tv U.S. House of Representatives CSPAN July 31, 2009 10:00am-1:00pm EDT
a legislative response to these bailout bonuses and the resulting public outrage. the cure-all solution bears the lofty and noble title, corporate and financial institution compensation fairness act. it is in every way up to the challenge laid down by our former colleague, mr. emanuel. most recently of 1600 pennsylvania avenue who never -- who said never let a crisis go to waste. it is also in many ways closely akin to the recently departed cap and tax legislation and the ever-looming government, or should i say public option, health plan. all three are sweeping power grab into the private sector under the guise of the government riding to the rescue. all three rely on the government to fix the problem. all three promise to fix the problem which to a great extent was caused by, guess who?
that's right, the government. and lack of regulation by the government. all three will create or more accurately duplicate large government bureaucracies. all three represent ill-advised and many cases incompetent government intrusions. just three weeks or four weeks ago, the white house spokesman, our gene sperling, legal counsel for of secretary of treasurer, warned, go slow. he said, this is a very difficult subject. it needs testing. it has potential for unintended consequences. just yesterday before the senate, the white house press spokesman, robert gibbs, stated that the obama administration is concerned that the chairman's legislation may give the government regulators too much say on incentive-based compensation.
but as the chairman said to the rules committee, my legislation goes beyond what the obama administration has proposed. now, if that doesn't take your breath away, nothing will. in some ways, this legislation borders on the classic bait and switch. it's being sold as giving the owners of the corporation the right to set pay and compensation standards. that's the shareholders. chairman frank just this week on cnbc said dollar amounts are for the chair holeders to decide. -- shareholders to decide. i would like -- is my time up? the speaker pro tempore: yes, it is. mr. bachus: i'd like to recognize myself two minutes. the speaker pro tempore: the gentleman is recognized for one minute. mr. bachus: he said say on pay is to shareholders. true, the first six pages of the bill give the owners, the shareholders a nonbinding vote on the pay of top executives. but then come the next eight
pages. the switch which gives the regulators the power to decide appropriate compensation for not only just top executives but for all employees of all financial institutions. above $1 billion in assets. and all without regard to the shareholders' prior approval. so under the guise of empowering shareholders it is in fact the government that is in power. one lesson we have learned from the government's arbitrary interventions over the past 18 months, and that is the converse of two big to fail is too small to -- too big to fail is too small to save which is a designation which applies to 99.9% of businesses which have been deemed by this administration and the regulators as significantly unimportant or significant. -- insignificant. but not so unimportant, not so insignificant to be totally ignored.
while not significant enough to receive a bailout, they are apparently worthy of increased regulation in the form of government mandated pay regulations and new disclosure requirements in the chairman's bill. and finally on page 15, the bill designates those same government entities which are empowered to control compensation plans that would threaten the safety of financial institutions or adversely impact economic conditions or financial stability to oversee this riskiness. look over the list and see if it inspires confidence. these are the same government agencies that regulated a.i.g., countrywide and collectively failed to prevent the worst -- i yield myself an additional minute. the speaker pro tempore: the gentleman is recognized for one minute. mr. bachus: these are the same government agencies that regulated a.i.g., countrywide and collectively failed to
prevent the worst financial calamity since the great depression. if it took them 30 years to catch bernie madoff, do you really think the s.e.c. can do beater swrob of identifying -- do a better job of identifying inappropriate risk of financial executives whose businesses have remain solvent during these challenging times? really now, is there any question who is better qualified or for that matter who ought to be responsible for setting compensation within the american corporation? in closing, mr. chairman, this bill continues the democrat majority's tendency to go to the default solution for every problem, create a government bureaucracy to make decisions better left to private citizens and private corporations. that's what we did in cap and trade, that's what we did in the health care proposals, and it's this bill on stpwhreck tif compensation -- executive compensation government bureaucrats don't know what's best for america. for those reasons, mr.
chairman, i urge opposition to this legislation and reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from massachusetts. mr. frank: mr. chairman, i yield myself three additional minutes to deal with some of these comments. the speaker pro tempore: the gentleman is recognized. mr. frank: first of all, i'm struck by the fact as the gentleman, as he indicated in our markup, is sufficiently nervous about the political implications of imposing this bill and having the house take no action whatsoever to deal with the problem of risk incentivizing bonuses. but he wants to debate cap and trade and health care. they're not before us. what's before us is this bill, and when members debate the bills that aren't here, it's an indication that they're a little shaky on the bills that are here. secondly, yes, it does say that they can deal with all wages but not in general. the gentleman reads selectively. the reading about taking action is in this context. to determine whether the compensation structure is aligned with sound risk management is structured to account for the time horizon of
risks. and will reduce unreasonable incentives by such institutions for employees to take undue risks. it is limited in its grantor authority only to structures that incentivize excessive risk. there is no mandate here to set wages for anybody. there is no mandate to say this percentage is bonuses and that percentage is pay. it's a mandate only to act where the structure invent advises risk. as has been recognized as part of the problem very broadly. i will plead guilty to one issue. yes, we are not in this case taking orders from the obama administration. and maybe having represented a party that took orders from the bush administration, they now wish they didn't, but that's not an example i want to follow. i am not here as a member of congress or as chairman of a committee to do whatever an administration says. i am here for us to put our independent judgment. but the gentleman closed with the key difference between us.
the republican position, as he articulates and it is have the federal government take no action whatsoever to strain the bonuses that incentivize excessive risk. if they pay back that tarp money that they benefited from -- and their position is do nothing to deal with this. we take the opposite position. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from alabama. the gentleman from alabama. mr. bachus: thank you. mr. chairman, i yield two minutes to the gentleman from south carolina. the speaker pro tempore: the gentleman is recognized for two minutes. mr. barrett: mr. speaker, i rise in opposition of the corporate and financial institution compensation fairness act of 2009. restoring confidence in our financial markets is crucial, mr. speaker. a component in bringing about economic recovery, and i support efforts to responsibly address the issues that led to
the financial crisis that we're facing today. however, 3269 does not do either. instead of addressing the need for smarter regulation, this bill represents further government intrusion into the private sector that culetly hinder economic recovery. if this legislation is passed, it will put in place far-reaching and permanent government regulations on the compensation practices of financial institutions, crippling their ability to recruit top talent and remain competitive abroad and here at home. mr. speaker, this bill goes too far by giving federal government, the federal government the authority to make compensation decisions for a wide range of employees and thousands of financial firms across the united states, which we can all agree is a far cry from just capping executive pay. in tough economic times like these, we need to if he cuss on ways to restore confidence -- we need to find ways to restore confidence in american businesses through responsible policies that restore market discipline and discourage
executive risk. -- excessive risk. i believe we cannot have a full economic recovery with a permanent overreaching regulations that this puts in place by this legislation. i therefore urge my colleagues to join me in voting no on this legislation, and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from massachusetts. mr. frank: i yield four minutes to a member of the committee, the gentleman from georgia, mr. scott. the speaker pro tempore: the gentleman is recognized for four minutes. mr. scott: thank you very much, mr. speaker. i appreciate that very much. let me just start out by saying this. we're hearing complaints from the other side about we are taking over the private enterprise system. we are taking over the free enterprise system. let me remind them that it wasn't us that went to the private enterprise system, it wasn't the government that went to wall street. wall street came to the government to bail them out from their behaviors. now, mr. speaker, the american
landscape is absolutely littered with company after company that has been driven into the ground by executives who were greedy, who were selfish, cared only about themselves with these huge salaries and these companies are left to wither on the vine after they have gotten their golden parachutes and have landed elsewhere. somebody needs to say something about the american people. this is a free enterprise system, but it's not just free for top executives. it's free for shareholders. it's free for those men and women who've given their lives, their blood, their sweat and their tears. and to see their companies in shambles because of excessive pay by executives who have abandoned those companies, what about their pensions? what about their retirement that have gone? no, mr. speaker, this is not about taking over the private
enterprise system. mr. speaker, this is about saving and protecting the free enterprise system so that we all can be free to participate in the system. now, mr. speaker, what we have before us here is something because of the fact that financial firms put together compensation packages and bonuses that were based on incentives, that were layden with excessive risk that caused our financial crisis and brought this economy to the edge of collapse and caused us here in congress to go and get over $2 trillion of the american taxpayers' money to bail them out. now, the first order of business -- and this is why this bill that chairman frank has pushed and i'm proud to say that we worked on this together over three years ago.
had we had that bill in place three years ago we might not have had this financial crisis because we will have been able to rein in the risky corporate behavior that brought about the collapse. and so that's what we're doing. we're putting forward some reasonable means here. what is more reasonable than giving the shareholders a simple say, a vote? it's nonbinding. we're not setting the salaries. even the shareholders are not. but don't they have a right? isn't their company? they're the ones that are pumping the money into it. the other feature about the bill, mr. speaker, that is very simple, very reasonable is that we require these compensation committees that are on these boards to be independent. right now it's a cozy relationship. the c.e.o. refers to them as his board. they're hand picked.
they're paid $50,000, $100,000, $200,000 to come and sit. they need to be independent, and we have rules and regulations in the bill that allow for the regulators to determine what these conditions will be to make sure they're independent. we make sure that the consultants who come in and help set up these compensation packages are there. the other point we do here, mr. speaker, which is important, we also want to make sure that as we move forward in this that risky behavior is disclosed so that we can prevent it. it's a very good bill, mr. speaker. i urge its passage. the speaker pro tempore: the gentleman's time has expired. the gentleman from alabama. mr. bachus: thank you, mr. chairman. i yield two minutes to the gentleman from new jersey, mr. lance. the speaker pro tempore: the gentleman is recognized for two minutes. mr. lance: thank you very much, mr. speaker. i rise out of concern for section 4 of this bill.
we had had an amendment in the rules committee that i offered with the distinguished gentleman from georgia, and it was ruled out of order by the rules committee. we believe that the amendment was germane, drafted properly and submitted on time. and the amendment dealt with section 4. regarding section 4, i believe, sir, that it is overly broad and in particular i am concerned with a section that says regarding incentive-based compensation that federal regulators can review that based upon other criteria as the appropriate federal regulators jointly may determine to be appropriate to reduce unreasonable incentives for officers and employees. to take undue risks. that gives too much discretion to federal regulators and we should be specific as members of congress in the statutory basis for compensation issues. i am also concerned that if this becomes law, that there
will be a tendency for capital to move away from the united states, places like london and asia, this is a matter i discussed previously in the committee and i certainly believe we should continue to be the place in the world where this type of activity occurs. our amendment in no way takes away the other provisions of the bill regarding say on pay and the independence of compensation boards. but i am sorry our amendment was not considered favorably in the rules committee and therefore will not be considered favorably here. this morning a report from bloomberg indicates that the white house press secretary mr. gibbs said yesterday the administration is concerned that the measure may give regulators too much say on incentive pay.
i agree with that sentiment. the speaker pro tempore: the gentleman from massachusetts. mr. frank: i yield myself 30 seconds to say on behalf of the obama administration, i welcome this temporary deference of -- deference to their views. i urge them to enjoy that brief moment of graciousness. i yield four minutes to the gentleman from texas. the speaker pro tempore: the gentleman from texas is recognized. mr. green: mr. chairman, jal though they are not my words, we have heard that it takes an act of congress to get many things done. i would only add to this what i have heard, it also takes a congress willing to act. this is our opportunity to act. this is our opportunity to do what dr. king called bending the arc of the moral university toward justice this piece of
legislation is just given the circumstance this is a we have been coping with. there is no dispute that many c.e.o.'s have had their pay structured such that no matter what the consequences of their actions, they were going to receive enormous bonuses. i think there are two good reasons to support this legislation. one, it deals with the safety and soundness of the banking institutions. it performs perfectly, if it does just this as far as i'm concerned, if it allows a banking regulator who sees that the structure of pay is impacting the safety and soundness of the institution, fit allow this is regulator to take some affirmative action to protect the safety and soundness of the institution, this piece of legislation is working. that's what it's designed to do not to structure the pay, but to prevent the pay from causing ordinary people to have to bail out big banks. people are expecting us to do
something to prevent this from happening again. if we are going to act this is a means by which we can act. talking about that which we cannot do and will not do, that is not on the agenda, that will not help us do what we can do today. i never let what i cannot do prevent me from doing what i can do the second reason i support this legislation, this legislation allows shareholders, by the way, i trust shareholders, i think people who have a vested interest in something ought to have some say. i think they ought to be able to know what the salary structure is and say something about it. in this case, it is nonbinding. there are many people who are of the opinion that nonbinding is not enough. but i trust the shareholders to have an opinion. they have but an opinion. they don't do anything to bind the corporation. these two reasons, when combined, will help us with the safety and soundness of these
stewings and give the shareholders an opportunity know how the salaries are structured and have some say. finally if we want to be a congress that acts, we've got to have courage. these are -- these are trying times. these are difficult times. it is easy to stay with the status quo. those who want change have got to be willing to take the risk of doing the right thing. the arc of the moral university bends toward justice but it doesn't do so by itself. it does so because of people who are willing to do the right thing under unusual and extraordinary circumstances. i am going to stand with the chairman, i believe the chairman is imminently correct he has structured a great piece of legislation, those who really want change will vote for this legislation. those who want to see a better system so that we don't end up with more headline this is a read, bailed out banks gave millions in executive bonuses,
not withstanding the fact that these banks have been -- they have not been managed properly and could have been managed a lot better. these kinds of headlines are going to cause problems for a lot of people. i am going to vote with the chairman. i'm voting for the bill. it is a good bill. it is a just bill. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back his time. the gentleman from alabama. mr. bachus: i yield four minutes to the gentleman from texas, mr. hensarling. the speaker pro tempore: the gentleman is recognized for four minutes. mr. hensarling: i thank the gentleman for yielding, mr. speaker. there are aspects of this legislation that i certainly appreciate. all americans have been outraged, it's a word we use frequently and use justifiably. about some of the compensation packages we've seen from failed company this is a come with tin cup in hand to the united states taxpayer. looking for more.
