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Public Statements

Financial Services and General Government Appropriations Act, 2008

Floor Speech

Location: Washington, DC



Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 3 minutes.

Mr. Chairman, sic transit gloria Oxley. Mike Oxley, my Republican predecessor, is barely gone, when one of his great works is being trashed by his former colleagues.

Indeed, as I look at this assault, the gentleman from New Jersey started out talking about small business, but small business clearly appeared to be the stalking horse here. He talked about the New York Stock Exchange. They don't deal with small business. He talked about Sarbanes-Oxley in very negative terms broadly. His complaint is not about small business, but about Sarbanes-Oxley in general. If you analyze what the gentleman said, it was an assault on Sarbanes-Oxley.

Now, Sarbanes-Oxley was passed by a Republican House and a Democratic Senate. It was signed and claimed as a great triumph by our Republican President, George Bush.

I am sad for President Bush. No Child Left Behind, Sarbanes-Oxley, immigration, Medicare part D, even the war in Iraq. Mr. Chairman, are there no Bush policies left that can escape the assault of the Republican Party? I am inclined to think that there are only two Bush policies left that command strong support on the Republican side: illegal wiretapping and torture. Everything else they appear to have abandoned.

In fact, 10 days ago, the Secretary of the Treasury, Secretary Paulson, explicitly disagreed with the gentleman from New Jersey on the need for this amendment and said, no, we don't want to do this now. This is working.

What is working is a couple of days ago the Chairman of the Securities and Exchange Commission, our former colleague Mr. Cox, said, we don't need legislation. We are in the process of changing this. All five of the Commissioners appeared, and none of them asked us for legislation. Mr. Cox specifically said it is not needed.

This is a vote of no confidence in Chris Cox and the SEC. They have said, yes, we should change this. We have more time. It is in a deferment period, and the SEC is in the process, along with the Public Company Accounting Oversight Board, of winding this down, of making it easier.

Mr. Cox was asked just yesterday, well, what is this going to cost small business? He said, we don't know yet, because we are changing it already for the big businesses that have to pay. But we are going to look at that, and we will make adjustments.

So Chris Cox, on behalf of a unanimous SEC, three Republicans, two Democrats, along with the Republican Secretary of the Treasury Mr. Paulson, says we are fixing this. Please do not at this point legislate.

Of course, what we see is, if you listen to the gentleman from New Jersey, this is the beginning of an assault on Sarbanes-Oxley in general, because much of his speech was not about small business, it was about Sarbanes-Oxley in general, which he does not like and thinks is a terrible burden and is driving people overseas.

It is not driving small business overseas. Nobody argues that. It is not driving small businesses off the New York Stock Exchange; they were never on it. So this is step one in the assault on Sarbanes-Oxley. It is an unnecessary assault because the SEC, under Chairman Cox, with a Republican majority and Secretary Paulson are already trying to fix this problem.


Mr. FRANK of Massachusetts. I voted against No Child Left Behind. I understand that. You have got nothing with Bush, and I understand that. I just felt sorry for the poor man being abandoned so much.


Mr. FRANK of Massachusetts. I thank the gentleman for yielding me time.

First, as to executive compensation, the gentleman from New Jersey, he finds inconsistencies where none exist. They are kind of like Harvey, his invisible rabbit.

On executive compensation, the SEC has said when asked that they do not have the power to do what our bill does. That is very different than Sarbanes-Oxley. With regard to Sarbanes-Oxley, Chris Cox has said I am doing this, so they are quite different.

The SEC with executive compensation said we can make them say how much it will be; if you want to go further, we have no power to do that.

That is exactly the opposite of what they have said on Sarbanes-Oxley in which they said we are fixing this, and Chris Cox said there is no reason for you to legislate.

The gentleman from New Jersey is being unfair to Chairman Cox in caricaturing him as saying ``we don't know.''

What he said when asked what it would cost is very straightforward: ``We don't know yet.'' He said we are in the process of finding out because what the chairman said is we are downsizing Sarbanes-Oxley. We are downsizing it for everybody. We will know better after we see what the new requirements are for larger businesses, how much there will be saved for smaller businesses.

The fact is that the gentleman from New Jersey quite graphically misrepresented what the SEC said. The SEC did not say ``we don't know,'' the SEC said ``we will tell you after we have had some experience.''


