GARRETT: We now move onto -- what's the number? I can't read without my glasses -- 2930, Patrick's bill. Clerk will report the bill.

CLERK: H.R. 2930, to amend the securities laws to provide for registration...

GARRETT: The bill will be -- with unanimous consent, the bill will be considered as read. Would the gentleman like to speak on his bill?

MCHENRY: Yes.

GARRETT: There you go. You're recognized for five minutes.

MCHENRY: Thank you, Mr. Chairman. Throughout our history, the United States has thrived under the hard work and ingenuity of small business. The vast majority of employed Americans work for such firms, and many of our most important and internationally recognized companies, such as Dell, Google, Whole Foods, and Wrigley's, as well as even Facebook, started out as small businesses.

Even in the strongest economic environment many small businesses cannot attract investors or secure the capital necessary for growth, resulting from barriers to investment and constraints on capital formation. Due to a relatively small number of shareholders participating in an issuance of small -- of shares of small businesses there are often few bids and offers discouraging potential investors who fear that they may not be able to sell their shares at the right time or at the right price.

The risk that an investor cannot sell shares in a timely manner or at a fair price under -- reduces investor interest in such opportunities, inhibiting the growth of small businesses and the economy in general. It has become increasingly difficult to access credit in today's marketplace. We hear this regularly from our small businesses in our district.

As a result, the United States capital formation and entrepreneurship have suffered. By permitting crowd funding issuances, which my legislation would do, entrepreneurs, startups, and small businesses who are often overlooked by conventional lenders will be able to raise money through relatively small equity investments from a large number of people, combining the best of both microfinance and crowd sourcing.

Today in the United States, Internet-based crowd funding is utilized to raise millions of dollars for charitable organizations and nonprofits. We should take this experience and apply it to growing our economy.

Other nations, such as Great Britain, Hong Kong, and the Netherlands already offer equity-based crowd funding opportunities to investors and startups to spur capital formation. Unfortunately, entrepreneurs and investors in the United States that communicate through Internet-based platforms and offer securities are subject to close -- costly SEC registration requirements. Compliance with each state's individual securities laws and rules, known as blue sky laws, is prohibitively costly if companies are seeking to raise only small amounts of money, which my legislation would allow. We can all agree that illiquidity is a major risk involved in investing in small issuers. Given this fact, we all should recognize that regulations inhibiting liquidity harm investors and cause more problems than they solve.

Through the implementation of H.R. 2930, I hope to inspire and protect confidence in the investment community as well as allow small businesses -- those companies most critical to our economy -- to gain the capital needed to expand, compete, and thrive.

This is not a new idea; this is a hearing we had on my Subcommittee on the Oversight and Government Reform Committee. It is also within the president's jobs package. Many base components of this legislation and the idea of crowd funding was referenced in the president's speech.

This is a great opportunity for us to work together in order to get equity investment going, especially with small investors, and giving them the same opportunity that many others have.

And so, Mr. Chairman, I ask unanimous consent to have the amendment in the nature of a substitute be considered as a base text.

GARRETT: We have to call up the initial amendment, so the clerk will report that amendment. And I understand this is something that's already been discussed with the ranking member and the minority party. The clerk will report.

CLERK: Amendment in the nature of a substitute...

GARRETT: Without objection, it will be considered as read. Now, how do you want this considered?

MCHENRY: I ask unanimous consent to have the amendment in the nature of a substitute to be considered as base text.

GARRETT: And as I say, I understand...

WATT: Mr. Chairman, reserving the right to object -- have people drafted their amendments to the...

GARRETT: My understanding is the answer is yes to that.

MCHENRY: If the gentleman would yield, yes, we have, and we've worked extensively -- the staff has worked extensively for...

WATT: OK. I withdraw my reservation.

GARRETT: The reservation is withdrawn. Without objection, it will be considered as stated, as base text.

MCHENRY: Thank you. If I may be recognized...