this bill has some provisions that adds increased transparency, some increased accountability, and that's good. but unfortunately, the bad in the bill way outshadows the good. so what i've always said, mr. speaker is what you do with your money is your business. what you do with the taxpayer money is our business. mr. speaker, unfortunately, you can't just read the bumper sticker slogan. you actually have to read the legislation. so we hear speech after speech about these failed institutions taking in all of this government money. well, i wonder then, why in committee on a party line vote did we vote down an amendment amendment i brought that would have ensured that the bailout recipients, that this legislation applied to them and them only.
they're the poster children in this debate, but yet the legislation extends potentially to every public company in america that somehow is defined as a quote-unquote covered financial institution. by the way, i would say to my friends on the other side of the aisle, the best way to deal with risky pay schemes is to quit bailing them out in the first place. my friends on the other side of the aisle are enshrining us as a bailout nation system of you complain about the taxpayers picking up the tab, i've complained about the taxpayers picking up the tab. quit bailing them out in the first place. now, again, we have to read the bill and not just read the slogan. because if you read the bill, what you find out is, number one, this isn't just pay restrictions that go to those in the troubled wall street rms.
again it's almost every covered financial institution. guess what? if you read further into the bill, it doesn't just cover the top officers, the top executives. every single employee, every single employee who has a yet-unquote incentive-based can -- a quote-unquote incentive-based compensation can be covered by this. we've learned that somehow work a very intrerptive approach to the english language that general motors and chrysler have been found to be financial institutions. this means any employee, any employee who receives a tip a sales commission a christmas bonus could have a federal bureaucrat take it away from them. ho, ho, ho. that's what this legislation is all about. don't get sucked in by the bumper sticker slogan. read the legislation. that was the problem on the
original bailout. nobody read the legislation. the government stimulus, nobody read the legislation. well, fortunately, this isn't a 1,000-page bill. i think it's 15 or 20 pages. i actually took the time to read it. if this is just about class warfare, mr. chairman, why doesn't this do anything about hollywood stars who make $25 million for a movie, yet the movie loses money? why isn't it about a third baseman for the new york yankees who gets $21 million and ties his worst record for striking out in the season? why doesn't have have -- why doesn't this have anything to do with the personal injury trial lawyers who make millions and millions and their clients are doing good to make thousands. may i have an additional minute? mr. bachus: i yield the gentleman an additional minute. the speaker pro tempore: the gentleman is recognized. mr. hensarling: i hear the rhetoric from the other side of the aisle which seems like a lot of recycled class warfare
to me. another point i'd make, we hear that we need this to deal with safety and soundness. we need this legislation to deal with systemic risk. well, number one, i listened very carefully to the testimony presented in our committee and i'm sure it's theoretically possible that there are pay structure this is a may lend themselves to this, but again, what -- show me the evidence. where is the evidence. when i look at pay structures among financial firm this is a fail versus those that didn't fail, i don't see the correlation. second of all, as we know, mr. speaker, the regulators have the power to regulate the liquidity and capital standards of these financial firms to make it commensurate with the risk. that's remedy. that's the remedy. not to take christmas bonuses
away from employees. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from massachusetts. mr. frank: i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. frank: there's a contradiction here, when we're talking about a power, namely to reduce excessive risk incentivizing bonus this is a republicans want to defend they talk about the unelected bureaucrats. the unelected bureaucrats can't be trusted, except the gentleman from texas said, don't worry, the unelected bureaucrats are out there to protect us. the unelected bureaucrats in the republican cost ophthalmology are like the obama administration, they are either great whipping boys or sources of wisdom, depending on how the republicans have them. but i am interested, i notice a number of member says they don't like the bonuses. is there a republican proposal to deal with the bonuses that are being given? our proposal does not empower
anybody to limit the amounts. the question is, is there a republican proposal that would deal with what paul volcker and ben bernanke and the financial regulators in england and warren buffett and many others believe is a destabilizing tendency to give out bonus this is a give you an incentive to take risks, excessive, excessive in the sense that you benefit if the risk pays off and you don't lose. we want people to take risk, but we want them to take risk this is a balance the upside and downside, not which look only at the upside. i continue to point out, not in the committee, not in 12 years when they controlled the place, not during this debate today, not in the rules committee, we have not seen a single republican proposal to deal with bonuses. their position apparently is, however the financial industry wants to structure bonuses, you
get a bonus if it pays off in short term and tushes sour in the long term you get a bonus if it pays off and don't lose anything if it doesn't. they want to leave that the same. last consensus among financial regulators and others that this contributed to risk taking. we believe in the free market system and the incentives. how can it be you acknowledge that there's a system that says to people, take a risk because this is risk-free for you? that's the problem, it's risk-free for the individual. it's risky for the company. when you accumulate riskers in company, it's risky for the economy. we say if it's risky for the company and the economy, we want it risky for the individual. we don't want risky individuals taking risks on the -- risk-free individuals taking risks on behalf of people who
face risks. let us return to the thrilling days of yesteryear when the loren rangers will ride again, untrammeled by any set of rule, they'll continue to give themselves bonuses to allow them to be free of risk. that's deal. the company will face risk, the economy will accumulate and face risk, but the decision makers will be free of the risks, negative side, they will gain from the risks, positive side, and like rational people, they'll take more risks. i reserve the balance of my time. the speaker pro tempore: the gentleman from alabama. mr. bachus: i yield two minutes to the gentleman from california. the speaker pro tempore: the gentleman is recognized for two minutes. mr. campbell: thank you. i thank the gentleman for yielding. i hear the gentleman's comments and remarks. and, you know, there's no argument with anyone i think on this floor about the -- that executive pay has been an issue, that has been excessive and that there has been
problems that have been created in companies in the economy with executive compensation. i think i would argue that rather than excessive risk taking that it's more about short-term thinking instead of long-term thinking which by the way is way better than executive -- way bigger than executive pay. that's another issue. but the question for me is whether this is the right way to deal with it, and i would argue no, because is the only problem out there in corporate governance is the only thing that has created problems for companies related to executive pay. no. let's look at general motors and chrysler and their recent problems. were their problems created because of executive pay? i am not sure i heard anybody argue that. but were their problems created in part because of excessive union contracts? yes. how about of retirement programs that were unfundable over time? yes. what about other companies where perhaps there have been legal settlements that have created problems that have been fatal or resulted in companies
going bankrupt? those have occurred. how about mergers and acquisitions? so what are we going to do? are we going to have shareholders vote on pay, on mergers, on acquisitions, on union contracts, on retirement pay, on legal settlements, on fees to attorneys? well, now, any of those arguably can bring a company down. and isn't that -- should the shareholders have a say on that? you know, obviously the shareholders are the ultimate owners of the company. if you want to give them a say on pay, fine. then you better give them say on the rest of that. but i am not sure that anybody on this floor thinks that's the right thing to do. the best way for shareholders to express their displeasure with the management or operation of a company is through the board of directors. and that's the way it has been done and that's the way it should be done. i yield back the balance of my time. the speaker pro tempore: the
gentleman yields back the balance of his time. the gentleman from georgia. mr. scott: yes, mr. speaker. i yield to the gentleman from north carolina, mr. miller, four minutes -- three minutes. the speaker pro tempore: the gentleman is recognized for three minutes. mr. miller: thank you, mr. speaker. i look forward to working with mr. campbell on giving shareholders much more -- much more power over their own corporations. there is much more we need to do to reform corporate governance in this country. it's one of many failings of our economy in the last year or so. mr. speaker, i don't want to run corporations, but someone needs to set some rules. we need the law to set some rules. we need someone to provide some oversight. we need someone to be a watchdog for what they are doing because we have found out what happens when there are no rules, when there is no oversight, when there is no watchdog. we are now in the worst economic downturn since the great depression, and we have been close to a financial collapse that would have left
the great depression in the shade. and we know what caused it. essentially the same things that went wrong in the 1920's. corporate executives were looting the country with predatory lending practices to make as much money as they possibly could without any regard to the consequences. and then the corporate executives in turn were looting their companies to make as much money for themselves as they could. they weren't doing right by american consumers. they weren't doing right by their own shareholders. they were only looking after themselves. the idea that corporate executives were acting in the best interest of their own shareholders is simply a farce. we saw vullingar compensation for executives -- vulgar compensation for executives and other top officials who were doing very little of any value to society. in fact, their predatory lending practices were doing much more harm than good, and it wasn't even to the benefit
of their shareholders because of the risk that they were creating for their corporation, that the short-term profits would lead to great risk in a very short while. this bill is part of what we need to do. it is only part of what we need to do. this just scratches the surface. we need to make sure that the financial collapse that we have seen in the last year never happens again. this bill is only part of it. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from alabama. mr. bachus: thank you. three minutes to the gentleman from delaware. the speaker pro tempore: the gentleman is recognized for three minutes. mr. castle: thank you, mr. speaker. and i thank the gentleman for yielding. and, mr. speaker, i rise in strong opposition to h.r. 3269, the corporate and financial institution compensation fairness act. this overreaching bill, which is being sold as a response to
the financial crisis, would in effect take away the rights of individual companies to conduct businesses as they see fit. in places government bureaucrats in charge of making key decisions about how businesses should be run. we can agree that some executives in this country are grossly overpaid, but allowing government to make such determinations is counter to everything that's made our country great. america has always been an economic powerhouse in the world, but this bill restricts competition through government intervention in a way that infringes on the entrepreneurial spirit of this nation. section 4 of h.r. 3269 would actually allow the government to involve itself in the running of private businesses by empowering federal regulators to prohibit compensation arrangements for all employees of all financial institutions, including banks, bank holding companies, broker dealers, credit unions and investment advisors. even regulators under the currented a mfrlings have testified that they do not -- current administration have testified that they do not want to cap pay for how companies should set compensation which could be counterproductive. however, the majority has ignored the administration's wishes by adding section 4 of
h.r. 3269. this bill is an overreaction to the current financial crisis. like many, i am concerned that executives in a handful of large companies like a.i.g. have been awarded extraffic get pay packages and bonuses even after the company received assistance from the government. in this case, when federal assistance has been granted, i do believe the federal government should mandate the pay structure of these firms, which is why i voted for an amendment during committee consideration of h.r. 3269 to only apply the provisions to tarp recipients for the time the tarp money is outstanding. this amendment was rejected, leaving many financial institutions who did not contribute to the current crisis to pay for the mistakes of others. finally, this bill undermines the privacy of corporate governance laws. laws have been left up to the states leaving them to foster competition. for this reason, i support mr. garrett's amendment to allow
state law to preempt the underlying bill. h.r. 3269 was introduced without a single legislative hearing to examine its far-reaching implications despite numerous people from the financial services committee. i believe this bill will have unintended consequences and i urge my colleagues to vote no on the underlying time. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from massachusetts. mr. frank: mr. speaker, i would ask if i could reserve for one more speaker while i work mg out. the speaker pro tempore: the gentleman reserves the balance of his time. -- mr. frank: one more speak while i work something out. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from alabama. mr. bachus: i yield two minutes to the gentleman from georgia, mr. price. the speaker pro tempore: the gentleman is recognized for two minutes. mr. price: i ask unanimous consent to revise and extend my
remarks. the speaker pro tempore: so ordered. mr. price: thank you, mr. speaker. i thank my friend from alabama for yielding me time and for leading on this issue. what we hear from the other side of the aisle is this famous old phrase, trust us. right? trust us. now, we know that folks on the other side don't have any reluctance to have the government run things. we've seen it over and over and over again. in fact, we just heard it from one of the speakers, we don't want to run private companies. and then he followed that up and said, but this is only part of what we need to do. but the bill, mr. speaker, the bill has language in it that would in effect allow the federal government to determine pay compensation for employees, and that might be all right if it were just companies that were receiving tax money. that might be ok. but in fact it's not. it is so many other companies. covered financial institutions, the definition in the bill would expose companies like c.v.s. care mark, yes, well care health plan, value line, textron, medco health solutions, lowe's corporation.
mr. speaker, this is another far reach by the democrats in charge who believe that the government knows best, not just about automobile companies, not just about energy companies, not just about how to spend your money, not just about your health care. they're working on that government-run health care plan. but also private companies across this country. they believe they ought to come and say, this is what you should make and not make. nobody should be concerned about having shareholders give their opinion, have a say about what executives make when shareholders own part of that company. that makes a whole lot of sense. but what we do have concerns about, grave concerns, is the intervention of the federal government into one business after another after another. this is just another example of that. it's a terrible idea. it strikes at the very core of the free market principles that have made the greatest nation in the history of the world. bad idea, mr. speaker. vote no. the speaker pro tempore: the
gentleman yields back the balance of his time. the gentleman from massachusetts. mr. frank: well, mr. speaker, i yield myself 15 seconds to say i welcome the gentleman from georgia to the cause of say on fay when we debated this on march 22, 2007, weighs -- -- when he was quite critical of it. i now yield to a question of the gentlewoman from california. the speaker pro tempore: the gentlelady is recognized. mr. speier: thank you, -- ms. speier: thank you, mr. speaker. in section 4 of the bill it defines the term covered financial institutions to include depository institutions, broker dealers, credit unions and investment advisors. but also authorizes the appropriate federal regulators to designate jointly by rule other financial institutions that are to be covered. because this authority is granted to appropriate federal regulators, can we assume that entities not regulated by the federal financial regulator are not intended to be covered by financial institutions? mr. frank: yes. as to section 4. if the public companies they're covered by say on pay.
