Floor Statements

Mr. Speaker, on February 8, 2019, I missed two recorded votes. Had I been present, on rollcall No. 74, I would have voted no, and on rollcall No. 75, I would have voted yes.

Mr. Speaker, I was not present for votes Wednesday, December 19, 2018. Had I been present, I would have voted: Roll Call No. 436 Aye; Roll Call No. 437 Aye; Roll Call No. 438 Aye; Roll Call No. 439 Aye; Roll Call No. 440 Aye; Roll Call No. 441 Aye; Roll Call No. 442 Aye; Roll Call No. 443 Aye; Roll Call No. 444 Aye; and Roll Call No. 445 Aye.

Mr. Speaker, I thank Ranking Member Waters for yielding.

I want to begin by recognizing the good work of the ranking member and the chairman and their staffs in compiling this capital formation package. I want to compliment the legislative skill shown by the ranking member and her staff in securing minority bills in this package, which I recognize involved a lot of give and take.

We are a long ways from where this Chamber was a little over 13 months ago when we voted in a very partisan manner on the Financial CHOICE Act. I am proud to support this package which contains a number of priorities which I supported in committee and on the floor.

I worked on two of these bills with my colleagues, Congressmen Hill and Hultgren. While I know that there are many others who contributed to this package, I want to thank in particular Katelynn Bradley, Katy Strohmaier, and Lisa Peto of the ranking member's staff for helping draft these amendments that led to unanimous support for these two bills in committee.

First, the Options Markets Stability Act would direct the banking regulators to write rules to provide far more accurate circulations of counterparty credit risk for options and derivatives. Under the current exposure method used today, banks that centrally clear trades today on behalf of their clients must hold capital against the total notional value of any positions without regard for the way hedges offset risk.

This bill directs the regulators to implement a framework that incentivizes central clearing of options and derivatives, which is a major part of our response in the Dodd-Frank bill that has provided financial stability for the last 8 years.

The second bill is the Cooperate With Law Enforcement Agencies and Watch Act. This bill creates a safe harbor for financial institutions and money service businesses from the Bank Secrecy Act so long as they have a letter from law enforcement asking for a specific account to be kept open. Law enforcement agencies often send these letters so that they can follow the money and obtain crucial evidence in investigations. This bill will encourage bank cooperation with these letters which are otherwise optional because it eliminates a situation of technical noncompliance.

Other provisions in this package will improve transparency in markets which drives investor demand from around the world.

Other provisions in this bill will simply make our capital markets work better.

I applaud the bipartisanship of the ranking member and the chairman, and I look forward to further improvements in the regulatory landscape as our markets evolve.

Mr. Speaker, I urge all of my colleagues to support this bill.

Mr. Chair, I have an amendment at the desk.

Mr. Chairman, my straightforward amendment would prohibit the misguided use of taxpayer dollars to attempt to develop a space- based missile defense intercept layer.

As the Chair knows, the Senate-passed version of the National Defense Authorization Act for Fiscal Year 2019 tasks the Missile Defense Agency with developing such a concept.

Mr. Chairman, we have been here before. The idea of a space-based intercept layer has gone in and out of fashion for the last 30 years, ever since President Reagan called for defending the United States against a massive first strike by developing a Strategic Defense Initiative system, commonly known as Star Wars.

But every time technologically competent outside experts have looked at this space-based concept, they deem it unworkable, impossibly expensive, vulnerable to simple countermeasures, easy for an opponent to destroy, easy to overwhelm with a small number of enemy missiles, or all of the above.

In fact, the former Director of the Missile Defense Agency, Admiral Syring said in 2016, that he had:

Serious concerns about the technical feasibility of

interceptors in space, and its long-term affordability.

In order to reach an incoming ballistic missile during the first few minutes of flight, a large number of interceptors must be stationed in low-altitude orbit where they will be very easy for an enemy to destroy.

A report conducted by the American Physical Society in 2003 concluded that in order to ensure full coverage, a fleet of 1,000 or more orbiting satellites would be required to intercept just a single missile.

To put that in perspective, the United States today currently has slightly more than 800 satellites in Earth's orbit, and that includes commercial, scientific, and military satellites.

The National Academy of Sciences estimated that even an austere and limited network of 650 satellites would cost $300 billion, or roughly 10 times the cost of a ground-based system.

