May 24, 2001

The Honorable J. Dennis Hastert

The Speaker

U.S. House of Representatives

H-232 The Capitol

Washington, D.C. 20515

Subject: H.R. 1088, the "Investor and Capital Markets Fee Relief Act"

Dear Mr. Speaker:

I am writing to alert you to a number of adverse policy and budgetary
implications of the Securities and Exchange Commission (SEC) pay
provisions in section 8 of H.R. 1088.

As you are aware this bill provides "pay parity" with other federal
financial regulators, such as the Federal Deposit Insurance Corporation
(FDIC), the Office of Comptroller of the Currency (OCC), the Office of
Thrift Supervision (OTS) and the National Credit Union Administration
(NCUA). I wanted to make sure you are aware what "pay parity" means as a
practical matter. It means permitting collective bargaining over pay
rates for this very narrow, specific group of federal employees without
any pay cap whatsoever.

Top pay for employees at the FDIC and OTS is equivalent to the pay of
the Vice President of the United States and the Speaker of the House of
Representatives. At the NCUA base pay is \$219,000, on top of which
locality pay is added. I might add that the five SEC employees that are
appointed by the President and confirmed by the Senate, will be paid at
either Executive Level III or IV (currently \$133,700 & \$125,700) even
if H.R. 1088 is enacted. Paying senior officials less than their
subordinates creates a pay inversion situation that is especially
troublesome from a human resource perspective.

Mr. Speaker/May 24, 2001/Page 2

Mr. Speaker, I simply do not believe it is fair or just to single these
federal employees out as being more important than the remainder of the
federal workforce. While I respect the work that is done by the
employees at the SEC, I do not believe their work is more important that
other jobs performed throughout this country by many dedicated federal
employees. The federal employees who dedicate themselves to various
tasks, include: ensuring safe food and drinking water, ensuring a strong
national defense, improving air and water quality, reducing exposure to
hazardous waste, protecting endangered species, advancing human rights
and providing humanitarian relief, all perform vital roles in our
society that is not in my opinion less important than the role played by
the employees at the SEC.

Contrary to the protestations by the SEC, they are [not]{.underline}
using all the current tools available under law to address recruitment
and retention problems. The SEC has only requested special pay authority
(5 USC 5305) for three occupations from the Office of Personnel
Management (OPM). OPM has granted special pay authority for these three
occupations. Unfortunately, the SEC has not used recruitment bonuses (5
USC 5753), retention allowances (5 USC 5754) and superior qualification
appointments (5 USC 5333) in a manner necessary to address the
agency-wide retention problem they contend they have. Also troubling is
that the SEC has never requested critical pay authority (5 USC 5377)
from the Office of Management and Budget. Critical pay authority, once
granted, allows an agency to pay employees in certain occupations up to
Executive Level 1, the same as Cabinet Officers (currently \$161,200).

Beyond the fact that the SEC has not adequately proven a verifiable
agency-wide recruitment and retention problem, exempting the agency from
Title 5 presents a terrible precedent. As a result of the debate
involving the SEC a number of other agencies have already made known
their desire to be taken out of Title 5. These include the Department of
Veterans Affairs, Commodity Futures Trading Commission, Export-Import
Bank and the Patent Trademark Office. This only represents the tip of
the iceberg.

The recently passed Budget Resolution holds domestic discretionary
spending to a five percent increase. This is the fifth straight year
that the federal government has balanced its budget. A balanced budget
allows for tax relief, further debt reduction, improving Medicare and
starts the rebuilding of our education system. Unfortunately, opening
the floodgates and allowing a multitude of agencies to pay their
employees unlimited salaries will bust the budget wide open.

For your review, I have enclosed a copy of the letter from OPM outlining
the Administration's strong opposition to the provision. As you will
note in the letter "... OPM strongly urges Congress to strike any
personnel provisions from H.R. 1088." As the Chairman of the Government
Reform Committee I am committed to working with the

Mr. Speaker/May 24, 2001/Page 3

new Administration to address the workforce issues facing the SEC, as
well as any other agencies in a thoughtful, systematic rather than a
piecemeal manner. If H.R. 1088 comes to the Floor of the House in its
present form I intend to strenuously oppose its passage for all of the
previously mentioned reasons.

Sincerely,

Dan Burton

Chairman

Enclosure