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[House Report 107-52]
[From the U.S. Government Publishing Office]

107th Congress                                             Rept. 107-52
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
              INVESTOR AND CAPITAL MARKETS FEE RELIEF ACT

                                _______
                                

                  May 1, 2001.--Ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1088]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1088) to amend the Securities Exchange Act of 
1934 to reduce fees collected by the Securities and Exchange 
Commission, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     7
Background and Need for Legislation..............................     8
Hearings.........................................................    10
Committee Consideration..........................................    11
Committee Votes..................................................    11
Committee Oversight Findings.....................................    13
Performance Goals and Objectives.................................    13
New Budget Authority, Entitlement Authority, and Tax Expenditures    13
Committee Cost Estimate..........................................    13
Congressional Budget Office Estimate.............................    13
Federal Mandates Statement.......................................    19
Advisory Committee Statement.....................................    19
Constitutional Authority Statement...............................    19
Applicability to Legislative Branch..............................    19
Exchange of Committee Correspondence.............................    19
Section-by-Section Analysis of the Legislation...................    22
Changes in Existing Law Made by the Bill, as Reported............    27
Dissenting Views.................................................    40

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Investor and Capital Markets Fee 
Relief Act''.

SEC. 2. IMMEDIATE TRANSACTION FEE REDUCTIONS.

  Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is 
amended--
          (1) by striking ``\1/300\ of one percent'' each place it 
        appears in subsections (b) and (d) and inserting ``$12 per 
        $1,000,000'';
          (2) in the first sentence of subsection (b), by striking ``, 
        except that'' and all that follows through the end of such 
        sentence and inserting a period;
          (3) in paragraph (1) of subsection (d), by striking ``, 
        except that'' and all that follows through the end of such 
        paragraph and inserting a period;
          (4) in subsection (e), by striking ``$0.02'' and inserting 
        ``$0.0072''; and
          (5) by adding at the end the following new subsection:
  ``(i) Pro Rata Application.--The rates per $1,000,000 required by 
this section shall be applied pro rata to amounts and balances equal to 
less than $1,000,000.''.

SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PROVISIONS; ADDITIONAL 
                    FEE REDUCTIONS.

  (a) Pooling and Allocation of Collections.--Section 31 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78ee) is further amended--
          (1) in subsection (b)--
                  (A) by striking ``Every'' and inserting ``Subject to 
                subsection (j), each''; and
                  (B) by striking the last sentence;
          (2) by striking subsection (c);
          (3) in subsection (d)--
                  (A) by striking paragraphs (2) and (3);
                  (B) by striking the following:
  ``(d) Off-Exchange Trades of Last-Sale-Reported Securities.--
          ``(1) Covered transactions.--Each national securities''
                and inserting the following:
  ``(c) Off-Exchange Trades of Exchange Registered and Last-Sale-
Reported Securities.--Subject to subsection (j), each national 
securities'';
                  (C) by inserting ``registered on a national 
                securities exchange or'' after ``security futures 
                products)''; and
                  (D) by striking ``, excluding any sales for which a 
                fee is paid under subsection (c)'';
          (4) in subsection (e), by striking ``except that for fiscal 
        year 2007'' and all that follows through the end of such 
        subsection and inserting the following: ``except that for 
        fiscal year 2007 and each succeeding fiscal year such 
        assessment shall be equal to $0.0042 for each such 
        transaction.'';
          (5) in subsection (f), by striking ``Dates for Payment of 
        Fees.--The fees required'' and inserting ``Dates for 
        Payments.--The fees and assessments required'';
          (6) by redesignating subsections (e) through (i) (as added by 
        section 2(5)) as subsections (d) through (h), respectively;
          (7) by adding at the end the following new subsection:
  ``(i) Deposit of Fees.--
          ``(1) Offsetting collections.--Fees collected pursuant to 
        subsections (b), (c), and (d) for any fiscal year--
                  ``(A) shall be deposited and credited as offsetting 
                collections to the account providing appropriations to 
                the Commission; and
                  ``(B) except as provided in subsection (k), shall not 
                be collected for any fiscal year except to the extent 
                provided in advance in appropriation Acts.
          ``(2) General revenues prohibited.--No fees collected 
        pursuant to subsections (b), (c), and (d) for fiscal year 2002 
        or any succeeding fiscal year shall be deposited and credited 
        as general revenue of the Treasury.''.
  (b) Additional Reductions of Fees.--
          (1) Amendment.--Section 31 of the Securities Exchange Act of 
        1934 (15 U.S.C. 78ee) is further amended by adding after 
        subsection (i) (as added by subsection (a)(7)) the following 
        new subsections:
  ``(j) Recapture of Projection Windfalls for Further Rate 
Reductions.--
          ``(1) Annual adjustment.--For each of the fiscal years 2003 
        through 2011, the Commission shall by order adjust each of the 
        rates applicable under subsections (b) and (c) for such fiscal 
        year to a uniform adjusted rate that, when applied to the 
        baseline estimate of the aggregate dollar amount of sales for 
        such fiscal year, is reasonably likely to produce aggregate fee 
        collections under this section (including assessments collected 
        under subsection (d)) that are equal to the target offsetting 
        collection amount for such fiscal year.
          ``(2) Final rate adjustment.--For fiscal year 2012 and all of 
        the succeeding fiscal years, the Commission shall by order 
        adjust each of the rates applicable under subsections (b) and 
        (c) for all of such fiscal years to a uniform adjusted rate 
        that, when applied to the baseline estimate of the aggregate 
        dollar amount of sales for fiscal year 2012, is reasonably 
        likely to produce aggregate fee collections under this section 
        in fiscal year 2012 (including assessments collected under 
        subsection (d)) equal to the target offsetting collection 
        amount for fiscal year 2011.
          ``(3) Review and effective date.--An adjusted rate prescribed 
        under paragraph (1) or (2) and published under subsection (g) 
        shall not be subject to judicial review. Subject to subsections 
        (i)(1)(B) and (k)--
                  ``(A) an adjusted rate prescribed under paragraph (1) 
                shall take effect on the later of--
                          ``(i) the first day of the fiscal year to 
                        which such rate applies; or
                          ``(ii) 30 days after the date on which a 
                        regular appropriation to the Commission for 
                        such fiscal year is enacted; and
                  ``(B) an adjusted rate prescribed under paragraph (2) 
                shall take effect on the later of--
                          ``(i) the first day of fiscal year 2012; or
                          ``(ii) 30 days after the date on which a 
                        regular appropriation to the Commission for 
                        fiscal year 2012 is enacted.
  ``(k) Lapse of Appropriation.--If on the first day of a fiscal year a 
regular appropriation to the Commission has not been enacted, the 
Commission shall continue to collect (as offsetting collections) the 
fees and assessments under subsections (b), (c), and (d) at the rate in 
effect during the preceding fiscal year, until 30 days after the date 
such a regular appropriation is enacted.
  ``(l) Definitions.--For purposes of this section:
          ``(1) Target offsetting collection amount.--The target 
        offsetting collection amount for each of the fiscal years 2002 
        through 2011 is determined according to the following table:

  
                                                      Target offsetting
``Fiscal year:
                                                      collection amount

  2002...............................................     $585,720,000 
  2003...............................................     $679,320,000 
  2004...............................................     $822,240,000 
  2005...............................................     $976,320,000 
  2006...............................................   $1,148,040,000 
  2007...............................................     $880,880,000 
  2008...............................................     $892,080,000 
  2009...............................................   $1,023,120,000 
  2010...............................................   $1,161,440,000 
  2011...............................................   $1,321,040,000 

          ``(2) Baseline estimate of the aggregate dollar amount of 
        sales.--The baseline estimate of the aggregate dollar amount of 
        sales for any fiscal year is the baseline estimate of the 
        aggregate dollar amount of sales of securities (other than 
        bonds, debentures, other evidences of indebtedness, and 
        security futures products) to be transacted on each national 
        securities exchange and by or through any member of each 
        national securities association (otherwise than on a national 
        securities exchange) during such fiscal year as determined by 
        the Commission, after consultation with the Congressional 
        Budget Office and the Office of Management and Budget, using 
        the methodology required for making projections pursuant to 
        section 257 of the Balanced Budget and Emergency Deficit 
        Control Act of 1985.''.
          (2) Conforming amendment.--Section 31(g) of such Act (as 
        redesignated by subsection (a)(6) of this section) is amended 
        by inserting before the period at the end the following: ``not 
        later than April 30 of the fiscal year preceding the fiscal 
        year to which such rate applies, together with any estimates or 
        projections on which such fees are based''.

SEC. 4. REDUCTION OF REGISTRATION FEES.

  Section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is 
amended by striking paragraphs (2) through (5) and inserting the 
following:
          ``(2) Fee payment required.--At the time of filing a 
        registration statement, the applicant shall pay to the 
        Commission a fee at a rate that shall be equal to $125 per 
        $1,000,000 of the maximum aggregate price at which such 
        securities are proposed to be offered, except that during 
        fiscal year 2003 and any succeeding fiscal year such fee shall 
        be adjusted pursuant to paragraph (5) or (6).
          ``(3) Offsetting collections.--Fees collected pursuant to 
        this subsection for any fiscal year--
                  ``(A) shall be deposited and credited as offsetting 
                collections to the account providing appropriations to 
                the Commission; and
                  ``(B) except as provided in paragraph (9), shall not 
                be collected for any fiscal year except to the extent 
                provided in advance in appropriation Acts.
          ``(4) General revenues prohibited.--No fees collected 
        pursuant to this subsection for fiscal year 2002 or any 
        succeeding fiscal year shall be deposited and credited as 
        general revenue of the Treasury.
          ``(5) Annual adjustment.--For each of the fiscal years 2003 
        through 2011, the Commission shall by order adjust the rate 
        required by paragraph (2) for such fiscal year to a rate that, 
        when applied to the baseline estimate of the aggregate maximum 
        offering prices for such fiscal year, is reasonably likely to 
        produce aggregate fee collections under this subsection that 
        are equal to the target offsetting collection amount for such 
        fiscal year.
          ``(6) Final rate adjustment.--For fiscal year 2012 and all of 
        the succeeding fiscal years, the Commission shall by order 
        adjust the rate required by paragraph (2) for all of such 
        fiscal years to a rate that, when applied to the baseline 
        estimate of the aggregate maximum offering prices for fiscal 
        year 2012, is reasonably likely to produce aggregate fee 
        collections under this subsection in fiscal year 2012 equal to 
        the target offsetting comlection amount for fiscal year 2011.
          ``(7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata to 
        amounts and balances equal to less than $1,000,000.
          ``(8) Review and effective date.--An adjusted rate prescribed 
        under paragraph (5) or (6) and published under paragraph (10) 
        shall not be subject to judicial review. Subject to paragraphs 
        (3)(B) and (9)--
                  ``(A) an adjusted rate prescribed under paragraph (5) 
                shall take effect on the later of--
                          ``(i) the first day of the fiscal year to 
                        which such rate applies; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        such fiscal year is enacted; and
                  ``(B) an adjusted rate prescribed under paragraph (6) 
                shall take effect on the later of--
                          ``(i) the first day of fiscal year 2012; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        fiscal year 2012 is enacted.
          ``(9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission has not 
        been enacted, the Commission shall continue to collect fees (as 
        offsetting collections) under this subsection at the rate in 
        effect during the preceding fiscal year, until 5 days after the 
        date such a regular appropriation is enacted.
          ``(10) Publication.--The Commission shall publish in the 
        Federal Register notices of the rate applicable under this 
        subsection and under sections 13(e) and 14(g) for each fiscal 
        year not later than April 30 of the fiscal year preceding the 
        fiscal year to which such rate applies, together with any 
        estimates or projections on which such rate is based.
          ``(11) Definitions.--For purposes of this subsection:
                  ``(A) Target offsetting collection amount.--The 
                target offsetting collection amount for each of the 
                fiscal years 2002 through 2011 is determined according 
                to the following table:

  
                                                      Target offsetting
``Fiscal year:
                                                      collection amount
  2002...............................................      $512,500,000
  2003...............................................      $589,380,000
  2004...............................................      $650,385,000
  2005...............................................      $790,075,000
  2006...............................................      $949,050,000
  2007...............................................      $214,200,000
  2008...............................................      $233,700,000
  2009...............................................      $284,115,000
  2010...............................................      $333,840,000
  2011...............................................      $394,110,000

                  ``(B) Baseline estimate of the aggregate maximum 
                offering prices.--The baseline estimate of the 
                aggregate maximum offering prices for any fiscal year 
                is the baseline estimate of the aggregate maximum 
                offering price at which securities are proposed to be 
                offered pursuant to registration statements filed with 
                the Commission during such fiscal year as determined by 
                the Commission, after consultation with the 
                Congressional Budget Office and the Office of 
                Management and Budget, using the methodology required 
                for projections pursuant to section 257 of the Balanced 
                Budget and Emergency Deficit Control Act of 1985.''.

SEC. 5. FEES FOR STOCK REPURCHASE STATEMENTS.

  Section 13(e) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(e)) is amended--
          (1) in paragraph (3), by striking ``a fee of \1/50\ of 1 per 
        centum of the value of securities proposed to be purchased'' 
        and inserting ``a fee at a rate that, subject to paragraphs (5) 
        and (6), is equal to $125 per $1,000,000 of the value of 
        securities proposed to be purchased'';
          (2) by inserting after paragraph (3) the following new 
        paragraphs:
          ``(4) Offsetting collections.--Fees collected pursuant to 
        this subsection for any fiscal year shall be deposited and 
        credited as offsetting collections to the account providing 
        appropriations to the Commission, and, except as provided in 
        paragraph (9), shall not be collected for any fiscal year 
        except to the extent provided in advance in appropriation Acts. 
        No fees collected pursuant to this subsection for fiscal year 
        2002 or any succeeding fiscal year shall be deposited and 
        credited as general revenue of the Treasury.
          ``(5) Annual adjustment.--For each of the fiscal years 2003 
        through 2011, the Commission shall by order adjust the rate 
        required by paragraph (3) for such fiscal year to a rate that 
        is equal to the rate (expressed in dollars per million) that is 
        applicable under section 6(b) of the Securities Act of 1933 for 
        such fiscal year.
          ``(6) Final rate adjustment.--For fiscal year 2012 and all of 
        the succeeding fiscal years, the Commission shall by order 
        adjust the rate required by paragraph (3) for all of such 
        fiscal years to a rate that is equal to the rate (expressed in 
        dollars per million) that is applicable under section 6(b) of 
        the Securities Act of 1933 for all of such fiscal years.
          ``(7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata to 
        amounts and balances equal to less than $1,000,000.
          ``(8) Review and effective date.--An adjusted rate prescribed 
        under paragraph (5) or (6) and published under paragraph (10) 
        shall not be subject to judicial review. Subject to paragraphs 
        (4) and (9)--
                  ``(A) an adjusted rate prescribed under paragraph (5) 
                shall take effect on the later of--
                          ``(i) the first day of the fiscal year to 
                        which such rate applies; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        such fiscal year is enacted; and
                  ``(B) an adjusted rate prescribed under paragraph (6) 
                shall take effect on the later of--
                          ``(i) the first day of fiscal year 2012; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        fiscal year 2012 is enacted.
          ``(9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission has not 
        been enacted, the Commission shall continue to collect fees (as 
        offsetting collections) under this subsection at the rate in 
        effect during the preceding fiscal year, until 5 days after the 
        date such a regular appropriation is enacted.
          ``(10) Publication.--The rate applicable under this 
        subsection for each fiscal year is published pursuant to 
        section 6(b)(10) of the Securities Act of 1933.''.

SEC. 6. FEES FOR PROXY SOLICITATIONS AND STATEMENTS IN CORPORATE 
                    CONTROL TRANSACTIONS.

  Section 14(g) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(e)(3)) is amended--
          (1) in paragraphs (1) and (3), by striking ``a fee of \1/50\ 
        of 1 per centum of '' each place it appears and inserting ``a 
        fee at a rate that, subject to paragraphs (5) and (6), is equal 
        to $125 per $1,000,000 of '';
          (2) by redesignating paragraph (4) as paragraph (11); and
          (3) by inserting after paragraph (3) the following new 
        paragraphs:
          ``(4) Offsetting collections.--Fees collected pursuant to 
        this subsection for any fiscal year shall be deposited and 
        credited as offsetting collections to the account providing 
        appropriations to the Commission, and, except as provided in 
        paragraph (9), shall not be collected for any fiscal year 
        except to the extent provided in advance in appropriation Acts. 
        No fees collected pursuant to this subsection for fiscal year 
        2002 or any succeeding fiscal year shall be deposited and 
        credited as general revenue of the Treasury.
          ``(5) Annual adjustment.--For each of the fiscal years 2003 
        through 2011, the Commission shall by order adjust each of the 
        rates required by paragraphs (1) and (3) for such fiscal year 
        to a rate that is equal to the rate (expressed in dollars per 
        million) that is applicable under section 6(b) of the 
        Securities Act of 1933 for such fiscal year.
          ``(6) Final rate adjustment.--For fiscal year 2012 and all of 
        the succeeding fiscal years, the Commission shall by order 
        adjust each of the rates required by paragraphs (1) and (3) for 
        all of such fiscal years to a rate that is equal to the rate 
        (expressed in dollars per million) that is applicable under 
        section 6(b) of the Securities Act of 1933 for all of such 
        fiscal years.
          ``(7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata to 
        amounts and balances equal to less than $1,000,000.
          ``(8) Review and effective date.--An adjusted rate prescribed 
        under paragraph (5) or (6) and published under paragraph (10) 
        shall not be subject to judicial review. Subject to paragraphs 
        (4) and (9)--
                  ``(A) an adjusted rate prescribed under paragraph (5) 
                shall take effect on the later of--
                          ``(i) the first day of the fiscal year to 
                        which such rate applies; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        such fiscal year is enacted; and
                  ``(B) an adjusted rate prescribed under paragraph (6) 
                shall take effect on the later of--
                          ``(i) the first day of fiscal year 2012; or
                          ``(ii) 5 days after the date on which a 
                        regular appropriation to the Commission for 
                        fiscal year 2012 is enacted.
          ``(9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission has not 
        been enacted, the Commission shall continue to collect fees (as 
        offsetting collections) under this subsection at the rate in 
        effect during the preceding fiscal year, until 5 days after the 
        date such a regular appropriation is enacted.
          ``(10) Publication.--The rate applicable under this 
        subsection for each fiscal year is published pursuant to 
        section 6(b)(10) of the Securities Act of 1933.''.

SEC. 7. TRUST INDENTURE ACT FEE.

  Section 307(b) of the Trust Indenture Act of 1939 (15 U.S.C. 
77ggg(b)) is amended by striking ``Commission, but, in the case'' and 
all that follows and inserting ``Commission.''.

SEC. 8. PAY PARITY PROVISIONS.

  (a) Securities and Exchange Commission Employees.--Section 4(b) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78d(b)) is amended--
          (1) by striking paragraphs (1) and (2) and by inserting the 
        following:
          ``(1) Appointment, compensation, and benefits.--
                  ``(A) In general.--The Commission may appoint and fix 
                the compensation of such officers, attorneys, 
                economists, examiners, and other employees as may be 
                necessary for carrying out its functions under this 
                Act.
                  ``(B) Rates of pay.--Rates of basic pay for all 
                employees of the Commission may be set and adjusted by 
                the Commission without regard to the provisions of 
                chapter 51 or subchapter III of chapter 53 of title 5, 
                United States Code.
                  ``(C) Additional compensation and benefits.--The 
                Commission may provide additional compensation and 
                benefits to employees of the Commission if the same 
                type of compensation or benefits are then being 
                provided by any agency referred to under section 1206 
                of the Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989 or, if not then being provided, 
                could be provided by such an agency under applicable 
                provisions of law, rule, or regulation.
          ``(2) Information; comparability.--In establishing and 
        adjusting schedules of compensation and additional benefits for 
        employees of the Commission, which are to be determined solely 
        by the Commission under this subsection, the Commission--
                  ``(A) shall consult with and inform the heads of the 
                agencies referred to under section 1206 of the 
                Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989;
                  ``(B) shall inform the Congress of such compensation 
                and benefits; and
                  ``(C) shall seek to maintain comparability with such 
                agencies regarding compensation and benefits.''.
  (b) Technical Amendments.--
          (1) Section 3132(a)(1) of title 5, United States Code, is 
        amended--
                  (A) in subparagraph (C), by striking ``or'' after the 
                semicolon;
                  (B) in subparagraph (D), by inserting ``or'' after 
                the semicolon; and
                  (C) by adding at the end of the following:
                  ``(E) the Securities and Exchange Commission.''.
          (2) Section 5373(a) of title 5, United States Code, is 
        amended--
                  (A) in paragraph (2), by striking ``or'' after the 
                semicolon;
                  (B) in paragraph (3), by striking the period and 
                inserting ``; or''; and
                  (C) by adding at the end the following:
          ``(4) section 4(b) of the Securities Exchange Act of 1934.''.

SEC. 9. STUDY OF THE EFFECT OF FEE REDUCTIONS.

  (a) Study.--The Office of Economic Analysis of the Securities and 
Exchange Commission (hereinafter referred to as the ``Office'') shall 
conduct a study of the extent to which the benefits of reductions in 
fees effected as a result of this Act are passed on to investors.
  (b) Factors for Consideration.--In conducting the study under 
subsection (a), the Office shall--
          (1) consider all of the various elements of the securities 
        industry directly and indirectly benefitting from the fee 
        reductions, including purchasers and sellers of securities, 
        members of national securities exchanges, issuers, broker-
        dealers, underwriters, participants in investment companies, 
        retirement programs, and others;
          (2) evaluate the impact on different types of investors, such 
        as individual equity holders, individual investment company 
        shareholders, businesses, and other types of investors;
          (3) include in the interpretation of the term ``investor'' 
        shareholders of entities subject to the fee reductions; and
          (4) consider the economic benefits to investors flowing from 
        the fee reductions to include such factors as market 
        efficiency, expansion of investment opportunities, and enhanced 
        liquidity and capital formation.
  (c) Report to Congress.--Not later than 2 years after the date of 
enactment of this Act, the Securities and Exchange Commission shall 
submit to the Congress the report prepared by the Office on the results 
of the study conducted under subsection (a).