Setting aside the massive cost, a space-based missile defense system has inherent vulnerabilities that greatly limit its effectiveness. Even with thousands of interceptors deployed, only a few would be within range to target an incoming missile, and those could easily be overwhelmed by the launch of several missiles from one location.

And because interceptors must be stationed in low-altitude orbit, they could easily be detected, tracked, and destroyed. It is these limitations that led Admiral Syring to conclude that:

Essential space-based interceptor technologies have been

worked on only sporadically over the years and, consequently,

are not feasible to procure, to deploy, or operate in the

near or midterm.

There is no doubt that a ballistic missile defense, if technologically feasible and economically justifiable, would be an important priority for our national security. So would be the Star Trek warp drive, or the transporter, if they were not technological fantasies.

But as a scientist, and, in fact, the only Ph.D. physicist in the U.S. Congress, I think that we have to listen to the experts and do our homework before investing hundreds of billions of dollars attempting to develop an unworkable system.

Mr. Chair, I urge my colleagues to join me and vote ``yes'' on my amendment, and I reserve the balance of my time.

Mr. Chairman, I spent most of my career as an energy particle physicist and accelerator designer, designing and building complex technical systems. Nothing is less productive as a use of taxpayer money than designing and building a system, attempting to build a system that you know from the outset cannot and will not work.

If there was suddenly a magic new technology, then we can revisit this decision. But the fundamental physics and the fundamental numerology of the attack versus defense balance in this has not changed in the last 30 years as we have examined this issue.

So I think that just because it would be nice if we could magically drop a launch missile back on the enemy's head, if we do not have plausible technology that could accomplish that, doing paper designs of systems that will not work is a blatant waste of taxpayer money.

Again, I urge all of my colleagues to vote ``yes'' on my amendment, and I reserve the balance of my time.

Mr. Chairman, how much time do I have remaining?

Mr. Chair, I think this all comes down to technical feasibility. Whenever you are thinking of how to spend taxpayer money, you must make a judgment call as to what things are just way out there and are not going to happen in our lifetimes, and things which have a realistic chance of working on the time scale that we are planning for.

And when all of the experts that you convene to look at this unanimously say that this system makes no sense, then it makes no sense to spend taxpayer money until we get the breakthroughs that might some day make it possible.

Mr. Chair, I yield back the balance of my time.

Mr. Chair, I demand a recorded vote.

Mr. Chairman, I thank the gentleman from Indiana for yielding.

As the only Ph.D. physicist in Congress, I would like to take a moment to highlight the risks of underfunding both nuclear nonproliferation and detection.

When discussing the dangers of nuclear weapons, we often overfocus our attention on missiles and missile defense. Unfortunately, proliferation challenges are changing significantly, and there are, unfortunately, many ways to deliver a nuclear weapon, for example, the smuggling of nuclear radiological materials into the United States through our maritime ports or borders or through the use of commercial and recreational vehicles to deliver waterborne nuclear devices.

We must focus our resources on developing and deploying technologies that will lead to a substantial improvement in our ability to detect, verify, and monitor fissile material and devices. And we must continue to strengthen our workforce at our national laboratories by continuing to recruit the best and the brightest technical experts.

I note that much of this expertise is the same as will be required to ensure complete, verifiable, and irreversible dismantlement of North Korea's nuclear weapons programs and their nuclear weapons.

We can have the most expensive missile defense system in the world, but unless we address these unconventional threats as well, it is simply a false sense of security.

So it is my hope that, by raising these concerns and rebalancing our spending, we will continue to develop new and innovative ideas to detect and monitor the nonproliferation of nuclear weapons and materials and, ultimately, make the world a safer place.

Mr. Chair, I thank my colleagues for helping me bring this amendment to the floor.

We now live in a world where technology has become increasingly important in our personal lives, in our economy, and in our democracy, but Congress is not adequately prepared to lead on the technical issues that could have serious effects on our country's future.

The Office of Technology Assessment would provide Congress with nonpartisan reports and realtime advice on issues that require leadership from lawmakers, including data privacy, artificial intelligence, cybersecurity, and others. When it was operating, lawmakers used the OTA's reports to make decisions that save taxpayer money, which is why this amendment received bipartisan support in the past.

Before it was defunded, the OTA advised Congress, for example, on the importance of interoperability of electronic health records, advice that, had it been acted on, would have saved billions of dollars and thousands of lives.