and there might be companies that are not federally regulated. as of now if they are not federally regulated they are not covered. because a.i.g. was federalry regulated by the o.t.s., so they would have been covered. but the gentlewoman is correct. i now yield three minutes to the gentleman from -- mr. speaker, i have no further request for time so i am going to reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from alabama. mr. bachus: i thank you, mr. chairman. mr. chairman, let me tie up a few what i consider loose ends about this legislation. one is the motivation. of course, we've heard that one of the motivations is that these pay schemes and arrangements could heighten risk. and then if one endorses the obama administration approach that would precipitate a bailout. because the government would
continually have to assure against some outside risk. and as i've said, the republican approach is simply, don't bail these companies out and then you don't have to be micromanaging every compensation decision by a company. i think there's another motivation, and i think it's a very -- it's a slippery slope. chairman frank was on cnbc this past tuesday, and he asked this question. is there some character defect with some people where they get hired that give them a prestige job but they really won't do it right unless you give them an extra bonus? most of us don't need that. so i'm wondering if one motivation for this legislation is so that the government can decide whether people need a
bonus or don't need a bonus, whether they're deserving of a bonus. and in fact several pages of the bill does just that. some people may not need that bonus. other people may. that decision will be made by the list of government entities on page 15, not by the shareholders, even though this bi is trotted out as a shareholder bill. not by the board of directors, not by the management, who an important tool of management is to offer incentives and incentivize performance and achievement. but apparently now it's the government will decide whether you need a bonus or not. that, mr. chairman, is scary in my mind. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from north carolina. mr. watt: mr. speaker, i yield
1 1/2 minutes to the gentleman from maryland, mr. van hollen. the speaker pro tempore: the gentleman is recognized for 1 1/2 minutes. mr. van hollen: thank you, mr. speaker. i thank my colleague from north carolina for his leadership on this issue. in this country we believe that hard work schad be rewarded, and i -- should be rewarded, and i think that most people in this country believes in the concept of pay for performance, but what we've seen on wall street over the last many years is turning that concept of pay for performance on its head. we saw c.e.o.'s and the folks in the wall street board rooms getting huge bonuses based on short-term gains for their companies even while that excessive risk taking put those institutions at risk. if it was just those constitutions, -- just those institutions, i think we'd say, let them take the risk. if it was just that company at risk, ok but this kind of excessive risk taking went on at the biggest financial
institutions of in this country and put the entire economy at risk, put the financial system at risk, and at the end of the day, put all of the taxpayers in this country on the line. so we all have a stake in changing the system. we all have a stake in making sure people get paid for performance and not paid by putting taxpayers in the financial system -- and the financial system at risk. at the end of the day, we're all holding the line, not just the c.e.o.'s and shareholders. mr. speaker, it's time to say enough is enough. let's pass this legislation to protect consumers, shareholders, and the taxpayer. the speaker pro tempore: the gentleman yields back. the gentleman from alabama. mr. bachus: thank you, mr. chairman. i yield two minutes to the gentleman from illinois, mr. roskam. the speaker pro tempore: the gentleman is recognized for two minutes. mr. roskam: i was minding my own business in my office, i've been listening to this debate and felt like i needed to come
and point a couple of things out. some real weaknesses of this bill. i'm hearing from manufacturers, mr. speaker, in my district who are particularly concerned about section 4 of the bill, they're making their concerns known through the national association of manufacturers. they said they are concerned that this bill would give authority to government regulatory agencies to review and prohibit pay arrangements for a wade range of employees. as a result, they strongly oppose the intervention of government. i'm the first to say if you took bailout money if you took tarp money, be in this category. those are entities the taxpayers have the right to regulate. but when we start to use ambiguous terms, terms that are not well-defined, we are creating an environment where there's going to be more government intervention.
why is it that the national association of manufacturers says don't do this to us? they're working hard to create jobs in this country and they haven't been able to do it, in part because of bad policies that they've seen come out of washington, d.c., mr. speaker. we can do much, much more. look, in a nutshell, this bill is an invitation for political meddling at its worst in the private confines of companies that are trying to work hard to create jobs and to create opportunities. you can imagine a politician getting on a phone with a regulator and saying, you know what, i'm interested in you checking into that company because i don't like them and i don't like the way they're doing business. we can do better. let's send the bill back to committee and i yield back. the speaker pro tempore: the gentleman from north carolina. >> mr. speaker, we have only one final speaker so we
reserve. the speaker pro tempore: the gentleman from alabama. mr. bachus: at this time, i recognize the gentleman from new jersey, mr. garrett, for one and a half minutes. the speaker pro tempore: the gentleman is recognized for one and a half minutes. mr. garrett: i thank the chair. in a few moments, bill submitting an amendment to this bill but first i want to talk about someone else's comment on this bill. this is neil meno, someone who no one would consider ancon servetive. she recognizes why this is coming up, she said the impulse is understandable but the standard is unworkable. what does inappropriate mean? what, while we're at it, does risk-taking mean? and the most terrifying question, who gets to decide what they mean?
chairman barney frank warned earlier this month, and he did so again just recently, that recent news of compensation show this is a some leaders yearn for the stirring need of yesteryear but it's a question of empowering the share holder to decide the appropriate level of pay, not the regulators. she concludes by saying who is in the best position to evaluate and respond to badly designed pay packages. as someone proud of eight years serving in government she says she has the utmost respect for politicians and bureaucrats but also recognizes their limits. the government, therefore, should not be micromanaging pay. instead, this is what republicans suggest, remove the obstacles that currently prevent oversight from those who are best qualified and motivated to manage the risk, the shareholders. with that, i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from north
carolina. >> we reserve the balance of our time. the speaker pro tempore: the gentleman from alabama. mr. bachus: mr. chairman, it appears as if this bill is so much more than a shareholder's right to say on pay bill. we already have a czar, a pay czar. are we going to have a consultant czar? we're going to enable these compensation consultants, they go to the agenciesing, they meet certain criteria, are we going to have a consultant czar? again, are we going to need management czars? risk czars? because these 20 pages and 15 of it deals with risk, it deals
with inappropriate behavior, are we going to, on the bonuses, are we going to have every bonus submitted to some government agency to review? how are you going to report those bonuses? how will you approve those bonuses? how long will it take to approve those bonuss? the administration itself has warned this bill goes too far. independent witnesses have warned this bill goes too far. the speaker pro tempore: the gentleman's time has expired. the gentleman from north carolina. mr. watt: i yield myself the balance of me time. the speaker pro tempore: the gentleman is recognized.
mr. watt: the fact that we are here today debating this bill with such vociferous opposition , to me is a commentary on how out of whack our whole system has become. first of all, this bill is a modest bill which gives shareholders the right to make advisory votes, take advisory votes on compensation. who are these shareholders? they're the owners of the company. they are the owners of the company. and somehow the opponents of this bill are trying to convince the public that the owners of a company shouldn't have the right to express their
opinion to the board about compensation of the officers of that company. and the bill specifically says, and i'm reading from the bill, the shareholder vote shall not be binding on the board of directors. and it shall not be construed as overruling a decision of the board. we're just giving them the explicit right to advise the board about compensation. one gentleman has said that this applies to manufacturers. it doesn't apply to manufacturers. section 4 doesn't apply to manufacturers. even if it did, it would apply only to the extent that they could threaten the safety and soundness of a financial institution. manufacturers are not financial institutions. and only to the extent that
they could be -- cause serious adverse effects on economic conditions or financial stability and that, i would submit, is an appropriate federal government role to play , to make sure we don't get back into the kind of meltdown that we are experiencing and have been experiencing as a result of greed and irresponsibility in the private sector. this is not the government taking over the corporate sector, either in the financial sector or any other sector of our economy. it is a statement by the american people that it's time for us to straighten up the ship. we should pass this bill today and move on. thank you. the speaker pro tempore: the gentleman's time has expired. all time for debate has expired.
for what purpose does the gentleman from massachusetts rise? mr. frank: to offer an amendment. the speaker pro tempore: the clerk will designate the amendment. the clerk: amendment number one, printed in house report 111-231, offered by mr. frank of massachusetts. the speaker pro tempore: the gentleman from massachusetts, mr. frank, and a member opposed, each will control five minutes. the chair recognizes the gentleman from massachusetts. mr. frank: i yield myself one minute. the speaker pro tempore: the gentleman is recognized. mr. frank: i offer an amendment which i said we would be willing to accept subject to some further change, we've talked, we have not yet reached agreement, this is going to be entirely up to debate, what the gentleman was concerned about, and i think legitimately, the possibility of a callback, that people give back bonuses they'd already received. we hope there will be rules adopted that will set those rules in place. but -- i agree people's pay should not be subjected to
decisions. there is an s.e.c. decisions that where someone received compensation and it turned out the transaction was not profitable that a return of the money given because of profitability might with be appropriate. our language reflects that. it does give some protection against arbitrary return and i reserve the balance of my time. the speaker pro tempore: for what purpose does the gentleman from georgia rise? >> to claim the time in opposition. the speaker pro tempore: the gentleman is recognized for five minutes mr. price: the debate on this amendment is very appropriate and jermaine to the actions of this entire congress. the amendment offered in the committee in good faith to try
to make certain that there weren't any changes that could be made retroactively to compensation packages and incentive pay was very specific. it said that no compensation of any executive having been approved by a majority of the shareholders may be subject to any callback, which is the retroactivity, unless it was part of the contract or unless there had been fraud committed. that's what accepted by committee, mr. speaker, accepted by committee. the amendment was put into the bill. with the caveat that the chairman wanted potentially a few changes. i would vote quothe from the chairman who said, the impulse to retroactivity is not one of our finest and ought to be restrained, unquote he said, quote, we could work together to make sure this doesn't derogate from the s.e.c. to make sure you don't do this i'm here to tell you, there weren't
any discussions before the rules committee met, or any substitutions -- discussions before the amendment we have before us was offered. as the apparently good faith effort to the amendment offered and adopted in a bipartisan manner, majority, in the committee. what is the new -- what does the new amendment say? it says no regulation promulgated shall require the recovery of incentive-based compensation under arrangements as of the date of the enact ofment this. what does that mean? the s.e.c., the federal government, will be able to dictate pay. dictate pay because of the language in this amendment to privately held companies. that may be ok if they take tax money -- publicly held companies. that may be ok if they take tax money, federal tax money, but this would be publicly traded company this is a don't take a dime of tax money. mr. speaker, this is a huge step in the wrong direction. section 4 is the area of this
bill we have great concerns about. it puts the federal government, it puts the s.e.c. into, into the agreements for compensation for executives in publicly traded companies, it cuts at the very core of our free market system, i would urge a no vote on the amendment and reserve the balance of my time. the speaker pro tempore: the gentleman from georgia reserves this ethe gentleman from massachusetts. mr. frank: how much time remains? the speaker pro tempore: the gentleman from massachusetts has four minutes remaining the gentleman from georgia has 2 1/2 minutes remaining. the gentleman from georgia has the right to close. mr. frank: i yield myself 30 seconds to act nong one thing that should have been drafted better. the word require is ambiguous. we didn't mean the regulation would -- we meant -- the word should have been permit, rather than require. we meant to say you could not require the individual to give it back. we do want to restrain the s.e.c. or anybody else from an inappropriate one. we will try to change that one word, won't make a huge difference to the gentleman
from georgia but i believe that permit would have been a more -- a better word. when we say require, we meant you could not require the gentleman to give it back. that was it. i yield two minutes to the gentleman from north carolina. the speaker pro tempore: the gentleman from north carolina is recognized for two minutes. mr. miller: it may be that the amendment was offered in good faith but the explanation for the amendment had very little to do with what the amendment actually says. this amendment, mr. frank's amendment, does accomplish the reason or the argument in favor of the amendment. we don't think that a regulator or regulation should require the recovery of an incentive-based pay where the existing contract doesn't require it. we shouldn't change contracts retroactively, existing contracts retroactively, but we also don't need to undermine the existing law that may provide for that.
mr. frank mentioned the s.e.c. the s.e.c. is now trying to recover money that was paid supposedly because transactions were profitable when in fact they weren't because of the accounting. so we don't want to reward accounting irregular larets. and going forward the regulators may well decide that an effective constraint on imprudent risk taking is to require longer horizons for incentive-based pay. that is the purpose of this amendment. it's what this amendment actually accomplishes. it's consistent with the reasons given in committee for the original amendment. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from georgia. the gentleman from georgia. mr. price: i continue to reserve. the speaker pro tempore: the gentleman from georgia reserves his time. the gentleman from massachusetts. mr. frank: yes. is the gentleman going to close because if he is i'll have my
side close? is the gentleman going to close with his remaining time? i'll take 15 seconds. we will still have a disagreement. but instead require it should say, he and i agreed within the limited version here, allow them to require it. in other words, we don't want the s.e.c. to be able to make an un-- inappropriate requirement. so that will be clarified. and i yield our remaining time to the gentleman from north carolina. well, then i will take our remaining time to say, yes, we did tentatively agree to it. there had been an s.e.c. decision that day which i was not aware of it. i did say to the gentleman i thought we would want to -- we would want to make some further changes. mr. price: will the gentleman yield? mr. frank: yes. mr. price: given the agreement that you and i reached on language, what's the posture about changing the language on this amendment? is that a unanimous consent? mr. frank: yes. i would ask unanimous consent if that's permissible, we are in the whole house, to change
on line 2 instead of require shall allow to require, shall allow the s.e.c. to require -- no, i take it back. here's how i will say it. shall be allowed to require. the speaker pro tempore: will the gentleman submit that language to the desk? mr. frank: yes. the speaker pro tempore: the gentleman's time has expired. mr. frank: it's easy for you to say, mr. speaker. the speaker pro tempore: the gentleman from georgia. mr. price: mr. speaker, until that language has been introduced, i'll reserve. the speaker pro tempore: the gentleman from georgia. mr. price: thank you, mr. speaker. the language -- parliamentary inquiry.
