Pension Security Act Of 2003
Mr. Speaker, I thank my friend for yielding me this time. My colleagues, how does one get on the agenda of the United States House of Representatives? If you are in the financial industry and you are interested in changing the rules for…
Mr. Speaker, I thank my friend for yielding me this time.
My colleagues, how does one get on the agenda of the United States House of Representatives? If you are in the financial industry and you are interested in changing the rules for giving pension advice, you can get on the agenda. If you are one of a plethora of special interests that is interested in changing the Internal Revenue Code, you can get on the agenda. But if you are one of the millions of people suffering unemployment in this country and you want this House to take up the question of whether your unemployment benefits ought to be extended, you cannot seem to get on the agenda.
Now, I know that there are people who believe that some of the people who are on unemployment are not trying hard to find a job, and I am sure there are some for whom that description is accurate; but I know this is true: for every three Americans looking for a job today, there is one job. One. And there are hundreds of thousands of people who at the end of this month are going to lose their ability to pay their bills because they are one of the two people who cannot get that one job out of every three people who is unemployed.
It is the business of this country, and it should be the business of this House, to debate whether or not an extension of unemployment benefits is justifiable for those people. I feel strongly that it is. I know there are Members who believe that it is not. I respect their views. The majority ought to respect our right to bring to this floor, before this House and before this country, the question as to whether those benefits ought to be extended.
In many households, Mr. Speaker, this is not some theoretical debate. It is a question of whether you will be able to pay your rent on the first of June, whether you will be able to pay your other bills on the first of June. Let us do the people's business. Let us put on the agenda of this House the question of whether to extend unemployment benefits.
Oppose the previous question.
Mr. Speaker, I thank the gentleman from California for yielding me this time. I rise in strong opposition to the bill that is on the floor.
There have been two trends taking place in American life in recent months and years. The first is an outbreak of conflict of interest in the financial world of America. A few days ago, the attorney general of New York State, together with other law enforcement officials, announced a global settlement against a large number of investment firms because those firms were rather routinely giving advice that was conflicted and, therefore, not in the best interests of investors. The common practice was that the investment banking side of the firm was out hawking certain securities and trying to sell certain deals. And then the advice side of the firm was telling the retail clients of the firm to buy into those very same deals. It became obvious that the advice being given by these financial houses was not in the best interests of the investor; it was in the best interests of the financial house.
It was a scandal that has rocked Wall Street to its foundations. It has caused some significant problems in the market. It caused this Congress to take significant steps in the Sarbanes-Oxley legislation of last year. It was an unwelcome intrusion into the marketplace of American finance.
The second trend is that more and more Americans have become their own board of trustees for their own pension fund. Twenty-five years ago, the way most people's pensions were is that they worked for an employer, the employer put money into a pension fund, there was a board of directors or board of trustees for that pension fund that invested the money, and, when you retired, every month you got a check based upon how much money you were entitled to under that plan.
In recent years many employers have shifted to self-directed accounts. Commonly these are known as 401(k)s, where instead of the employer deciding how the money is invested, the constituent, the individual, decides how the money is invested, and, in effect, our constituents become their own board of trustees for their own pension plans. There is today $1.8 trillion of American pension money invested in these 401(k)s.
Now, one would think that when we have a trend of tremendous conflict of interest problems in the financial industry and a huge jump in the number of pension dollars in self-directed accounts that the House would be about the business of trying to find ways to assure that we eliminated any possibility for conflict of interest when people give advice to pensioners and workers as to how to invest their pension funds. In fact, since 1974, that has been
the law. It is illegal under present law for a conflicted adviser to give advice.
The bill before the House today lifts that prohibition and makes it legal. In other words, what the attorney general of New York and the securities agencies of the Federal Government labored so hard to make unlawful in the rest of the economy, the House is now trying to make lawful with respect to people's pension funds.
Common sense tells us we want to go in the other direction. We want to reduce or eliminate conflicts of interest in investment advice. This bill authorizes and legalizes those conflicts of interest. It makes no sense. If one liked the Enron scandal, one will love what will happen if conflicted, unfettered investment advice visits the $1.8 trillion of America's pensions held in these funds.
Mr. Speaker, this bill should be rejected, and the Democratic substitute that we will debate later should be adopted.
Mr. Speaker, as the designee of the ranking member, I offer an amendment in the nature of a substitute.