So I urge my colleagues to support this amendment and restore the OTA so Congress, once again, has access to credible and nonpartisan scientific expertise.

Mr. Chairman, I thank the ranking member for yielding me time.

I rise today in opposition to S.J. Res. 57, which provides for congressional disapproval of CFPB guidance on discrimination in the indirect auto lending industry.

As the only Ph.D. scientist in Congress, when I come to the floor, it is usually to debate science or important technical details of financial service regulations. But I am also the son of a civil rights lawyer, a scientist who stepped away from his career in science and became a civil rights lawyer. My father actually wrote much of the enforcement language behind the Civil Rights Act of 1964.

The issue of minorities being systematically overcharged when purchasing automobiles is not a small issue, and, unfortunately, it is not going away.

This issue was first documented academically in the Chicago metropolitan region in the early 1990s when it was found that if you were a non-White person you were, on average, charged over $500 more, in today's dollars, than a White person was.

In a recent study in the D.C. suburbs, it was found that non-Whites were charged an average of $2,500 more than White people.

I understand this is a subject for some debate. I urge my colleagues to actually read the report that some are calling junk science here. It is a report that, frankly, as a scientist, may not have the statistics that I would like in terms of a large number of test cases, but the effect is so large that it cannot be a statistical fluctuation.

It was undertaken by the National Fair Housing Alliance, and it was done with a number of important scientific controls in its process.

This number by which non-Whites are being overcharged is not a small number. If you are overcharged by thousands of dollars on every one of the 5 to 10 cars that you buy during your lifetime, it is a big impediment to building up household wealth for minorities or any family. Every dollar that goes out to pay an overpriced loan is $1 that cannot be spent for retirement savings or for your child's college education.

A big part of this discrepancy is that non-Whites were far too often discriminated against not only in whether the loan application is approved but also in the rate charged for the loan.

Because of the financial arrangement between banks, when a non-White person is overcharged for a loan, the extra profits from that are split between the dealership and the bank. So I believe there is a responsibility for both parties to make sure that this financial incentive does not lead to the sort of discriminatory behavior that we unfortunately continue to see in this country.

During the debate over the Dodd-Frank bill, we decided to exempt car dealerships from direct oversight from the CFPB. I believe we did that because we felt, correctly, that car dealerships were the victims, rather than the cause, of the financial collapse. But we retained CFPB oversight over financial products, like the loans that are sold on financial markets.

This left an important line to be drawn because both banks and dealerships need guidance. While the banks, I believe, have a duty to make sure that the dealerships that are acting as, effectively, loan brokers on their behalf are not engaging in discriminatory behavior, they cannot be expected to put one of their agents in the room where every car deal is negotiated.

So guidance is needed. Into the breach strode the CFPB, which I believe was appropriate. This guidance is important to protecting American consumers.

In the past, critics of the CFPB guidance have argued that it relies on data that is inaccurate or misunderstood. I think that it relies on an incorrect understanding of the statistical uncertainties that are always present in any scientific measurement. The effect here is real, and it is large.

In the past, there have been bipartisan efforts to put some clarity on how the CFPB could offer this guidance, and this bill walks away from that bipartisan effort.

The bill that the majority is bringing to the floor this week will preclude the reissuance of that necessary guidance instructive of how to comply with the Equal Credit Opportunity Act of 1974, which will remain in place.

Lenders will still be, rightly, required to comply with the law, but they will not have any guidance on how to do so, leading at least one analyst to call S.J. Res. 57 a ``long-term negative for lenders,'' which, as a businessman, I agree with. S.J. Res. 57 is bad for both consumers and for lenders.

Mr. Speaker, I urge my colleagues to oppose S.J. Res. 57 and preserve the opportunity to promulgate guidance intended to curtail discrimination.

Mr. Speaker, I thank Ranking Member Waters for yielding me the time and for her commitment to thoughtful debate in our caucus to get the best results for the people that we represent.

I thank Congressman Hill for working with me and our staff for months to craft the bipartisan bill that you see on the floor today.

When I first entered Congress, the Great Recession required an emergency response for lawmakers to save the economy from collapse, and then it required a thoughtful response to make sure that we would have an economy that would remain stable and work for everyone.

That is why I worked hard to draft the Dodd-Frank Wall Street Reform and Consumer Protection Act, and I am proud that it has succeeded in creating a more stable and better capitalized financial system so that hardworking families should never have to endure a similar financial crisis. The balance has generally been good between reining in risk and allowing financial services firms to play their necessary role in our economy.