GARRETT: The gentleman... MCHENRY: In pursuit of creating more structure and more investor protection around this innovative form of financing, this amendment in the nature of a substitute creates substantial intermediary requirements, or issuer requirements, if there is no intermediary. To qualify for crowd funding exemptions the intermediary, or issuer, if there is no intermediary, will be required to: one, warn investors of the speculative nature generally applied to investing in startups, including risk in the secondary market related to illiquidity; two, warn investors that they are subject to the restriction on sale requirements; three, take reasonable measures to reduce the risk of fraud; four, provide the SEC with continuous investor-level access to issuer's Web site; five, require each potential investor to answer questions demonstrating competency in A, the recognition of the level of risk generally applicable to investments in startups, B, the risk of illiquidity, C, any other area as the SEC may determine as appropriate; number six, require the issuer to state a target offering amount and withhold capital formation proceeds until aggregate capital raised from investors other than the issuer is no less than 60 percent of the targeted offering amount; seven, require the intermediary to carry out a background check on the issuers principals; eight, outsource cash management functions to a qualified third party custodian; nine, maintain such books and records as the SEC determines appropriate; 10, make available a method of communication that permits the issuer and investors to communicate with one another; and 11, prohibit intermediaries from offering investment advice.

So the contents of this now base text incorporates a number of concerns that were raised at the legislative hearing, at the previous markup we had from my colleagues across the aisle, and many in the industry that we spoke to. The goal here it to minimize fraud, because we want this to be an opportunity for people to invest and to get opportunities on the equity side of small businesses, startups, and expansions. we want those small businesses to have good opportunities to raise this capital.

Now, the idea here is that you would be able to use basically Internet technology -- a platform, of sorts -- in order to get very small equity investors. That's the idea.

And I've heard from my colleagues -- Mr. Greene, Ms. Maloney, Mr. Perlmutter, and others -- we've worked actively across the aisle -- as well as Ms. Waters, and so we're going to have some good amendments that I think will improve this from my colleagues, make this a stronger and better piece of legislation, and make it a greater avenue to protect small investors but yet give them the opportunity for upside equity investment in startups.

So with that, I would yield back...

GARRETT: The gentleman yields back. At this point, amendments are open, and Ms. Maloney, from New York, has an amendment.

And also, I thank the gentleman for his work with Ms. Maloney and others on this to try to come to some accommodations on this legislation. The gentlelady from New York is recognized on her amendment to...

(CROSSTALK)

MALONEY: OK. I have an amendment at the desk. GARRETT: Clerk shall report the amendment.

CLERK: Amendment offered by Ms...

GARRETT: Without objection, it will be considered as read. The lady from New York is recognized for five minutes.

MALONEY: First, Mr. Chairman, I'd like to commend the gentleman from North Carolina, Mr. McHenry, for his work on this issue and for his willingness to work with our side of the aisle and to accommodate many of our concerns that we had and that were voiced to the Capital Market Subcommittee markup two weeks ago.

And I think, first of all, I want to speak to the underlying amendment -- the substitute amendment. Many of us voiced concern that we were interested in facilitating capital formation in small amounts, but we also are concerned about protecting investors and maintaining a fair and orderly market. And his underlying substitute amendment achieves this, putting within it many of the current concerns that we put forward to place structure and oversight over crowd funding.

My particular amendment addresses the notice of filing to the SEC and to the states. This amendment would increase investor protections for overcrowding issuance under H.R. 2930 by requiring issuers to file notice with the SEC and with states.

Currently, H.R. 2930 preempts state law with regard to registration and qualification. In addition, H.R. 2930 does not require an issuer or Web site to register with the SEC.

During our hearing two weeks ago the North American Securities Administrators Association's witness testified at this subcommittee that with no notice there is no ability for a state to be certain that the issuer is really a business entity and really has an address. If an issuer commits fraud state and federal regulators would not even know where to begin.

So I believe this amendment is absolutely essential and I am thanking the gentleman from North Carolina in advance for the support that he gave me that he would accept it. And this amendment would provide regulators with the information necessary to enforce against fraudulent actors by requiring any issuer to tell the regulators who they are, where they operate, and what they intend to sell. So this is an important addition for not only the SEC but for the states, and I urge my colleagues to support it. I offered a similar amendment during the markup and it will help the states police this undertaking and it allows them to know that they -- the sites exist so that they can follow up if, in fact, there is any fraud.

MCHENRY: Will the gentlelady yield?

MALONEY: Yes.

MCHENRY: I support the amendment. This improves the underlying legislation. I appreciate her and her staff working so diligently to craft this language and I certainly appreciate the gentlelady for offering it. I support it fully and I think it's a great addition to the bill.

Thank you, and I yield back.

