.
       Yet Pitt's presence as the government's top securities 
     watchdog carries dangers for Bush, too. Even some Pitt 
     defenders say his close ties to the accounting industry limit 
     his credibility as a reformer. In his first speech as SEC 
     chairman last year, Pitt told an audience of auditors that 
     the SEC would be ``a kinder and gentler place for 
     accountants.''
       ``Pitt has been in hot water since day one and WorldCom 
     turned it into a full boil,'' said GOP operative Scott Reed. 
     Because Bush will not drop Pitt, Reed said, ``McCain and the 
     Democrats have turned him into a political pinata, and that 
     will continue ad infinitium.''
       Democrat Chris Lehane, who defended Bill Clinton and Al 
     Gore during that administration's scandals, said Bush is 
     making the wiser political choice in keeping Pitt, even 
     though Pitt could undermine faith in Bush's reforms. ``Pitt 
     could do everything right and nobody's going to give him 
     credit for it,'' he said.
       Pitt's foes point to his past legal work for executives of 
     now-sullied corporations, including MCI, Merril Lynch & Co., 
     Arthur Andersen LLP and other accounting firms. He has also 
     been criticized for meeting in April with a former client, 
     KPMG Consulting Inc., while KPMG's audits of Xerox Corp. were 
     being investigated by the SEC. Critics also say that as a 
     lawyer, Pitt favored restricting federal oversight of 
     auditing firms. Over the years, Pitt has represented figures 
     such as Ivan Boesky and Michael Saylor in SEC actions.
       Bush, in his Monday news conference, generously defended 
     Pitt. ``I support Harvey Pitt--Harvey Pitt has been fast to 
     act,'' Bush said. Later, Bush added: ``I'm going to give him 
     a chance to continue to perform.''
       Privately, Bush has expressed amazement at the conflict-of-
     interest charges. ``It's only in this town that people want 
     someone who doesn't know what they're talking about to lead 
     an agency,'' he told congressional Republicans visiting the 
     White House yesterday.
       Pitt has an unlikely defender in Lanny J. Davis, one of 
     President Clinton's scandal handlers. ``The attack being made 
     by Democrats could be made on most anyone for having 
     conflicts from prior positions,'' he said. But Davis said the 
     administration has been making matters worse. ``The more you 
     bottle up Harvey Pitt, the more you allow Democrats to make 
     him an issue,'' Davis said.
       Observers on both sides expect Pitt to make a public effort 
     to build his credibility by demonstrating that he can be hard 
     on his old friends. Indeed, some in the administration joke 
     that Pitt will come to resemble a model Democratic SEC 
     chairman, one heavy on regulations.
       The White House has distributed evidence of Pitt's activity 
     on the job: requiring chief executive and chief financial 
     officers of the 947 largest companies to personally recertify 
     the accuracy of their disclosures; seeking to bar 54 officers 
     and directors; and issuing a long list of new reporting rules 
     and regulations.
       Pitt was not Bush's first choice for the SEC job, and 
     officials say he continues to be far from Bush's inner 
     circle. The reforms Bush announced Tuesday were developed 
     largely by Treasury Secretary Paul H. O'Neill and White House 
     deputy staff chief Joshua Bolten, with help from Bush 
     economic advisers Lawrence B. Lindsey and R. Glenn Hubbard.
       But Bush is stubborn about demonstrating loyalty to his 
     aides, which enables him to claim reciprocal loyalty. 
     Officials say he continues to defend Army Secretary Thomas E. 
     White, embattled because of his Enron Corp. ties and personal 
     travel, because White has been faithful to Bush.
       But when underlings act disloyal, Bush can quickly cut them 
     loose. Linda Chavez was dropped as Bush's nominee to be labor 
     secretary when it appeared she had misled those vetting her 
     background. Michael Parker, the civilian chief of the Army 
     Corps of Engineers, was ousted for complaining about 
     administration budget cutting.
       Pitt so far has demonstrated fealty to Bush, and Bush aides 
     remain loyal to him. ``The best thing to do is vigorously 
     enforce the law, and that's what he's doing,'' Lindsey said.

  Mr. GRAHAM. In this article, the President of the United States has 
given as one of his reasons to continue his support for the Chairman of 
the Securities and Exchange Commission, Chairman Harvey L. Pitt, the 
fact that Mr. Pitt has required chief executives and chief financial 
officers of the 947 largest companies to personally recertify the 
accuracy of their disclosures.
  What was left out were all the American companies which have their 
corporate headquarters outside the United States of America. 
Apparently, the Chairman of the SEC believes he can discriminate and 
apply a principle only against those corporations which are sited in 
the United States and exclude corporations outside the United States.
  That is an irrational and unfair distinction and one that we should 
correct as promptly as possible in this legislation.

[[Page 12642]]

  I thank the Senator from West Virginia.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. REID. Mr. President, will the Senator yield for a unanimous 
consent request?
  Mr. BYRD. Gladly.
  Mr. REID. Madam President, I renew my unanimous consent request.
  The PRESIDING OFFICER (Ms. Landrieu). Without objection, it is so 
ordered.
  The Senator from West Virginia.
  Mr. BYRD. Madam President, since the revelation last month of yet 
another corporate accounting scandal--this time involving the second 
largest telecommunications provider, WorldCom--the Bush administration 
seems to have lost its patience with corporate America. In fact, from 
the rhetoric we have heard from the administration in recent weeks, I 
expected to hear the President tell corporate America this week that 
his top advisors had been in the White House basement planning, not 
just a corporate fraud task force, but a new Department of Corporate 
Security.
  The President said last month at the G8 summit in Canada, ``The 
revelations that WorldCom has misaccounted [$3.8] billion is 
outrageous.''
  In his June 29 weekly radio address, the President warned corporate 
America that ``no violation of the public's trust will be tolerated. 
The Federal Government will be vigilant in prosecuting wrongdoers to 
ensure that investors and workers maintain the highest confidence in 
American business.''
  The President apparently is so miffed with these corporate 
``wrongdoers'' that he has elevated them in his rhetoric to a bad-guy 
level that is almost, but not quite as bad, as al-Qaeda's 
``evildoers.'' Almost the same level; perhaps not quite.
  WorldCom president and CEO John Sidgmore, in a June 28 letter to 
President Bush, joined the President in expressing his outrage. ``I 
want you to know that we, the current management team, are equally 
surprised and outraged . . . about past accounting irregularities at 
WorldCom,'' he said.
  So the Bush administration and the CEO of WorldCom now both agree 
that American corporations teaming up with unscrupulous (or 
incompetent) accountants to mislead shareholders about how much money 
the company is making is an ``outrageous'' practice.
  Madam President, how comforting it is. As Jackie Gleason used to say: 
``How sweet it is.'' How sweet it is. How comforting it is to know that 
we have finally reached a consensus on that issue.
  Despite the excuses and the explanations, I find little credibility 
in the argument that certain corporate executives lacked sufficient 
knowledge to ask the right questions about their companies' accounting 
practices.
  If CEOs are worth their generous pay, one would think they could take 
the time to make sure that the company's chief financial officer is not 
padding earnings by omitting costs from the balance sheet.
  In fact, one finds disconcerting the acute lack of shame--the acute 
lack of shame--S-H-A-M-E--on the part of some of these corporate 
executives. Former Enron CEO Jeffrey Skilling told the House Energy and 
Commerce Oversight Subcommittee that Enron had tight control on 
financial risk, but that he could not be expected to oversee everything 
and ``close out the cash drawers . . . every night.''
  Can you imagine that kind of statement? I think it was Wordsworth who 
said: No matter how high you are in your department, you are 
responsible for what the lowliest clerk is doing.
  Let me repeat that. Wordsworth said: No matter how high you may be in 
your department, you are responsible for what the lowliest clerk is 
doing. That was William Wordsworth. Let's take that statement and put 
it beside the statement of former Enron CEO Jeffrey Skilling when he 
told the House Energy and Commerce Oversight Subcommittee that Enron 
had tight controls on financial risk but that he could not be expected 
to oversee everything and ``close out the cash drawers . . . every 
night.'' Oh, that poor man. What a heavy burden he carried. That poor 
man. We can all shed crocodile tears for someone who is put into that 
very difficult position and then consider the kinds of salaries these 
people draw down.
  Shakespeare said: ``The quality of mercy is not strain'd, it droppeth 
as the gentle rain . . . upon the place beneath.'' I will tell you, it 
does strain gentle mercy when we read about these scandals that have 
swept over this country and how these people plead the fifth amendment 
when they are called up before Senate committees and House committees--
plead the fifth amendment. That is a stunningly irresponsible attitude 
for a chief executive.
  It is something that you might hear from the teenage manager of a 
fast food restaurant who cannot account for a handful of change missing 
from the cash drawer at the end of the night. You might hear that from 
the teenage manager of a fast food restaurant who cannot account for a 
handful of change missing from the cash drawer at the end of the night. 
But we are not talking about a handful of change. We are talking about 
the American public. Those eyes that are peering--they are peering at 
this Senate floor at this very minute through the lenses of those 
cameras. They are the taxpayers out there. I see them looking through 
those cameras. I see them in West Virginia. I see them in Texas. I see 
them in Wyoming. I see them in New York looking through those cameras.
  We are talking about them, the American public having lost by some 
estimates tens of billions--not millions--tens of billions of dollars 
of invested savings in companies that issued false--the Ten 
Commandments, I keep them on my walls; some of these CEOs should keep 
them on their walls--financial reports and tens of thousands of workers 
who have lost their jobs, and many have lost their meager earnings that 
they, too, invested, that is what we are talking about.
  So here is an individual who tells a House committee he cannot be 
expected to oversee everything and close out the cash drawers every 
night--such a stunning, irresponsible, arrogant attitude on the part of 
a chief executive. I say again it is something that you might expect to 
hear--you might--from the teenage manager of a fast food restaurant who 
could not account for a handful of change missing from the cash drawer 
at the end of the night.
  We are not talking, let me say again, about a handful of change. We 
are talking about the American public, those people out there, 
Republicans and Democrats and Independents, in the Alleghenies, along 
the eastern coast, on the storm-beaten coast of Maine, the fishermen on 
the mighty deep, the people in the Plains and the Rockies and beyond. 
These are the people, north and south, the public. We are talking about 
the American public having lost, by some estimates, tens of billions of 
dollars of invested savings in companies that issued false--and they 
knew they were issuing false--financial reports. Tens of thousands of 
workers who have to wash the grime from their hands and their faces, 
workers in the fields, in the mines, in the shipyards, those are the 
people we are talking about, the public, tens of thousands of workers 
who have lost their jobs.
  Even after these corporations' fraudulent accounting, somebody ought 
to go to jail, and the doors should be locked and the keys thrown away. 
Throw away the keys. It really would not be too severe a punishment for 
some of these four-flushers.
  Even after these corporations' fraudulent accounting methods are 
exposed, the accounting games seem to continue. After telling the 
Securities and Exchange Commission that it hid nearly $4 billion in 
expenses last year, WorldCom submitted revised financial reports to the 
SEC which the SEC Chairman, Harvey Pitt, immediately called wholly 
inadequate and incomplete. Apparently, WorldCom's revised financial 
statements included additional accounting errors dating back to 1999 
and 2000. That, Chairman Pitt said, could add at least $1 billion to 
the company's financial revision.
  No wonder the trust of those people is broken. No wonder the public's 
trust in corporate America has eroded. What