SEC. 10. EFFECTIVE DATES.

  (a) In General.--Except as provided in subsections (b), (c), and (d), 
the amendments made by this Act shall take effect on October 1, 2001.
  (b) Immediate Transaction Fee Reductions.--The amendments made by 
section 2 shall take effect on the later of--
          (1) the first day of fiscal year 2002; or
          (2) 30 days after the date on which a regular appropriation 
        to the Commission for such fiscal year is enacted.
  (c) Pay Parity.--
          (1) In general.--Except as provided in paragraph (2), the 
        amendments made by section 8 shall take effect on the date of 
        enactment of this Act.
          (2) Exception.--The amendments made by section 8(b)(1) shall 
        take effect as of such date as the Securities and Exchange 
        Commission shall (by order published in the Federal Register) 
        prescribe, but in no event later than 1 year after the date of 
        enactment of this Act.
  (d) Additional Exceptions.--The authorities provided by section 
6(b)(9) of the Securities Act of 1933 and sections 13(e)(9), 14(g)(9) 
and 31(k) of the Securities Exchange Act of 1934, as so designated by 
this Act, shall not apply until October 1, 2002.

                          Purpose and Summary

    The purpose of H.R. 1088, the Investor and Capital Markets 
Fee Relief Act, is to provide cost savings to investors and 
market participants. The legislation reduces or eliminates all 
of the ``user'' fees imposed by the Securities and Exchange 
Commission (SEC), including transaction fees, registration 
fees, merger and tender offer fees, single stock future 
transaction assessments, and Trust Indenture Act fees.
    The legislation reduces transaction fees by over 60 percent 
for the years 2002 to 2006. From 2007 to 2011, those fees are 
reduced by over 40 percent. The fees are reduced by a smaller 
percentage in the later years because under current law, the 
fees will be lowered significantly in 2007. In the aggregate 
over fiscal years 2002 to 2011, the bill reduces registration 
fees by 28 percent. In the aggregate over fiscal years 2002 to 
2011, the legislation reduces merger and tender offer fees by 
50 percent. H.R. 1088 reduces the assessment on security 
futures transactions by 64 percent in 2002, and an additional 
44 percent in 2007.
    The legislation directs the SEC, in consultation with the 
Congressional Budget Office and the Office of Management and 
Budget, to set the new reduced fee rates annually, based on 
estimates reached pursuant to the methodology used by the CBO.
    H.R. 1088 includes a provision granting SEC employees pay 
parity with Federal banking regulators. This provision is 
designed to help the Commission attract and retain first-rate 
attorneys, accountants, and economists for its important 
mission of protecting investors, preserving the integrity of 
the capital markets, and promoting capital formation. This 
provision would require a net funding increase of approximately 
$70.9 million in fiscal 2002, with yearly adjustments for 
inflation thereafter.
    H.R. 1088 changes the budgetary treatment of fee 
collections. Under current law, fees are deposited and 
collected as either general revenue of the Treasury or 
``offsetting collections,'' depending on the fee. The 
legislation reduces overall SEC fee collections by eliminating 
the general revenue portion of fee collections ($14.0 billion 
or approximately 50 percent of projected SEC fee collections 
over the next ten years). The bill is designed to keep 
offsetting collections, which are the monies used by the SEC's 
appropriators to fund the agency, at the levels projected under 
current law over the next ten years. As such, H.R. 1088 
provides a long-term stable funding source for the 
appropriators to fund the Commission. The SEC has 
enthusiastically endorsed H.R. 1088.

                  Background and Need for Legislation

    Federal securities laws authorize the Securities and 
Exchange Commission to impose ``user'' fees on investors and 
market participants. The fees include: transaction fees, paid 
when securities are sold, authorized under section 31 of 
Securities Exchange Act of 1934; registration fees, paid by 
corporations and investment companies when they register 
securities for sale, authorized under section 6(b) of the 
Securities Act of 1933; fees on mergers and tender offers, 
which are bids to acquire publicly traded corporations through 
purchase of their stock, authorized by sections 13(e) and 14(g) 
of the Securities Exchange Act of 1934; and assessments paid by 
investors on the sale of single stock futures, a hybrid 
financial instrument made legal by enactment of the Commodity 
Futures Modernization Act of 2000, authorized by section 31 of 
Securities Exchange Act of 1934.
    Congress created this fee structure in the 1930s, so that 
the regulated community would pay for the cost of its 
regulation, i.e., the fees paid by market participants would 
fund the SEC. Congress intended the fees to provide the 
Commission with sufficient fundingfor its important mission of 
promoting capital formation and protecting investors. Congress neither 
expected nor intended the fees to evolve from a cost-recovery mechanism 
into a general tax deposited into the U.S. Treasury, with the proceeds 
used to fund other Federal agencies and programs.
    Since 1983, fee revenue has exceeded the budget of the SEC 
by a significant and growing margin, due largely to a rising 
stock market and unprecedented trading volume. In fiscal year 
2000, overall SEC fee collections were $2.27 billion--more than 
six times the Commission's $377 million budget.
    According to the Congressional Budget Office (CBO), fee 
revenue will continue on an upward path. The latest CBO 
baseline estimates indicate that over $4 billion in fees will 
be collected by fiscal year 2006--over ten times the 
Commission's most recent budget.
    The following chart illustrates the statutory authority, 
rate, and amount of the fees that the SEC collected for fiscal 
year 2000:

----------------------------------------------------------------------------------------------------------------
                                                                                          Actual collections, FY
               SEC fee                   Statutory authority              Rate                     2000
----------------------------------------------------------------------------------------------------------------
Transaction.........................  Sec.  31 of the           1/300th of 1%..........  $1.091 billion
                                       Securities Exchange Act                            collected ($502
                                       of 1934.                                           million to general
                                                                                          revenues, $589 million
                                                                                          to offsetting
                                                                                          collections).
Registration........................  Sec.  6(b) of the         1/50th of 1%...........  $1.102 billion
                                       Securities Act of 1933.                            collected ($829
                                                                                          million to general
                                                                                          revenues, $279 million
                                                                                          to offsetting
                                                                                          collections).
Mergers and Tender Offers...........   Sec. Sec.  13(e)(3) and  1/50th of 1%...........  $78 million collected
                                       14(g) of the Securities                            (all to general
                                       Exchange Act of 1934.                              revenues).
Single Stock Futures................  Sec.  31 of the           $0.02 for each round     N/A.
                                       Securities Exchange Act   turn transaction.
                                       of 1934.
----------------------------------------------------------------------------------------------------------------

    The fees affect the bottom line of individual investors. 
The 80 million Americans who own stocks directly or 
indirectly--such as through a mutual fund, pension fund, or 
401(k)--are subject to the transaction fee. Similarly, 
registration, mergers, and tender offer fees all add costs to 
capital formation, impeding job creation and economic growth, 
and are ultimately paid by investors.
    For more than a decade, Congress has sought to address 
concerns about the SEC's excess fee collections. While there 
has been consensus that the current structure is indefensible, 
no legislative proposal has succeeded in eliminating the excess 
fees.
    By 1995, fee revenue was more than twice the amount of the 
SEC budget. Many in Congress argued that the fees were becoming 
an unintended tax on investors and capital formation.
    Congress addressed these concerns in the National 
Securities Markets Improvement Act of 1996 (NSMIA) (Public Law 
104-290). Among other provisions, NSMIA lowered registration 
fees, dramatically reduced transaction fees beginning in FY 
2007, and extended the transaction fee to NASDAQ stocks to 
provide competitive parity between the exchanges and the NASDAQ 
market.
    Despite the progress represented by the 1996 reforms, fees 
continued to spiral upward due to increasing market volume and 
a sustained bull market. In the 105th Congress, two competing 
bills reducing transaction fees were introduced in the House to 
bring fee collections in line with their original intent of 
recouping the government's costs of supervising the markets. 
One bill reduced the rate (H.R. 4269), and the other placed a 
cap on the fees (H.R. 4213). No committee action was taken on 
either bill.
    In the 106th Congress, bills incorporating the two 
different approaches to reducing transaction fees were 
introduced again. In the House, the Committee on Commerce 
reported legislation (H.R. 2441; H. Rpt. 106-1034) reducing the 
rate from 1/300th of 1 percent to 1/500th of 1 percent. The 
Senate Banking Committee also reported a bill (S. 2107; S. Rpt. 
106-360) reducing the transaction fee rate. Neither bill 
received further consideration.
    In the 107th Congress, the Subcommittee on Capital Markets, 
Insurance, and Government Sponsored Enterprises held a hearing 
entitled ``Saving Investors Money: Reducing Excessive SEC 
fees'' on March 7, 2001. The Subcommittee received testimony 
from the Securities and Exchange Commission, the Senate 
sponsors of S. 143 (a similar measure that passed the Senate on 
a voice vote on March 23, 2001), and various market 
participants, including one of the country's largest pension 
fund managers, indicating that the ``user'' fees imposed by the 
SEC are producing revenues far in excess of the Commission's 
operating costs. The witnesses testified that the excess 
collections are inconsistent with the explicit congressional 
intent of the fees, which is to recover the costs to the 
government for supervising the capital markets.
    In the most recent fiscal year, the fees generated revenues 
exceeding the SEC budget by over 600 percent. Over the next ten 
years, it is estimated that total fee revenue will be 
approximately $25 billion. The witnesses observed that these 
fees are paid by investors and market participants, and are an 
unjustified and excessive tax on retirement savings and capital 
formation. The witnesses unanimouslyurged the Committee to 
consider legislation that would reduce these excess fees.
    The witnesses also testified in favor of providing the SEC 
with the ability to pay their employees at a level commensurate 
with that paid to other financial regulators, such as the 
Office of the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, the Office of Thrift Supervision, and 
the Federal Reserve System. The SEC observed that it is 
extremely difficult to retain top professional staff at current 
pay levels, and noted that, after passage of the Gramm-Leach-
Bliley Act, SEC employees are often performing identical 
functions as their counterparts in the banking agencies, yet 
they receive considerably less compensation.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on H.R. 974, the Small Business Interest 
Checking Act of 2001 on March 13, 2001. The Subcommittee 
received testimony from: The Honorable Laurence H. Meyer, 
Member, Board of Governors of the Federal Reserve System; Mr. 
Donald V. Hammond, Acting Under Secretary for Domestic Finance, 
Department of the Treasury; Mr. James E. Smith, Chairman and 
Chief Executive Officer, Citizens Union State Bank & Trust of 
Clinton, Missouri, President-Elect of the American Bankers 
Association; Mr. David A. Bochnowski, Chairman and Chief 
Executive Officer, Peoples Bank of Munster, Indiana, Chairman 
of America's Community Bankers; Mr. Thomas P. Jennings, Senior 
Vice President and General Counsel, First Virginia Banks, Inc., 
on behalf of the Financial Services Roundtable; and Mr. Robert 
Gulledge, President and Chief Executive Officer, Citizens Bank, 
Inc. of Robertsdale, Alabama, Chairman of the Independent 
Community Bankers of America.