We have to constantly monitor for new risks and ways that regulation may unintentionally reduce liquidity or restrict access to capital. But first and foremost, we need to fight to preserve the substantive pieces that we got right and to build on its success with improvements to the law. That includes the Volcker rule, a crucial aspect of protecting the system. The current arrangement uses a committee of five agencies--the Fed, OCC, FDIC, SEC, and CFTC--to write and update the rule.

During Volcker rulemaking, each regulator on the committee has an effective veto over any proposed policy. I spoke with former regulators who were involved in that rulemaking process and came to understand that the committee decision often formed around the weakest regulatory position, which is not good. The veto of each regulator also applies to interpreted guidance, which makes it very hard for either industry or watchdog groups to get a straight answer on what the details of the Volcker rule actually are.

H.R. 4790 would strengthen Dodd-Frank by making regulatory practices more efficient and clear. The bill, including my amendment, would make the Federal Reserve the sole rulemaking agency for the Volcker rule, identify the regulator primarily responsible for oversight of an institution, and provide relief to community banks who are not going to threaten our economy by setting up a massive proprietary trading desk.

Consolidated rulemaking at the Fed will also streamline the process for updating the Volcker rule to new market conditions that may create new threats. As markets change, we need a single nimble regulator to respond by amending the rule and providing an interpretation for new conditions.

Identifying the single regulator responsible for Volcker oversight of an institution ensures consistent implementation and enforcement. This will be the Fed for a bank holding company, the OCC for a national bank, the FDIC for a federally insured State-chartered bank, the SEC for a broker-dealer, and the CFTC for a swap dealer. Importantly, the FDIC retains its backup examination authority for banks to protect the Deposit Insurance Fund with respect to all insured institutions.

Exempting small community banks will relieve a significant compliance cost that is unnecessary because few of these banks have any interest in proprietary trading. This would also allow the regulators to focus on the largest banks which are the only ones capable of having large trading operations. These large banks hold 82 percent of all deposits and are the potential source of nearly all systemic risk.

The bill limits the exemption to banks with less than $10 billion in assets and less than 5 percent of those assets being in trading assets.

Mr. Speaker, this 5 percent limitation means that any well-capitalized small bank that decides to invest in tradeable assets could take 100 percent losses on its trading positions without becoming insolvent and without threatening the Deposit Insurance Fund. So there is no gambling with taxpayer funds involved here.

Mr. Speaker, I urge you to support a stronger Volcker rule by bringing greater efficiency and transparency to the policy formulation and greater consistency to implementation and enforcement.

I thank, again, the ranking member for yielding me the time, and I urge a ``yes'' vote on the final passage of H.R. 4790, the Volcker Rule Regulatory Harmonization Act.

Mr. Chairman, I rise to speak in favor of the amendment.

Mr. Chairman, since the start of the debate on this legislation, I have been laser-focused on getting the problems with ADA compliance actually fixed. The problems of drive-by lawsuits have hit my district, and abusive demand letters are a problem nationwide. One of the tragedies of the status quo is that, even after settlement of demand letters, the problems are often not even fixed.

Many of my colleagues have expressed concern, however, that the underlying text of this legislation would not provide sufficient incentive for legitimate civil rights attorneys to take to court businesses that offer no good faith effort to solve the problem with ADA compliance after they have been pointed out.

My amendment simply would allow courts to award punitive damages in the cases that a business has made no good faith effort to remove a barrier to access. If they cure the problem, the matter is resolved; if not, they should be subject to the full force of the law, including punitive damages.

Since its enactment, the Americans with Disabilities Act has allowed millions of Americans to gain access to public accommodations that many of us take for granted. The passage of the ADA was a major civil rights victory. Many more schools, hospitals, grocery stores, and movie theaters are now accessible. Thanks to the ADA, many of our fellow citizens are fully integrated into the fabric of society.

Despite these gains, however, more still remains to be done. As people with disabilities have continued to work to make our public accommodations more accessible, unfortunately, some individuals have found ways to use the current system for their own financial benefit.

The underlying bill aims to prevent unscrupulous individuals from taking advantage of the law and to establish a process leading to increased compliance. However, during many meetings with disability groups in my district over their concerns, some voiced fears that the underlying bill would discourage attorneys from taking ADA cases.