the speaker pro tempore: the gentleman will state his inquiry. mr. price: has the language introduced at the desk been -- mr. frank: will the gentleman yield? i'll ask unanimous consent to amend the bill according to that language which the gentleman has seen. the speaker pro tempore: the clerk will report the modification. the clerk: modification to amendment number 1 printed in house report 111-237 offered by mr. frank of massachusetts. on line 2, insert after shall, be allowed to. the speaker pro tempore: is there objection to the modification? without objection, the amendment is modified. the gentleman from georgia. mr. price: i thank the speaker and i thank the chairman for his desire and willingness to work together on this. and that being said, the challenges with section 4 are huge. the far reach of the s.e.c. and the ability of the federal government now to get into the
executive compensation packages for businesses for which there is no federal money involved is remarkable in its extent. and as we know, the democrat majority has a great desire to have the government everywhere in our lives. whether it's in financial institutions, whether it's in energy companies, whether it's the american people have to turn on and off their light switch. i just picked up the paper this morning, mr. speaker, and saw there was an op-ed in "the wall street journal" talking about health reform and cancer and saying if the federal government is allowed to control health care then it may result in the innovation in the area of cancer. i suggest that if the federal government is allowed in this arena, that what we'll see is a huge depressing effect on the ability of businesses all across this land to be able to create the most vibrant and entrepreneurial and active businesses that are to the
benefit of the american people, that create jobs, that allow us to be the greatest nation in the history of the world, and it's just little bits that chip away at the fabric of our nation that make it so that it is impossible to continue to compete on an international basis. and so, mr. speaker, i'll -- i'm pleased that the chairman was willing to clarify the amendment. however, it still gets to the heart of whether or not we are going to allow the federal government into decisions that ought to be left in a free market and in a private sector arrangement. so i urge defeat of the amendment and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the question is on the amendment as modified by the gentleman from massachusetts, mr. frank. all those in favor say aye. all those opposed, no. in the opinion of the chair, the ayes have it. mr. price: mr. speaker. the speaker pro tempore: the gentleman from georgia. mr. price: on that i request a recorded vote.
the speaker pro tempore: a recorded vote is requested. sprourt -- those favoring a recorded vote will rise. a sufficient number having arisen, a recorded vote is ordered. pursuant to house resolution 697, further proceedings on the question will be postponed. for what purpose does the gentleman from new jersey rise? mr. garrett: i have an amendment at the desk. the speaker pro tempore: the clerk will designate the amendment. the clerk: amendment in the nature of a substitute number 2 printed in house report 111-237 offered by mr. garrett of new jersey. the speaker pro tempore: pursuant to house resolution 697, the gentleman from new jersey, mr. garrett, and a member opposed, each will control 15 minutes. the chair recognizes the gentleman from new jersey. mr. garrett: i thank the chair. i yield myself four minutes at this time. the speaker pro tempore: the gentleman is recognized for four minutes. mr. garrett: the american public should be outraged when they read the front page in regards to bonuses and pay. have to read the second headline to realize the $33 billion are going to the banks that receive basically the taxpayer bailouts. and at the bottom of the line on all of this is nothing in
this legislation that would have actually prohibited this from going forward. now, the other side of the aisle on the floor today and repeatedly says, well, the republican side simply has no alternative. it's just the party of no. well, we know that's not true. that on the legislation before us today with regard to executive compensation, both in committee and through rules, republicans have proposed a number of substantive proposals, which i'll go through right now, that would address the underlying problems that we're trying to address right now. if you permit me, i'll now address three or four major points in this substitute which would get at these points that i think outrages america with regard to compensation but do so in a fair and just manner. point one, in the underlying bill it allows for a nonbinding shareholder vote on executive compensation every year. we propose instead that that vote should occur every three years. why is that? all the expert testimony we heard so far says that wall street focuses too much on the short term, the year, the six
months, the three quarters or end of the quarter. why then when compensation packages usually go longer than one year, usually go for three years, would be requiring a vote that would refocus the attention on one year, short period of time, as opposed to being in line to a three-year longer time frame? so we suggest that a three-year vote would be much more appropriate than a one year. secondly, the shareholders and whom we trust with these decisions. we suggest that if we are going to trust the shareholders to be making these decisions, should we not also trust them to make the decision whether or not to have such votes on executive compensation in the future? so our amendment would suggest that a substitute would allow for a 2/3 vote of shareholders to opt out of the shareholder advisory vote if they are so inclined. we know that this is a position taken by a number of institutions, companies in the past because they said that we do not want to have such power, do not want to involve ourselves in such decision
making. and we know it's right now as well because we have a letter from the united brotherhood of carpenters who point out the very real reason why that is. they hold something like 3,603 different companies in their portfolio and they said they were going to have to make this decision one year or every three years, and considering their due diligence that they would have to engage in, this commitment will be a severely challenge to their fiduciary responsibilities. so if he want to opt out of this, -- so if they want to opt out of this, shouldn't we give them the ability of 2/3 deciding to do so? another one, state law. i know the other side talks about this. should we preempt state law or should they not be able to speak up and have their voice heard and be not preempted by the federal government? and fourthly and most importantly, section 4. this section goes well beyond what the administration has talked about. the administration doesn't like
what this section says. our substitution says we should delete section 4. the bottom line on this one is who is it that the other side really trusts to make these decisions? is it the shareholders, as we saw in the first three sections of this bill to make the decision that we would suggest they should be in position to make the decisions, or is it the bureaucrats that they think should be able to make these decisions? is it the same bureaucrats who over at the s.e.c. in the past totally missed the whole madoff situation that they should be making decisions as opposed to the stockholders? is it the same bureaucrats who are -- the regulators for a.i.g. and totally missed that situation, is that who they trust instead? so we suggest all four points are substantive amendments to this. we would appreciate your consideration. the speaker pro tempore: the gentleman reserves the balance of his time. mr. garrett: i reserve the balance of my time. the speaker pro tempore: for what purpose does the gentleman from massachusetts rise?
mr. frank: i yield to the gentleman from california, mr. sherman, for four minutes. the speaker pro tempore: the gentleman from california is recognized for four minutes. mr. sherman: i thank the chair. i support the bill. i wish it went a bit further. and i of course oppose mr. garrett's amendment. first, what his amendment does is it weakens the say on pay provisions significantly. that's right. it weakens a provision which itself simply provides for nonbinding resolutions. but the core of the garrett amendment is that it eliminates the provision in the bill which is designed to provide very modest restrictions on some very peculiar and pernicious compensation formulas that have been used on wall street. now, let us look at how narrow this provision is. it applies only to financial institutions and then only to those over $1 billion. it does not prohibit million
dollar a month salaries. it does not prohibit $10 a month salaries. it -- $10 million a month salaries. it allows a executive to get a kagillion stock options. this bill is not an overall limit on compensation on wall street. what it does is it prohibits those compensation formulas that provide an incentive for taking extreme risks, risks that are bad for our economy, risks that are bad for the company. now, the group of 30 led by paul volker found and reported, there are numerous examples of misaligned incentives of incentives that contribute to instability and cyclicality in financial markets. the crisis has driven home the
importance of aligning compensation practices with the incentives and controls in a firm's risk management program. aligning pay with long-term shareholder interest rather than short-term returns that cannot be sustained and which entail greater risk. this is a provision not designed, not intended, to limit the overall level of compensation at financial institutions. not designed to prevent enormous bonuses, but the bonuses must not by themselves be designed to undermine the economy or the company. this is a small step that we can take to make sure we don't have another financial meltdown. let me respond to mr. hensarling and others who came to this floor and basically said, all we have to do is make
sure there are no further bailouts. well, i opposed the wall street bailout. but i'm not going to join with those who say the only problem we had in september of 2008 was that we voted for the bill. we've got to act to prevent the next financial meltdown. and it is not enough to come to this floor and say, well, it's ok to have another september, 2008, as long as we vote against that some future bailout bill twice instead of once. the goal is not to defeat the tarp bill. the goal is to prevent the conditions which caused so many to think it was necessary and for all of us to recognize that we faced a great financial crisis. the way to do that is to vote down this amendment and make sure that some very peculiar, very pernicious incentive
formulas are not used to cause those on wall street to feel if they can only take the most enormous risk, they can maximize their compensation. i yield back. the speaker pro tempore: the gentleman's time has expired. the gentleman from new jersey. mr. garrett: i yield three minutes to the gentleman from texas. the speaker pro tempore: the gentleman is recognized for three minutes. >> this is a reasonable and thoughtful substitute. republicans are here to bring good ideas to the table to try to work with the majority to ensure our markets operate with transparency. rather than vote every year our substitute aligns it with standard compensation packages and ensures that investors who represent shareholders will be able to have proper time to do due diligence to make
meaningful votes. it allows share holders who don't want to be involved in these votes to opt out. makes sense to me. finally the substitute ensure this is a federal government cannot decide the pay for employees or financial institutions. determining pay practices is not the role of government. as we work together to reform the financial regulatory struck churk debating compensation practices may make some feel better, but it doesn't fix the cause of our financial crisis. while we in the public may not like to hear about some of the large salaries and bonuses others have earned, we have to ask ourselves, how much did these compensation practices really contribute to the problem? most important -- the most important tool financial regulators have is the ability to set capital standards for financial institutions. not the ability to tell financial institutions how how much they can pay or how much they should pay their employees.
we need regulators to ensure capital and rev raj ratios at financial institutions match the risk those en-- those entities are taking on. that's what theyhould focus on, not whether a certain incentive practice is appropriate. a finance professor released a study comparing bank performance and c.e.o. incentives leading up to the crisis. the professor is quoted in today's "new york times," it says, it's hard to believe that they'll be regulated by compensation plans. proper ly designed capital approaches are much more effective than fiddling with compensation packages. congress should not be working to -- congress should be working to encourage well-managed, well-run, well-capitalized financial institutions. this bill does the opposite.
support the common sense garrett substitute. with that, i yield back the balance of my time. the speaker pro tempore: the gentleman from massachusetts. mr. frank: i yield myself three minutes. first, i had been taken -- taking as given that the president's press secretary said he had some problems with the bill. we have the republicans in a temporary mode of obedience to the president. they thought it was still george bush. they were used to snapping to attention for president bush. a lit -- a little of that is left other for president obama. i think we should have been independent in both cases. mr. gibbs said nothing negative about this he was asked if he would sign this bill he said there are some pieces moving, and it'll go through the senate. he didn't fully answer it and got a followup about are they trying to avoid spilling beer on the president's children's table. i want to talk about say on
pay. here's what the gentleman from alabama had to say as a prediction when we debated this in march of 2007. evidence that free market forces are already at work to correct any excesses in the system should give this committee real pause before it seeks to impose a legislative fix that could, like past efforts in this area, have unintended and negative consequences. in march, well over two years ago, the gentleman from alabama confidently predicted that free market forces are already at work to correct pay excesses system of apparent he the gentleman from alabama was correct, there have been no pay excesses for 2 1/2 years, we've all been hallucinating. he was wrong then, he's wrong now. now they've had to acknowledge the importance of say on pay. i also would repeat what i say -- when i say the republicans have no version. they want to weaken say on pay. with regard to the bonus structure that gives people an
incentive to take risks because the decision maker is risk-free, even though the company is at risk, the republican position is zero. there has not been in any of our deliberations any republican approach to how you deal with the incentive to take excessive risk no way, no how. they have reluctantly agreed to say on pay, they want to water it down. as to the argument that an annual vote focuses you short-term, of course not. there's an annual proxy vote. it doesn't require you, if you've got a three-year contract, then every year it would still be approved system of this notion that it focuses on a shorter term is of course wholly inaccurate. it says you put it on the proxy every year. some have annual contracts, some binall, some tri-enall. if they are triennial, that's when they vote. we can -- the is is two, weaken
say on pay and have the federal government say nothing about the bonus structure. those who received tarp money and paid it back and want to do bonuses in ways to recreate the risk will be entirely free to do so under this amendment. the speaker pro tempore: the gentleman from new jersey. mr. garrett: i'm pleased to yield three minutes to a lead for the advocating for those prix market principles as great as it is, the gentleman from texas. the speaker pro tempore: the gentleman is recognized for three minutes. mr. hensarling: to quote the distinguished chairman of the financial services committee, he was wrong then, he is wrong now. to say that republicans have no program. to deal with excessive risk and compensation prackages. yes, we do have a program. end the bailouts. end the tarp program. if you quit bailing out risky behavior, mr. speaker, you receive less risky behavior. second of all, the gentleman's
also wrong as far as the republican having no program, otherwise we wouldn't have the substitute we are debating at the moment. i also heard the gentleman from north carolina earlier say, well, we need to have the underlying legislation because share hold verse no right to have a say on pay. wrong again, mr. speaker. shareholders have the right. they can have a say on pay by electing directors who will fire the management. they have a say to invest elsewhere. their bill says we have to have mandatory, mandatory say on pay. now we can debate the merits of it, but the gentleman from north carolina was simply, clearly, wrong. i also want to say to my friends on the other side of the aisle, when i listen to, again, the lodge take we have to have a new federal regulation that somehow will regulate risky incentive pay
structures, again, all the rhetoric has to do with wall street. but guess what, lead read the bill. financial institutions. chrysler and g.m. have been found to be financial institutions. we've had testimony, when they came looking for the taxpayer bailout, that the u.a.w., the united auto workers, had a pay structure that was 40% higher than their competitors. so now we have a law here that will allow federal regulators, i assume to come in and say, folks at the u.a.w., your incentive structure is contributing to the demise of chrysler and g.m. we have to come down and take down your wage rates. read the bill, mr. speaker. this isn't restricted to the top executives. if anybody believes this is restricted to wall street, then why did chrysler, why did g.m. get coverage under a statute that described financial
institutions? so, mr. speaker, what we have is a federal government that is now taking over our auto company, telling us what kind of automobiles we can drive. taking over our mortgage companies, telling us whether or not we can enjoy a mortgage. they now want to control access to our family doctor. now they want to decide for millions and millions of americans whether or not they can ever receive a sales commission or christmas bonus that they may view as too risky. what is risky is too much po litization of the economy plitization of our economy, too much government control of the economy. we've had enough. the speaker pro tempore: the gentleman from massachusetts. mr. frank: briefly, the gentleman talked about the bailout of general motors and chrysler, which was done by the bush administration. the fact that the bush administration decided to have
a bailout of g.m. and chrysler, is not binding on this. i yield three minutes to the gentleman from georgia, mr. scott. the speaker pro tempore: the gentleman is recognized for three minutes. mr. scott: thank you, mr. speaker. thank you, mr. chairman. let me say this, my good friend from new jersey's mr. garrett is not like having a say on pay, but maybe a little whisper. mr. garrett's amendment goes at the heart and soul of this bill. and that is this -- that we must have a very strong, definitive say-so from the shareholders. now, mr. hensarling, the gentleman from texas, pointed out about the bailouts and how we're to prevent this. this measure that we have is designed to prevent this same situation from happening again. in section 4, as he pointed out, the reason we need section 4, and let us remember what section 4 is, section 4 again
is the heart and soul of this. because it spells out how we're going to go about preventing bonuses tied to incentives that have dragged down this economy and brought us into the financial situation we have. we e-- he questions the regulators. maybe the american people need to know who we're talking about. we're not talking about somebody over here inexperienced, we're going to set up. who are these regulators? these regulators are the federal reserve bank, whose duty it is to regulate our economy. s the office of the comptroller currency, the federal deposit insurance corporation who has to go in afterwards and fix banks and declare bankruptcy of banks. the securities and exchange commission, the federal housing agency. what is this awesome power we're giving to them?