MALONEY: Thank you, Mr. McHenry. And I must say that not only on this amendment, but in many of our other concerns you incorporated in the underlying amendment, so I appreciate that tremendously.

GARRETT: Gentleman to your right, I think, is looking for you to yield?

WATT: No. I'm looking...

GARRETT: For your own time?

WATT: Yes.

GARRETT: OK.

Does the gentlelady...

MALONEY: I'll yield back the balance of my time.

GARRETT: I'll just say, I commend the lady as well, for her working on this, and I think you hit a right point (ph) with regard to the notice of requirements to the states. And I don't know exactly how it would have worked without that, so that's a very good point.

The gentleman is recognized on his own time for five minutes. Mr. Watt?

WATT: Thank the chairman for yielding time.

I support the amendment. The concern I have is -- and I haven't been in the loop on the discussion, so I don't know whether this is going to happen or not -- to notify state of the fact that these things are...

MCHENRY: Will the gentleman yield?

WATT: ... is taking place is one thing, but if they can't do anything and the underlying bill supersedes state law, is somebody offering an amendment that will...

MCHENRY: If the gentleman would yield...

GARRETT: I think that's taken care of in the base -- if the gentleman...

MCHENRY: If the gentleman will yield, Mr. Perlmutter, from Colorado, is -- we're working on language now to ensure that that antifraud component is till preserved at the state level and there will be state action that... WATT: OK. I'm ahead of the game here. I haven't been involved...

UNKNOWN: Well, you usually are ahead of the game. That's the difference.

WATT: Well, I'm behind the game in the sense that you all have been talking about this. I'll just wait on Mr. Perlmutter's amendment to make...

MALONEY: If the gentleman will yield...

WATT: Happy to yield. I was getting ready to yield back, but...

MALONEY: OK. This is a top concern that I'd say Democrats and Republicans have, that we have the ability to go after fraud. Sometimes I believe in this committee we've put so much restrictions in the beginning with regulation and not enough enforcement in the end to make sure that bad actors are punished and put in jail.

So I share your concern completely. It's my understanding in the current form it does not supersede state action, in terms of fraud. But any way that we can strengthen state enforcement is very important.

A number of my colleagues and I believe that in many ways the SEC is overburdened with all of the requirements and lack of funding for staff, and so in many cases it has been the state A.G.s that have been the ones that have really struck out and combated consumer fraud. So strengthening the states in this area is critical. I absolutely support it. It's my understanding that their action is not in any way superseded now, but any way to strengthen the hand of states in enforcement I completely and totally support.

I support Mr. Perlmutter's idea and his amendment. I look forward to supporting it.

And I yield back the balance of my time. Or I yield back to you.

WATT: I thank the gentlelady for yielding back, and I yield back.

GARRETT: And the gentleman yields back, and I think everyone has yielded back.

Then if there's no other discussion on the gentlelady from New York's amendment, all those in favor of Ms. Maloney's amendment will say "aye."

[A chorus of ayes.]

GARRETT: All those opposed will say "nay."

[A chorus of nays.]

GARRETT: I the opinion of the chair the ayes have it.

Did we have another amendment?

Gentleman from Ohio, Mr. Stivers, do you have an amendment? The clerk will...

STIVERS: Yes, sir.

GARRETT: ... report the amendment.

CLERK: Amendment offered by Mr. Stivers, of Ohio, page one, beginning on line 11, strike $5 million or...

GARRETT: It's safe to say that it will be considered as read, without objection. The gentleman from Ohio is recognized for five minutes on his amendment.

STIVERS: Thank you, Mr. Chairman. I'd like to thank the gentleman from North Carolina for his leadership on this bill, and clearly crowd funding is something that's been used by artists and bands and a lot of nonprofits for some time, but due to the securities laws it's not been able to be used to give capital to small businesses. And while a lot of this in America is a theoretical exercise, it has been used other places.

I think the gentlelady from New York's amendment makes this a better bill. I think the substitute makes it a better bill.

And I have an amendment. You know, there is a hole in access to capital in America for small businesses, and while this bill today goes up to $5 million, I think we need to focus on real small businesses. And so what my amendment does is a couple things: It reduces the issuance cap from $5 million to $1 million flat, or if somebody gets audited financials it goes up to $2 million.

And because the bill exempts state securities laws and blue sky requirements I think that is important at the smaller end of the scale. But when you get it some critical mass I think we shouldn't do that anymore, and that's why I'm willing to support the bill as long as we get an amendment that reduces the issuance cap to this lower level.