[[Page 12643]]

kind of trust can the public have in companies that hide information in 
an effort to pull the wool over the eyes of American investors?
  After WorldCom's announcement, the Bush administration sharpened its 
rhetoric and is now working to assure the American public that it 
recognizes the importance of transparency and disclosure. The Chairman 
of the White House Council of Economic Advisers, Glenn Hubbard, said in 
an interview last month that the President wants to reassure investors 
about the economy while also delivering a shot across the bow to 
leaders of corporations that abuses of the public trust will not be 
tolerated.
  In the midst of congressional hearings last March, after the collapse 
of Enron, the President lectured corporate America about how to regain 
the public's trust. He said corporations must disclose relevant facts 
to the investing public and they must focus on the interests of 
shareholders, who are the real owners of any publicly held enterprise, 
to properly inform shareholders and the investing public that we must 
adopt better standards of disclosure.
  That is nice rhetoric, but this administration hardly sets the model 
for openness and transparency. In fact, this is an administration that 
prides itself on operating in secrecy and governing by surprise. 
Remember the secret government that was being set up? In fact, this is 
an administration, let me say again, that prides itself in operating in 
secrecy and governing by surprise.
  I find it difficult to watch this administration lecture corporate 
America about virtues of disclosing information to the public while at 
the same time it is restricting the public's access to information 
about its own executive actions.
  Last October, Attorney General John Ashcroft issued a memo 
encouraging Federal agencies to withhold unclassified records under the 
Freedom of Information Act, the law that gives the American public the 
legal right to certain Government information. The Attorney General 
even told the Federal agencies that the Justice Department would defend 
agency decisions to deny FOIA, Freedom of Information Act, requests.
  Last November, the President issued an Executive order to limit 
access to Presidential papers that, under the Presidential Records Act 
of 1978, would normally be made available to the American public. The 
Executive order allows a former or a sitting President to block the 
release of records requested under the law by invoking 
``constitutionally based privileges.'' The words ``constitutionally 
based privileges'' are in quotation marks.
  The American people would have to go to court to challenge the 
privilege claim. The order could even permit a former or incumbent 
President to impede requests for old records simply by withholding 
approval for their release, effectively negating the need for the Chief 
Executive to even make the claim of executive privilege.
  We have had our own little taste of this side of the coin from the 
executive branch as we on the Appropriations Committee, Senator Stevens 
and I, tried to have the administration let Tom Ridge come up before 
the committee and testify.
  Then we see this creation of this mammoth reorganization of 
Government that sprang like Minerva, fully clothed and armed, from the 
forehead of Jupiter.
  When this administration's chief executive talks about adopting 
better standards of disclosure, I hope that these executive actions are 
not what he has in mind. These are just examples of the administration 
directly restricting the public's access to government information. The 
administration has also moved to limit access by Members of Congress, 
who are elected by the people and responsible for the oversight of 
executive actions in the public's behalf.
  Last December, the President gave notice that he was unilaterally 
withdrawing the United States from the Antibalistic Missile Treaty, 
allowing the administration to begin development of a new antibalistic 
missile defense system. Soon after, the Pentagon began to exempt 
missile defense projects from traditional reporting requirements and 
Congressional oversight, an overt attempt to keep the Congress and the 
American people in the dark about the progress of that system. As the 
administration requests additional defense funds, the Pentagon is 
taking further steps to shield cost estimates and time tables from the 
Congress, making it harder to keep the administration accountable for 
technical and budgetary assessments.
  The Dark Ages were supposed to have ended in about 1000 A.D. They 
lasted 1,000 years, the Dark Ages. Reminiscent of the Dark Ages, an 
administration that believes in keeping a Congress in the dark, the 
American people in the dark, and we are hearing a lot of sword rattling 
about it. An attack on Iraq--the administration should level with the 
Congress. It is an equal branch. It is not a subordinate branch to the 
Government. It never has been, and I hope never will be. Let's hear 
more about this plan to invade Iraq. Watch out for August when Congress 
is out of town, or before the election. Who knows?
  This reorganization of Government sprang like Aphrodite from the 
ocean foam, and she was carried on a leaf to the island of Crete. She 
later appeared in full dress before the gods on Mount Olympus. They 
were stunned with her beauty.
  This is what we see. These ideas sprang from where? This idea to 
reorganize the Government--and I am concerned it will also reorganize 
the checks and balances of the Constitution unless we are watchful--
sprang from the bowels of the White House, the creation of four 
individuals who are named in the public press. Not exactly the equal, 
perhaps, of that committee that wrote the Declaration of Independence--
Thomas Jefferson, Benjamin Franklin, Roger Sherman, John Adams, and 
Livingston, those five. Not exactly.
  But look at all the commotion that ideas has created. Look out, the 
Congress is being stampeded into putting its imprimatur on that idea. 
Well, some parts of the idea may be OK, but we should not be in too big 
a hurry.
  And that is to say nothing of the fact that these executive actions 
toward secrecy have occurred during a period in which the President has 
refused to allow Tom Ridge, in his capacity as the Director of Homeland 
Security, to testify before the Congress, and in which the Comptroller 
of the General Accounting Office was forced to sue the Vice President 
of the United States to obtain information about the White House energy 
task force and its connections to Enron.
  These are not the actions of an administration that believes in the 
virtues of disclosing information to the public. This is an 
administration that not only embraces the idea of operating in secrecy, 
but flaunts its abilities to hide information from the Congress and the 
American public.
  Upon announcing its proposal for a new Department of Homeland 
Security, the administration bragged to the media about how the plan 
had been pieced together by just four men and a few trusted aides in 
the basement of the White House. As the work became more detailed and 
the working groups expanded, the code of silence was gravely explained 
to each new arrival. At the end of each meeting, all papers were 
collected: nothing left that room, we've been told. The work was 
completed before any member of the Congress was briefed on the plan. 
White House Chief of Staff Andrew Card even arrogantly proclaimed, ``We 
consulted with agencies and with Congress, but they might not have 
known we were consulting.''
  Now, get that. I can hardly believe my eyes, except my eyes have seen 
this prior to my having stated it on the floor. White House chief of 
staff Andrew Card even proclaimed--I used the adverb ``arrogantly,'' I 
will put it back in--White House chief of staff Andrew Card arrogantly 
proclaimed, ``We consulted with agencies and with Congress but they 
might not have known we were consulting.''
  What a reflection on Congress. What is he saying about Congress? That 
is

[[Page 12644]]