                        Committee Consideration

    The Subcommittee on Capital Markets, Insurance, and 
Government Sponsored Enterprises met in open session on March 
21, 2001 and approved H.R. 1088 for full Committee 
consideration by a voice vote, without amendment, a quorum 
being present.
    On March 28, 2001, the Committee met in open session and 
ordered H.R. 1088 reported, as amended, to the House with a 
favorable recommendation by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Oxley to report the bill, with an amendment, to 
the House with a favorable recommendation was agreed to by a 
voice vote.
    The following amendments were considered--
    An amendment in the nature of a substitute by Mr. Fossella, 
No. 1, making technical changes to the bill, was agreed to by a 
voice vote, as amended.
    An amendment to the amendment in the nature of a substitute 
by Mr. Frank, No. 1a, striking the fee reduction provisions, 
was not agreed to by a record vote of 12 yeas and 46 nays 
(Record vote no. 3).
        YEAS                          NAYS
Mr. LaFalce                         Mr. Oxley
Mr. Frank                           Mr. Leach
Mr. Kanjorski                       Mrs. Roukema
Ms. Waters                          Mr. Bereuter
Mr. Sanders                         Mr. Baker
Mr. Gutierrez                       Mr. Bachus
Ms. Velazquez                       Mr. Castle
Mr. Watt of North Carolina          Mr. Royce
Ms. Lee                             Mr. Lucas of Oklahoma
Mr. Mascara                         Mr. Ney
Ms. Schakowsky                      Mr. Barr of Georgia
Mrs. Jones of Ohio                  Mrs. Kelly
                                    Mr. Paul
                                    Mr. Weldon of Florida
                                    Mr. Ryun of Kansas
                                    Mr. Riley
                                    Mr. Jones of North Carolina
                                    Mr. Ose
                                    Mrs. Biggert
                                    Mr. Green of Wisconsin
                                    Mr. Toomey
                                    Mr. Shays
                                    Mr. Fossella
                                    Mr. Gary Miller of California
                                    Mr. Cantor
                                    Mr. Grucci
                                    Ms. Hart
                                    Mrs. Capito
                                    Mr. Ferguson
                                    Mr. Rogers of Michigan
                                    Mr. Tiberi
                                    Mrs. Maloney of New York
                                    Mr. Ackerman
                                    Mr. Bentsen
                                    Ms. Hooley of Oregon
                                    Mr. Sherman
                                    Mr. Sandlin
                                    Mr. Inslee
                                    Mr. Gonzalez
                                    Mr. Ford
                                    Mr. Hinojosa
                                    Mr. Lucas of Kentucky
                                    Mr. Shows
                                    Mr. Crowley
                                    Mr. Israel
                                    Mr. Ross

    An amendment to the amendment in the nature of a substitute 
by Mr. Kanjorski, No. 1b, addressing the recovery of additional 
costs for governmental activities beyond those incurred by the 
Securities and Exchange Commission, was not agreed to by a 
record vote of 14 yeas and 37 nays (Record vote no. 4).
        YEAS                          NAYS
Mr. LaFalce                         Mr. Oxley
Mr. Kanjorski                       Mrs. Roukema
Ms. Waters                          Mr. Bereuter
Mr. Sanders                         Mr. Baker
Mr. Gutierrez                       Mr. Bachus
Mr. Watt of North Carolina          Mr. Castle
Mr. Bentsen                         Mr. King
Ms. Hooley of Oregon                Mr. Royce
Mr. Sherman                         Mr. Barr of Georgia
Mr. Meeks of New York               Mrs. Kelly
Ms. Lee                             Mr. Cox
Mr. Mascara                         Mr. Weldon of Florida
Ms. Schakowsky                      Mr. Ryun of Kansas
Mrs. Jones of Ohio                  Mr. Riley
                                    Mr. Jones of North Carolina
                                    Mrs. Biggert
                                    Mr. Green of Wisconsin
                                    Mr. Toomey
                                    Mr. Shays
                                    Mr. Shadegg
                                    Mr. Fossella
                                    Mr. Cantor
                                    Mr. Grucci
                                    Ms. Hart
                                    Mrs. Capito
                                    Mr. Ferguson
                                    Mr. Rogers of Michigan
                                    Mr. Tiberi
                                    Mrs. Maloney of New York
                                    Mr. Maloney of Connecticut
                                    Mr. Inslee
                                    Mr. Moore
                                    Mr. Gonzalez
                                    Mr. Lucas of Kentucky
                                    Mr. Shows
                                    Mr. Israel
                                    Mr. Ross

    An amendment to the amendment in the nature of a substitute 
by Mr. Bentsen, No. 1c, providing for a study of the effect of 
the fee reductions, was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. LaFalce, No. 1d, raising the fees in the underlying bill 
by diminishing the reduction in fees in the underlying bill, 
was not agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that this 
legislation does not authorize funding, and therefore no 
statement is required.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
legislation would result in changes to budget authority, 
entitlement authority, or tax expenditures or revenues 
consistent with the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 3, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1088, the Investor 
and Capital Markets Fee Relief Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Ken Johnson.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1088--Investor and Capital Markets Fee Relief Act

    Summary: H.R. 1088 would adjust the fees and assessments 
that the Securities and Exchange Commission (SEC) is authorized 
to collect for registrations, mergers, and transactions of 
securities. Under current law, some of those fees and 
assessments are recorded in the budget as governmental receipts 
(revenues), and some are recorded as offsetting collections 
that are credited against discretionary appropriations for the 
SEC. The bill would reclassify all SEC fees and assessments as 
offsetting collections and adjust the fee rates. If 
implemented, H.R. 1088 would reduce the total amount of SEC 
fees from an estimated $2.5 billion in fiscal year 2001 to $1.3 
billion 2003. CBO estimates that enacting H.R. 1088 would 
reduce governmental receipts by $1.5 billion in 2002 and by 
$8.9 billion over the 2002-2006 period. Because H.R. 1088 would 
affect governmental receipts, pay-as-you-go procedures would 
apply. CBO estimates that implementing H.R. 1088 also would 
cause the SEC's offsetting collections to increase by about 
$126 million in 2002 and $130 million over the 2002-2006 
period, relative to CBO's current baseline estimates.
    The bill would authorize the SEC to increase employees' 
compensation and benefits to make them comparable to agencies 
that regulate banking, such as the Federal Deposit Insurance 
Corporation (FDIC) and the National Credit Union Administration 
(NCUA). CBO estimates that implementing the bill's 
compensation-related provisions would cost about $362 million 
over the 2001-2006 period, assuming the appropriation of the 
necessary amounts.
    H.R. 1088 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1088 is shown in Table 1. The costs of 
this legislation fall within budget function 370 (commerce and 
housing credit).

                               TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 1088
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

CBO Baseline Estimate of Net SEC Spending:
    Estimated Authorization Level \1\...............      -594         0         0         0         0         0
    Estimated Outlays...............................      -620      -156       -54       -62       -86       -97
Proposed Changes:
    Changes in Gross SEC Spending:
        Estimated Authorization Level...............        16        65        69        71        73        75
        Estimated Outlays...........................        14        60        69        71        73        75
    Changes in Offsetting Collections:
        Estimated Authorization Level...............         0      -126        -2        -1         0        -1
        Estimated Outlays...........................         0      -126        -2        -1         0        -1
    Changes in Net SEC Spending:
        Estimated Authorization Level...............        16       -61        67        70        73        74
        Estimated Outlays...........................        14       -66        67        70        73        74
    Net SEC Spending Under H.R. 1088:
        Estimated Authorization Level \1\...........      -578       -61        67        70        73        74
        Estimated Outlays...........................      -606      -222        13         8       -13       -23

                                               CHANGES IN REVENUES

Estimated Revenues..................................         0    -1,494    -1,601    -1,750    -1,919   -2,097
----------------------------------------------------------------------------------------------------------------
\1\ The 2001 level is the estimated net amount appropriated for that year; the gross SEC appropriation for 2001
  was $423 million.

    Basis of estimate: CBO estimates that implementing the 
compensation-related provisions of H.R. 1088 would increase the 
gross spending of the SEC by $362 million over the 2001-2006 
period, subject to appropriation of the necessary amounts. For 
purposes of this estimate we assume the bill and supplemental 
appropriations to implement it will be provided in the next few 
months. Carrying out the bill's fee-related provisions would 
increase offsetting collections by about $126 million in 2002 
and $130 million over the 2002-2006 period, relative to CBO's 
baseline estimates. Also, we estimate that enacting the bill 
would reduce revenues by $1.5 billion in 2002 and by $8.9 
billion over the 2002-2006 period by eliminating those SEC fees 
and assessments that are currently recorded in the budget as 
revenues.

Spending subject to appropriation

    H.R. 1088 would have two effects on the spending of the SEC 
that are subject to appropriation. First, the bill would 
authorize the SEC to increase the compensation it offers to its 
employees. Also, H.R. 1088 would restructure the fees the 
agency is authorized to charge as an offset to its 
discretionary appropriations.
    Changes in Gross Spending. Currently, SEC employees fall 
into two compensation categories: those subject to the pay 
scales of the civil service system, and those whose salaries 
have been adjusted to equal the amounts received by similar 
employees in the securities industry. H.R. 1088 would authorize 
the SEC to raise the pay of both types of employees to a level 
commensurate with the compensation offered by federal banking 
regulatory agencies. Based on information from the SEC and 
several of the banking-related agencies, CBO estimates that 
implementing this provision of the bill would cost $14 million 
in 2001, $60 million in 2002, and $362 million over the 2001-
2006 period, assuming appropriation of the necessary amounts.
    Changes in Offsetting Collections. H.R. 1088 would 
restructure all four types of SEC collections: registration 
fees, merger and tender fees, assessments on the trading of 
single stock futures, and transaction fees (see Table 2). The 
bill would reclassify all of these fees as offsetting 
collections, as of October 1, 2001. Also, the bill would reduce 
the rates on registration and merger fees effective on October 
1, 2001, and on transaction fees and assessments as of 30 days 
after the enactment of the 2002 appropriation for the SEC. 
Based on historical information from the securities industry on 
the number and type of securities registered and traded, CBO 
estimates that the fee-related provisions of H.R. 1088 would 
cause the SEC's offsetting collections to rise by $126 million 
in 2002 and $130 million over the 2002-2006 period, relative to 
CBO's baseline.
    Transaction fees. Under current law, the SEC collects 1/
300th of a percent of the aggregate dollars traded through 
national securities exchanges, national securities 
associations, brokers, and dealers. The fee rate will decline 
to 1/800th of a percent for 2007 and thereafter. Currently, 
fees collected from national securities associations are 
recorded as offsetting collections, while fees from other 
sources are recorded as revenues.
    Under the bill, all transactions fees would be classified 
as offsetting collections. Furthermore, the bill would reduce 
the transaction fee rate in 2002 to $12 per $1 million of the 
aggregate dollars traded. For the years 2003 through 2011, the 
bill would require that the SEC establish a fee rate before a 
fiscal year begins that would generate transaction fee 
collections in that fiscal year equal to a target amount. For a 
given year, the target amount would be equal to a figure 
specified in the bill, minus the estimated assessments on 
trades of single stock futures that would be collected by the 
SEC in that year.