And the $1 million, $2 million levels weren't just out of thin air. Today, if you want to raise capital -- equity capital -- without audited financials it has to be under $1 million, so that's where we chose the $1 million and the audited financials up to $2 million, and there seems to be a real gap in that $2 million and under opportunity to raise capital, and so I believe this crowd funding bill can help, but I thought it was important to keep it focused. So that's what my amendment does. And I'd be happy to answer any questions on the amendment, but I would urge adoption of the amendment.

Thank you for your time. I yield back, Mr. Chairman.

GARRETT: The gentleman yields back. Is there any -- there is.

The gentlelady from New York is recognized...

MALONEY: I would like to support the gentleman's amendment, although I don't have a copy of it. Where is the amendment? Have you handed it out? Where is his amendment?

GARRETT: It should be handed out.

MALONEY: OK. I think it's important -- and by the way, it is consistent with the president's proposal. And crowd funding offers startups and entrepreneurs the ability to quickly raise small amounts of capital. The president of ProFounder, an overcrowding Web site, noted that the average dollar amount that a business wants to raise has been roughly $30,000, so there's absolutely no reason to have the $5 million.

I support going down to the $1 million, and it recognizes the fact that this exemption should only be provided for small issuers. Certainly $5 million is not a smaller issuer. And I think it should -- being at $5 million, I would say that annually it increases the likelihood and motivation for fraud. And I believe that lowering is important.

Crowd funding is not intended as a sole source of funding, but only the first round. A larger limit may deter companies from seeking alternative sources of capital available to them once they've proven their ability to deliver a product. I believe it's balanced and fair. I support this amendment.

GARRETT: Thanks. The gentlelady yields back.

Gentleman from North Carolina, you'd like to speak on the...

WATT: Mr. Chairman, I move to strike the last word, just for the purpose of asking the sponsor of the amendment a question. Is there an accepted definition of what an audited financial statement is somewhere? Does that include balance sheets, income statements -- what all does it include?

STIVERS: An audited financial statement is -- I mean, there is a definition in the SEC of an audited financial statement.

WATT: OK. All right.

I yield back, Mr. Chairman.

GARRETT: Gentleman yields back. Anyone else...

GREEN: Mr. Chairman, I move to strike the last word.

GARRETT: Gentleman is recognized for five minutes.

GREEN: Thank you, Mr. Chairman. I recall at the subcommittee hearing when the gentleman spoke on this topic and he raised some significant questions at that time. I'm honored that he has followed through with this amendment and I'd like to voice my support for the amendment as well. Thank you.

GARRETT: OK. The gentleman yields back. No other discussion on the amendment, then the question is now on the gentleman from Ohio's amendment. All those in favor will say "aye."

[A chorus of ayes.]

GARRETT: All those opposed will say "nay."

[A chorus of nays.]

GARRETT: In the opinion of the chair, the ayes have it. The amendment is adopted.

We will then go to further amendments. And I believe Mr. Green has an amendment.

GREEN: Yes, Mr. Chairman. I have an amendment at the desk.

GARRETT: Clerk will report the amendment.

CLERK: Amendment offered by Mr. Al Green, of...

GREEN: Mr. Chairman, I ask that the amendment be considered as read.

GARRETT: Without objection. And the gentleman is recognized for five minutes.

GREEN: Thank you, Mr. Chairman. Mr. Chairman, I'd like to thank Mr. McHenry and his staff. We have been working together to get this amendment in order.

I'm also honored to thank Mr. Grimm and his staff. This has been less of a challenge than some might think, but there were still some things that had to be worked out.

And of course, I thank the committee and this committee staff, and my staff, as well. This is a bipartisan amendment, and it is something that I believe we should give serious consideration to and I ask my colleagues to support it.

I ask that it be supported because we are creating a new point of entry, if you will, into capital markets, and in so doing we want to have as much assurance that we can generate that those who would perpetrate fraud, those with rapacious personalities will be barred from perfecting their predatory practices. And as a result, this amendment would limit, by way of the SEC, persons who have been convicted of state or federal security frauds from participating in this crowd funding that we are establishing.

We can't stop everybody, but we can stop those who are known to be bad actors from participating. That's what this amendment seeks to do.