hardly a model of transparency that I want corporate America to follow.
  We don't want to hear corporate CEOs saying we shared information 
with the American public, but they might not have known we were sharing 
it with them. The administration's euphoria for secrecy seems motivated 
in large part by its desire to implement a political agenda. That is 
what it is. A political agenda, regardless of whether it has the 
support of the American people.
  Mr. REID. Will the Senator yield?
  Mr. BYRD. I would be glad to yield.
  Mr. REID. Mr. President, I have been listening to the Senator from 
West Virginia give his speech, and I am of the opinion maybe the reason 
all that secrecy takes place is they are running the White House like 
people run corporations. Rather than having a public institution as the 
administration and White House should be, maybe they are running the 
White House like a corporation.
  I say to my friend that the White House, this administration is 
covered with corporate America. Maybe they think the White House is to 
be run like a corporation.
  Mr. BYRD. The distinguished Senator from Nevada introduces an 
interesting idea. Maybe they do. Maybe anything goes. All is fair in 
love and in war they say. Now we can add, big business. Big business.
  That is not a fair thing to say about many big businesses really 
because many of the people in big business are honest and try to do the 
right thing. They are open, they are transparent. It is too bad a few 
bad apples reflect on the whole barrel. I used to sell produce. I was a 
produce boy, married, with children coming on, and I found that a few 
bad peaches would quickly ruin the whole bushel. The same thing with 
apples and other fruits and so on.
  When the administration's polls suggest opposition to certain 
policies from the American public, it limits access to information 
about that policy. I fear that the American public, and their elected 
representatives in Congress, at times are viewed by this administration 
as some sort of obstacle or hurdle that is to be avoided. There is a 
contempt, there is an arrogancy in this administration, there is a 
contempt for Congress. They hold Congress in contempt.
  This kind of executive mentality can only emanate from the arrogance 
of an administration that believes the White House is the fountain of 
wisdom in Washington. Wisdom is the principal thing. Such a mentality 
is dangerous, it is absolutely dangerous. I was here in the Nixon 
administration. I remember what happened to that administration. Such a 
mentality is dangerous. We need only look to the corporate accounting 
scandals which this administration has so harshly criticized in recent 
weeks to see why.
  Most economic pundits seem convinced that the hyperactive stock 
market of the late 1990s was the catalyst for a slow, steady 
deterioration in professional and ethical standards in corporate 
America. The pressure on CEOs and companies to produce earnings, 
quarter after quarter, resulted in a kind of competitive behavior that 
encouraged companies to push the accounting envelope. Rising profits 
and stock prices provided cover for underlying ethical lapses. The 
longer the boom lasted, the more brazen these corporations became in 
cutting corners and taking a little more off the top.
  By the end of the boom, many companies appear to have been engaged in 
the kind of fudging, gamesmanship and ethical corner-cutting that, 
while legal in some cases, was certainly less than ethical. 
Unfortunately, it was only after the stock market began its inevitable 
decline and great piles of money were lost that people began to ask the 
critical, penetrating questions that should have been asked earlier to 
prevent this kind of behavior in the first place. Those harder 
questions are now leading to accounting revisions, executive 
resignations, lawsuits, and criminal investigations.
  So far, the reflexive instinct of the business community and the Bush 
administration largely has been to blame a ``few bad apples,'' but that 
assertion is hardly consistent with the fact that the SEC opened 64 
financial-reporting cases between January and March of this year, and 
that almost a thousand companies, not just a handful, have been asked 
to recertify to the SEC their financial statements through the last 
fiscal year.
  It is somewhat ironic that the actions of chief executives were 
protected by soaring stock prices, since the administration finds 
itself in a similar position. Just like soaring stock, as long as the 
President's approval ratings remain high, presumably propped up by the 
American public's understandable desire to support the war on 
terrorism, the more latitude the administration will be granted in 
restricting information about its executive actions under the guise of 
national security. This kind of culture can be extremely dangerous. It 
was allowed to flourish in corporate America during the late 1990s, and 
now threatens the public trust.
  The administration would do well to take some of its own medicine and 
make itself more transparent to the American public. For all of its 
expressed concerns about the public's loss of confidence in corporate 
America, this administration seems to have given little, if any, 
consideration to the loss of the public's trust in government. That is 
the most basic of commodities in republican government. I do not refer 
to it, as many politicians who ought to know better glibly refer to 
this, our system, as a democracy. They ought to go back and read 
Madison's 10th and 14th essays in the Federalist Papers. They will 
finally learn the difference--or be reminded of the difference. They 
probably have forgotten the difference between a democracy and a 
republic.
  The public's trust in government--when the public loses its trust, 
when the public's trust is eroded, all is lost: The public trust. And 
sooner or later, high poll numbers will tumble, as they always do. We 
have seen them do it before.
  Don't read the polls, I say to my colleagues, so assiduously, read 
the Constitution--which I hold in my hand. Read the Constitution. I say 
to the administration, I say to the executive branch, read the 
Constitution. Don't be so enamored with the polls. They are fleeting. 
Read the Constitution.
  This administration's Chief Executive came into office touting 
himself as the first President to earn a master's degree in business 
administration. That is certainly more than I have. He announced that 
he would run the White House like a modern-day corporation. Ha-ha-ha; 
watch out.
  To be fair, the President probably didn't realize at the time that he 
would be faced with the exposure of a corporate culture--not all his. 
The President probably didn't realize at the time that he would be 
faced with the exposure of a corporate culture which encouraged shoddy 
auditing, negligent or criminal management, and impudent and secretive 
corporate CEOs.
  In hiding its own actions from the public view, this administration 
is fostering the same kind of arrogant, arrogant culture in which these 
corporate accounting scandals were allowed to flourish. This 
administration would do well to take preventive measures to keep the 
nasty, nasty little seeds of arrogance and secrecy that have affected 
corporate America from taking root in the executive branch and 
threatening the public's trust.
  I close with a Biblical parable: Pride goeth before destruction, and 
the haughty spirit before a fall.
  I ask unanimous consent to have printed in the Record an article from 
today's Washington Post titled ``Bush Took Oil Firm's Loans as 
Director''; and an article from today's Washington Times titled 
``Cheney named in fraud suit.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, July 11, 2002]

                 Bush Took Oil Firm's Loans as Director

                            (By Mike Allen)

       As a Texas businessman, President Bush took two low-
     interest loans from an oil company where he was a member of 
     the board of directors, engaging in a practice he condemned 
     this week in his plan to stem corporate abuse and accounting 
     fraud.

[[Page 12645]]

       Bush accepted loans totaling $180,375 from Harken Energy 
     Corp. in 1986 and 1988, according to Securities and Exchange 
     Commission filings. Bush was a director of Harken from 1986 
     to 1993, after he sold his failed oil and gas exploration 
     concern to the company. He used the loans to buy Harken 
     stock.
       Corporate loans to officers came under scrutiny after 
     WorldCom Inc., the long-distance carrier that last month 
     reported huge accounting irregularities, revealed it had lent 
     nearly $400 million to Bernard J. Ebbers to buy the company's 
     stock when he was chief executive. He resigned in April as 
     the stock price tumbled.
       Bush attacked corporate loans during his speech on Wall 
     Street on Tuesday, when he offered proposals to tighten the 
     accountability of corporate executives while stopping short 
     of the tougher measures headed toward passage in the Senate. 
     ``I challenge compensation committees to put an end to all 
     company loans to corporate officers,'' he said.
       A senior administration official, briefing reporters on 
     Bush's plan, said Tuesday that Bush wants public companies to 
     ban loans to their officers, including directors. ``Corporate 
     officers should not be able to treat a public company like 
     their own personal bank,'' the official said.
       The contrast between Bush's record as a business executive 
     and his rhetoric in the face of corporate scandals 
     underscores the challenge his administration faces in trying 
     to credibly foster what he calls ``a new era of integrity in 
     corporate America.''
       Bush was investigated by the SEC in 1991 for possible 
     illegal insider trading, although the SEC did not take action 
     against him, and he has admitted making several late 
     disclosures to the agency, which regulates public companies.
       Harken's loans to Bush--at 5 percent interest, below the 
     prime rate--were reported several times in filings to the SEC 
     in the years before the debt was retired in 1993 and were 
     noted in news accounts at the time. The loans were for the 
     purchase of Harken stock, which was then held as collateral.
       Rajesh K. Aggarwal, a Dartmouth College professor who 
     specializes in executive compensation and incentives, said 
     such loans ``are not unique, but are by no means 
     widespread.''
       White House communications director Dan Bartlett said 
     Harken offered the loans to directors to buy shares in the 
     company as part of an incentive for board members ``to have a 
     long-term commitment with the company.'' Bartlett said the 
     loans to Bush were ``totally appropriate--there was no 
     wrongdoing there.''
       ``This is a common practice in small, medium and large 
     companies,'' Bartlett said. ``These recent abuses of certain 
     types of loans led the president to believe that the 
     government should draw a bright line concerning loans going 
     forward. This is one of the main things that undermined the 
     confidence of investors and shareholders.''
       Bartlett said the loans were for $96,000 in 1986, for 
     80,000 shares, and $84,375 in 1988, for 25,000 shares. He 
     said that in 1993, Harken changed its compensation policies 
     and discontinued the loan program. He said Harken converted 
     to a program giving directors stock options, allowing them to 
     buy stock later at a fixed price.
       Bartlett, asserting that Bush did not profit on the loans, 
     said Bush traded the 105,000 shares being held as collateral 
     for the loans, retiring his debt. Bush then received 42,503 
     options under the new compensation plan, Bartlett said, The 
     options were never exercised and expired after Bush left the 
     board, Bartlett said.
       With adminsitration officials privately expressing concern 
     about the impact of so much fresh attention to old questions 
     about Bush's career, the White House yesterday distributed 
     talking points headlined ``If you get asked about Harken'' to 
     Bush loyalists who might be contacted by reporters. Bartlett 
     said the fact sheets were sent to members of Congress after 
     they asked for them.
       White House press secretary Ari Fleischer said aides to 
     Bush have ``talked to the private accountants and private 
     counsels who are involved in the president's private 
     transactions'' while preparing answers to reporters' question 
     during the growing debate over corporate responsibility.
       Vice President Cheney also is receiving unwanted attention 
     to his corporate past. The SEC is investigating an accounting 
     practice begun by Halliburton Co., the Dallas-based energy 
     services company, when Cheney was chief executive before 
     joining Bush's campaign ticket.
       Also yesterday, the White House refused to release records 
     of Bush's service on Harken's board. Bush had pointed to 
     those records during a news conference on Monday when asked 
     about his role in the sale of a subsidiary. The transaction 
     later was used by Harken to mask losses.
       ``You need to look back on the director's minutes,'' Bush 
     said.
       Bartlett said the administration does not have the minutes 
     and does not plan to ask Harken for them. ``He personally 
     would not have access to them,'' Bartlett said. ``These are 
     company documents. I can't release something I don't have.''
       Harken has declined to release board records ever since 
     questions about Bush's record on the board were raised during 
     his first campaign for Texas governor, in 1994.
       Bartlett also said the White House would not accept a 
     challenge by Senate Majority Leader Thomas A. Daschle (D-
     S.D.) on Sunday to ask the SEC to make public the records of 
     its investigation into whether Bush had engaged in illegal 
     insider trading of Harken stock.
       Daschle said on CBS's ``Face the Nation'' that Bush would 
     do well to ask the SEC to release the file. ``We've had 
     different explanations as to what actually occurred,'' 
     Daschle said. ``I think that would clarify the matter a good 
     deal.''
       Bartlett said Bush will not do that. ``Those are documents 
     in the possession of an independent regulatory agency,'' 
     Bartlett said. ``I'm not in a position to call on them to do 
     that. We've made available every relevant document we have in 
     our possession.''
       Administration officials said they would take the same 
     position about an SEC investigation that resulted in Harken's 
     restating its earnings to show a $12.6 million loss for a 
     quarter instead of an earlier reported loss of $3.3 million. 
     Bush was a member of the board's audit committee.
                                  ____