it's spelled out very simply. what we want them to do is simply -- we will require those regulators to prohibit certain compensation structures at large financial institutions, if they could have a serious adverse effect on financial stability. instability. that's what we're trying to do. we're trying to prevent the same thing from happening again. secondly, we will require federal regulations to write rules requiring financial stewings to simply disclose their incentive based pay plans. incentives that are tied to risky behavior. mr. speaker, what has happened that brought this on, here's the simple case. a.i.g. they went and set up a little department with 430 employees, out of connecticut and over into europe, and assigned them
risky behavior and assign red wards to that risky behavior for their bonuses. the company came down. we had to bail them out and you know who had to pay for those bonuses? the taxpayers. this bill is designed to prevent that. the speaker pro tempore: the gentleman's time has expired. mr. scott: this amendment is designed to gut it. i vote we vote down the amendment. the speaker pro tempore: the gentleman from new jersey. mr. garrett: i yield two and a half minutes to the ranking member. mr. bachus: we continue to hear the mantra that this is all about shareholders and empowering them with rights, but then you sort of give them a crumb. you give them a nonbinding right to have a vote on pay and then you follow that up with 12 or 14 pages where you give the government all sorts of powers. powers to regulate pay, bonuses, and you do that, you
give the shareholders the right to have a nonbinding say on the top executives but then you give the government in the back door the last 15 pages of the bill, 14 pages. you give them the right to set the pay for every rank and file employee. and you also do it under the guise that these companies may are so big and so systemically important that they may fail. and that's right. they may. but then you do all the other 99% of the companies that aren't going to fail. now, chairman frank last month invited i think one of his favorite witnesses, mel ninno to testify on his save for pay bill. came and testified favorably. then he added this government say on pay, where the
government will make the decisions. well, just yesterday we had what we call a man bites dog moment. she came out and she posted this on her website. she's now opposes -- vehemently opposes section 4 of the bill, the government say on pay. she states the standard is unworkable. what does inappropriate mean? boy, i agree. deciding whatever bonus or incentive pay or every commission is inappropriate. she asked the same question that we asked, who is in the best position to evaluate and respond to badly designed pay packages? here's her answer, entire answer. i have the utmost respect for politicians and bureaucrats but i also recognize that there are limits. the government should not micromanage pay. and that is what this debate is about. going to let the government do it, are you going to let the
board of directors do it, are you going to let the shareholders do it? obviously you go to the default position that you went to on health care, cap and trade and now financial services. let the government decide. the speaker pro tempore: the gentleman's time has expired. the gentleman from massachusetts. mr. frank: mr. speaker, i'll take 30 seconds to say apparently the gentleman from alabama only has witnesses if he'll sure he'll agree with everything he said. he said it's man bites dog because we had a witness that we disagreed on some and disagreed on others. apparently having a witness like this is new to the gentleman from alabama. i'll continue to invite witnesses who i think is useful even though i don't always agree with them. and i say that the gentleman from alabama's say on this is against pay. it was enough for him to say that it was going to cause real problems 2 1/2 years ago. i repeat his view on pay in march of 2007. evidence that free market forces are already at work to create any excesses should give
this committee pause but seeks to oppose the legislative fix that could have unintended and negative consequences. he was talking about that insignificant pay on pay he's now talking about. i yield a minute to the gentleman from indiana. the speaker pro tempore: the gentleman is recognized for one minute. mr. carson: mr. speaker, today i've heard a number of interesting accusations about what this legislation would do if passed. i have heard that the government will sit in board rooms and set caps on pay. but, of course, my constituents are acustomed to hearing these kinds of false arguments from those who wish to maintain the status quo. my constituents sent me to congress to move beyond the status quo of a broken financial regulatory structure. they sent me to enact commonsense reforms like those included in the legislation we're discussing today, mr. speaker. they know that average families have cut back, worked longer hours and have saved their money during this crisis. meanwhile, wall street execs have acted irresponsibly and have enjoyed lavish
compensation packages that have allowed their companies to fail. so i'm proud to be an original co-sponsor of this bill, that we will bring a new era of responsibility on wall street. i encourage my colleagues to do the same. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from new jersey. mr. garrett: can you tell us how much time is remaining and who will be closing? the speaker pro tempore: the gentleman from massachusetts will be closing. the gentleman from new jersey has three minutes remaining. the gentleman from massachusetts has 3 1/4 minutes remaining. mr. garrett: parliamentary inquiry. as far as the procedure who closes, is it not the author of the amendment? the speaker pro tempore: a manager in opposition has the right to close. mr. garrett: was that how we -- mr. frank: parliamentary inquiry. the speaker pro tempore: the gentleman will state his inquiry. mr. frank: did the gentleman not notice that mr. price had the right to close because he was defending what i offered? mr. garrett: i yield myself the remaining time.
the speaker pro tempore: the gentleman is recognized. mr. garrett: the final question i guess is, who do we trust? who do we trust to deal with the situation of pay? the gentleman just spoke on the floor with regard to respecting his constituents. it doesn't matter who your constituents are, if they are the c.e.o. on the top of the ladder, somewhere in between, the receptionist, anywhere in between on the pay scale, this bill will affect them and affect their ability as far as what their compensation is. it will allow the federal government to dictate what their pay will be. government bureaucrats will be making those decisions in the future as opposed to the people involved in the company. large income or small, bureaucrats will be the ones at hand to make the final decisions. the odd thing about this legislation as we read through it and as we look at the amendment we try to address this problem is the underlying bill gives with one hand and takes with another. as been previously indicated, it gives with one hand in an
approach to say that the shareholders should be able to make that decision. but then it takes it right back then and says if the government decides if they make an incorrect decision some person at the s.e.c. or regulator should take that power away from them. it says that the state -- in the committee at one hand says that the states should have say such as with the cfpa, but here they want to step in and preempt those states. states that may have a long history of dealing with such situations as executive pay compensation or states that may want to address it in the future. but the underlying bill says they will preempt that. that's why we have come up with an alternative. we have come up with the solution. we are not the party of no. we are the party of reform. a party that says we should address this in a longer period of time, a party that says we should allow the shareholders to be able to decide these issues, a party that says that when it comes to compensation,
the federal government should not to be intermeddling. now, there was an article in "the new york times" recently. it quoted from allen blender, a former vice chairman of the fed who wrote recently for "the wall street journal" with regard to this. says the executives, lawyers who design systems are skilled and definitely not disinterested. congress and government bureaucrats won't beat them at their own game. congress has tried to do this in the past when they set the issue with regard to deductibility for executive compensation at $1 million. it had the unintended consequence of setting $1 million as the floor. and wall street then went from compensation packages greatly exceeding this. we may well see this with the underlying legislation as well. in the headlines when i started the hour out bank bonus of $33 billion, money that is actually coming from -- coming from the very taxpayers who are watching us here right now, this underlying legislation will not change that.
despite the fact that the gentleman from texas tried to limit this legislation to try to address the legislation to situation as tarp companies, this legislation will not solve this. our substitute will. our substitute will return the power to the individual, return the power to the corporation and most importantly return the power to the shareholder and take it from the government bureaucrat. the speaker pro tempore: the gentleman's time has expired. the gentleman from massachusetts. mr. frank: i yield our remaining time to a leading member of the committee, the gentleman from colorado. the speaker pro tempore: the gentleman from colorado is recognized. mr. perlmutter: thank you, mr. speaker, and i appreciate the comments of my friend from new jersey. but i'd say the word that comes to mind is amnesia. my friends on the republican side of the aisle have amnesia. they have amnesia over how the brucks tried to deregulate everything, tried -- obama administration tried to deregulate everything, tried to make -- bush administration tried to deregulate everything, tried to make ponzi schemes as
what happened with madoff. we had the failure with katrina and we had the biggest collapse in the banking sector because of deregulation and a belief that the free market could do anything it wanted to do. now, this bill is very mild. what it allows, mr. speaker, is it allows shareholders to have a say on what the officers of the company make in terms of salary. the owners having a say on pay. what could be more american and more free enterprise than that? what it does allow is the board of directors to overrule the shareholders if they think that's appropriate, but we need to have the ownership of the company have a say on what their executives make so that it doesn't get out of line and that there's no back scratching going on. the second piece that my friends complain about and that the substitute is designed to gut is that the federal banking
regulators have a say on the commissions and the bonuses and the stock options that exist. and where we saw this most specifically was in mortgages. lots of mortgages sold, lots of commissions made, lots of stock options went straight through the roof, but there was a time bomb in those mortgages four, five years down the road that cost all those mortgages to fail and companies and banks to collapse. we're not going to allow that anymore. we're not going to allow the taxpayer to be holding the bag the way we've had to hold the bag in the -- in this last fall. it is a time for reasonable regulation to restore confidence in our financial system. that's what this bill does. the substitute amendment guts that. i urge a no vote on the substitute and a yes vote on say on pay. and with that i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time.
pursuant to house resolution 697, the previous question is ordered on the bill as amended and on the amendment -- >> parliamentary inquiry. the speaker pro tempore: the gentleman will state his inquiry. garte can the chair indicate how much time remains? the speaker pro tempore: all time for -- does the gentleman seek unanimous consent to extend the debate? mr. garrett: yes, we do. mr. frank: i object. let me reserve the right to object. what's this about? i'm reserve the right to object. members want to get out of here. i can't be responsible for keeping members here. let me ask -- and -- if the
gentleman will yield to me? i'll speak on my reservation. the speaker pro tempore: the gentleman is recognized. mr. frank: apparently there's an effort -- i don't think we ought to keep everybody in the dark. there is a unanimous consent agreement involving another bill. so they're asking us to delay this. i'm perfectly willing to do this if people know it's not our fault. we were trying to get finished. there is a bipartisan leadership request that we wait another 10 minutes. i'm perfectly prepared once people understand this. i do thinks this whisper, whisper, nobody knows, is not the way to go. there is a bipartisan agreement on the cash for clunkers. the speaker pro tempore: without objection, debate will be extended five minutes on each side. mr. frank: i rather we do a recess instead of extending it. the speaker pro tempore:
pursuant to house resolution 697, the previous question is ordered on the bill. mr. frank: well, then i will agree to an extension of the debate for five minutes on each side. the speaker pro tempore: without objection, debate on each side will be extended by five minutes. the gentleman from massachusetts is recognized. mr. frank: i reserve my time. the speaker pro tempore: the gentleman from massachusetts reserves his time. mr. frank: i have at most one further speaker. the speaker pro tempore: the gentleman from new jersey. mr. garrett: and i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. garrett: and i appreciate the gentleman from massachusetts for working with the respective parties in order to deal with any situation that's going on outside this area. and just as the gentleman says, it's nothing on your side of the aisle in the chambers today at fault. i guess we would say the same thing for those sitting here right now as well.
