Congressional Record—House H1544

H1544 CONGRESSIONAL RECORD — HOUSE April 24, 2002 should have had the opportunity to discuss the So our amendment, also rejected by the PERMISSION FOR COMMITTEE ON modest and reasonable package of amend- Rules Committee, did three things to imple- FINANCIAL SERVICES TO FILE ments I put before the Rules Committee to ment the Bush plan. First, it requires CEOs SUPPLEMENTAL REPORT ON H.R. strengthen this woefully inadequate bill. and CFOs to certify the accuracy of their firms’ 3764, SECURITIES AND EXCHANGE This House should have the opportunity to financial statements. Violation of this provision COMMISSION AUTHORIZATION consider and debate thoughtfully proposals to would carry with it criminal (in the event that ACT OF 2002 strengthen H.R. 3763, the so-called Corporate the violation is willful), civil, and other pen- Mr. OXLEY. Mr. Speaker, I ask unan- and Auditing Accountability, Responsibility, alties provided for under the securities laws. imous consent that the Committee on and Transparency Act of 2002. This bill claims H.R. 3763 contains no similar provision. It is Financial Services be permitted to file to address many of the financial disclosure essential that Congress require officers of and accounting issues raised by the collapse a supplemental report on H.R. 3764. public companies to stand behind their public of Enron. Unfortunately, the kinds of financial The SPEAKER pro tempore. Is there abuses that led to this unprecedented debacle disclosures. That is the absolute minimum we objection to the request of the gen- will not be stopped—or even very much im- should require. tleman from Ohio? peded—by this Republican bill. It is cosmetic Second, this amendment required corporate There was no objection. and simply pretends to bring about reform. officers who falsify their financial statements to f ‘‘Don’t look for a major overhaul of the ac- surrender their compensation, including stock CORPORATE AND AUDITING AC- counting industry soon,’’ says the Wall Street bonuses and other incentive pay. it empow- COUNTABILITY, RESPONSI- Journal in a recent article criticizing the Oxley ered the Securities and Exchange Commis- bill because it ‘‘punts’’ overhaul ‘‘to just where BILITY, AND TRANSPARENCY sion (SEC), in an administrative proceeding, or ACT OF 2002 the industry would like it—the Securities and in court, to seek such a disgorgement. H.R. Exchange Commission.’’ 3763 requires only a study of the question: The SPEAKER pro tempore. Pursu- This bill does virtually nothing to correct the should guilty CEOs forfeit their stock bonuses. ant to House Resolution 395 and rule systemic flaws in our financial reporting sys- XVIII, the Chair declares the House in tem. It fails to strengthen oversight of auditors Third, this amendment empowered the SEC the Committee of the Whole House on and accountants, and fails to hold corporate to bar officers and directors from serving in the State of the Union for the consider- executives fully accountable for their mis- that capacity for a public company if they are ation of the bill, H.R. 3763. deeds. Unless major improvements are made, found guilty of wrongdoing and determined to H.R. 3763 will do nothing to restore integrity to be unfit. It would also remove judicial hurdles b 1105 our financial markets and will not protect the to seeking such a bar in court. Incredibly, the IN THE COMMITTEE OF THE WHOLE savings and pensions plans of millions of Republican bill actually makes ti harder to ob- Accordingly, the House resolved Americans that remain threatened by future tain officer and director bars. It codifies restric- itself into the Committee of the Whole Enrons. tive judicial standards that would make it sub- House on the State of the Union for the The House should have had the opportunity stantially more difficult for the SEC to obtain consideration of the bill (H.R. 3763) to today to work its will on several key areas. officer and director bars—a change which the protect investors by improving the ac- First, I offered an amendment in the Rules head of the SEC’s Enforcement Division has curacy and reliability of corporate dis- Committee to create a powerful new regu- stated publicly is highly problematic. In this re- closures made pursuant to the securi- latory board to ensure that auditors will be gard, H.R. 3763 is a serious step backward. ties laws, and for other purposes, with truly independent and objective. My amend- The Rules Committee even refused to allow Mr. SWEENEY in the chair. ment provided for a regulator that (1) sets The Clerk read the title of the bill. audit and quality standards for auditors of pub- debate on my amendment that gave shareholders a voice in executive compensation de- The CHAIRMAN. Pursuant to the lic companies; (2) possesses sweeping inves- rule, the bill is considered as having tigative and disciplinary powers over audit cisions by requiring that a majority of shareholders