               [From the Washington Times, July 11, 2002]

                       Cheney Named in Fraud Suit

                           (By Patrice Hill)

       Vice President Richard B. Cheney was named yesterday with 
     the energy company he headed in a lawsuit by investors that 
     cited bookkeeping practices under investigation by the 
     Securities and Exchange Commission.
       The lawsuit arranged by Judicial Watch, a government 
     watchdog group, charges that Halliburton Inc. overstated its 
     revenue by $534 million between 1998 and the end of last year 
     by illegally booking revenue from oil construction projects 
     that were in dispute and had not been collected from its 
     clients. The suit says the accounting fraud resulted in 
     overvaluation of Halliburton's stock, deciving investors.
       Mr. Cheney was Halliburton's chief executive from 1995 
     until August 2000, after he joined the Bush presidential 
     campaign. The White House and Halliburton yesterday said the 
     suit was without merit but both acknowledged that the SEC 
     investigation is continuing.
       ``We are working dilgently with the SEC to resolve its 
     questions regarding the company's accounting practices,'' 
     said Doug Foshee, Halliburton's chief financial officer. The 
     claims in this lawsuit are untrue, unsupported and 
     unfounded.''
       SEC Chairman Harvey L. Pitt has vowed to pursue the 
     investigation. ``We don't give anyone a pass,'' he told ABC's 
     ``This Week'' on June 30. ``If anybody violates the law, we 
     go after them.''
       President Bush on Tuesday called for stronger SEC 
     enforcement and longer prison terms for corporate executives 
     found guilty of the kind of accounting fraud charged in the 
     lawsuit. The suit was filed in the U.S. District Court in 
     Dallas, where Halliburton is based.
       A unified Senate approved harsh new penalties yesterday for 
     corporate fraud and document shredding, adding enforcement 
     teeth to Mr. Bush's plan to curb accounting scandals. In a 
     series of unanimous votes, senators added the penalties to an 
     accounting oversight bill moving toward passage.
       Also named as a defendant in the lawsuit is the Arthur 
     Andersen firm, Halliburton's former auditor, which was fired 
     in April after the accounting firm was charged with 
     obstructing an SEC investigation of Enron Corp. Andersen was 
     convicted of the obstruction charge last month and is no 
     longer permitted to audit public companies.
       The suit says Andersen was a champion of ``aggressive'' 
     accounting tactics and masterminded the bookkeeping maneuvers 
     that defrauded Halliburton investors.
       As evidence of Mr. Cheney's knowledge and approval of these 
     maneuvers, the suit refers to his appearance in a promotional 
     video for Andersen in which he said he got ``good advice'' 
     from the firm, advice that went ``over and above just the 
     normal by-the-books auditing arrangements.''
       The lawsuit cites a critical accounting change made by 
     Halliburton and Andersen in late 1998. Halliburton was facing 
     losses because of a recession in the oil industry and cost 
     overruns on construction contracts in which the company had 
     negotiated fixed, or lump-sum, payment plans.
       Before the accounting change, which was never formally 
     disclosed to investors, Halliburton had booked the cost 
     overruns as losses on such projects as long as they were in 
     dispute and customers had not agreed to pay them.
       But starting in 1998, the company booked payment for the 
     cost overruns as revenue if it believed the disputes would be 
     resolved and the customers would pay the bills.
       As a result of this change, Halliburton showed a profit for 
     several quarters in 1998 and 1999 when it otherwise would 
     have posted losses, the suit charges. In some years, the 
     disputed revenue appears to account for as much as half of 
     the company's reported profits.
       ``Halliburton overstated profits that many American 
     citizens relied upon,'' said Larry

[[Page 12646]]

     Klayman, chairman of Judicial Watch. ``That's fraudulent 
     security practices, and it resulted in those Americans 
     suffering huge losses.''
       The suit says Halliburton and Andersen violated securities 
     laws when they did not disclose and justify the accounting 
     change in a letter to investors. Halliburton's financial 
     statements starting in 1998 do note, however, that it was 
     booking uncollected revenue from cost overruns.

  Mr. REID. Madam President, if the Senator will yield for a 
parliamentary inquiry.
  Mr. BYRD. Yes. I yield.
  Mr. REID. The Senator was allocated 45 minutes. Of course, we have 
other time. We have an extra 15 minutes. It is my understanding there 
are 4 or 5 minutes left. Is that right?
  The PRESIDING OFFICER. There are 3\1/2\ minutes remaining.
  Mr. REID. If the Senator so desires, we could also allocate 15 
minutes to the Senator from West Virginia if he has more to say.
  Mr. BYRD. Madam President, I thank the distinguished majority whip 
for his courtesies and generosity, and for his characteristic ways of 
helping his colleagues. I think I will let my remarks remain today as 
they are. I thank him.
  I yield the floor.
  Mr. REID. Madam President, while there are a couple of minutes 
remaining of the Senator's time, I am sure the chairman of the 
committee joins with me in expressing our pleasure at being able to 
listen to such a profound statement which the Senator made. I think it 
again is what this is all about. By ``this,'' I am talking about the 
legislation.
  I talked with a friend of mine. We played football together as young 
men. He runs a company in Las Vegas. He said: Harry, I took all of my 
money out of the stock market. I will never invest in the stock market 
until something is done. He said: I am afraid. I said: We all feel that 
way.
  I think the Senator really condensed what is going on in corporate 
America. It needs to be changed, and hopefully this legislation will 
help that.
  Mr. BYRD. Madam President, let me express my gratitude to the 
distinguished Senator for his comments.
  And with respect to the manager of this legislation, let me state 
without any equivocation that this is one of the finest minds I have 
seen in the Senate. I have been here 44 years. I have seen the 
equivalent of the entire Senate come and go, and I have never seen a 
sharper intellect. I have seen some sharp ones--John Pastore, Herman 
Talmadge, and there are others. I have never seen any sharper than that 
of Paul Sarbanes, in my judgment. I don't know a great deal about the 
intelligence quotients. I don't know what the high range is. I assume 
it could be 150, or 155, or 160--whatever it is. Paul Sarbanes is the 
brightest.
  Also, he has a way about him of not flaunting his intellect in front 
of others. Most of us--not because of that kind of intellect--have been 
inclined to speak more often--maybe too much, and perhaps I do already, 
but not because of that kind of intellect. But I salute the manager and 
commend that kind of intellect. He applies it. I watch him in the 
committees, and I watch him on the floor as he manages a bill. He is 
never a man to act in haste, or to be too rhetoric in haste. I admire 
his patience. He is plotting; he is studying; he is working; and he is 
extremely effective.
  When I was majority leader, there were certain Senators I would call 
into my office from time to time. I would try to pick their brains as 
to what we should do on this or that. Scoop Jackson was one. Paul 
Sarbanes is always there.
  Mr. REID. Madam President, will the Senator yield for a comment?
  Mr. BYRD. Yes.
  Mr. REID. What the Senator is saying is that the Rhodes Scholar 
Committee a number of years ago made a good choice in selecting Paul 
Sarbanes to be a Rhodes scholar. Is that what the Senator is saying?
  Mr. BYRD. I am saying exactly that. I am happy the distinguished 
Senator put it that way.
  This bill before the Senate is the product of that kind of mind, that 
kind of attention, and that kind of dedication.
  I hope we can pass this bill with an overwhelming vote, and, also in 
conference so that when put on the President's desk he can sign it. I 
am eager to support it in any way I can.
  Before I yield the floor, let me say that when we talk about 
intellect and sharp intellects, this man from Texas, Phil Gramm, is 
another. He is sharp. I have talked to my staff many times about that 
kind of intellect. He can talk about anything. He doesn't need a 
script. I have prided myself on working with him on several challenges, 
and I have found him to be fair and straightforward.
  I admire people--like these two--having that kind of sharp intellect.
  I was told by an old Baptist pastor, former chief chaplain in the 
Army during the war--I don't remember which war it was. But he always 
said: The mark of brilliance is to surround yourself with brilliant 
people.
  I am really proud to look around this Chamber and see people such as 
Paul Sarbanes and Phil Gramm. Sometimes I say that North Dakota has the 
highest overall quotient, perhaps of all, with its two Senators--
Senators Conrad and Dorgan. I don't know whether they are Rhodes 
scholars or not. I am not a Rhodes scholar. I was not fortunate enough. 
I just barely made it by working at night for 10 years just to get a 
law degree. But these people make me proud to serve in this body.
  Let me yield to the Senator from Maryland.
  Mr. SARBANES. Madam President, I thank the distinguished Senator for 
his extraordinarily generous remarks. I am very appreciative of them.
  I want to echo what the very able Senator from Nevada said about the 
Senator's eloquent address just a few minutes ago, which is reflective 
of the pattern that he has established--which is to go on the floor of 
the Senate and go to the very fundamentals of what our system is all 
about. His constant reference to the Constitution draws us back to 
those fundamentals. The Senator has always put before the Senate this 
broader and deeper vision of why we are here, what we ought to be 
doing, and calling us back to our basic principles as a nation--right 
back to the Founding Fathers--as the Senator pointed out in his talk 
today. Important aspects of that are being challenged today in a very 
serious way.
  I echo what my colleague said and express my appreciation to the 
Senator from West Virginia.
  Mr. BYRD. Madam President, I thank the distinguished Senator. I am 
going to yield the floor.
  Before I yield it, I apologize to the distinguished Senator from 
Kentucky, Mr. McConnell. He is a Republican and I am a Democrat.
  I have been known to go down into Kentucky at his invitation and 
speak, and I value his friendship. I apologize to him for imposing on 
his time.
  Mr. GRAMM. Before the Senator yields, if he would yield very briefly 
to me, I thank him for his very sweet comments. I am very happy to be 
named along with Paul Sarbanes. And someday when I am talking to my 
grandchildren about the fact that their grandpa actually was a pretty 
important guy in his day--though his mind, I am sure, at that point 
will have seemed to have largely slipped away--I will say: I got to 
serve with the great Robert C. Byrd.
  Mr. BYRD. I thank the Senator.