I believe that there will be unintended consequences with any new legislation. Well, this is an intended consequence. The intention is to make sure that those who have already demonstrated by way of their track records that they are persons who would prey upon unsuspecting consumers, we would make sure that they don't have the opportunity to do so in this new point of entry into capital markets. With this said, I do, again, thank my colleagues on all sides who are going to support and those that have already worked with us, and I'd like to yield now to Mr. Grimm (ph) for him to give expressions, if he so desires.

GRIMM: I thank the gentleman for yielding, and I have to say that it was an excellent opportunity for our staffs to get to work together. I thank Mr. McHenry, as well.

And everything, I think, was said very eloquently, and there's no reason for me to reiterate everything. I urge my colleagues to support of this common sense amendment that I think we can all agree makes sense and will strengthen the underlying bill. Thank you, and I yield back.

MALONEY: Would the gentleman yield?

GREEN: Well, in yielding -- excuse me -- my time for just a moment -- and I will yield to the lady -- I do want to make, as the gentleman was very kind in saying eloquent after having mispronounced his name. So I apologize for the mispronunciation, and I will yield to the lady.

MALONEY: I'd just like to commend my colleagues, Mr. Grimm and Mr. Green. This amendment will prohibit criminals from doing further damage to investors in the American economy. It's a common sense amendment. We should all be behind it.

And I yield back. Thank you for your amendment.

MCHENRY: Mr. Green, will the gentleman yield?

GREEN: I will yield to my colleague, Mr. McHenry.

MCHENRY: Thank you for working so diligently to perfect this language. I think it's a great amendment. Thank you for offering it, and I support it.

GREEN: Thank you.

GARRETT: Does the ranking member wish to have time yielded to her from Mr. Green?

GREEN: I will yield to any other member desiring time.

WATERS: Thank you very much, Mr. Green.

I'd like to offer my strong support for this Grimm -- Green-Grimm amendment to H.R. 2930, which would provide this -- that the SEC shall establish a disqualification provision, whereby bad actors would be unable to participate in crowd funding. I know this has been a priority for you, Mr. Green, and I am pleased that the issues that you have raised -- that you raised during the subcommittee markup have been addressed as we move to full committee.

As you know, I have indicated that I have had concerns about the crowd funding legislation, while potentially opening up capital- raising opportunities to small business, has the potential for significant fraud. With this Green-Grimm amendment I think we have an added layer of protection to a new crowd funding regime. And I must say that this added to some of the other amendments that have already been passed here in the committee today certainly makes the bill more attractive and alleviates many of my concerns. But I would certainly at this point ask my colleagues to support the Green-Grimm amendment.

GREEN: Reclaiming my time, and to my colleague, Mr. Grimm, again, thank you for working with us, and look forward to continuing to work with you.

I yield back.

GARRETT: Gentleman yields back.

Gentleman from North Carolina, do you have anything else on this amendment?

If there's no other discussion then the question is called on the Green-Grimm amendment. All those in favor will say "aye."

[A chorus of ayes.]

GARRETT: All those opposed will say "nay."

[A chorus of nays.]

GARRETT: In the opinion of the chair, the ayes have it and the amendment is adopted.

We now move on to -- the gentleman from Colorado has an amendment. He is recognized...

PERLMUTTER: I call up amendment number one.

GARRETT: Clerk shall report the amendment.

CLERK: Amendment offered by Mr. Perlmutter, of Colorado...

GARRETT: (inaudible) considered as read. The gentleman from Colorado is recognized for five minutes.

PERLMUTTER: And I thank you. The amendment, as will be passed out, basically strikes the section on preemption, so section four of the bill. Mr. McHenry and I have reached an agreement.

The structure of this bill -- let's just talk about what this bill does. It allows for the solicitation -- it's called crowd funding, which is a term I'd never heard of before -- but it's solicitation of a lot of small investors through the Internet.

And so as we talked about it the structure is boiling down to this: There will be a general solicitation offering filing that will be in effect nationwide as it's proposed, and it would be an SEC- regulated event. Then there will be notice, under the Maloney amendment -- the Maloney- McHenry amendment that was passed earlier -- there will be notice to the states. Then the amendment that Mr. McHenry and I are -- I have language, but basically instead of striking the entire preemption it would say the states are not in any way preempted or superseded from their supervisory, regulatory law enforcement role if there is a bad actor.