My amendment would work to create an incentive for lawyers to take ADA cases, knowing that, if a business does not comply, punitive damages may be sought. The goal is that individuals with disabilities have access to competent legal representation in order to bring meritorious cases against businesses that seek to purposely avoid compliance with the ADA.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I would just like to answer by saying that my goal in this amendment has nothing to do with the plaintiff's bar. It has to do with getting the problems fixed without going to court.

Unfortunately, I think without at least the threat of punitive damages, I think it is a legitimate question as to whether some fraction of the violations of the ADA will, in fact, not be fixed as part of the calculation of cost benefit. I think that is not the way we should solve this in this country.

It is a time in this country when a lot of our justice system--our courts--are coming under attack, and I actually have faith in the judges and courts in our country to make a reasonable judgment as to whether or not there was a good faith effort made to fix this fundamental law in our country.

Mr. Chairman, I yield back the balance of my time.

Mr. Speaker, I have an amendment at the desk.

Mr. Speaker, my amendment clarifies that this bill is only intended to apply to the source code underpinning algorithmic trading rather than any computer code that exists anywhere in the enterprise.

The algorithmic source code at a trading firm are its crown jewels. It is basically the core of its existence in its intellectual property.

It is not merely historical or descriptive like books or records that regulators routinely have access to. Likewise, it is not a broad expression of strategies that a firm might use some time in the future. Rather, it is a specific and prescriptive algorithm that generates a specific outcome based on a specific set of inputs.

The firms that rely on algorithmic trading have Ph.D. scientists, mathematicians, and economists researching correlations that lead to these relationships between the inputs and outputs. These may be simple but may also be incredibly complex, involving multiple inputs that do not appear related at first glance.

This complexity, coupled with the fact that they are written largely in computer code, limits the usefulness of

inspecting source code as an examination tool. It is, rather, the behavior of the firm in the market that represents potential violations of security laws. Manipulative behavior, like frequently displaying or canceling orders, should get the regulators' attention and prompt them to ask the firm to explain it.

Source code would be and will be a valuable part of any investigation or enforcement action into observed manipulation of the market, but this is not the basis and should not be the basis for casual inspection. It would probably be central to proving the element of intent in an enforcement action because it demonstrates that the algorithm was designed to engage in, for example, manipulative or abusive behavior.

To this end, it is imperative that the firms achieve archived versions in effect at any given time and log modifications to those algorithms, including who made them, at any time that the code is altered. These should always be available by subpoena.

Additionally, I believe that most firms would allow the regulator on site to examine the source code on an air gap computer. To treat the source code as ordinary books and records would not limit the regulator to onsite examination, but would allow for staff to request it and that it be made available offsite, which has real dangers.

Because of the value the firm carries with its proprietary algorithms, it makes sense that the firm would be reluctant to allow any undue access to its crown jewels. It is really, I believe and I think the majority of my colleagues believe, something that should be accessible only by a subpoena.

My amendment simply clarifies that it is only the algorithmic trading code and related information that should be covered. I urge my colleagues to support my amendment and, upon its adoption, to support the bill on final passage.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would just like to simply reiterate that it should be the actions in the market that are the first indications that the regulators should have a look at, and when they see suspicious activity in the market, that is the time to get the subpoena and go after the source code.

With that, I just urge the adoption of the amendment and the passage of the underlying bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Chairman, I rise today in opposition to H.R. 3326 as it currently stands.

This is a disappointment to me. I, like many of my colleagues, originally voted to support this legislation in committee, with the understanding that both sides of the aisle would continue to work to allay the concerns that elements of this bill would give the Trump administration new and disruptive tools that would likely be used to the detriment of the World Bank's mission and our relationships with other countries.

There was an understanding to negotiate changes, but this legislation we will be voting on today does not reflect that promise. In light of that failure, my colleague, Gwen Moore, offered an amendment that would have set aside our concerns, but this amendment was not made in order, so we will not be voting on that either.

This bill does have elements that are important to our country's obligation to some of the poorest countries in the world. The World Bank provides grants and highly concessional loans through the International Development Association, the IDA, to the world's 77 poorest countries. This money goes a long way towards raising the standard of living, public health, and economic growth for the 450 million people who live there.