approve any stock options plan for an been read the first time. firms; and (3) is controlled by a board com- Under the rule, the gentleman from prised of public members—not the accounting officer or director. H.R. 3763 does not include Ohio (Mr. OXLEY) and the gentleman industry. My amendment took a decidedly dif- a similar provision. Would anyone argue on from Pennsylvania (Mr. KANJORSKI) this floor that shareholders should not have a ferent approach than H.R. 3763, which punts each will control 30 minutes. almost all of the functions and powers of the voice in the lucrative stock option plans of offi- The Chair recognizes the gentleman regulator to the SEC. Only a regulator with ex- cers and directors. After all, it is the share- from Ohio (Mr. OXLEY). plicit powers and duties, and a defined com- holders who own public companies, not man- Mr. OXLEY. Mr. Chairman, I yield position, such as the one I proposed, will en- agement. myself such time as I may consume. sure that the abuses we witnessed in the Finally, the Rules Committee refused to give Today, the House turns to H.R. 3763, Enron debacle will not be repeated. this body an opportunity to debate and vote on In addition, the Republican bill purports to the Corporate and Auditing Account- an amendment to ensure that stock analysts prohibit auditors from providing their audit cli- ability, Responsibility, and Trans- ents with two consulting services: financial re- are truly independent and objective. My parency Act. To my colleagues on both porting systems design and internal auditing. amendment achieved this by (1) barring ana- sides of the aisle, today we must act. In fact, the bill prohibits nothing. Instead, it lysts from holding stock in the companies they We must act for our Nation’s investors, simply codifies existing SEC rules that provide cover; (2) prohibiting analysts’ pay from being retirees, and employees of publicly only very limited restrictions on these services. based on their firms’ investment banking rev- traded companies; and that covers a In contrast, my amendment clarifies the defini- enue; and (3) barring their firm’s investment large majority of Americans. tions of these two services in a way that will banking department from having any input into In recent months our struggling actually ban them. In the case of any non- analysts’ pay or promotion. As with other im- economy has absorbed a number of audit consultant services that are not prohib- portant issues in this legislation, H.R. 3763 shocks. We have endured two large ited, my amendment requires approval by the only requires a study. bankruptcies, Enron and Global Cross- ing. Thousands of jobs have been lost audit committee of the firm’s board of direc- Today we are on the verge of squandering for hardworking employees. Billions of tors. an opportunity for real reform. I urge my col- Second, in a spirit of bipartisanship and dollars are gone from investment port- leagues to consider our substitute and do folios and retirement plans. Investor comity with our Republican friends. Mr. KAN- something real to prevent the next Enron. JORSKI and I have taken President Bush’s pro- confidence has understandably posals on corporate responsibility and execu- Mr. SESSIONS. Mr. Speaker, I yield wavered. tive accountability and prepared an amend- back the balance of my time, and I Congress has examined these issues ment to give them legislative substance and move the previous question on the res- for 4 months. The Committee on Finan- real teeth. Rather than implement the Presi- olution. cial Services alone held seven hearings, dent’s proposals, the GOP bill either regresses The previous question was ordered. took testimony from 33 witnesses; and from current law or does nothing to hold CEOs we are but one of many panels. We accountable. It amazes me that the Repub- The resolution was agreed to. know now what happened, and we know lican bill summarily rejected the President’s A motion to reconsider was laid on what needs to be done. Now it is our re- own plan to promote corporate responsibility. the table. sponsibility to do something about it. VerDate Apr 18 2002 00:28 Apr 25, 2002 Jkt 099060 PO 00000 Frm 00008 Fmt 4634 Sfmt 0634 E:\CR\FM\A24AP7.011 pfrm15 PsN: H24PT1 April 24, 2002 CONGRESSIONAL RECORD — HOUSE H1545 We owe action to the American in- We need to empower the SEC to act nances conducted for the benefit of the vestor who faithfully puts away money without tying its hands and within investing public. When an auditor also every month in his IRA or his 401(k) flexible statutory changes. receives a million dollars from the plan. We owe action to the employees Let us remember that a strong regu- company for nonaudit services, com- who lost their jobs, and we owe action lator is not one that is completely dic- mon sense dictates that those nonaudit to all of the American companies who tated to by Congress.

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