Mr. Speaker, I yield myself 2 minutes.
I would urge our colleagues to support this well-reasoned and well- thought-out Democratic substitute. It differs in many ways, and it is an improvement in many ways from the underlying bill. I would like to highlight a few of those improvements, first in the area of investment advice.
This substitute does provide for investment advice for workers and pensioners, but it clearly favors independent investment advice. It provides that workers and pensioners will receive advice from qualified individuals who do not have an interest in the outcome of the advice that they are giving.
Second, this substitute, unlike the underlying bill, deals with the problem of cash balance plans. Cash balance plans, which I believe have been improperly used in many cases, have become a nightmare for pensioners, where people who thought that they had a guaranteed income at a set level for the rest of their lives have confronted the nightmare scenario where they, in fact, have much less, sometimes as much as 50 percent less than they thought they had in their pensions.
This substitute contains a very simple provision that empowers each employee to choose between conversion of his or her pension to a cash balance plan or retention of his or her pension in its more traditional form. This bill puts a stop to the secret transactions involving executive pension compensation and pension provisions. This substitute also requires that in collective bargaining negotiations, that companies be candid and comprehensive in their disclosures to bargaining units with whom they are negotiating.
Very recently in the problems regarding American Airlines, we saw the situation where unions received significant misrepresentations as to the financial provisions of their employers and agreed to massive cutbacks in their compensation packages based upon those misrepresentations. This substitute would outlaw such a provision.
In summary, the substitute addresses the underlying problems and causes of the Enron scandal. I would urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I yield such time as he may consume to the distinguished gentleman from California (Mr. George Miller), the author of the substitute.
(Mr. GEORGE MILLER of California asked and was given permission to revise and extend his remarks.)
Mr. Speaker, I yield 3 minutes to the gentleman from Vermont (Mr. Sanders), who is the author of a key provision of the substitute regarding the prevention of the abuse of cash balance plans.
(Mr. SANDERS asked and was given permission to revise and extend his remarks.)
Mr. Speaker, may I inquire how much time we have left on our side.
Mr. Speaker, I yield 30 seconds to the gentleman from Vermont (Mr. Sanders).
Mr. Speaker, I yield 2 minutes to the gentlewoman from California (Ms. Solis), who speaks with passion and conviction for people struggling to get ahead around our country.
(Ms. SOLIS asked and was given permission to revise and extend her remarks.)
Mr. Speaker, I yield 2 minutes to the gentleman from Oregon (Mr. Blumenauer).
Mr. Speaker, I yield such time as he may consume to the
gentleman from California (Mr. George Miller), the author of the substitute.
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would urge our colleagues to vote in favor of the Miller substitute. If there is one asset that should be sacrosanct, if there is one asset that should be solid as a rock, it is our pensions. Prior to 1974, there were numerous problems with pensions as corrupt or incompetent boards of trustees mismanaged workers' funds.
Twenty-nine years ago this Congress did something about that by passing the ERISA law. Since then, scandals and misappropriation of pension funds have been few and far between. They have been rare, and pensions have been largely safe.
But there is a new kind of pension. It is a self-directed pension account, commonly called a 401(k). The problem with the 401(k) has admittedly been that workers who do not have sound advice have sometimes made unsound decisions and lost their money.
There is no dispute that there is a need to provide solid and sound investment advice, but there is a strong dispute about how to do so. The substitute provides for advice; but frankly, it favors independent advice so the advice given is not given from the point of view of self- interest. The substitute provides a remedy.
When someone entrusted with fiduciary responsibility under the ERISA law does wrong by the pensioner or by the worker, there are consequences. My friend from Texas a few minutes ago said that there would be an expansion of remedies under ERISA. He is absolutely correct, because as the workers at Enron can tell us, the remedies that the present law contains do not do them very much good at all when they see their future security evaporate in the new pension scandals of our time.
The Miller substitute provides for sound investment advice, it ceases the practice of fraudulent misrepresentation during collective bargaining, it stops secret pension deals on behalf of highly compensated employees and executives, and it provides for meaningful remedies for those who have been wronged. It stops the abuse of cash balance plans and makes sure that every American pensioner is made whole. It is a realistic and meaningful response to the scandals of the last 24 to 36 months.
Mr. Speaker, I would urge all of my colleagues to vote ``yes'' in favor of the Miller substitute.
Mr. Speaker, I yield back the balance of my time.
Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.