And I don't want to go try to list all the different kinds of deceit and fraud and misleading statements and those. We need to do it right, taking Mr. Schweikert's Ms. Rosenbaum's, you know, approach, which is to do this properly.

But the language would be more or less this act -- being this act on crowd funding -- and it's really just a general solicitation to small investors. This act in no way affects, preempts, supersedes the authority of the states or the territories to enforce their laws regarding securities, so that there is -- these are going to be small enough in nature that the SEC's not going to have the time or resources to deal with problems, and it's the state regulatory structures that will deal with it.

And I'd yield to my friend from North Carolina.

MCHENRY: I thank my colleague for yielding, and thank you for working with me on this. You have my commitment to work with you to perfect this language before we get to the floor so that it conforms with the '33 and '34 acts (ph), so that it really conforms with existing language in securities law.

And I appreciate you working on this issue, and I think this is a way that we can meet halfway to preserve that oversight authority that the states do have in a proper way while at the same time allowing for this communication across state lines, in essence preserving the right to put up on your Facebook status that you're doing this without legal action being brought against you in likely 47 states.

So I thank my colleague for offering and withdrawing this amendment and working with me on language that's agreeable to all sides.

FRANK: Would the gentleman yield?

PERLMUTTER: Yes. I'd yield to...

FRANK: I'm encouraged by this. I think for many of us this would be the key to whether or not we could be supportive.

As I said earlier, we did hear from the North American Securities Administrators who were concerned. I think what we're talking about here allows this to go forward in terms of the registration being gone (ph), what leaves in place state enforcement, which I think has, on the whole, been helpful. And we appreciate (inaudible) adopt the amendment of the gentleman from New York so there's notification.

So assuming we get this conceptual agreement worked out then I think we have a got a bill that's going to be very broadly supported.

PERLMUTTER: I'd yield to the gentleman from North Carolina. WATT: First of all, I presume on your amendment it's page three that's being amendment -- amended, not page eight, since there's not a page eight.

PERLMUTTER: Yes, we'd be striking the -- well, the amendment that's on the floor, which I'm going to withdraw...

WATT: You're getting to withdraw. OK, all right. Then it becomes academic. But you're talking about the language on page three?

PERLMUTTER: Yes.

WATT: OK. And let me be clear on what's happening between now and the time you are withdrawing it, and then what?

PERLMUTTER: OK, in response to my friend I will, with Mr. McHenry, draft an amendment that will basically say, with the exception of registration filing, which is with the SEC, there is absolutely no preemption of the states' ability to enforce the laws regarding securities.

WATT: And when will that take place? I guess that's what...

PERLMUTTER: Well, we've been trying to do it. I've got language but it's still pretty rough, and so we talked about drafting it between now and when it goes to the Rules Committee so that it's available at the Rules Committee and on the floor.

MCHENRY: If the gentleman will yield -- gentleman has my commitment that we will have -- that we'll find language that is agreeable to both of us in dealing with, especially -- I mean, to make sure that it's very clear that the states have prerogatives to enforce fraud and manipulation laws as they currently do. And I think that's a very important thing. And I think this improves -- this actually improves the legislation and makes it very clear of the states' right of action.

PERLMUTTER: Yes. And I -- reclaiming my time, if I could, Mr. Chairman...

GARRETT: You have no time to reclaim, but we'll give you another...

PERLMUTTER: ... I'd like to offer a letter from the National American Securities Administration Association...

GARRETT: Without objection, it's entered into the record.

PERLMUTTER: ... 25th. And with that, I withdraw the amendment that -- to the bill that just strikes that section and I'll work with my friend from North Carolina.

GARRETT: We thank the gentleman for his amendment. Thank you for withdrawing the amendment, and we do look forward to see the final text before it goes to the Rules Committee.

WATT: Mr. Chairman?

GARRETT: Gentleman on this amendment or another amendment? WATT: Well, the amendment's been withdrawn, I guess on the bill.

GARRETT: Then on the bill, recognized.

WATT: I ask unanimous consent to submit for the record a letter dated October 25, 2011 from the secretary of state of North Carolina, which is on this same issue...

GARRETT: OK.

WATT: ... and one of the reasons that I've been so concerned about it, because I'm a little uneasy about where we are, because we're getting ready to pass a bill with an agreement that something will happen which should have happened in the committee, I think. But I understand that there's good faith here, and...