Mr. FRANK of Massachusetts. The answer is ``yes'' for a variety of reasons, but I want to make this point. It has nothing to do with this amendment. The gentleman has proven my point. Small businesses don't do IPOs. It is not in the small business area where the decline has happened. So what we see here is small business has been taken hostage by people who never liked Sarbanes-Oxley because the argument the gentleman makes has nothing to do with the specifics of the gentleman's amendment.


Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume.

Again, the gentleman from Florida has made a general assault on Sarbanes-Oxley. He is now attacking Speaker Hastert. The number of people who are in trouble on the Republican side by this group grows and grows and grows. It is the Speaker of the House, the gentleman from Illinois, the former Speaker, who apparently acquiesced, inappropriately, according to the gentleman. Take it up with him, I would say to the gentleman.


Mr. FRANK of Massachusetts. The fact is that I will not allow my time to be diverted by internecine Republican warfare. You don't like George Bush's bill that he signed. You don't think that Oxley did a very good job. You are upset at your own leadership procedurally. You think Chris Cox doesn't know what he is doing. You disagree with Paulson.

Mr. Chairman, they can fight it out. I would like to discuss substance. I'm not here to get even for past grievances that Republicans have with other Republicans.

Again, the gentleman from Florida's assault has nothing to do with this amendment, but it is relevant in this sense: It shows that what we have here is the beginning of an attack on Sarbanes-Oxley.

The IPOs, small business don't do IPOs. Small business hasn't left America to go to England. That is the clear indication of what is up.

Now to get back to the substance, Chairman Cox and the other members of the commission said we agree it went too far in the regulation. We are scaling it back. We are scaling it back first for the big businesses who will be affected by it, and we will learn from that scaling back how much it will help smaller businesses.

Again, the gentleman from New Jersey quite unfairly mischaracterized what the commissioners said. The commissioners didn't say ``we don't know,'' period. They said we don't know now because we expect to get experience from the reductions in the scaling back we have already ordered, and that will tell us how that will help small business.


Mr. FRANK of Massachusetts. The gentleman is simply wrong. He made it very clear. I am quoting him almost verbatim when I say they said: We will find out from scaling back in general how much it will save, and then we will be able to tell you how much the savings will be.

No, I am not yielding any more because this is just not a debatable issue. The five commissioners didn't say simply ``we don't know.'' They said, ``We don't know as of now, but we will know better once we have had this experience.''

I want to go back and respond, the gentleman from Florida said the SEC is fiddling while capital markets burn. I don't think Chris Cox is fiddling.


Mr. FRANK of Massachusetts. Let me make the substantive argument here.

Law enforcement in America is not totalitarian. It is not authoritarian. It requires a buy-in by those regulators. And that's why this amendment would do so much damage. There is, of course, a disconnect between the amendment which hides behind small business and the broader attack on Sarbanes-Oxley that we have heard from the two speakers.

But here's where the connection comes in. The SEC, with the full backing of Secretary Paulson, all these Republican nominees, Secretary Paulson from Goldman Sachs, Chris Cox and the others, they understand that Sarbanes-Oxley was overwritten in the regulatory phase. They are writing it down, but they don't want people to just think this is chaos. They have asked us explicitly, the Secretary of the Treasury and the SEC, the Republican appointees, to let them work this out. They agree that it needs to be reduced.

But if you start now with Congress piecemeal amending it, the degree of consensus they are trying to reach in the business community will erode. If people think, oh, we got one amendment through, we got this piece out, then there will be others who want another piece, people who have always resented it. And Mr. Cox has been very careful to try to get, for instance, unanimity in the commission because he wants people not to think this is a chance he's saying, it's going one way, it's going the other. And to begin now to whittle away at his authority, when he is in the process of doing exactly what critics of Sarbanes-Oxley as it now stands say they want to do, undermines his ability to reform this in an orderly way.


Mr. FRANK of Massachusetts. First of all, does the gentleman not understand that his question, as virtually all of his debate, has zero to do with the amendment he purports to be supporting?

The fact is that the problems, yes, in China they have decided to do it in Shanghai. I think there are a lot of reasons why there has been a shifting and we're no longer overall in the world. But it has nothing to do with this amendment because it's not about small business. We haven't lost the share of small business. But the gentleman has reinforced my point. I mentioned Shanghai. Shanghai is appropriate, because this amendment is an attempt to shanghai small business into the cause of undermining Sarbanes-Oxley and undercutting the effort by the SEC, supported by the Secretary of the Treasury--and I assume the Bush administration--to allow the process of scaling back Sarbanes-Oxley to be done in an orderly, reasonable fashion.


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