Trid Improvement Act of 2017

Floor Speech

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Mr. CAPUANO. Mr. Speaker, I have a motion to recommit at the desk.

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Mr. CAPUANO. I am, in its current form.

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Mr. CAPUANO. Mr. Speaker, my amendment simply requires a company to have a policy in place to claw back executives' incentive-based pay if it is materially noncompliant with financial reporting requirements. Now, those words matter because the words ``materially noncompliant'' mean something in the accounting world. It has to be a big change, not just some minor, little accounting error.

This amendment really should be noncontroversial. It is outrageous, not to mention shortsighted, that almost a decade after the crisis that wrecked the economy we still don't have commonsense safeguards in place to ensure that CEOs do not turn a blind eye to problems that lead to a public restatement of their company's financials.

This is not something hypothetical. It happens on a pretty regular basis. It is not relegated to just the past. Everybody here is pretty familiar with Wells Fargo Bank. It has generated scandal after scandal by ripping off its own consumers. Last year, the bank settled an 11-year lawsuit with the Department of Justice because it overcharged veterans who applied for home loan refinancing. At the same time, we learned of hundreds of thousands of car loan customers charged for car insurance that they never agreed to purchase.

In 2016, we learned of millions of fake deposits and credit card statements opened up by Wells Fargo and then charging their customers. Last September, the bank failed to refund insurance payments made by customers who paid off their car loans early. And most recently, we found out that they delayed mortgage closing dates in order to jack up their own fees.

These abuses come on top of $10 billion in fines by that bank that has been paid in recent years for everything from mortgage fraud, illegal marketing, kickback schemes, insider trading, racial discrimination, and student loan scams. Yet the bank believes that this kind of consistent misconduct is not materially financially important enough to require a restatement.

Wells Fargo has only ever clawed back a few tiny dollars from its executives. All this recommit does is simply says that if you commit an act that requires a material change in your public statements, you shouldn't profit by it. That is all. Not basic pay; just the incentive pay tied to those actions.

The underlying bill goes in the opposite direction. It makes it more likely that there will be material inaccuracies in certain public companies' financial statements. If this is what Congress is going to do, we should, at the very least, not incentivize that bad behavior. Title III of this bill allows new public companies to get out of independent audit requirements for 10 years--ten years.

Now, we all think, well, that is fine for a small company. Small company? Up to $700 million of company shares? That is a small company? Those are significant companies that put lots of people at risk, shareholders and investors.

In 2002, the Sarbanes-Oxley Act--I want to repeat, the Sarbanes-Oxley Act because Mike Oxley was the Republican chair of the Financial Services Committee at the time--requires companies to issue stock to publicly report their internal control structures and procedures for financial reporting. Those reports have to be attested to and covered in an audit report.

There is a reason why an independent audit of large corporations is a good thing: it makes it harder for them to hide bad actions. This recommit, again, it is simple. It doesn't change the underlying bill. It simply says: If a corporation makes a material change to its publicly stated financial records and an executive's incentive pay has been tied to the profits made off of that now-changed policy, the company has to have a policy in place whereby to claw back those ill- gotten profits. I don't think that is controversial. I don't think that is partisan. I don't think that is antibusiness. I don't think that is overregulation. It is simply fair.

We don't let bank robbers keep their money. We don't let other people who commit wrongdoings keep the profits that they have. Why should we let corporations who go out of their way--some, not all, only a handful go out of their way--to make sure that they hide their bad actions, report them badly? And when they get caught and have to report them appropriately, they still get to keep the ill-gotten gains.

That is all this recommit does. It is simple. It is straightforward. And I would hope that my friends on not just the other side but on both sides of this aisle see this as a thoughtful, insightful, and commonsense approach to amend this bill.

Mr. Speaker, with that, I yield back the remainder of my time.

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Mr. CAPUANO. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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