Since World War II, the United States has stood as a strong partner and a leader in the multilateral work to improve the quality of life around the world. Our success has relied on the diligent support of American lawmakers, diplomats, and groups around the world that work closely with allies and partner organizations throughout the world to provide assistance in times of great crisis.

But our confidence that this administration's broad discretion to defund the IDA--provided in the bill we will be voting on--would not be abused, frankly, was not improved by the President's recent racist remarks last week.

We are constantly reminded of the continuing importance of this mission and the need to pledge our support to the poorest countries in the world, to offer aid for the neediest individuals. Time after time, however, the Trump administration has shown itself incapable of using the resources that Congress gives it to work in constructive ways within multilateral organizations, instead, alienating our allies and undermining our country's reputation and mission. While I support this legislation's authorization of $3.29 billion for multilateral development efforts for these countries, the poorly conceived and defined conditions in this legislation make it impossible to support.

Any withholding of U.S. contributions to IDA is a serious action that would have devastating consequences. It would punish millions of children and other vulnerable groups in Africa, Latin America, and Asia, many of whom live in absolute poverty. It would also limit our ability to help individuals in famine-ridden parts of the world and refugees in fragile areas. They rely on humanitarian assistance for food and water.

Mr. Chair, they rely on humanitarian assistance for food, water, and basic medical care and could face death without this assistance.

Many of the provisions in this bill, as written, would place conditions on U.S. contributions to IDA that, in the hands of the Trump administration, would not be an effective approach to reform and could very well undermine efforts to reduce poverty and promote growth. This would damage our country's historic and noble mission to lead the world in assisting the poorest countries with food, clean water, and medical help.

So, with reluctance, I have to encourage my colleagues to vote ``no'' on this bill and hope that it comes back to the floor with the bipartisan input that we were promised.

Mr. Speaker, I yield myself such time as I may consume, and rise today in support of H.R. 4279.

This was a thoroughly negotiated bill, incorporating the views of affected funds and consumer and investor advocacy groups.

My staff worked with Congressman Hollingsworth's staff up to the eleventh hour in committee, demonstrating the importance of bipartisan relationships in creating legislation. The ranking member's staff and the chairman's staff worked with us throughout this process, and I offered an amendment that we all agreed to.

My amendment simply changed the approach the bill used to accomplish parity for closed-end investment funds with operating companies under the SEC's securities offering reforms of 2005.

Moving this bill in regular order, we heard in a legislative hearing that there were reasons why parity might not mean identical treatment. This amendment would direct the SEC to propose, within 180 days, a rule that would allow closed-end funds that are listed or have periodic redemptions--interval funds--to be treated as well-known seasoned issuers, WKSIs.

This rule will have to be finalized within a year, or else the bill will provide a statutory ability for these companies to qualify if they meet the other criteria currently applicable to operating companies. The SEC can act at any time thereafter to propose rules that would be controlling for closed-end funds covered by the bill.

I encourage the SEC to consider the disclosure regime under the Investment Company Act of 1940 to promulgate a rule that will allow listed closed-end funds and interval funds to use the streamlined offering and proxy rules that are available to WKSIs.

This bill will increase options for investors and savers while ensuring that protections appropriate to a WKSI are applied to closed- end and interval funds.

Mr. Speaker, I encourage all of my colleagues to support this bill as it comes to a decision on the floor, and I reserve the balance of my time.

Mr. Speaker, at this point I have no further speakers, so I would like to close with a few words here.

This bipartisan bill will increase options for investors and savers while ensuring that the protections appropriate to a WKSI are applied to closed-end fund and interval funds. It is my hope that we can do more bipartisan work like this in our committee and in our Congress for the remainder of this term.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I was not present for votes Tuesday, January 9, 2018. Had I been present, I would have voted: Roll Call No. 2, Aye; Roll Call No. 3, Aye; and Roll Call No. 4, Aye

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 3903. This bill will expand the ability of companies to test the waters prior to going public and to submit confidential filings for feedback from the SEC staff prior to filing of an IPO.

The JOBS Act of 2012 created these mechanisms for emerging growth companies. Emerging growth companies are those with less than $1 billion in revenue, $700 million in public float, and $1 billion in nonconvertible debt. The JOBS Act enabled these companies to speak to institutional investors prior to an IPO without it being considered an unregistered offering for sale of securities.