                           Amendment No. 4200

  The PRESIDING OFFICER. The Senator from Kentucky will now be 
recognized for up to 45 minutes.
  Mr. McCONNELL. Thank you, Madam President.
  I rise to speak on behalf of the McConnell amendment which will be 
voted on sometime in the not too distant future. It is my understanding 
that my own colleague, Senator Enzi, may make a motion to table at the 
end of the debate. So let me, at the outset, say I support the Edwards-
Enzi amendment.
  The second-degree amendment that is pending at the desk, which I will 
shortly discuss, does not, in any way, change or diminish the Edwards-
Enzi amendment. I think it is a good idea.

[[Page 12647]]

However, I think it simply does not go far enough.
  I also supported the Leahy amendment yesterday after my amendment to 
combat union fraud was defeated. I will continue to support responsible 
corporate accountability measures in this bill.
  My only point is, corporations do not have a monopoly on misconduct, 
deception, and fraud. As long as we are addressing professional 
misconduct, deception, and fraud, we ought to recognize this is a 
problem in our entire professional culture, not just in corporate 
culture. Let me repeat that. This is a problem in our entire 
professional culture, not just in corporate culture.
  I understand the mood at the moment is to beat up on corporations. 
And they deserve it. That is what the underlying bill is about. On the 
other hand, to ignore other areas of abuse, it seems to me, is to miss 
an opportunity to address the problem in a broader way.
  The Senator from North Carolina raises real problems with the ethics 
and conduct of corporate lawyers. I commend him for that. And I commend 
the Senator from Wyoming for that. But I have long sought to curb 
similar and well-documented abuses in the general practice of law, 
specifically in the case of personal injury law.
  Let me say at this point that the McConnell amendment applies only to 
Federal claims and Federal courts. We are talking here about Federal 
claims and Federal courts. My point in offering this amendment is not 
to obstruct but to extend and enhance our debate on professional 
conduct.
  We ought to set standards for corporate attorneys. I favor that. And 
we ought to set standards for personal injury lawyers as well. 
Corporations and corporate attorneys do not have a monopoly on 
misconduct. We are doing a real disservice to the American public if, 
during this important debate on professional misconduct, we turn a 
blind eye to abuses in our society that have been piling up way 
before--long before--Enron, WorldCom, and Global Crossing.
  All too often we hear stories about lawyers who take advantage of 
their clients by not informing them of the legal fees and costs those 
clients will incur. This sad practice results in consumers of legal 
services receiving next to nothing in personal injury and other claims.
  Let me recount the story of Diana Saxon. Ms. Saxon was a victim of, 
among other things, attempted forcible rape. The defendant was 
convicted, and Ms. Saxon brought a personal injury action against that 
defendant. The attorney she hired said the fee he was going to charge 
was 40 percent, plus costs.
  Ms. Saxon received an award of $25,000. Of that, per her agreement, 
$8,300 went to her lawyer in attorney's fees. But an additional $20,716 
went to her lawyer for expenses. However, none of those costs was made 
known to Ms. Saxon during the course of the litigation. She was only 
informed of them after her case was concluded.
  Now, it gets even better--or, for Ms. Saxon's unfortunate situation, 
it gets worse. After her lawyer charged her his costs, she ended up 
owing her attorney $4,000--$4,000. That is right. For poor Ms. Saxon, 
she was actually left over $4,000 in the hole, in debt.
  Now, to be fair, Ms. Saxon's lawyer was actually magnanimous in that 
he waived a few costs and a small portion of his fee so that she was 
actually able to walk away with the princely sum of $833--$833.
  In his letter to her, where he agreed to offer her these few hundred 
dollars from her award of $25,000, he wrote:

       I'm agreeable to pay the sum of $833. This is the only 
     money you will receive from your $25,000 settlement.

  So, in sum, even though Ms. Saxon's lawyer told her that the lawyer 
would get 40 percent of her award, plus costs, in reality, after 
including these costs, he got 96 percent--96 percent--of her award. 
That is right, 96 cents on every dollar that Ms. Saxon received.
  We need to make sure that consumers of legal services are not duped 
by this type of inaccurate and incomplete information.
  Let me quote Ms. Saxon. She has put the problem better than I could. 
Here is what she had to say:

       This is not how our civil justice system is supposed to 
     work. What happened to me should never happen to anyone 
     again. You have a chance today to make a difference by 
     passing a law to protect people from the kind of thing my 
     attorney did to me. Had I known in advance or at some point 
     along the way how little of my lawsuit was going to benefit 
     anyone but my lawyer, I might have thought different about 
     enduring 2 years of emotional trauma during the litigation.

  Summing up what she had to say: Had she had any idea how little of 
the money she might get, she might not have wanted to endure the trauma 
of this litigation for 2 long years.
  Now, Ms. Saxon, in a sense, was lucky in that at least her lawyer 
told her she would be liable for costs, although he obviously did not 
tell her the magnitude of the costs she was looking at and, thereby, 
completely misled her.
  But as these excerpts from the Yellow Pages here in the District of 
Columbia area phonebook indicate, some lawyers are not even that 
candid.
  So let's take a look at the first chart out of the DC phonebook. On 
this first chart, we have an ad with the big banner entitled 
``AUTOMOBILE ACCIDENTS.'' There is a line almost as big--the fourth 
line down--proclaiming: ``No Recovery, No Legal Fees''--``No Recovery, 
No Legal Fees.'' It does not say anything about the cost the plaintiff 
is going to have to bear and, therefore, does not paint an accurate 
picture.
  Let's take a look at the second chart, again out of the DC phonebook. 
It has a big banner down the right side entitled ``PERSONAL INJURY.'' 
At the top is says: ``Personal Injury Lawyers Who Put You First.'' 
``The Firm Boasts an All-Star Roster of Top Personal Injury 
[Lawyers].'' And it makes the point: ``No fee if no recovery.'' But, 
again, like the last ad, it does not mention at all anywhere in the 
ad--nowhere in all of this ad--that the client will be liable for 
costs.
  Let's take a look at chart No. 3. This ad is marginally--marginally--
better. At the top of the ad there is a headline, in bold, saying: 
``Legal Problems Require a Lawyer.'' Obviously, legal problems require 
a lawyer. About midway down is a line item saying: ``Call Me. I can 
help.'' ``Call me. I can help.'' And right below this line, another 
line says: ``No Legal Fee If No Recovery.'' In a little bit smaller 
print you will notice, ``No Legal Fee If No Recovery.'' But this 
lawyer, at least, to his credit, has an asterisk by this line. If you 
look very carefully, you see an asterisk; and way down here at the 
bottom of the ad, in minuscule print--which might require you getting 
your glasses adjusted or to get a magnifying glass--it says: ``Cost May 
Be Additional.''
  This lawyer at least gets credit in his ad for mentioning that there 
might be some cost, although you better have your glasses adjusted in 
order to find it.
  Chart No. 4 is a familiar pitch, that there be ``no legal fees unless 
recovery.'' This lawyer, to his credit, at least has it in print large 
enough to where you might actually see that line. But there is, of 
course, an asterisk; down here at the bottom, again, in tiny, minuscule 
print, ``Clients may be responsible for reasonable fees.''
  This lawyer, at least, gets some credit--be the print ever so small--
for pointing out that there could be a cost involved, and maybe a 
careful client would see that in the ad.
  Chart No. 5, really my favorite one, it has a big banner at the top, 
``accidents,'' all the way across the top. You wouldn't have any 
trouble missing that. Underneath, ``No legal fee if no recovery.'' Very 
enticing observation to an injured client, potential client, and there 
is an asterisk after it.
  Going to the bottom of the page, below the Visa and MasterCard logos, 
it says, ``excluding costs.'' That is about the smallest print on the 
ad. But a careful potential client might be able to find that there 
could conceivably be a cost attached to this.
  Frankly, I am not sure if this phrase means that costs are excluded 
and, therefore, you don't have to pay for these either, or if it means 
that costs are excluded from the exclusion, which