i left my last comments with the question of, who do you trust and what do we need to do in order to address this situation? i'll step that from a moment to look -- to the larger issue here that we're trying to uncover. i commend the gentleman for the number of hearings that we have had over the last several weeks to try to delve into the various matters that dealt with the fiscal crisis we are currently facing in this country. one of the takeaways, though, that i had from those myriad of hearings that we had is that the underlying concerning on the members of the house on both sides of the aisle is to try to get at the root cause of what was it that actually brought us to the current financial situation that we find in this country today. we have heard a number of experts, from think tanks, from people across the country they expound on where they believe
the underlying cause was. we heard some that say it was with regard to the g.s.e.'s, fannie mae and fred gee mac, such extensive leverage allowed this to -- freddie mac, such extensive leverage allowed this to occur. some say it was deregulation, though i ask if they could cite specific actions of congress with regard to dereaglation. we've heard other areas, excesses by both government and wall street. through all those debates, i have yet to recall anyone who can provide factual evidence, factual proof other than their opinion that the underlying cause was because of excessive pay by various corporations in this country. no one certainly brought up the idea that the problems that brought us here was due to excessive pay outside of the -- outside of the financial sector. so then we have to look at the
legislation -- the underlying legislation, and ask, what is it we're trying to get to here? in the major portion of the legislation, which goes to allowing shareholders rights to vote with executive compensation, outside the financial sector, no evidence whatsoever that that brought us to this situation. we ask, why is that in the underlying bill? we do try to attempt to reform it, in as much as that's all we can do, putting on a three-year extension we do try to reform their idea to say that state this is a looked into these issues should have the prerogative to continue with their legislation, thiser that more knowledgeable, have been more engaged they more followed the trends in their states, we try to reform it and improve leg in that area as well. we try to reform it in a last way to say that for those corporation this is a say that we have looked at the situation, our shareholders have digested the information and realized it would not be to the benefit of the corporation or the shareholders themselves
and 2/3 of the shareholders say they do not want to engage in setting pay but rather would allow it to return to where it has always historically been in this country, by management of the director, we but put that in as well. still the underlying bill takes those powers away, from the shareholders, from the management from the director, and does so without any evidence that they were at all the cause of the problem. section four does arguably go to financial institutions. it goes to those institution this is a arguably could be, some would say, the cause of the current situation. we already had regulation in place for most of those financial institutions. we already had regulators who were supposed to be doing their job. we had regulators over s.e.c. with regard to the may dauf situation. unfortunately we know all too well they failed in that job, despite the fact that there was testimony that evidence was presented to them, handed to them, documenting why that may doff situation was out there
and why the s.e.c. should be involved, the regulators missed it. we saw regulators missing it at a.i.g. as well. they had authority to regulate those institutions as well. did they do so? no. they missed it completely with regard to the a.i.g. situation. the other side of the aisle seems to say, that was then, this is now. the same regulators who missed may dauf who missed a. implet g., who missed executive compensation and other problems in the past, now all of a sudden we're going to say to them and expand it further and say those regulators will have broader authority by financial institutions, however they may be defined in in the the future, because this bill recognizes the definition may change, bewe trust them northwestern bureaucrats. the speaker pro tempore: the gentleman from massachusetts. mr. frank: i yield myself five minutes. let me emphasize when the gentleman says, trust the shareholders. that's a conversion.
we are born-again shareholder advocates. in 2006 when the republicans controled this institution, they would not even on the financial service committees allow it to come up. we had a petition under the rules for the hearing. then we asked for a markup and they refused it. then in 2007, the gentleman from alabama, the gentleman from new jersey, they told us the gentleman from alabama told nuss 2007 that the free enterprise system was taking care of pay excess. we he said that in march of 2007. all of the problems we've had with pay in the interim, apparently were figments of our imagination. the gentleman from alabama had such confidence in the free enterprise system 2.5 years ago, they told it it wouldn't happen. say on pay, now, it's not a big deal. it was a big deal enough for them to oppose it. they say to the gentleman from new jersey, here's the problem. no, it's not so much conscious
acts of deregulation as nonregulation. what happened was new things grew up in the economy. particularly in the area of subprime mortgages and the way of packaging them and sending them around. some of us in the minority wanted to change it. there were party differences. in 2004, my friend from north carolina, mr. miller, who is here, he was early here. he spoke with people, the center for responsible lending in north carolina, who told us in 2004 trouble was coming. by the way, trouble was coming because of an excessive encouragement of low-income people to buy homes, not from the c.r.a. or from liberal democrats but from the bush administration. as the gentleman from texas, mr. hensarling, inserted an amendment which we adopted in 2002, the bush administration sped this up. in 2004, over my objection, among others, the bush administration directed fannie mae and freddie mac
substantially to increase the number of subprime mortgages they were buying and for people below income. that's in the amendment that mr. hen ar ling offer wed adopted. some of us saw the problem at that point. i hadn't seen a problem with fannie mae and freddie mac before but i did become worried. i joined the gentleman, mr. oxley, in trying to pass a bill, though i had a housing on the floor, other republicans thought mr. oxley was too soft. we got into an intra-republican dispute on fannie mae and freddie mac where the house passed a bill, the house you should the republicans, supported by the overwhelming majority of republicans, every amendment offered to toughen it up rejected by the majority of republicans and the republican senate had a difference. ironically, the democrats in the senate agreed with mr. oxley. the republicans in the senate agreed with mr. bush. no bill. we also tried, as i said to do something about subprime
lending. the gentleman from north carolina pushed for legislation. the gentleman from alabama to his credit, was somewhat interested in working with us on it. the republicans were overruled by mr. delay who used the rhetoric you're hearing today, keep the bureaucrats out of it, that was the prevailing philosophy of the republicans who ruled this house in 2004 and 2005. when some of us, including the gentleman from alabama, mr. bachus, tried to work on legislation to restrict subprime lending, mr. bachus was even chairman of the subcommittee, he was overruled. the chairman of the committee, mr. oxley, was told we don't do that, we believe in free enterprise. it was a conscious decision not to do anything. i yield to the gentleman from california. >> i'm finding it difficult to understand your rapid speech. would you slow down? mr. frank: no, i'll tell you to the gentleman from california, he has to speed up.
if he waits a couple of day, there's a competent transcriber, he'll be able to read it, maybe we can get it put into large type so he can read it. now, since the gentleman interrupted me, that's what you try to do when you don't like what's being said. if we had been able to get the legislation done in 2005, we would have retarded the crisis. there were conscious digs not to regulate. there was a bill passed in 1994 by a democratic congress replaced in 1995 by a republican congress which gave the federal reserve the authority to regulate mortgages of the kind that cause trouble. alan greenspan supported by the republicans in congress, refused to use that authority. it was when he continued to refuse that some of us tried to do something system of yes, that's where we got this.
a republican commitment to never doing anything of the sort they're talking about now that let subprime mortgages flourish. the speaker pro tempore: pursuant to house resolution 697, the previous question is ordered on the bill as amended and on the amendment a in the nature of the substitute printed in house report 111-237, offered by mr. garrett of new jersey. the question is on the amendment offered by mr. garrett of new jersey. those in favor say aye. those opposed, no. in the opinion of the chair the noes visit. mr. garrett: i ask for a recorded vote. the speaker pro tempore: a recorded vote is requested. those favoring a recorded vote will rise. a sufficient number having risen, a recorded vote is ordered. pursuant to house resolution 697, further proceedings on this question will be postponed. pursuant to clause 1c of rule 19, further proceedings on the bill will be postponed.
the speaker pro tempore: the gentleman from massachusetts. mr. frank: a point of personal privilege. the speaker pro tempore: does the gentleman state a parliamentary inquiry? mr. frank: parliamentary inquiry. the speaker pro tempore: the gentleman will state the parliamentary inquiry. mr. frank: this is a no way of the responsibility of the financial services committee and we want to go to a vote and we are very much the victim of whatever this is. the speaker pro tempore: the gentleman may seek time to address the body. the gentleman may seek time to address the body. mr. frank: well, i want to put further excess on the body.
the speaker pro tempore: for what purpose does the gentleman from colorado rise? mr. perlmutter: thanks, mr. speaker. i ask unanimous consent that the speaker be authorized on this legislative day to entertain a motion to suspend the rules relating to h.r. 3435. the speaker pro tempore: is there objection? without objection, so ordered. for what purpose does the gentleman from wisconsin rise? mr. obey: mr. speaker, i move the house suspend the rules and pass h.r. 3435. the speaker pro tempore: the clerk will report the title of the bill. the clerk: h.r. 3435, a bill making supplemental appropriations for fiscal year 2009 for the consumer assistance to recycle and save program. the speaker pro tempore: pursuant to the rule, the gentleman from wisconsin, mr. obey, and the gentleman from california, mr. lewis, each will control 20 minutes. the chair recognizes the gentleman from wisconsin. mr. obey: mr. speaker, i ask unanimous consent that all members may have five legislative days to revise and
extend their remarks on h.r. 3435. the speaker pro tempore: without objection. mr. obey: mr. speaker, i yield myself three minutes. the speaker pro tempore: the gentleman is recognized. mr. obey: mr. speaker, late yesterday, it came to our attention that the cash for clunkers program which enacted a few days ago has proven more wildly popular than its strongest supporters had predicted. just last month, congress passed the program which provided up to $4,500 if you trade in your old gas guzzler for a new car that gets better mileage. that was done in the hopes of spurring some new car sales and encouraging people to be a little more environmentally friendly. we provided $1 billion in the supplemental to get it going, enough for about 250,000 sales. the program kicked off monday, and it's already officially received 40,000 requests for reimbursement worth about $160 million in rebates. in is survey done by the national automobile dealer association this week suggest that at least 200,000 deals have been completed but not yet
officially submitted. if that's true and we're being told that it probably is, then the entire $1 billion is just about exhausted, so we have before us a bill to provide stopgap funding for cash for clunkers by allowing the administration to transfer up to $2 billion from the department of energy innovative technology loan guarantee program which doesn't expect to award funding until late next year. some would call this letting the markets work. consumers have spoken with their wallets and they are saying they like this program and clearly it was intended to do what it was supposed to do, spur car sales in this sluggish economy. this will keep it going, hopefully. i'd urge support for the bill and i reserve the balance of my time. the speaker pro tempore: the gentleman from wisconsin reserves the balance of his time. the gentleman from california. mr. lewis: thank you, mr. speaker.
mr. chairman, i rise to point out the absurdity of the situation we find ourselves in today. in the majority's haste to slam legislation through the floor with almost no consideration at the committee level, with no time for consideration by the house membership in general, and with absolutely no ability for the members of this body to amend bills on the floor, we are now seeing the effects of such short-sided martial law tactics. mr. chairman, the cash for clunkers program was passed on the suspension calendar, so no members were able to offer amendments. the senate had a exarble which will with some significant differences. the house and senate bills should have gone to full and open conference so those differences could have been negotiated and a conference report then brought for a vote. instead the leadership of this body, without consultation or
negotiation, struck the house version of cash for clunkers, they stuck it on what was supposed to be a, quote, clean war supplemental, a bill only for the purpose of funding and supporting our troops and our efforts overseas and the war on terror. they had to do that because of the mess the majority created of the conferenced bill and i use that term loosely as most of the funding levels and programs were determined not in a conference but by the house leadership and by my chairman. but when it came to counting votes, the leadership and the chairman had to do some dancing and started loading up the war supplemental with extraneous and unrelated items on -- all of which needed to get more votes. cash for clunkers was one of those items. my colleagues in the senate, senator feinstein in particular and senator collins, had some serious concerns with the house
bill. senator feinstein tried to negotiate some changes to improve the program, but was rebuffed, as i understand it, by my chairman. basically they were told it was his way or the highway. here we are today, not one hearing on the cash for clunkers program in the appropriations committee, not one hearing on the needs of the program prior to receiving funds, no one hearing on how the first $1 billion has been spent, not one hearing on how much money the program will need to get through the fiscal year. instead we find ourselves on the suspension calendar for the second time in three days. bailing out another program, shoveling another $2 billion out the door this fiscal year after we shoveled $14 billion out the door to bail out the highway programs and other related
items. my colleagues are going to pat themselves on the back for finding an offset for this transfer and for that i say two things. first, you should have been finding ways to offset spending all year. second, if there was an extra $2 billion in a stimulus program that was suitable for a different purpose, why did we spend the $2 billion in the first place? how many other billions of dollars are in the stimulus not being spent that we can return to our taxpayers? now, many of my colleagues will say, this is a great program, a necessary -- and necessary for the revitallyization for the economy and the car did industry and i'm not really going to argue with those goals. those are good goals and we are looking for solutions. however we are sure this program is working like it's supposed to. i don't think so. how is it that we didn't hear of this funding problem until last
night and even then we were told there's roughly 24 hours before they were going to shut down the program? this program has only been up and running one week. if that is how the government is going to handle $1 billion programs affecting all americans, i ask, whatever will we do if the administration takes control of our health care system? i quote one car dealer from new york, if they can't administer a program like this, i'd be a little concerned about my health insurance. i would say, amen. and i reserve the balance of my time. the speaker pro tempore: the gentleman from california reserves his time. the gentleman from wisconsin. mr. obey: mr. speaker, i yield myself 30 seconds. the speaker pro tempore: the gentleman is recognized. mr. obey: mr. speaker, i'm not going to give any political speeches. we're simply trying to react to one program the public has apparently latched onto.