The definition of a securities offering is appropriately broad to protect investors and ensure transparency in our markets by requiring registration and significant disclosures. However, companies considering a public offering should be able to talk to the most sophisticated investors in the markets, large institutional investors, to gauge the interest in the offering. Having that ability will help encourage public offerings because it enables companies to realize efficiencies in assessing demand.

Research-intensive firms are more likely to test the waters because it lowers the cost of proprietary disclosure. These are the firms that drive economic growth by bringing new ideas to market.

Research is obviously a passion of mine, having founded a company that was based on my intellectual property and subsequently designing particle accelerators as a physicist at Fermi National Lab. It is the new ideas that grow our GDP and improve the standard of living for all Americans.

Moreover, new businesses with new ideas do more to grow the economy than incumbents with new ideas or just acquisitions. The public market presents an opportunity for small businesses to become big businesses without being bought out.

Additionally, this bill would allow companies of all sizes to file confidentially forms with the SEC. This allows the firm to receive feedback without making inappropriate or unrequired information public. Disclosing the correct information helps the markets understand risks and price an offering appropriately.

The bill also includes a provision giving the SEC discretion to ensure that these mechanisms are used in a way that benefits markets and investors. The U.S. capital markets are the deepest and most liquid in the world, and this bill will help more companies tap into that capital and grow our economy.

Mr. Speaker, I urge broad support for this bill today, and I reserve the balance of my time.

Mr. Speaker, I would like to, first off, reiterate my support of this bill. It is the sort of commonsense, bipartisan fix that will make an incremental improvement to our public markets.

However, I would also like to emphasize what I believe is the real threat to the health of our public markets, which is the concentration of wealth at the very top. It is no secret that the competition to our public markets are private equity and venture capital, and these are investment instruments largely, almost entirely, under the control of the very wealthy.

We are, this week, going to begin debate on a tax bill that will decide, to a large extent, whether we accelerate or decelerate the concentration of wealth at the very top. I just want to emphasize that connection to make everyone understand that the continued health of our public markets, which historically have been such an important contributor to middle class investment in growing businesses. So I want people to consider that as we debate this bill, which I fully support, and, as well, the variety of important issues that we debate that really affect the distribution of wealth in this country.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 1585. This bill will expand the definition of accredited investor, a status reserved for investors who possess the sophistication and financial means necessary to invest in private securities offerings.

Currently, accredited investors are limited to persons who have an annual income more than $200,000, or $300,000 together with a spouse, or a net worth in excess of $1 million, excluding a primary residence.

Aside from the primary residence exclusion added by the Dodd-Frank Act, the accredited investor definition has not been updated since 1982.

In light of the growth of private markets and increasing complexity, the SEC's Investor Advisory Committee recommended that the SEC conduct additional study of adjusting the current thresholds for inflation and establishing alternatives based on existing credentials, investment experience, and limits of investments.

An updated definition is long overdue. Current law speaks almost exclusively to the ability to bear a loss rather than the sophistication of the investor.

The bill we consider today is the product of bipartisan compromise. Last Congress, it was significantly narrowed to include only persons who qualify based on current income and net worth tests: registered brokers, and investment advisers, and those who have the appropriate educational background and job experience as determined by the SEC and verified by FINRA.

These categories are in line with the recommendations of the Investor Advisory Committee and effective proxies for sophistication, access to information, and ability to withstand losses.

There is an inherent tension between democratizing markets and protecting investors on the basis of their ability to bear financial losses.

This bill includes Ranking Member Waters' bipartisan amendment to require the SEC to adjust net worth and income thresholds for inflation every 5 years. This will establish the economic value of the thresholds in current law, as the dollar amounts are increased, with growth in the overall economy and changes in the value of the dollar.

Doing so will preserve access to private markets for those currently investing in them. Private offerings can offer some of the best returns in the market, but they obviously carry different risks, like illiquidity, than securities in the public markets.

While there can be investment opportunities that significantly increase a person's net worth, they cannot be immediately sold if an investor's financial circumstances change.

So this bill strikes a good compromise between giving access to investments without exposing the retirement accounts of working families to excessive risks.

Mr. Speaker, I urge broad support for the bill today, and I reserve the balance of my time.

Mr. Speaker, I just wanted to say that I appreciate my colleague's heartfelt concern for the difficulty of the wealth piling up in the top of our country.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Madam Speaker, I was unavoidably detained. Had I been present, I would have voted ``yea'' on rollcall No. 548.