[[Page 12648]]

means you do have to pay for them. A consumer of legal services should 
not be enticed by the prospect of free legal services, including what 
appears to be an exclusion of cost from the charges for which he is 
responsible.
  As I will shortly describe, the amendment I am offering would help 
prevent people from being duped by incomplete and misleading 
representations such as these. Let me repeat that the scope of my 
amendment is not every court in America but only applies to Federal 
claims and Federal courts.
  Shifting gears for a moment, we also hear stories of ambulance 
chasers who take advantage of grieving families when they are most 
vulnerable. For example, at the scene of a 1993 collision between two 
commuter trains in Gary, IN, witnesses reported seeing lawyers' 
business cards being passed around at the scene of the accident. And 
the injured were being videotaped as they were removed on stretchers.
  After an August 1987 crash of a commercial airline flight in Detroit, 
a man posing as a Roman Catholic priest, Father John Irish, appeared at 
the scene to console families of the victims. He hugged crying mothers 
and talked with grieving fathers of God's rewards in the hereafter. 
Then he would hand them the business card of a Florida attorney, urging 
them to call the lawyer, and then the father would disappear.
  We should make sure that misleading ads and shameless ambulance 
chasing do not occur. I propose a clients' bill of rights for consumers 
of legal services. We have talked a lot in recent years about a 
Patients' Bill of Rights to make sure patients are treated properly by 
health maintenance organizations. We need a clients' bill of rights to 
make sure consumers of legal services are treated fairly.
  This clients' bill of rights would do two things. The first thing it 
would do is require consumers of legal services to receive basic 
information at the beginning, during the course, and at the end of the 
case so that all along the way the client, the consumer of legal 
services, has a clear understanding of what the financial relationship 
is between the lawyer and the client.
  As the old saying goes: Knowledge is power. My amendment empowers 
consumers by giving them the knowledge they need to make informed 
decisions about their legal representation. As I pointed out earlier in 
one of my examples, there was a lady who had no earthly idea, because 
of not receiving proper information about the extent of the cost that 
could be involved in her case, that after getting a $25,000 settlement 
she would essentially get nothing. The lawyer then benevolently gave 
her $833.
  So clients need information all along the way to make informed 
decisions about legal representation.
  At the initial meeting before they are retained, under the McConnell 
amendment, attorneys would have to provide would-be clients with the 
following things--and this is not unreasonable; it's elementary 
justice--No. 1, the estimated number of hours that will be spent on the 
case; No. 2, the hourly fee or the contingent fee that will be charged; 
No. 3, very importantly, the probability of a successful outcome; next, 
the estimated recovery reasonably expected; next, the estimated cost or 
expenses the plaintiffs will bear; and whether a client will be subject 
to fee arrangements with other lawyers.
  This is elementary consumer protection. Let me say to my friends in 
the Senate who are close to and allied with the plaintiffs' lawyers in 
America: We are not talking about capping anybody's fees. This is not 
about capping fees. The fee arrangement could still be whatever 
astronomical amount the lawyer believes he can charge. But we are 
talking about providing basic information to the client so the client 
can understand what the fee arrangement is going to be. There are no 
fee caps in this amendment.
  Monthly statements: My amendment would also require lawyers to 
provide their clients with monthly statements so that consumers of 
legal services will be informed on a regular basis of the basic 
progress of their case. Specifically, the lawyers would have to tell 
clients how much time they are expending on their case, what they are 
spending their time doing, and what expenses they are incurring in the 
case. Again, this is basic information clients should receive so they 
know how their case is progressing and how in essence their money is 
being spent.
  Then an accounting at the end of the case: Clients should receive 
basic information at the end of the case so they know exactly what they 
paid for during their representation. To this end, my amendment 
provides that within 30 days after the end of the case, attorneys shall 
provide clients with the number of hours expended; the amount of 
expenses to be charged; the total hourly fee or the total contingency 
fee in a contingency fee case; the effective hourly fee charged, which 
would be determined by dividing the total contingency fee by the total 
number of hours expended.
  Again, this is elementary, reasonable information, no fee caps, just 
providing reasonable information to the client at the end of the case 
so they can understand just what the legal services have provided.
  Madam President, in the age of disclosure, I cannot believe that my 
colleagues would not support some basic disclosures that the first part 
of my amendment would provide. It does not limit--I say again--
attorney's fees in any regard. There are no fee caps of any sort in 
this amendment. Frankly, I would like to see that. We have had fee caps 
under the Federal Tort Claims Act for years, and I am told there is no 
dearth of lawyers prepared to bring tort claims against the United 
States. But there are not any fee caps in this legislation. That is 
something a large number of Members of the Senate do not support. The 
first part of my amendment simply enables consumers of legal services 
to make informed choices.
  The second thing my amendment does is establish a bereavement rule. A 
bereavement rule means the provision for a period of mourning, or a 
period of bereavement, during which lawyers would have to be respectful 
of injured victims or their families. As I mentioned, this provision is 
important because there are disturbing stories of ambulance-chasing 
lawyers who prey upon victims and their families when these people are 
the most vulnerable.
  To address this problem, my amendment simply provides that there will 
be no unsolicited communication by lawyers to victims, or to their 
families, regarding an action for personal injury, or wrongful death, 
for 45 days from the date of death or personal injury--just 45 days to 
give the victims, or their families, an opportunity to begin to get 
their feet back under them before they start considering which lawyer, 
if any, they want to retain to pursue the legal action to which they 
may be entitled.
  Let me repeat. This amendment applies only to unsolicited 
communications. If the victims or their families are feeling like it 2 
days after the event, they are certainly free to call whomever they 
choose. This only applies to unsolicited communications to victims or 
their families. Injured parties and their families are free to contact 
whomever they want whenever they want.
  Madam President, there is precedent for this respectful, considerate 
principle in existing Federal law. In 1996, we passed legislation that 
prohibited lawyers from engaging in unsolicited communications for 30 
days following an airline disaster. Let me say it again. There is 
precedent for a bereavement rule already in Federal law. In 1996, we 
passed legislation that prohibited lawyers from engaging in unsolicited 
communications for 30 days following an airline disaster. Just 2 years 
ago, in 2000, we extended this prohibition to 45 days from the date of 
an airline crash. That prohibition is codified at 49 U.S.C. section 
1136(g)(2).
  The point I am making here is that there is precedent in Federal law 
already for a bereavement rule, and this simply expands upon that 
preference and provides this protection for additional victims during a 
period of mourning.
  Madam President, someone who has been killed or injured in a train 
crash or a shipping accident is just as dead, or just as injured, as 
someone who is

[[Page 12649]]