                         TABLE 2.--SEC FEES UNDER CBO'S BASELINE ESTIMATES AND H.R. 1088
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
SEC Fees Under CBO's January 2001 Baseline:
    Transaction Fees................................     1,370     1,627     1,887     2,284     2,712     3,189
    Registration Fees...............................     1,024       980       953       912       958       999
    Merger Fees.....................................        84        89        93        97        99       100
    Assessments on Single Stock Futures.............         0         1         1         2         2         2
                                                     -----------------------------------------------------------
      Total.........................................     2,478     2,697     2,934     3,295     3,771     4,290
                                                     ===========================================================
SEC Fee Collections Under H.R. 1088:
    Transaction Fees................................     1,370       758       679       822       975     1,147
    Registration Fees...............................     1,024       513       589       650       790       949
    Merger Fees.....................................        84        56        66        72        84        94
    Assessments on Single Stock Futures.............         0         1         1         1         1         1
                                                     -----------------------------------------------------------
      Total.........................................     2,478     1,328     1,335     1,545     1,850     2,191
                                                     ===========================================================
Proposed Changes:
    Transaction Fees................................         0      -869    -1,208    -1,462    -1,737    -2,042
    Registration Fees...............................         0      -467      -364      -262      -168       -50
    Merger Fees.....................................         0       -33       -27       -25       -15        -6
    Assessments on Single Stock Futures.............         0         0         0         1         1         1
                                                     -----------------------------------------------------------
      Total Changes.................................         0    -1,369    -1,599    -1,750    -1,921    -2,099
----------------------------------------------------------------------------------------------------------------

    CBO estimates that implementing H.R. 1088 would yield $758 
million in 2002 from such fees. By comparison, under our 
current baseline assumptions, CBO estimates $989 million in 
offsetting collections from transaction fees in 2002. (Under 
current law, we also estimate revenues of $638 million in 2002 
from transaction fees.)
    Registration fees. Under current law, the SEC collects a 
fee on the registration of securities. The current registration 
fee is $200 per $1 million of the maximum aggregate price for 
securities that are proposed to be offered during the 2002-2006 
period. After 2006, the fee drops to $67 per $1 million of the 
maximum aggregate price for securities that are proposed to be 
offered. These fees are recorded as governmental receipts 
(revenues). Current law also requires, subject to 
appropriation, that the SEC charge an additional registration 
fee of $39 per $1 million of the maximum aggregate price for 
securities that are proposed to be offered in 2002. Under 
current law, this added registration fee gradually declines 
after 2002, until it ends at the end of 2005. These additional 
fees are recorded as offsetting collections.
    H.R. 1088 would eliminate all registration fees that are 
recorded as governmental receipts and would set fees that are 
recorded as offsetting collections at $125 per $1 million of 
the maximum aggregate price for securities that are proposed to 
be offered in 2002. For the years 2003-2011, the bill would 
require that the SEC establish a fee rate before a fiscal year 
begins that would generate registration fee collections in that 
fiscal year equal to a target amount. CBO estimates that under 
the bill the SEC would collect $513 million in registration 
fees in 2002, subject to appropriation. By comparison, we 
estimate that under the CBO baseline the SEC would collect a 
total of $980 million in registration fees in 2002 ($820 
million that would be recorded as revenues and $160 million in 
offsetting collections).
    Merger and tender fees. Under current law, the SEC charges 
a merger fee equal to $200 per $1 million of the value of 
securities proposed to be purchased as part of a merger. These 
fees are also currently recorded as revenues. H.R. 1088 would 
eliminate the current merger fee and establish a new one that 
would be recorded as an offsetting collection at a rate equal 
to the rate for registration fees under the bill. CBO estimates 
that under H.R. 1088 the SEC would collect about $56 million in 
merger fees in 2002, subject to appropriation. By comparison, 
under the CBO baseline, we estimate that merger fees would 
total $89 million in 2002.
    Assessments on transactions of single stock futures. The 
Commodity Futures Modernization Act of 2000 allowed individuals 
to begin trading futures on individual stocks. The act also 
established an assessment on these trades equal to 2 cents per 
transaction through 2006 and 0.75 cents per transaction for 
2007 and thereafter. These assessments are currently recorded 
as governmental receipts (i.e., revenues). Under CBO's 
baseline, we project that these assessments will total $1 
million in 2002.
    H.R. 1088 would reclassify those assessments that are 
recorded as receipts and would treat them as offsetting 
collections subject to annual appropriation acts. The bill also 
would change the rates on these assessments to $0.0072 per 
transaction during the 2002-2006 period and $0.0042 per 
transaction in 2007 and thereafter. CBO estimates that, under 
H.R. 1088, the SEC would collect $1 million in assessments on 
trading of single stock futures in 2002 and $5 million over the 
2002-2006 period.
    Summary. CBO's January 2001 baseline includes estimated 
offsetting collections for the SEC totaling about $1.15 billion 
in 2002, rising to $2.2 billion in 2006. We estimate the change 
in the fee rates paid for registrations, mergers, transactions, 
and trades of single stock futures and the reclassification of 
all SEC fees as offsetting collections would increase the 
offsetting collections received by the SEC by $126 million in 
2002 and $130 million during the 2002-2006 period (relative to 
our baseline projections).

Revenues

    H.R. 1088 would eliminate all fees and assessments on 
registrations, mergers, and transactions that are currently 
recorded as revenues. CBO estimates that H.R. 1088 would reduce 
revenues by $8.9 billion over the 2002-2006 period, and by 
$14.0 billion over the 2002-2011 period.
    Pay-as-you-go-considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The 
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in Table 3. For the purposes of 
enforcing pay-as-you-go procedures, only the effects in the 
current year, the budget year, and the succeeding four years 
are counted.

                                         TABLE 3.--ESTIMATED IMPACT OF H.R. 1088 ON DIRECT SPENDING AND RECEIPTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2001      2002      2003      2004      2005      2006      2007      1008      2009      2010      2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays........................                                                 Not applicable
Changes in receipts.......................         0    -1,494    -1,601    -1,750    -1,919    -2,097      -921      -933    -1,009    -1,087    -1,176
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 1088 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimate: On March 14, 2001, CBO transmitted a 
cost estimate for S. 143, the Competitive Market Supervision 
Act of 2001, as ordered reported by the Senate Committee on 
Banking, Housing, and Urban Affairs on March 2, 2001. S. 143 
contains the provisions in H.R. 1088 that would authorize the 
SEC to raise the compensation of its employees to levels 
commensurate with other financial regulatory agencies. S. 143 
would also reclassify all SEC fees as offsetting collections 
and alter the fee rates. However, that bill would change SEC 
fees in different ways than H.R. 1088, and S. 143 would require 
that total offsetting collections fall between a minimum amount 
and a maximum amount for each year. CBO estimated that S. 143 
would reduce revenues by $8.9 billion over the 2001-2006 period 
and would have no effect on offsetting collections, relative to 
the CBO baseline.
    Because H.R. 1088 and S. 143 would affect state, local, and 
tribal governments in the same way, the intergovernmental 
mandate statements for both bills are identical.
    S. 143 contains a private-sector mandate with costs below 
the annual threshold established by UMRA ($113 million in 2001, 
adjusted for inflation). Provisions in the Senate bill would 
require each national securities exchange and the national 
securities association to file monthly with the SEC an estimate 
of fees and assessments that they are required to pay. H.R. 
1088 does not include those provisions and the bill does not 
contain any private-sector mandates as defined by UMRA.
    Estimate prepared by: Federal Costs: Ken Johnson and Erin 
Whitaker. Impact on State, Local, and Tribal Governments: Susan 
Sieg Tompkins. Impact on the Private Sector: Lauren Marks.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis. G. Thomas Woodward, Assistant 
Director for Tax Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States); Article 1, section 8, 
clause 3 (relating to the power to regulate interstate 
commerce); Article 1, section 8, clause 5 (relating to the 
power to coin money and regulate the value thereof); and 
Article I, section 8, clause 18 (relating to making all laws 
necessary and proper for carrying into execution powers vested 
by the Constitution in the government of the United States).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                  Exchange of Committee Correspondence