GARRETT: I think everybody...

WATT: ... I just want to be clear that this bill will not go to the floor or move forward in the process beyond this point without the amendment that really captures what Mr. McHenry and Mr. Perlmutter have talked about, because in the absence of that language, which is not currently in the bill, I can't support the bill. So if I were voting for the bill it would have to be with the understanding...

GARRETT: Will the gentleman yield on that point?

WATT: Yes.

GARRETT: The point today raises an issue of state preemption, and the issue of states' rights are issues that are also very close to me, as well. So first of all, I commend the gentleman from North Carolina on his work with all the other members on the minority side with regard to all the other amendments. This is an issue that concerns me, as well -- not that I'm going to get into the loop on the text, or what have you. I'll leave it to the other people involved.

But I'll share with you, this is an issue that concerns me, as well, and that we will try to do all they can and make sure that this is done...

WATT: I ask unanimous consent to submit this letter for the record...

GARRETT: Without objection.

WATT: ... and then I'll yield to Ms. Waters.

WATERS: Thank you very much. I am extremely pleased about the way that Mr. McHenry has worked with everyone who had concerns about this bill. I want to tell you, when I left our subcommittee hearing I was not convinced that we were going to be able to offer the amendment that would satisfy so many concerns about potential fraud, et cetera. But you have done a great job and the amendments that have been offered here today from everybody from Mr. Perlmutter, to Ms. Maloney, to Mr. Stivers have improved this bill tremendously. And so while I have great concerns about state preemption, also, as expressed by my colleague from North Carolina and from Mr. Garrett, given the way in which you have worked with everybody I would ask that we continue to work in this fashion with full faith that you will honor the concerns that are being raised, and that I'm going to support this bill. I yield back the balance of my time.

WATT: Mr. Chairman, you never did actually get this on the record. I asked unanimous consent but you never acted on my unanimous...

GARRETT: I did say, without objection, so ordered.

WATT: Oh, OK. All right.

I'll yield back unless Mr. McHenry wants me to yield to him.

MCHENRY: I thank the gentleman for yielding, and I thank my colleagues for working so diligently to improve this legislation to the point where I'm hopeful that we can have bipartisan support for this. The amendments offered today, in fact, improve on this idea, and do it in a workable fashion. And I want to thank especially the staffs -- our staffs who have worked so diligently on this matter.

Thank you for improving this legislation and thank you for the healthy debate today. And I yield back.

FRANK: Would the gentleman from North Carolina yield?

WATT: I yield to...

FRANK: I would just urge all members to tell people about this cooperation, because given the harmonious nature of it, nothing will appear in the media about it.

(LAUGHTER)

WATT: I yield back, Mr. Chairman.

GARRETT: The gentleman yields back.

UNKNOWN: (inaudible)

GARRETT: Oh, I'm sorry. The chairman is...

BACHUS: Yes. Let me update the members on the schedule. We have -- we'll probably have three votes. The most contentious will be the Miller amendment, and we have members that are having to leave around 2 o'clock; we have members that aren't getting back until 2:15. So I'm going to suggest that at 2 o'clock we'll call a vote on Miller that we will leave open until 2:20 and that will give members who are leaving time to vote on it, and members who aren't leaving can get here about 2:10 or 2:15, and we'll hold it open until...

FRANK: I appreciate that, but I thought we -- I think we only have two votes. Is there a third... BACHUS: Two votes. OK.

FRANK: Yes, just the two votes on that one bill...

BACHUS: So we could even vote -- so 2 o'clock I'm going to call -- one or two members have to leave right after that. The other members don't need to be here until 2:15 and we won't close it out until about...

FRANK: One other conciliatory suggestion, which is if the Miller amendment is adopted there'll be no need for a second roll call.

BACHUS: That's probably true. So that's what we'll do. So members need to be here.

If you're planning on leaving and can't be here past 2:15 you need to be here at 2 o'clock to start the vote.

GARRETT: But before you leave, it's now -- we have a vote still on final passage of 2930, amendment in the nature of a substitute, as amended by the one, two, three -- three amendments. All those in favor will say "aye."

[A chorus of ayes.]

GARRETT: All those opposed will say "nay."

[A chorus of nays.]

GARRETT: In the opinion of the chair, the ayes have it and the bill is passed as amended. So we are in recess until 2 o'clock.

END