killed or injured in an airline crash. These victims and their families 
deserve the same type of respect and consideration. All these types of 
victims and their families are in a vulnerable state where it is easy 
for them to be pressured or taken advantage of.
  The second part of my amendment would afford victims of other 
tragedies the same protection that we afford victims of airline 
disasters. The language in my amendment that we used to do so is 
virtually identical to current Federal law. It would guarantee these 
people a reasonable period of time to grieve, collect their thoughts, 
and to think clearly about what action they want to take and who they 
want to take such action on their behalf.
  As I said, there is current precedent for it in Federal law, and I 
hope my colleagues will support it, along with the disclosure 
provisions in my amendment.
  Madam President, what is the time situation?
  The PRESIDING OFFICER. The Senator has 20 minutes remaining.
  Mr. McCONNELL. Madam President, let me sum up what the McConnell 
amendment is. There are essentially two parts to it. First, it would 
require that lawyers provide to their clients all along the way, from 
initially being retained until the conclusion of the case, adequate 
consumer protection information so the clients will have a sense at 
every stage of the case how the case is moving along, what the 
likelihood of success is and, very importantly, what kind of costs the 
client may be incurring in the course of the litigation.
  Secondly, we provide for a bereavement rule of 45 days to give the 
victims and their families an opportunity to get back on their feet 
during an atmosphere in which unsolicited efforts to retain these 
victims are put off. If, however, the family at any point during that 
45-day period decides it is ready to move on and wants to look at its 
legal options, there is nothing in the amendment that would prevent the 
victim or victim's families from retaining a lawyer at any time. All 
this does is protect them from unwanted solicitations for a brief 
period of 45 days following the occurrence of the event.
  As I pointed out, there is already precedent in Federal law for such 
a bereavement period of 45 days. That applies in the wake of airline 
disasters.
  Finally, let me repeat this because I know this is something that is 
offensive to many Members of the Senate, particularly on the other side 
of the aisle. As much as I would like to see fee caps established, this 
amendment has no fee caps in it. Even though, under the Federal Tort 
Claims Act, since the late 1940s, we have had a fee cap of 25 percent 
in tort actions against the Federal Government, no such fee cap is in 
this amendment.
  So I think this is a modest proposal to provide consumer protection 
to victims of accidents as they contemplate their futures and 
determine, first, which lawyer to hire, and after hiring the lawyer, 
have adequate information along the way to make sure they understand 
what the fee arrangement is.
  I yield the floor and retain the remainder of my time and now urge--
and I will also do so later--the Senate to adopt this amendment.
  The PRESIDING OFFICER (Mrs. Clinton). Who yields time?
  Mr. SARBANES. Madam President, can I inquire as to what the 
allocation of time is? Let me make a parliamentary inquiry. I 
understand the vote on a motion to table that will be offered by 
Senator Enzi is scheduled to take place at 12:45.
  The PRESIDING OFFICER. That is correct.
  Mr. SARBANES. Can the Chair inform us as to the allocation of time 
from now until quarter to 1?
  The PRESIDING OFFICER. The unanimous consent agreement provided that 
the time between the conclusion of Senator McConnell's remarks and the 
12:45 p.m. vote will be evenly divided between Senators Gramm and 
Sarbanes, and Senator McConnell has a remaining amount of time of 16 
minutes.
  Mr. SARBANES. Sixteen minutes?
  The PRESIDING OFFICER. That is correct.
  Mr. McCONNELL. Madam President, is it the Senator's thought we move 
up the vote?
  Mr. SARBANES. Staff has made an announcement, and people have planned 
accordingly. I understand that is the situation on both sides of the 
aisle for that matter. It was announced earlier on. People, therefore, 
made plans accordingly.
  The PRESIDING OFFICER. If Senator McConnell used all of his remaining 
time, each side would have approximately 10 minutes.
  Mr. McCONNELL. I say to my friend from Maryland, I will be happy to 
hear from the other side on the amendment. I am reluctant to yield back 
my time until I know the extent of the debate in which we are going to 
engage. In any event, the vote, Madam President, occurs at quarter to 
1?
  The PRESIDING OFFICER. That is correct.
  Mr. McCONNELL. I retain the remainder of my time until such time we 
decide otherwise. I have not heard from the other side.
  Mr. SARBANES. As I understand the agreement, I do not think others 
can use time until the Senator from Kentucky uses his time.
  The PRESIDING OFFICER. That is the Chair's understanding.
  Mr. McCONNELL. I suggest we divide the remainder of the time between 
now and the vote. Will that be acceptable?
  The PRESIDING OFFICER. Is there objection?
  Mr. SARBANES. I ask unanimous consent that the remaining time between 
now and quarter of 1 be divided equally to the manager of the bill, to 
Senator Enzi, and to Senator McConnell. That will give us about 10 
minutes each, I think.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maryland.
  Mr. SARBANES. Madam President, I will speak briefly to the McConnell 
amendment which has been added as a second-degree amendment to the 
Edwards-Enzi amendment. Before I address that amendment itself, let me 
again indicate my very strong support for the underlying first-degree 
amendment, the Edwards-Enzi amendment, which was very carefully worked 
out and I believe represents a constructive suggestion. I am hopeful we 
can get to that amendment and have a vote on it sometime in the near 
future.
  Obviously, the way things are now structured, we have to dispose of 
the McConnell second-degree amendment in order to get to the Edwards-
Enzi amendment, but I think the Edwards-Enzi amendment warrants both 
the attention and the support of this body. I hope at some point we 
will be able to do that.
  I am not going to address the substance of the McConnell amendment, 
or perhaps I will discuss it only in passing. I simply wish to observe 
that it is not relevant to this bill. It is talking about a client's 
bill of rights which may or may not be a worthy subject to examine.
  How we regulate the lawyers is a complicated problem, obviously. It 
has mostly been done at the State level. The Senator from Kentucky has 
some sweeping proposals on a national basis, and they may warrant 
examination, but I certainly do not think they warrant coming into this 
debate on a very different issue. I do not know that there has been any 
study of it. I do not think this represents the recommendation or the 
report of any committee that is putting this forward, having undertaken 
an appropriate series of hearings in order to examine the subject. I 
have not had the benefit of testimony from the proponents and 
opponents. In fact, if the Senator from Kentucky will yield for a 
question, has a committee of the Senate recommended anything like this?
  Mr. McCONNELL. I say to my friend from Maryland, no committee of the 
Senate recommended the energy bill on which we spent 6 weeks in the 
Senate, and the majority leader has bypassed committees consistently 
throughout the last year. So I do not know that the Senate was 
constrained in any way--
  Mr. SARBANES. It may be a response to say to me it was done somewhere 
else. I have a very specific question: Has a committee of the Senate 
recommended this proposal?

[[Page 12650]]


  Mr. McCONNELL. I would like to provide my own answer. If the Senator 
is asking for an answer from the Senator from Kentucky, I would like to 
be able to express myself, if that is OK with the Senator from 
Maryland.
  Mr. SARBANES. The Senator from Kentucky is very skilled. I watched 
him on these television programs. I know he is very good when the 
question is put to him to give the answer he wants to give, even though 
it is not directed to the question. Obviously, I will have to go 
through that same experience on the floor of the Senate now.
  Mr. McCONNELL. I thank my friend from Maryland for his compliment and 
respond, as with many other bills over the last year that we dealt with 
on the floor of the Senate, it has not been reported by a committee. 
But many worthwhile ideas have been adopted and made a part of law that 
have been recommended by both Democratic and Republican Senators that, 
in the years my friend and I have been here, were not officially 
reported out of a committee.
  Mr. SARBANES. Have any hearings been held on these proposals--the 
bereavement period and the fees proposal? Have hearings been held on 
those issues?
  Mr. McCONNELL. I am unaware of any hearings to that effect, but I ask 
my friend from Maryland why he thinks something as elementary as this, 
something as obviously as fair as this, and in the case of the 
bereavement rule, which we adopted in Federal law for families and 
victims of airline crashes, would not be an appropriate thing to do 
with or without hearings?
  Mr. SARBANES. It seems to me there are complicated issues that are 
raised by Senator McConnell's proposal, and they certainly should have 
been preceded by hearings in which the pros and cons could have been 
carefully examined.
  Madam President, I reiterate my point, this amendment is not relevant 
to the issue before us. It does not come to us on the basis of any 
hearings that back up or buttress the proposal. It has not worked 
through any committee. It certainly has not been recommended by any 
committee, and there have not even been any hearings, as I understand 
it, by any committee.
  At the appropriate time, I will be very strongly supportive of the 
motion to table that will be offered by the able Senator from Wyoming. 
This is, of course, the second McConnell second-degree amendment we 
have had to deal with on this legislation.
  I hope the Senator from Kentucky does not view this as a kind of fair 
hunting game to bring forth at each step along the way, whenever there 
is an opening for a second-degree amendment, whatever sort of pet 
project he has been harboring in his office for whatever period of 
time.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. I yield myself some of my time to respond to my friend 
from Maryland.
  As I listened carefully to my friend from Maryland, he is straining 
to think of a good argument against this worthwhile amendment. It has 
been my experience over the years in the Senate that when we start 
saying there has been no committee action, there have been no hearings, 
we are having a hard time thinking of a good argument against the 
proposal on the merits.
  So let me repeat again what the merits are. It seems to me we do not 
need committee hearings or committee action to convince us that a 45-
day bereavement rule for victims and their families, which we have 
already adopted in Federal law for victims and families of plane 
crashes--we do not need committee action to tell us this is a 
fundamentally appropriate thing to do.
  Do we need hearings and committee action to tell us that in Federal 
claims and in Federal cases it is appropriate and only right that 
lawyers provide information to their clients at the beginning, during, 
and at the end of their handling of the case as to the possible costs 
involved? That is what is before us, not the issue of whether or not we 
should have hearings on this or whether or not the committee should 
act. My goodness, we spent 6 weeks on an energy bill that the committee 
did not pass out of the Energy Committee. We do that frequently. The 
Senate is not known to be constrained by tight rules of germaneness, 
nor by official committee action.
  So I urge my colleagues to look at the amendment itself, not these 
rather extraneous arguments seeking to divert our attention away from 
what the amendment itself provides, which is protections for consumers 
of legal services.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Madam President, on the energy analysis, I simply point 
out that the Energy Committee held extended hearings over a long period 
of time on the energy issue. Then, they did not actually evolve a bill, 
but they had a very full set of hearings and a lot of recommendations 
available to be included in an energy package.
  On the other, I say to my colleague, I forbore from discussing the 
substance because I did not want to prejudice the Senator on some 
future occasion by having to go substantively into the weaknesses and 
deficiencies of the proposal that is before us. Since the time is 
limited and that would take quite a while to do, I intend to continue 
to do that out of a sense of consideration to my colleague because 
presumably, if this amendment is tabled, he will be back visiting with 
us on another day, perhaps on an appropriate vehicle. I do not know. 
One would have to wait and see whether that would be realized.
  Out of some deference of respect for my friend from Kentucky, I 
simply thought I would not undertake to go into this point by point on 
the substance because it is really not appropriate. We ought to 
recognize that and go ahead and table the amendment, and maybe when it 
finally comes up in an appropriate context, we can then address its 
substantive weaknesses or strengths. Perhaps at that time it would have 
evolved into a different animal.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Wyoming.
  Mr. ENZI. Madam President, I yield myself such time as I may consume. 
At 12:45, I will be making a motion to table the McConnell second-
degree amendment to amendment No. 4200. We are working on a bill that I 
have spent hundreds of hours on, part of them in hearings, much of the 
time in drafting my own legislation, then working with Senator Gramm to 
come up with an even better bill, and then working with Senator 
Sarbanes to come up with the bill we have before us.
  There is a crisis in the stock market. Two days ago, it dropped by 
185 points. Yesterday, it dropped by 285 points. Some suggest that is 
because Congress is working on this issue and it is scaring the heck 
out of the people of the United States. I hope that is not the case. I 
hope it is a sign that they do want to have a solution, and they want 
to have a solution quickly. We do have the solution that, combined with 
the House bill, can serve the purpose of restoring the confidence of 
American investors.
  The McConnell amendment is a clients' bill of rights to reform the 
way attorneys treat their clients. It is not about securities and 
exchange. It is all about attorneys. Senator Edwards and I modified our 
amendment so it applies only to action before the Securities and 
Exchange Commission. That was so that if this debate draws out with 
multiple second-degree amendments well beyond the time we have the 
cloture vote, our amendment will still be germane.
  A standard that the Senator from Texas, Mr. Gramm, has put on 
amendments is that they be germane. He did an extensive speech last 
night about the need to do germane amendments and get this finished.
  This amendment is good and well intended. It requires attorneys to do 
a number of things in representing those who put their trust in 
attorneys' hands, and this includes requiring attorneys to provide 
written disclosure to their clients on the number of hours that will be 
spent on their case, the attorney's hourly or contingent fee, the