                          House of Representatives,
                                  Committee on Agriculture,
                                     Washington, DC, April 2, 2001.
Hon. Michael G. Oxley,
Chairman, House Committee on Financial Services, Rayburn House Office 
        Building, Washington, DC.
    Dear Mr. Chairman: On March 28, 2001, the Committee on 
Financial Services ordered reported H.R. 1088, the Investor and 
Capital Markets Fee Relief Act. As you are aware, section 2 of 
the bill affects the Agriculture Committee's jurisdiction with 
regard to transaction fees on security futures products.
    Because of your willingness to consult with the Committee 
on Agriculture regarding this matter, your continuing support 
for our requested changes, and the need to move this 
legislation expeditiously, I will waive consideration of the 
bill by the Agriculture Committee. By agreeing to waive its 
consideration of the bill, the Agriculture Committee does not 
waive its jurisdiction over H.R. 1088. In addition, the 
Committee on Agriculture reserves its authority to seek 
conferees on any provisions of the bill that are within our 
jurisdiction during any House-Senate conference that may be 
convened on this legislation. I ask your commitment to support 
any request by our Committee for conferees on H.R. 1088 or 
related legislation.
    I request that you include this letter and your response as 
part of your committee's report on the bill and the 
Congressional Record during consideration of the legislation on 
the House floor.
    Thank you for your cooperation in this matter.
            Sincerely,
                                             Larry Combest,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                           Committee on Financial Services,
                                     Washington, DC, April 2, 2001.
Hon. Larry Combest,
Chairman, House Committee on Agriculture, Longworth House Office 
        Building, Washington, DC.
    Dear Chairman Combest: Thank you for your letter regarding 
your Committee's jurisdictional interest in H.R. 1088, the 
Investor and Capital Markets Fee Relief Act.
    I acknowledge your committee's jurisdictional interest in 
the changes to the fee structure for security futures products 
contained in this legislation and appreciate your cooperation 
in moving the bill to the House floor expeditiously. I agree 
that your decision to forego further action on the bill will 
not prejudice the Committee on Agriculture with respect to its 
jurisdictional prerogatives on this or similar legislation. I 
will include a copy of your letter and this response in the 
Committee's report on the bill and the Congressional Record 
when the legislation is considered by the House.
    Thank you again for your cooperation.
            Sincerely,
                                          Michael G. Oxley,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                               Committee on Ways and Means,
                                     Washington, DC, April 2, 2001.
Hon. Michael G. Oxley,
Chairman, House Committee on Financial Services, Rayburn House Office 
        Building, Washington, DC.
    Dear Congressman Oxley: I am writing to express my support 
for what you are trying to accomplish in H.R. 1088, the 
Investor and Capital Markets Fee Relief Act. The Committee on 
Ways and Means has long taken a jurisdictional interest in the 
fees collected by the Securities and Exchange Commission. In 
our view, these ``fees'' are taxes because they greatly exceed 
the SEC's regulatory costs. In the past, we worked with the 
Committees on Commerce and Appropriations to attempt to rectify 
this problem.
    As you know, I am strongly committed to protecting the 
jurisdictional interest of the Committee on Ways and Means and 
to ensuring that all revenue measures are properly referred to 
this Committee. To this end, the Committee on Ways and Means 
relies upon the statement issued by the Speaker in January 1991 
(and reiterated by Speaker Hastert on January 3, 2001) 
regarding the jurisdiction of the House Committees with respect 
to fees and revenue measures. Pursuant to that statement, the 
Committee on Ways and Means generally will not assert 
jurisdiction over ``true'' regulatory fees that meet the 
following requirements:
    (i) The fees are assessed and collected solely to cover the 
costs of specified regulatory activities (not including public 
information activities and other activities benefitting the 
public in general);
    (ii) The fees are assessed and collected only in such 
manner as may reasonably be expected to result in an aggregate 
amount collected during any fiscal year which does not exceed 
the aggregate amount of the regulatory costs referred to in (i) 
above;
    (iii) The only persons subject to the fees are those who 
directly avail themselves of, or are directly subject to, the 
regulatory activities referred to in (i) above; and
    (iv) The amounts of the fees (a) are structured such that 
any person's liability for such fees is reasonable based on the 
proportion of the regulatory activities which relate to such 
person, and (b) are nondiscriminatory between foreign and 
domestic entities.
    Additionally, pursuant to the Speaker's statement, the mere 
reauthorization of a preexisting fee that had not historically 
been considered a tax would not necessarily require a 
sequential referral to the Committee on Ways and Means. 
However, if such a preexisting fee were fundamentally changed, 
it properly should be referred to the Committee on Ways and 
Means.
    We last addressed SEC fees in the National Securities 
Markets Improvement Act of 1996. That legislation was intended 
to reform the SEC fee structure and bring the total amount of 
fees down to the level of the SEC's budget. In a letter from 
Chairman Archer to the Chairman of the Commerce Committee, 
Congressman Bliley (whose committee had jurisdiction over the 
SEC at the time), Chairman Archer noted the Committee on Ways 
and Means' longstanding goal of reducing these ``fees'' so that 
they truly are fees rather than taxes. Chairman Archer also 
reserved jurisdictional interest in the fee structure, and 
stated that the Committee would strongly oppose any attempts to 
delay or lengthen the fee phase-down schedule provided by the 
1996 Act.
    Since the enactment of the 1996 Act, it has become 
increasingly clear that actual fee collections greatly exceed 
what was estimated in 1996. In fact, I understand that these 
fees are projected to generate over $2.5 billion in revenue in 
fiscal year 2001, more than six times the SEC budget. H.R. 1088 
seeks to address this issue by reducing these fees down to the 
level of the SEC's budget, which was also the goal of the 1996 
Act.
    Because H.R. 1088 would not ensure that fee collections 
will not exceed the amount required to fund the relevant 
regulatory activities of the SEC fees, the bill does not meet 
requirements (i) and (ii) of the Speaker's statement set forth 
above. If the fees were being newly created, or were 
fundamentally different from existing fees, the Committee on 
Ways and Means would ask that H.R. 1088 be referred to it, in 
accordance with its jurisdictional prerogative. However, the 
Committee understands that the intent of H.R. 1088 is to 
significantly reduce these fees and eliminate fees in excess of 
the SEC's budget. Under such circumstances (and without 
prejudice to the jurisdictional interest of the Committee on 
Ways and Means), I will not seek sequential referral of H.R. 
1088 or have any objection to its consideration by the House.
    However, I would emphasize that, if the fee structure set 
forth in H.R. 1088 is modified in the future, the Committee on 
Ways and Means will take all action necessary to protect its 
proper jurisdictional interest. For example, the Committee will 
view any modification as falling within its jurisdiction if 
such modification would result in fee collections in excess of 
the amount required to fund the relevant regulatory activities 
of the SEC.
    Finally, I would respectfully request that you include a 
copy of this letter in the report for H.R. 1088 or in the 
Record during floor consideration of the bill. With best 
personal regards,
            Sincerely,
                                               Bill Thomas,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                           Committee on Financial Services,
                                     Washington, DC, April 2, 2001.
Hon. William M. Thomas, 
    Chairman, House Committee on Ways and Means, Longworth 
House Office Building, Washington, DC.
    Dear Chairman Thomas: Thank you for your letter regarding 
your Committee's jurisdictional interest in H.R. 1088, the 
Investor and Capital Markets Fee Relief Act.
    I acknowledge your committee's jurisdiction over the 
revenue aspects of this legislation and appreciate your 
cooperation in moving the bill to the House floor 
expeditiously. I agree that your decision to forego further 
action on the bill will not prejudice the Committee on Ways and 
Means with respect to its jurisdictional prerogatives on this 
or similar legislation. I will include a copy of your letter 
and this response in the Committee's report on the bill and the 
Congressional Record when the legislation is considered by the 
House.
    Thank you again for your cooperation.
            Yours truly,
                                          Michael G. Oxley,
                                                          Chairman.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    This section establishes the short title of the bill, the 
``Investor and Capital Markets Fee Relief Act.''

Section 2. Immediate transaction fee reductions

    Section 2 reduces the fee rate in section 31 of the 
Securities Exchange Act (15 U.S.C. 78ee) applicable to 
securities transactions on exchanges and in the over-the-
counter market and the assessment on security futures 
transactions on exchanges in fiscal 2002. The section 31 fee 
rate on securities transactions is reduced by 64 percent in 
fiscal 2002 (from the current rate of 1/300th of 1 percent, or 
$33.33 per million, to $12 per million of the dollar amount of 
securities transactions). The section 31 assessment on security 
futures transactions also is reduced by 64 percent in fiscal 
2002 (from the current $0.02 to $0.0072 per round turn 
transaction).

Section 3. Revision of securities transaction fee provisions; 
        additional fee reductions

    Section 3 provides a mechanism for adjusting the section 31 
fee rate on securities transactions after fiscal year 2002, and 
makes an additional reduction to the section 31 assessment on 
security futures transactions. The section also converts all 
section 31 fees and assessments to offsetting collections, with 
no fees credited as general revenue of the Treasury.
    This section includes a mechanism to adjust the fee rate on 
securities transactions each year from fiscal years 2003 
through 2011 so that the rate, when applied to an estimate of 
the total dollar volume of securities transactions for a given 
year, is reasonably likely to produce collections equal to a 
target amount for that year. The target amounts for fiscal 2003 
through 2011 are fixed at levels that (based on current 
projections of total dollar volume) will result in a rate of 
$12 per million from fiscal years 2003 through 2006 (versus 
$33.33 per million under current law), and a rate of $7 per 
million from fiscal years 2007 through 2011 (versus $12.50 per 
million under current law).
    The SEC will determine the estimate of the total dollar 
volume of securities transactions in a given year, after 
consultation with the Congressional Budget Office (CBO) and the 
Office of Management and Budget (OMB), using the methodology 
that CBO uses to make projections under the Balanced Budget and 
Emergency Deficit Control Act of 1985. Tying the adjustment 
mechanism to each year's target amount has the effect of 
decreasing (or increasing) the section 31 fee rate on a yearly 
basis depending on the estimated total dollar volume of 
securities transactions for the year. In other words, any 
unexpected increase in the projected dollar volume of 
securities transactions will lead to a reduction in the section 
31 fee rate to meet the target amount.
    The SEC will perform the task of setting the fee rate each 
year. The fee rate will be set by order and published in the 
Federal Register (along with the underlying estimates or 
projections on which the rate is based) not later than April 30 
prior to the start of each fiscal year. The setting of the fee 
rate will be a ministerial task (determined by dividing that 
year's estimate of the total dollar volume of securities 
transactions by that year's statutory target amount), and will 
not be subject to judicial review. The adjusted rate will go 
into effect on the later of the first day of the fiscal year or 
30 days after a regular appropriation for the SEC has been 
enacted. The 30-day delay is designed to provide industry with 
sufficient lead-time to make any necessary system changes for 
the new section 31 fee rate. If a regular appropriation has not 
been enacted on the first day of the fiscal year, the SEC will 
collect fees at the rate in effect during the prior fiscal year 
until the new rate goes into effect.
    There is one ``final rate adjustment'' to set the section 
31 fee rate after fiscal 2011. Specifically, for fiscal 2012, 
the SEC will adjust the rate so that the rate, when applied to 
the estimate of the total dollar volume of securities 
transactions in fiscal 2012, is reasonably likely to produce 
the target amount for fiscal 2011 (the prior fiscal year). This 
adjustment is intended to create additional, permanent fee 
relief. The final rate adjustment for fiscal 2012 will apply to 
all subsequent fiscal years.
    Section 3 also reduces the assessment on security futures 
transactions an additional 44 percent in fiscal 2007 (from 
$0.0075 under current law to $0.0042 per round turn 
transaction).
    Finally, the Committee recognizes that the legislation 
ultimately may require that the Commission receive an up-front 
appropriation each year that would be reduced by offsetting 
collections as they are collected. The Commission would need 
such an up-front appropriation purely for cash-flow reasons; it 
would not ``cost'' anything in terms of general revenue.