the demand for this was so great that within three days of its inception the funds were apparently totally used up. that indicates that we need to do something if we don't want the program to shut down three days after it begins. that's what we're trying to do today and with that i yield two minutes to the distinguished gentleman from new york. the speaker pro tempore: the gentleman from new york is recognized for two minutes. >> i thank the chairman for the time. mr. speaker, i was one of the original co-sponsors or sponsors of the cash for clunkers bill. many of us knew that it would work well. few of us realized how well it would work. this program has been truly stimtive. many people are questioning whether the congress -- stimulative. many people are qug whether the congress is passing anything that will stimulate the economy. this program has stimulated the economy. we have doubled car sales over the past five years. this is truly stimulative. it is creating jobs, it is a creating a surge for -- it is
creating a surge for car dealers. the american consumers are satisfied with it. the american consumer has taken cash for clunkers on a test drive and they want to continue driving cash for clunkers. they want to continue this program. in fact, not only should we continue it over the next six weeks by providing emergency funding, but we ought to improve it when we return in september. we should improve it by increasing the efficiency standards, we should improve it by making used cars eligible for the program, we should improve it through a long-term program because we have learned that the short-term program was so successful that we have exhausted the funds in only five days. this is an example of a bipartisan program that makes sense. we need to create a bridge of funding for the next six weeks, come back and extend it and improve it into the future. i want to thank the distinguished chairman for yielding me the time and i yield back. the speaker pro tempore: the gentleman yields back the
balance of his time. the gentleman from california. mr. lewis: mr. speaker, i yield to the gentlelady from michigan three minutes. the speaker pro tempore: the gentlewoman from michigan is recognized for three minutes. mrs. miller: mr. speaker, i was proud to be the co-sponsor of the original legislation we passed months ago. cash for clunkers. . what a fantastic success. this program has succeeded everybody's expectations and most of the naysayers are admitting it's the best $1 billion that the federal government has ever spent and here's a couple of today's quotes from those who are directly impacted. first of all, the c.e.o. of one of our nation's largest auto groups said, the most brilliantly conceived and most effective economic stimulus program ever put forward by the federal government. ford motor company says, it's a huge success. this congress appropriated $1 billion on november 1, whatever came first, and only several days into the program and now we need more cash for the cash for clunkers. if we can just think about the tremendous multiplier, economic
multiplier, effect this is having. it is good for the auto dialers, it is good for the auto manufacturers, it is good for the suppliers, it is good for workers, it is good for the states, mr. speaker. think about all of the revenue that is being generated by sales tax and licensing fees as well for this program. good for the environment, it's getting all these old vehicles off the road and it's absolutely great for consumers. let me just read quickly, here's one letter i got from a lady in michigan. thank you for pushing through and helping develop the cash for clunkers legislation. i am now the happy owner of an american-made 2010 ford fusion that i am going to be picking up on july 30. it has been 12 years since i've been able to purchase a new vehicle. due to the cash for clunkers plan i was able to save over $7,000 before taxes on my ford fusion. my old vehicle was a 1995 ford windstar with 150,000 miles. she says, i'm so excited for me. well, we're excited, too. mr. speaker, throughout our
nation's history, since we've had the automobile, actually, it it has been automobile sales that have literally pulled our nation out of recession. and this time is going to be the same. i think we are seeing ourselves being placed on the road to economic recovery here and this road is paved by the cash for clunkers program. i actually wrote a letter at the beginning of this week to the speaker and to the house leadership saying that we were going to run out of money and that we were going to need some more money for this program. here we are on friday of the first week. we absolutely need to do this, mr. speaker, we cannot leave for our august recess until we fund -- until we vote for this reprogramming of unspent economic stimulus funds for this program. we need to do it. and one other thing, for those who keep saying that we need to get the government out of the automobile business, if you really want to get the government out of the pocket of general motors or whatever, this is the way to do it, mr. speaker. i would urge my colleagues to support this bill. it is very, very important. not just for the state of michigan, this is a national
economic program, best thing we've ever done. more cash for cash for clunkers. i yield back. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from wisconsin. mr. obey: i yield a minute and 45 seconds to the gentleman from michigan, mr. levin. the speaker pro tempore: the gentleman from michigan is recognized for one minute and 45 seconds. mr. levin: i ask unanimous consent to revise. the speaker pro tempore: without objection. mr. levin: the public has spoken . consumers have been going to dealerships. the white house has now acted and the issue is whether this house will respond. as i see it and i think the public will see it this is a test whether congress can shed
its disagreements on other issues and respond to what the public indeed wants. the rush to use this program shows its need. i say to the gentleman from california and anybody else, what else do we need to see? this program is working. the white house has made clear that the dealers can go forward. this program is open until further notice and dealers are urged not to rush too much but to do it right in the first place and get in line. so, it's open until further notice. the question is whether this institution will shut it down or whether it will continue to open up the valves?
it will be good for everybody, it will be good for the national economy. this is an issue -- michigan, ohio, wisconsin, indiana, illinois, but for whole the -- for the whole nation. this is an issue of our national economic recovery and anyone who votes no on this is saying no to an important boost to our economy at a critical time. the speaker pro tempore: the gentleman's time has expired. the gentleman from california. mr. lewis: mr. chairman, i am proud to yield two minutes to the co-chairman of the bipartisan auto caucus, the gentleman from michigan. the speaker pro tempore: the gentleman from michigan is recognized for two minutes. >> i thank my friend from california. i'm from this great state of michigan where our unemployment is sadly at 15.2%. almost twice the national average. last night we learned from the national association of auto dealers that in fact this program in three days has brought about almost a quarter of a million new car sales in
just those three days yet the cash is going to run out literally in the next couple of days without an infusion. it's important that we're not taking new money, this is existing money. this bill moves existing money into other accounts so it will not add to this year deficit. but it is going to run out without this legislation. here is today's "usa today," full page ad by chrysler, dodge, jeep, $4,500 if you bring in dollars back, if you purchase a new vehicle, bring in your old one. a lot of our auto dealers can do it. whether it's the big three or the transplants, too. nationwide one in 10 jobs are auto related. in michigan it's about one in four, one in five jobs. auto sales, the last three years -- auto sales the last three years have declined by nearly 50%. 16 other countries have done
this. whether it be germany, south korea, even slovakia has done this. and in all of those 16 countries, car sales have come back. this country has lost one in five manufacturing jobs in the last 16 months. if we want to keep jobs here in this country, bring back some of those that we have lost, obviously it's got to be in the auto sector where one in 10 jobs are auto related. this bill sends those dominoes the other way. it brings people back in the showroom, we've demonstrated that just this week. it brings back the call orders, we've heard in a number of dealers across michigan that they're running out of cars. guess what they're going to do? they're going to order them back and that's going to bring people back to work. wouldn't you rather have -- let me just end on this, wouldn't you rather have people working and paying taxes than being unemployed and receiving benefits which in michigan are becoming exhausted?
i ask my colleagues to vote for this bill. the speaker pro tempore: the gentleman's time has expired. the gentleman from wisconsin. mr. obey: mr. speaker, i yield a minute and a half to the distinguished gentleman from michigan, mr. dingell. the speaker pro tempore: the gentleman from michigan is recognized for a minute and a half. mr. dingell: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. dingell: mr. speaker, i rise to commend the leadership and commend my dear friend, the chairman of the appropriations committee, for his extraordinary leadership on this matter. the success of the cars program in just a few short days has been extraordinary. the program has been doing so well, in fact, the initial $1 billion allocated for the program is already running low. this is a great problem to have in the midst of all the difficulties that we confront. it's a sign that the program is not only working well and the consumers are very interested, but it's also proving that cars is providing a jolt, a
meaningful upward jolt to our economic recovery efforts. this is a simple extension. it's an infusion of money in an area where it's needed and where it's working. the legislation should not get bogged down by calls for changing the program. that would only serve to stall the extension and confuse consumers. we cannot and should not make changes in an extraordinarily successful program that has only been operating for a week. that would be irresponsible. i would add that the additional $2 billion for the program has already been appropriated under arra and will not cost the taxpayers an additional time. i ask for passage of the bill. i commend the leadership and i thank my dear friend, the chairman of the committee, and the other members of the committee who has made it possible for us to consider this legislation so fast. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time.
the gentleman from california. mr. lewis: mr. speaker, i yield two minutes to the gentleman from texas, mr. hensarling. the speaker pro tempore: the gentleman from texas is recognized for two minutes. mr. hensarling: i thank the gentleman for yielding. cash for clunkers, mr. speaker. obviously it's a popular program. it's a clever title. it pays people several thousand dollars to trade in their old cars if they buy new cars. and, yes, yes, mr. speaker, people are hurting in the auto industry. there's no doubt about it. but i would also note that the taxpayers are hurting. $80 billion to chrysler and g.m., and the auto industry, the auto industry does not have a monopoly on hard times in this economy. recently one of the largest poultry producers in america, pilgrim's pride, just a few miles outside of my congressional district, they had to declare chapter 11. maybe we should have a cash for cluckers program and pay people to eat chicken. then after that we can have a
program to pay people to buy tv's and then a program to pay people to buy lumber. it would pass the test. it has a clever title. it would help a large industry. it would put free money in the hands of consumers, but this is not, this is not a humorous affair, mr. speaker. and it's not humorous because this is an extension of a program that has the government picking winners and losers. why is the auto industry the winner, why is the poultry industry the loser? this is one more step in enshrining us as a bailout nation. now, people say, well, it's $2 billion that's coming out of the stimulus program. well, i would tell my distinguished colleagues that that is still $2 billion that has to be borrowed from the chinese with the bill sent to our children and grandchildren at a time when the national deficit has hit $1 trillion for the first time in history. you cannot bail out, borrow and
spend your way into economic prosperity. instead, let's unleash the spirit of entrepreneurial capitalism, let's help small businesses with tax relief, let's grow our way out of this economic recession. the speaker pro tempore: the gentleman's time has expired. the gentleman from wisconsin. mr. obey: i yield a minute and a half to the distinguished gentleman from michigan, mr. kildee. the speaker pro tempore: the gentleman from michigan is recognized for a minute and a half. mr. kildee: i thank the gentleman for yielding. mr. speaker, when we passed the cash for clunkers legislation last month, i said it would provide a much-needed boost to our auto industry and our manufacturing communities. after just one week we see the great success of this program. i've been working closely with the white house, the auto task force and my congressional cleeds to add addition -- colleagues to add additional funds to keep it up and running. this program has been an unprecedented success and there are no plans to suspend it. this program is a successful
example of economic stimulus at work. to continue this positive program, i have joined my colleagues today to introduce legislation to redirect $2 billion from the economic stimulus bill to the cash for clunkers program. we are poised to pass this legislation through the house of representatives today and urge my senate colleagues to do the same as quickly as possible. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california. mr. lewis: i yield, mr. speaker, two minutes to the gentleman from michigan, mr. hoekstra. the speaker pro tempore: the gentleman from michigan is recognized for two minutes. mr. hoekstra: i thank my colleague for yielding. i'd like to begin by thanking the chairman of the committee and the ranking member of the appropriations committee for moving so expeditiously in getting this bill to the floor of the house this afternoon. you know, the response from consumers to this program has been, as one of my dealers described it this week, he had chaos in his showroom. it accomplished what we wanted
it to accomplish. i was skeptical when this program passed a while back, but it has delivered customers into the showroom, and they are buying cars. and being from michigan, experiencing a 15.2% unemployment rate, this is not going to only provide opportunities for employment in the people that assemble cars but also for the suppliers and those types of things. and hopefully this can be a catalyst for a stronger economic recovery. it appears to be one of the programs in the stimulus package that have passed this house that actually appears to be working. at the same time, while we are, you know, maybe euphoric about the parts of the program that are working, i think we also have to recognize that the back end of this program, the parts that are being handled by the federal government have been a disaster for our dealers. i have yet to have one dealer who has sold a car that has gotten it approved by the department of transportation. we can't -- the federal
government can't process a simple rebate. i've got dealers that have submitted the paperwork three times and have gotten three rejections. the last one came back and it said no reason for rejection. what is a dealer supposed to do? they've already destroyed the cars that have been traded in, they have sold the car, they're now on the hook and expecting a check for $3,500 to $4,500 from the federal government and they're not getting it. we need to get these back room problems fixed to be able to call this problem truly successful. it can't just be the front end. it has to be the entire process, from selling it to the customer to the dealer getting the money from the federal government. that all has to work seamlessly for this program to be an unqualified success. thank you, mr. speaker. and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from wisconsin. mr. obey: mr. chairman, i yield a minute and 45 seconds to the gentlewoman from ohio, ms. sutton.
the speaker pro tempore: the gentlewoman from ohio is recognized for one minute and 45 seconds. ms. sutton: i thank the gentleman for the time. mr. speaker, i rise in support of this legislation that's going to provide an additional $2 billion for the cars act. a bill that i sponsored, sometimes referred to cash for clunkers, but by any name, this bill has been thus far a tremendous success. it has helped consumers purchase cars that they couldn't have purchased in this economic downturn, perhaps, but which they needed. it's going to give them cars and fuel savings for a long time to come. it's helping our auto companies, our auto dealers, all of the jobs associated with that very vital and important industry in this country to maintain itself, to continue and give it the chance to grow and restore. the program also, of course, is good for our environment because it's taking out -- less fuel efficient cars and getting them off the road and replacing them with more fuel efficient cars.