[[Page 12651]]

probability of successful outcome, estimated recovery of costs, and 
bereavement.
  Under normal circumstances, I probably would be very excited about 
this bill. The reason I am opposing it is simply because it does not 
have anyplace in the accounting reform bill that we are debating today. 
I realize it does not change anything in my amendment. It is not a 
substitute amendment, but it is an addition that will cause problems 
further down the road. It will delay actually getting accounting reform 
into place. The accounting reform bill is being used as a vehicle to 
provide a free ride for a nongermane, unrelated amendment. I will 
probably use that same line again on a number of other amendments that 
come up later--it is nongermane.
  The McConnell amendment needs to hitchhike on a different road with a 
different vehicle at a different time.
  Over several months, I and my esteemed colleagues on both sides of 
this aisle have worked hard on the accounting reform bill. We have 
worked hard to keep out surplus, nonrelevant issues so we can get 
through the process of getting accounting legislation through in a 
timely fashion and in a bipartisan manner. We have been very successful 
at keeping out exact amendments even that deal with how to do 
accounting and have set up a process where people who are knowledgeable 
on that can figure out the right way to do it and the right way to do 
it faster than before.
  I strongly believe this bill cannot afford to be held up any longer 
just for Members on both sides of the aisle to score political points 
on hot button issues. A lot of us have pet projects and issues we would 
have liked to add on, but we resisted and we encouraged our colleagues 
on the Banking Committee to do the same thing.
  We are now in the amendment process, but amendments should be germane 
to the contents of the underlying bill and amendment. That is not a 
requirement until after cloture, but we need to get the bill done. 
There is no reason we even need to go to cloture if we would get the 
germane amendments done and get this into a conference committee so we 
can get the work done.
  The McConnell second-degree amendment, while well intended, is not 
germane. It does not deal solely with securities laws or those 
attorneys appearing and practicing before the SEC. It does not deal 
solely with attorneys working for publicly traded companies but to any 
attorney and any client practicing any form of Federal law. It does not 
deal with an attorney's professional responsibilities of reporting 
Federal securities law violations to its corporate client. It is much 
broader than the underlying amendment which does deal strictly with 
Federal securities laws, attorneys appearing and practicing before the 
SEC, and internal reporting by an attorney within a publicly traded 
company.
  In addition, the McConnell amendment is going to require study and 
debate, meaning more time spent diverting passage of the much needed 
accounting reform bill. We are running out of time before the next 
recess and have several important bills yet to consider, including 
Homeland Security Department legislation.
  While the McConnell amendment is well intended, the timing is simply 
wrong. I respect my colleague from Kentucky and his constant support 
and earnest effort to make attorneys play it straight with their 
clients. But I must respectfully oppose this amendment at this time. I 
hope we will be able to debate and vote on it on another day. When the 
time is appropriate under the agreement, I will make a motion to table 
the amendment.
  I yield the floor, and I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Madam President, let me say first with regard to 
whether this is appropriate to be added to this bill, the ranking 
member of the Banking Committee, the manager of the bill on this side, 
supports my amendment. Obviously, it is not his view that this is in 
any way inappropriate for this legislation.
  I also say to my good friend from Wyoming, this will not slow down 
the bill. This amendment will be voted on at 12:45. There is a time 
agreement on it. We certainly are not in any way trying to slow down 
the passage of the underlying bill which I fully expect to support.
  The issue is whether we are only interested in corporate defense 
counsel misbehavior. Why are we only interested in corporate defense 
counsel misbehavior? My amendment applies to the other side, the 
plaintiff's side. It would apply to cases, for example, brought under 
the Federal Employers Liability Act, which governs injury and wrongful 
death actions against railroads in interstate commerce by railroad 
workers and their families. It would apply to cases brought under the 
Longshore and Harbor Workers Compensation Act, which establishes no-
fault compensation for employees injured on navigable rivers. And it 
would apply to plaintiffs bringing action under the Price Anderson Act 
amendments of 1998, which creates a Federal cause of action for nuclear 
accidents. It would also apply to the Federal Tort Claims Act, which 
creates Federal causes of action for tort claims against the U.S. 
Government. It would apply to lawyers representing clients bringing 
cases under the Public Health Service Act, which are suits against 
certain federally supported health centers and their employees brought 
under the Federal Tort Claims Act. And finally, it would apply to 
lawyers representing clients bringing actions under part of Federal 
law, very important in my State, the Black Lung Benefits Act of 1972, 
which establishes a compensation scheme for coal miners allegedly 
suffering from blank lung disease and survivors of miners who died from 
or were totally disabled by the disease.
  Let me sum it up again: it is not my intent to slow the bill down. 
This amendment will be voted on at 12:45, so it clearly is not slowing 
anything down. It seems to me entirely consistent with the underlying 
amendment dealing with corporate defense counsel misbehavior to also 
address the question of a plaintiff's lawyer's misbehavior.
  Beyond that, we are talking simply about providing consumers of legal 
services with basic information, at the beginning, during, and at the 
end of a lawsuit, and a modest 45-day bereavement rule giving the 
victims and their families a chance to get back on their feet before 
they are contacted by lawyers seeking to represent them in court. It 
would not in any way prevent families from contacting a lawyer during 
that time but would protect them from unwarranted solicitation of legal 
services for a mere 45 days.
  This is a very modest proposal. I would love to go a lot further. I 
like the fee caps in the Federal Tort Claims Act. That is not what we 
have offered. That is not what I offered. There is no impact on fees, 
no caps on damages. This is strictly consumer protection in the area of 
legal services. It is a very modest proposal which I hope the Senate 
will adopt when we vote on it at 12:45.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Madam President, I will give a little explanation for the 
point raised that this particular bill--because a time has been set for 
the vote--will not hold things up. There are about 60 amendments out 
there; there are probably 10 that actually deal with what is in the 
bill. There has to be some point where we have to ask, Can we not 
concentrate on what is in the bill instead of bringing up the other 
things? I am sorry that yours is the bill on which we are starting 
that.
  Mr. McCONNELL. Will the Senator yield?
  Mr. ENZI. Sure.
  Mr. McCONNELL. It was my understanding that cloture was filed last 
night. Would my friend from Wyoming not agree, that cloture vote brings 
the bill to a conclusion? I am not in any way trying to delay the 
passage of the bill. I support the underlying bill. I believe my 
amendment is appropriate to be considered.
  Mr. SARBANES. Will the Senator yield?

[[Page 12652]]


  Mr. ENZI. Yes.
  Mr. SARBANES. Actually, I will use my own time, and the Senator may 
reserve his time.
  We must table this amendment. Otherwise, it becomes an invitation for 
others to come in and offer second-degree amendments that are not 
relevant to the bill. This amendment is not relevant to the bill--
nowhere close. If we start this process now, opening up the bill to 
these nonrelevant amendments, what will happen to the relevant 
amendments, some of which are germane under cloture and others of which 
might miss the tight test of germaneness but are relevant material, 
which are pending, which other colleagues have offered, if they want to 
get to those amendments?
  We could have done the Edwards amendment yesterday and moved on to 
something else, but we came in with a second-degree amendment, not 
relevant--not only not relevant to the Edwards amendment, not relevant 
to the bill.
  Frankly, we are well beyond the point where we at least ought to set 
aside amendments that have no relevance to the underlying legislation.
  Mr. McCONNELL. Will the Senator yield?
  Mr. SARBANES. Certainly, I yield.
  Mr. McCONNELL. I ask my friend from Maryland, if he believes my 
amendment may have some merit, whether he would support taking it up as 
a freestanding measure with a time agreement.
  Mr. SARBANES. No, I would not support that.
  Mr. McCONNELL. I thank the Senator.
  Mr. SARBANES. Why would I support a request like that? Surely the 
Senator from Kentucky is just making a joke on the floor of the Senate 
by making that inquiry. That must be apparent to all. I appreciate the 
Senator's sense of humor in that regard. I also appreciate his 
indication, just a moment or two ago, he intends to support the 
underlying bill. Of course, we are gratified to hear that.
  I yield the floor and reserve whatever time I may have left.
  What is the time situation?
  The PRESIDING OFFICER. The Senator has 33 seconds, Senator McConnell 
has 4 minutes 38 seconds, and the Senator from Wyoming has 3 minutes.
  Who yields time?
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. It was my understanding that Senator Santorum was on 
the way. But if he has not arrived yet, I suppose the best thing to do 
would be to enter a quorum call knowing full well my time is running.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Madam President, I will alert Members we are going to have 
a vote later. The two members of the Appropriations Committee have 
finally gotten a meeting with the House appropriators on the 
supplemental appropriations bill. I think it would be in everyone's 
best interest that they are allowed to go forward with that most 
important meeting.
  We received a request from the chairman of the Appropriations 
Committee, Senator Byrd. Therefore, I ask unanimous consent that the 
order that is now in effect be modified and that Senator Enzi would be 
recognized at 2 p.m. to move to table the amendment, and that 8 minutes 
prior to that would be devoted to debate between the two managers of 
the bill, Senator Sarbanes and Senator Gramm, and that Senator Enzi 
would be recognized for 2 minutes, and Senator McConnell for 2 
minutes--a total of 8 minutes. All other provisions of the unanimous 
consent agreement now in effect would remain the way they are.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. REID. Madam President, the vote will occur at 2 o'clock today. In 
the meantime, I ask there be a period from now until then for morning 
business, with the time equally divided between Senator Daschle or his 
designee or Senator Lott or his designee.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I suggest the absence of a quorum, and I ask the time be 
charged equally between Senator Daschle and Senator Lott.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. CLINTON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Miller). Without objection, it is so 
ordered.

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