Section 4. Reduction of registration fees

    Section 4 reduces the fee rate under section 6(b) of the 
Securities Act of 1933 (15 U.S.C. 77f(b)) that applies when 
companies register their securities with the SEC. The section 
also converts all section 6(b) fees on the registration of 
securities to offsetting collections, with no fees credited as 
general revenue of the Treasury.
    Under the section, the section 6(b) fee rate on the 
registration of securities is reduced in fiscal 2002 (from $239 
per million to $125 per million of the maximum offering price 
at which securities are proposed to be offered). For each of 
the fiscal years 2003 through 2011, the section 6(b) rate will 
be adjusted to a rate that, when applied to an estimate of the 
aggregate maximum offering price at which securities are 
proposed to be offered during the year, is reasonably likely to 
produce collections equal to a specified target amount for that 
year. The target amounts for fiscal 2003 through 2011 are fixed 
in the bill so that there will be an aggregate reduction in 
projected section 6(b) fee collections of 28 percent over ten 
years.
    The SEC will determine the estimate of the aggregate 
maximum offering price at which securities are proposed to be 
offered during a given year, after consultation with the 
Congressional Budget Office and the Office of Management and 
Budget, using the methodology that the Congressional Budget 
Office uses to make projections under the Balanced Budget and 
Emergency Deficit Control Act of 1985. Tying the adjustment 
mechanism to each year's target amount has the effect of 
decreasing (or increasing) the section 6(b) fee rate on a 
yearly basis depending on the estimate of the aggregate maximum 
offering price at which securities are proposed to be offered 
during a given year. In other words, any unexpected growth in 
projected registered offerings will lead to a reduction in the 
section 6(b) fee rate to meet the target amount.
    The SEC will perform the task of setting the fee rate each 
year. The fee rate will be set by order and published in the 
Federal Register (along with the underlying estimates or 
projections on which the rate is based) not later than April 30 
prior to the start of each fiscal year. The setting of the fee 
rate will be a ministerial task (determined by dividing that 
year's estimate of the aggregate maximum offering price at 
which securities are proposed to be offered during the year by 
that year's statutory target amount), and will not be subject 
to judicial review. The adjusted rate will go into effect on 
the later of the first day of the fiscal year or 5 days after a 
regular appropriation for the SEC has been enacted. The five-
day delay is designed to provide industry with sufficient 
advance notice of the new section 6(b) fee rate. If a regular 
appropriation has not been enacted on the first day of the 
fiscal year, the SEC will collect fees at the rate in effect 
during the prior fiscal year until the new rate goes into 
effect.
    There is one ``final rate adjustment'' to set the section 
6(b) fee rate after fiscal 2011. Specifically, for fiscal 2012, 
the SEC will adjust the rate so that the rate, when applied to 
the estimate of the aggregate maximum offering price at which 
securities are proposed to be offered during fiscal 2012, is 
reasonably likely to produce the target offsetting collection 
amount for fiscal 2011 (the prior fiscal year). This adjustment 
is intended to create additional, permanent fee relief. The 
final rate adjustment for fiscal 2012 will apply to all 
subsequent fiscal years.

Section 5. Fees for stock repurchase statements

    Section 5 reduces the fee rate under section 13(e) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78m(e)) that applies 
to stock repurchase statements filed with the SEC in connection 
with ``going-private'' transactions. The section also converts 
all section 13(e) fees to offsetting collections, with no fees 
credited as general revenue of the Treasury.
    In fiscal 2002, the section 13(e) fee rate on the 
repurchase of securities is reduced from 1/50th of one percent, 
or $200 per million, to $125 per million of the value of 
securities proposed to be purchased. After fiscal 2002, the fee 
rate will be adjusted by Commission order to equal the fee rate 
under section 6(b). The adjusted rate will go into effect on 
the later of the first day of the fiscal year or 5 days after a 
regular appropriation for the SEC has been enacted. The five-
day delay is designed to provide industry with sufficient 
advance notice of the new section 13(e) fee rate. If a regular 
appropriation has not been enacted on the first day of the 
fiscal year, the SEC will collect fees at the rate in effect 
during the prior fiscal year until the new rate goes into 
effect.

Section 6. Fees for proxy solicitations and statements in corporate 
        control transactions

    Section 6 reduces the fee rates under section 14(g) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78n(g)) that apply 
to proxy solicitations and statements in corporate control 
transactions filed with the SEC. The section also converts all 
section 14(g) fees to offsetting collections, with no fees 
credited as general revenue of the Treasury.
    The section 14(g) fee rates are reduced in fiscal 2002 from 
1/50th of one percent, or $200 per million, to $125 per million 
of the value of the transaction. After fiscal 2002, the fee 
rates will be adjusted byCommission order to equal the fee rate 
under section 6(b). By linking the section 14(g) fee rates and the 
section 13(e) fee rate addressed under section 5 of the Act 
(collectively known as ``merger and tender offer'' fee rates) to the 
fee rate under section 6(b), the section results in an aggregate 
reduction in projected merger and tender offer fee collections of 50 
percent over ten years.
    The adjusted rates will go into effect on the later of the 
first day of the fiscal year or 5 days after a regular 
appropriation for the SEC has been enacted. The five-day delay 
is designed to provide industry with sufficient advance notice 
of the new section 13(e) fee rate. If a regular appropriation 
has not been enacted on the first day of the fiscal year, the 
SEC will collect fees at the rates in effect during the prior 
fiscal year until the new rates go into effect.

Section 7. Trust Indenture Act fee

    Section 7 eliminates the $100 filing fee that applies to 
applications for qualification of certain indentures under 
section 307(b) of the Trust Indenture Act of 1939 (15 U.S.C. 
77ggg(b)). This filing fee raises negligible revenues ($2,300 
during fiscal 2000).

Section 8. Pay parity provisions

    Section 8 gives the SEC the ability to match the pay and 
benefits of Federal banking regulators to address the SEC's 
current staffing crisis and to reflect the increased 
coordination of activities among financial service regulators 
following enactment of the Gramm-Leach-Bliley Act of 1999. The 
pay parity provisions are based on language that the Office of 
the Comptroller of the Currency received in the enactment of 
FIRREA in 1989. Specifically, the Commission is given the 
authority to fix the total compensation of SEC employees, 
including pay and benefits.
    Under section 8, the guiding standard is comparability of 
total pay and benefits with those offered by the Federal 
banking regulators. To further this objective, the bill 
requires the Commission to consult with and inform the banking 
regulators regarding SEC pay and benefits, as well as to inform 
Congress.
    Section 8 also makes a technical amendment to remove the 
SEC from the Senior Executive Service system. This change makes 
the SEC consistent with Federal banking regulators such as the 
Office of the Comptroller of the Currency, which was removed 
from the Senior Executive Service system when it was given pay 
parity with the Federal Reserve and the FDIC in 1989. 
Implementing pay parity with the Federal banking regulators 
would require a net funding increase for the SEC of 
approximately $70.9 million in fiscal 2002, with yearly 
adjustments for inflation thereafter.

Section 9. Study of the effect of fee reductions

    Section 9 requires the SEC's Office of Economic Analysis to 
study the extent to which the benefits of the bill's fee 
reductions are passed on to investors. The section provides 
factors that the Office of Economic Analysis must consider in 
conducting its study, including the elements of the securities 
industry that benefit from the fee reductions, the impact of 
fee reductions on different types of investors, and the 
economic benefits to investors flowing from fee reductions. The 
section also provides that the Office of Economic Analysis 
shall treat shareholders of entities subject to the fee 
reductions as ``investors'' for purposes of the study. In 
determining whether the benefits of the Act's fee reductions 
are passed on to investors, this section does not require the 
SEC to conduct surveys of the securities industry or investors 
to the extent the information is otherwise available. Likewise, 
this section does not require the SEC to develop or test 
econometric models of investors' transaction demand. The SEC is 
required to submit a report on the findings from the study 
required by this section to the Congress within two years of 
enactment of the bill.

Section 10. Effective dates

    Section 10 provides that the section 31 fee and assessment 
rate reductions for fiscal 2002 are effective as of the later 
of October 1, 2001 or 30 days after the SEC's regular 
appropriation for fiscal year 2002 has been enacted. The 30-day 
delay is designed to provide industry with sufficient lead time 
to make any necessary system changes for the new section 31 fee 
and assessment rates. With the exception of the ``lapse of 
appropriation'' provisions, the other fee provisions are 
effective as of October 1, 2001. The ``lapse of appropriation'' 
provisions created by this bill in section 6(b)(9) of the 
Securities Act and sections 13(e)(9), 14(g)(9) and 31(k) of the 
Exchange Act are effective as of October 1, 2002. The delayed 
effective date is necessary to make sure that SEC fees are 
credited as offsetting collections and not general revenue. As 
a result of this delay, for fiscal 2002, if the Commission's 
regular appropriation is not enacted by October 1, 2001, the 
Committee recognizes that any continuing resolution would need 
to authorize the Commission to continue to collect securities 
transaction, registration, and merger and tender offer fees to 
prevent a fee collection stoppage. After fiscal 2002, the 
``lapse of appropriation'' provisions will eliminate the need 
for fee collection authorization language in any continuing 
resolutions. The pay parity provisions are effective on the 
date of enactment, with the exception of the provisions 
removing the SEC from the Senior Executive Service system. To 
facilitate the transition to a new compensation system, the SEC 
is given the authority to eliminate the Senior Executive 
Service system within twelve months of enactment.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                    SECURITIES EXCHANGE ACT OF 1934

              TITLE I--REGULATION OF SECURITIES EXCHANGES

                              short title

  Section 1. This Act may be cited as the ``Securities Exchange 
Act of 1934''.

           *       *       *       *       *       *       *

                   securities and exchange commission

  Sec. 4. (a) * * *

           *       *       *       *       *       *       *

  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          [(1) Appointment and compensation.-- The Commission 
        is authorized to appoint and fix the compensation of 
        such officers, attorneys, examiners, and other experts 
        as may be necessary for carrying out its functions 
        under this Act, without regard to the provisions of 
        other laws applicable to the employment and 
        compensation of officers and employees of the United 
        States, and the Commission may, subject to the civil-
        service laws, appoint such other officers and employees 
        as are necessary in the execution of its functions and 
        fix their salaries in accordance with the 
        Classification Act of 1923, as amended.
          [(2) Economists.--
                  [(A) Commission authority.--Notwithstanding 
                the provisions of chapter 51 of title 5, United 
                States Code, the Commission is authorized--
                          [(i) to establish its own criteria 
                        for the selection of such professional 
                        economists as the Commission deems 
                        necessary to carry out the work of the 
                        Commission;
                          [(ii) to appoint directly such 
                        professional economists as the 
                        Commission deems qualified; and
                          [(iii) to fix and adjust the 
                        compensation of any professional 
                        economist appointed under this 
                        paragraph, without regard to the 
                        provisions of chapter 54 of title 5, 
                        United States Code, or subchapters II, 
                        III, or VIII of chapter 53, of title 5, 
                        United States Code.
                  [(B) Limitation on compensation.--No base 
                compensation fixed for an economist under this 
                paragraph may exceed the pay for Level IV of 
                the Executive Schedule, and no payments to an 
                economist appointed under this paragraph shall 
                exceed the limitation on certain payments in 
                section 5307 of title 5, United States Code.
                  [(C) Other benefits.--All professional 
                economists appointed under this paragraph shall 
                remain within the existing civil service system 
                with respect to employee benefits.]
          (1) Appointment, compensation, and benefits.--
                  (A) In general.--The Commission may appoint 
                and fix the compensation of such officers, 
                attorneys, economists, examiners, and other 
                employees as may be necessary for carrying out 
                its functions under this Act.
                  (B) Rates of pay.--Rates of basic pay for all 
                employees of the Commission may be set and 
                adjusted by the Commission without regard to 
                the provisions of chapter 51 or subchapter III 
                of chapter 53 of title 5, United States Code.
                  (C) Additional compensation and benefits.--
                The Commission may provide additional 
                compensation and benefits to employees of the 
                Commission if the same type of compensation or 
                benefits are then being provided by any agency 
                referred to under section 1206 of the Financial 
                Institutions Reform, Recovery, and Enforcement 
                Act of 1989 or, if not then being provided, 
                could be provided by such an agency under 
                applicable provisions of law, rule, or 
                regulation.
          (2) Information; comparability.--In establishing and 
        adjusting schedules of compensation and additional 
        benefits for employees of the Commission, which are to 
        be determined solely by the Commission under this 
        subsection, the Commission--
                  (A) shall consult with and inform the heads 
                of the agencies referred to under section 1206 
                of the Financial Institutions Reform, Recovery, 
                and Enforcement Act of 1989;
                  (B) shall inform the Congress of such 
                compensation and benefits; and
                  (C) shall seek to maintain comparability with 
                such agencies regarding compensation and 
                benefits.