this is an unprecedented success. and my colleague is right, we must make sure that it works throughout the entire process. but we are well on our way, and i appreciate the leadership of the chairman of the appropriations committee, secretary lahood, the administration who i've been working very closely with to make sure that we build on this success, which is stimulating our economy, keeping people working, helping our environment and helping our consumers when they really, really need it. and i yield back. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from california. mr. lewis: mr. speaker, i'd like to say to the gentlelady who has offered this floor, she has more -- i'm proud to yield two minutes to the gentleman from california, mr. campbell. the speaker pro tempore: the gentleman from california is recognized for two minutes. mr. campbell: thank you, mr. speaker. and i thank the gentleman for yielding. you know, mr. speaker, cash for
clunkers program was inartfully drafted, it is more complex than come bersome than it needs to be -- come bersome than it needs -- cumbersome than it needs to be. the administration of it has not gone on well but it has worked. and, mr. speaker, we have passed a number of things in this congress this year intended to stimulate the economy. the vast majority of them have not had that effect. but this one has. and it has clearly worked. for the initial billion dollars to be exhausted, that means that roughly 250,000 new vehicles must have been sold in just the last week or two in order to exhaust all of that money. that is clearing inventories in car dealerships which means car dealers will be ordering more cars. when they order more cars, plants will begin to run again. plants will open up. they will be producing more cars, and people will go back to work. there will be suppliers that will produce supplies, various parts for those cars, steel mills will be produced for those cars, and those people will go back to work. there will be trucks and trains
that deliver those cars and those people will go back to work. and, mr. speaker, the $2 billion for this is coming out of the existing funding, so it is not increasing the debt or the deficit any more than what has already been there. mr. speaker, i support this bill. i support this effort. there is -- it is the one thing we have done in this congress that is absolutely working. it is stimulating the economy. it is creating jobs and we want it to create more. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from wisconsin. mr. obey: i yield a minute and a half to the distinguished gentleman from massachusetts, mr. markey. the speaker pro tempore: the gentleman from massachusetts is recognized for a minute and a half. mr. markey: i thank the gentleman very much and i appreciate your hard work in extending this program. this program is a win for consumers who are trading in old gas guzzlers for hybrids, a win for our economy and a win for energy independence and the environment as the new vehicles
are averaging 60% more fuel efficiency than the junkers being taken off the road. however, i am concerned that we are taking funding from the renewable energy loan guarantee program and would express my strong belief that we must find a way of replenishing those funds as soon as possible. mr. chairman, could you work with me and other members to ensure that the funds for this program will be replenished? mr. obey: if will the gentleman yield? i share the gentleman's view that the renewable energy loan guarantee program is of vital importance to creating a new green economy. we have talked with the white house. we've talked with the speaker. and i want to assure you that all of us certainly have every intention of restoring these funds. mr. markey: i thank the chairman very much. i know that this has always been the highest priority for yourself, for speaker pelosi and for the obama administration. and i look forward to working with you in the future in order to make sure that we have a win-win here for renewable
energy and for fuel-efficient vehicles. thank you. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california. mr. lewis: mr. speaker, i yield two minutes to the gentleman from arizona, mr. flake. the speaker pro tempore: the gentleman from arizona is recognized for two minutes. mr. flake: i won't take two minutes. i have to say i thought i had heard it all until i came to the floor today. somebody said earlier, this bill is a success. ford motor company loves it. i think that that's self-evident. but i think that there are taxpayers around the country who are wondering why we're taking $2 billion more from them to decide which industry here is going to get a break. we decided to give out free money and now we're surprised when people take advantage of it and love the program. i mean, that's the nature of human nature. if you're given free money, you like it and you want more. and that's what this program is. why are we deciding to aid this sector and not another? if you're mr. or mrs.
businessman across the country, you've got to be wondering if we have lost our minds here by saying we're going to continue to give out more money just for this industry but not help the others. i just -- i don't understand this process and how we can bring this up this quickly but an appropriations committee that can bring a defense bill to the floor in 18 minutes for a markup that has more than 1,100 earmarks, i guess, has no problem doing this. with that i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from wisconsin. mr. obey: mr. chairman, i yield myself 20 seconds. the speaker pro tempore: the gentleman is recognized. mr. obey: i just want to say, mr. chairman -- mr. speaker, that we've heard several times here today about this action are complaints from the people who helped wreck america's economy and are now complaining because of the way this president and this congress is trying to pull the country out of the ditch and restore economic growth. we've come to expect that, but
that doesn't make it any more pleasant. with that i yield a minute to the distinguished speaker of the house. the speaker pro tempore: the speaker of the house is recognized. the speaker: thank you very much, mr. speaker. i thank the gentleman for yielding and i thank him for his very important and swift action to address the opportunity that was given to us this week. as you know, my colleagues, as part of the supplemental earlier this year the cash for clunkers provision was provided in it. many people had worked very, very hard on that for a long time and we were able to have it passed on a bill that was going to be signed by the president. i want to acknowledge congresswoman sutton for her enthusiastic support and leadership, congressman inslee, congressman israel, steve israel of new york, all worked very hard on this. certainly the chairman emeritus, mr. dingell, the current
this brings together so many elements of what we want to do to grow our economy, to help our workers, to protect our environment and to do so in a very focused way that works. and that's what is interesting about this week and about -- week. in about six days it's estimated that 250,000 cars were sold. on both sides of the aisle people acknowledge the effectiveness of this initiative. and that is why yesterday, as we were seeing what was happening this week, the obama administration asked us to help consumers who have yet to have the opportunity to take advantage of trading in their old cars for new energy efficient models. when they do that, again, they strengthen the auto industry, strengthen our economy at large and help preserve our environment. what's interesting about it and the point that is made by many speakers already is just -- that was made by many speakers
already is just that everything has performed beyond the requirements of the bill. the cars that have been purchased are much more fuel efficient and the emission standard much better than the bill even required and that's good news. i do share the concern that has been put forth by mr. markey and, i don't know if mr. inslee has yet but he will, about the source of the revenue and that is the innovative technology's loan guarantee program. the recovery package in january, we voted for a $6 billion initiative. it was very important to have it at that level and it's very important in terms of our renewables program. $6 billion. the administration has just released a solicitation for about half of that money, $3 billion, in loans for renewable energy. the rest of the money would not be released until next year,
until after january. so that gave us an opportunity for the time being to use $2 billion of that for this cash for clunkers expansion. and i, again, am concerned about the fact that that money is taken from that account but the not taken -- it has not made any opportunity costs for the program because the timing is that that money would be spent next year. i do hope that whether it's in the continuing resolution or some other step along the way, that those funds will be restored because it's not appropriate for us to take money to do one thing for fuel efficiency out of an account that is designed to do just that looking into the future with further inovation. so i share the concerns expressed by mr. markey and appreciate the comments made by mr. obey in the colloquy that
they had about restoring those funds. but again i think this is pretty exciting -- this is a pretty exciting day. as i said, we got the word just as this news was unfolding this week, yesterday it was determined that we could go forward. the rules committee under congresswoman slaughter responded very positively, the chairman of the appropriations committee, mr. obey, just trying to find solutions for us and the leadership of the republican party very cooperative in how we could bring the billed to floor. so this is a very positive, bipartisan initiative to help our auto industry, to help consumers, to grow our economy, to do it in an environmentally sound way. i think it's the perfect message for us to take home for august. thank you all for your leadership in making this possible. with that i yield back the balance of my time. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from california. mr. lewis: mr. speaker, the time remaining on each side? the speaker pro tempore: the gentleman from california has
four minutes remaining and the gentleman from wisconsin has 7 3/4 minutes remaining. mr. lewis: thank you, mr. speaker. i yield one minute to dr. broun. the speaker pro tempore: the gentleman is recognized for one minute. mr. broun: i thank my friend from california for yielding. cash for clunkers has serious problems that are administrative problems. i have dealers in my district in northeast georgia that probably are going to go bankrupt because of these problems and i hope as we go forward that we'll fix these administrative snafus that are in this problem. we're throwing money into another government program that has serious, very serious problems where dealers can't get their money. i have one dealer that has paid out of his pocket for 50 cars and has only gotten money back for one. now that dealer, if he doesn't get paid back, is going to have very severe financial problems and his employees are going to be put out of work if we don't
fix these. certainly we've sold a lot of cars because this program but just throwing money into a program that has tremendous administrative red tape problems and other problems is not going to be the long-term answer. i hope that the administration will straighten out these administration snafus and will get this program the money to dealers that they desperately need. i yield back. the speaker pro tempore: the gentleman's time has expired. the gentleman from wisconsin. mr. obey: i yield one minute to the distinguished gentleman from new york, mr. maffei. the speaker pro tempore: the gentleman from new york is recognized for one minute. without objection. mr. maffei: mr. speaker, today we are faced with a rare problem. we have a program that is proven to be working and all with we need to do is keep it working. getting gas guzzling vehicles off the road replaced by new fuel efficient vehicles is helping our environment, it is putting money directly into the
pockets of middle income families, it is a ray of hope for auto dealers in this country, a ray of hope for the u.s. auto industry and a ray of hope for our economy. finally we have a bailout not for the big businesses, not for wall street, but a bailout for main street. as the lead sponsor of a bill to help protect the legal rights of auto dealers, i can tell you, this is a god send for the auto dealers in my district. don't stall what's working. give it a fillup and let's get cash for clunkers back on the road. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california. mr. lewis: mr. speaker, i'll be the last speaker on our side, so i reserve for now. the speaker pro tempore: the gentleman from california reserves the balance of his time. the gentleman from wisconsin. mr. obey: mr. speaker, i yield one minute to mr. schauer, the gentleman from michigan. the speaker pro tempore: the gentleman from michigan is
recognized for one minute. mr. schauer: thank you, mr. chairman. thank you for your quick leadership on such an important issue. when i ran for congress, and i'm from michigan, i plenged -- pledged that i would fight every day for people in businesses in my community that are being hurt by a brutal economy. the cash for clunkers program has breathed life into a very difficult economy in communities all around my district. here's why this is important. as i've talked to car dealers in my district, they can't keep cars on the lots. they will be ordering new cars from manufacturers in my state and around the country, suppliers who supply parts for those cars will be manufacturing more of them. this is very, very critical and has been very effective in turning around our economy in just a matter of days. mr. chairman, thank you for giving us the opportunity to continue this program and continue to turn our economy around. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. does the gentleman from
california continue to reserve his time? mr. lewis: reserve. the speaker pro tempore: the gentleman from wisconsin. mr. obey: i yield one minute to the gentleman from oregon, mr. -- or washington, mr. inslee. the speaker pro tempore: the gentleman from washington is recognized. mr. inslee: revise and extend. the speaker pro tempore: without objection. mr. inslee: mr. speaker, i want to just make a point that this program has been spectacularly successful from an environmental perspective. it was originally criticized that we did not call for a higher enough efficiency improvement of these cars. the people have fixed this problem for us. we are seeing average increases of efficiency of 60%, well, well above what was required by congress. and one car company, 78% of the cars that they're buying are over 30 miles a gallon, 39% above 30 miles per gallon. the american people have had spectacular improvements in the efficiency and environmental performance. and i wanted to thank the speaker and mr. obey for essentially assuring us, i'll take it as that, almostthat we in fact are going to replace this money.
i hope it is in the c.r., it is necessary to achieve our efficiency goals. thank you. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from wisconsin. mr. obey: i yield 30 seconds to the gentleman from indiana, mr. donnelly. the speaker pro tempore: the gentleman is recognized. donald donald i want to thank the chair in -- mr. donnelly: i want to thank the chairman for bringing this to the floor. this is better for our environment, it's good for our farms who get to -- families who get to save some money had they make this big purchase ands also very, very good for the workers of indiana who are bark to -- back to work building these cars. this is a win-win-win for our country. it's one of the great programs to create jobs, to help our environment and to help our families. we're very supportive and we want to thank the chairman for bringing this program forward. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from wisconsin. mr. obey: mr. speaker, i thought i had two speakers remaining but i don't see the second.
so i guess i will be the last speaker on our side. the speaker pro tempore: the gentleman from wisconsin reserves the balance of his time. the gentleman from california. mr. lewis: mr. speaker, it should be noted that the speaker, when she was presenting her views to the membership, indicated that one way or another she'd find a way to get this money back into the bill somewhere down the line. between now and then it's pretty obvious that this bill could not be on the floor today if it had not been for an emergency designation, that would allow to us exercise ourselves in this fashion -- us to exercise ourselves in this fashion. i would remind ourselves one more time of the quote received from a car dealer in new york. speaking of us, about how this bill was handled, he said, if they can't administer a program like this, i'll be a little concerned about my health insurance. and to that i join the gentleman one more time in saying, amen and i yield back the balance of my time. the speaker pro tempore: the
gentleman from california yields back the balance of his time. the gentleman from wisconsin. mr. obey: mr. speaker, i yield myself the remainder of the time. the speaker pro tempore: the gentleman is recognized. mr. obey: mr. speaker, the commerce department today just issued figures which have indicated that the depth of the recession in the last quarter of last year was much more severe than anyone had estimated. they also estimate that, and this ised good news part of the day, they also tell us that in the last quarter of the year -- in the first quarter of this year that the economy, the shrinkage of the economy has now slowed considerably, which is very hopeful sign because the economy evidently performed significantly better than most of the economic experts had thought it would perform. we all welcome that news but as you know, that is not good
enough. we need to see more progress. our dilemma is this, ordinarily in a recession, when the country is losing jobs, the federal reserve others will interest rates and that helps -- lowers the interest rates and that helps the housing industry and the auto industry and our economy is normally led out of the recession by the housing industry and the auto industry. this time around the situation is very different because those two sectors have been a basket case for the past year and a half. the first glimmer of hope we've seen in the auto industry is the news that we received yesterday from the secretary of transportation, mr. lahood, who informs us that in just three day's time, when this program was started, as far as they can tell it's already oversubscribed. that means the consumers like this program, it means they are
reacting to it and it means that it would be irresponsible of us not to try to prevent the shutdown of this program just three days after it began. so we're here trying to take advantage of one of the few bright spots in the economy to help move the economy forward. we still have a long way to go before the good news shows up on the unemployment side of the ledger. today i think this is one piece of good news and i think we need to respond to it. i'd be happy to yield to my friend. mr. lewis: i just wanted to say, mr. chairman, that for some reason or other the gentleman who is our speaker has drawn the short end of the stick this week. he's been doing wonderful work, moving the process along, and i