           *       *       *       *       *       *       *

                      periodical and other reports

  Sec. 13. (a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *

           *       *       *       *       *       *       *

  (3) At the time of filing such statement as the Commission 
may require by rule pursuant to paragraph (1) of this 
subsection, the person making the filing shall pay to the 
Commission [a fee of \1/50\ of 1 per centum of the value of 
securities proposed to be purchased] a fee at a rate that, 
subject to paragraphs (5) and (6), is equal to $125 per 
$1,000,000 of the value of securities proposed to be purchased. 
The fee shall be reduced with respect to securities in an 
amount equal to any fee paid with respect to any securities 
issued in connection with the proposed transaction under 
section 6(b) of the Securities Act of 1933, or the fee paid 
under that section shall be reduced in an amount equal to the 
fee paid to the Commission in connection with such transaction 
under this paragraph.
          (4) Offsetting collections.--Fees collected pursuant 
        to this subsection for any fiscal year shall be 
        deposited and credited as offsetting collections to the 
        account providing appropriations to the Commission, 
        and, except as provided in paragraph (9), shall not be 
        collected for any fiscal year except to the extent 
        provided in advance in appropriation Acts. No fees 
        collected pursuant to this subsection for fiscal year 
        2002 or any succeeding fiscal year shall be deposited 
        and credited as general revenue of the Treasury.
          (5) Annual adjustment.--For each of the fiscal years 
        2003 through 2011, the Commission shall by order adjust 
        the rate required by paragraph (3) for such fiscal year 
        to a rate that is equal to the rate (expressed in 
        dollars per million) that is applicable under section 
        6(b) of the Securities Act of 1933 for such fiscal 
        year.
          (6) Final rate adjustment.--For fiscal year 2012 and 
        all of the succeeding fiscal years, the Commission 
        shall by order adjust the rate required by paragraph 
        (3) for all of such fiscal years to a rate that is 
        equal to the rate (expressed in dollars per million) 
        that is applicable under section 6(b) of the Securities 
        Act of 1933 for all of such fiscal years.
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances equal to less than $1,000,000.
          (8) Review and effective date.--An adjusted rate 
        prescribed under paragraph (5) or (6) and published 
        under paragraph (10) shall not be subject to judicial 
        review. Subject to paragraphs (4) and (9)--
                  (A) an adjusted rate prescribed under 
                paragraph (5) shall take effect on the later 
                of--
                          (i) the first day of the fiscal year 
                        to which such rate applies; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for such fiscal year is enacted; and
                  (B) an adjusted rate prescribed under 
                paragraph (6) shall take effect on the later 
                of--
                          (i) the first day of fiscal year 
                        2012; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for fiscal year 2012 is enacted.
          (9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission 
        has not been enacted, the Commission shall continue to 
        collect fees (as offsetting collections) under this 
        subsection at the rate in effect during the preceding 
        fiscal year, until 5 days after the date such a regular 
        appropriation is enacted.
          (10) Publication.--The rate applicable under this 
        subsection for each fiscal year is published pursuant 
        to section 6(b)(10) of the Securities Act of 1933.

           *       *       *       *       *       *       *

                                proxies

  Sec. 14. (a) * * *

           *       *       *       *       *       *       *

  (g)(1)(A) At the time of filing such preliminary proxy 
solicitation material as the Commission may require by rule 
pursuant to subsection (a) of this section that concerns an 
acquisition, merger, consolidation, or proposed sale or other 
disposition of substantially all the assets of a company, the 
person making such filing, other than a company registered 
under the Investment Company Act of 1940, shall pay to the 
Commission the following fees:
          (i) for preliminary proxy solicitation material 
        involving an acquisition, merger, or consolidation, if 
        there is a proposed payment of cash or transfer of 
        securities or property to shareholders, [a fee of \1/
        50\ of 1 per centum of] a fee at a rate that, subject 
        to paragraphs (5) and (6), is equal to $125 per 
        $1,000,000 of such proposed payment, or of the value of 
        such securities or other property proposed to be 
        transferred; and
          (ii) for preliminary proxy solicitation material 
        involving a proposed sale or other disposition of 
        substantially all of the assets of a company, [a fee of 
        \1/50\ of 1 per centum of] a fee at a rate that, 
        subject to paragraphs (5) and (6), is equal to $125 per 
        $1,000,000 of the cash or of the value of any 
        securities or other property proposed to be received 
        upon such sale or disposition.

           *       *       *       *       *       *       *

  (3) At the time of filing such statement as the Commission 
may require by rule pursuant to subsection (d)(1) of this 
section, the person making the filing shall pay to the 
Commission [a fee of \1/50\ of 1 per centum of] a fee at a rate 
that, subject to paragraphs (5) and (6), is equal to $125 per 
$1,000,000 of the aggregate amount of cash or of the value of 
securities or other property proposed to be offered. The fee 
shall be reduced with respect to securities in an amount equal 
to any fee paid with respect to such securities in connection 
with the proposed transaction under section 6(b) of the 
Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee paid 
under that section shall be reduced in an amount equal to the 
fee paid to the Commission in connection with such transaction 
under this subsection.
          (4) Offsetting collections.--Fees collected pursuant 
        to this subsection for any fiscal year shall be 
        deposited and credited as offsetting collections to the 
        account providing appropriations to the Commission, 
        and, except as provided in paragraph (9), shall not be 
        collected for any fiscal year except to the extent 
        provided in advance in appropriation Acts. No fees 
        collected pursuant to this subsection for fiscal year 
        2002 or any succeeding fiscal year shall be deposited 
        and credited as general revenue of the Treasury.
          (5) Annual adjustment.--For each of the fiscal years 
        2003 through 2011, the Commission shall by order adjust 
        each of the rates required by paragraphs (1) and (3) 
        for such fiscal year to a rate that is equal to the 
        rate (expressed in dollars per million) that is 
        applicable under section 6(b) of the Securities Act of 
        1933 for such fiscal year.
          (6) Final rate adjustment.--For fiscal year 2012 and 
        all of the succeeding fiscal years, the Commission 
        shall by order adjust each of the rates required by 
        paragraphs (1) and (3) for all of such fiscal years to 
        a rate that is equal to the rate (expressed in dollars 
        per million) that is applicable under section 6(b) of 
        the Securities Act of 1933 for all of such fiscal 
        years.
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances equal to less than $1,000,000.
          (8) Review and effective date.--An adjusted rate 
        prescribed under paragraph (5) or (6) and published 
        under paragraph (10) shall not be subject to judicial 
        review. Subject to paragraphs (4) and (9)--
                  (A) an adjusted rate prescribed under 
                paragraph (5) shall take effect on the later 
                of--
                          (i) the first day of the fiscal year 
                        to which such rate applies; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for such fiscal year is enacted; and
                  (B) an adjusted rate prescribed under 
                paragraph (6) shall take effect on the later 
                of--
                          (i) the first day of fiscal year 
                        2012; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for fiscal year 2012 is enacted.
          (9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission 
        has not been enacted, the Commission shall continue to 
        collect fees (as offsetting collections) under this 
        subsection at the rate in effect during the preceding 
        fiscal year, until 5 days after the date such a regular 
        appropriation is enacted.
          (10) Publication.--The rate applicable under this 
        subsection for each fiscal year is published pursuant 
        to section 6(b)(10) of the Securities Act of 1933.
  [(4)] (11) Notwithstanding any other provision of law, the 
Commission may impose fees, charges, or prices for matters not 
involving any acquisition, merger, consolidation, sale, or 
other disposition of assets described in this subsection, as 
authorized by section 9701 of title 31, United States Code, or 
otherwise.

           *       *       *       *       *       *       *

SEC. 31. TRANSACTION FEES.

  (a) Recovery of Cost of Services.--The Commission shall, in 
accordance with this section, collect transaction fees and 
assessments that are designed to recover the costs to the 
Government of the supervision and regulation of securities 
markets and securities professionals, and costs related to such 
supervision and regulation, including enforcement activities, 
policy and rulemaking activities, administration, legal 
services, and international regulatory activities.
  (b) Exchange-Traded Securities.--[Every] Subject to 
subsection (j), each national securities exchange shall pay to 
the Commission a fee at a rate equal to [\1/300\ of one 
percent] $12 per $1,000,000 of the aggregate dollar amount of 
sales of securities (other than bonds, debentures, other 
evidences of indebtedness, and security futures products) 
transacted on such national securities exchange[, except that 
for fiscal year 2007 or any succeeding fiscal year such rate 
shall be equal to \1/800\ of one percent of such aggregate 
dollar amount of sales. Fees collected pursuant to this 
subsection shall be deposited and collected as general revenue 
of the Treasury.].
  [(c) Off-Exchange Trades of Exchange Registered Securities.--
Each national securities association shall pay to the 
Commission a fee at a rate equal to \1/300\ of one percent of 
the aggregate dollar amount of sales transacted by or through 
any member of such association otherwise than on a national 
securities exchange of securities registered on such an 
exchange (other than bonds, debentures, other evidences of 
indebtedness, and security futures products), except that for 
fiscal year 2007 or any succeeding fiscal year such rate shall 
be equal to \1/800\ of one percent of such aggregate dollar 
amount of sales. Fees collected pursuant to this subsection 
shall be deposited and collected as general revenue of the 
Treasury.]
  [(d) Off-Exchange Trades of Last-Sale-Reported Securities.--
          [(1) Covered transactions.--Each national securities]
  (c) Off-Exchange Trades of Exchange Registered and Last-Sale-
Reported Securities.--Subject to subsection (j), each national 
securities association shall pay to the Commission a fee at a 
rate equal to [\1/300\ of one percent] $12 per $1,000,000 of 
the aggregate dollar amount of sales transacted by or through 
any member of such association otherwise than on a national 
securities exchange of securities (other than bonds, 
debentures, other evidences of indebtedness, and security 
futures products) registered on a national securities exchange 
or subject to prompt last sale reporting pursuant to the rules 
of the Commission or a registered national securities 
association[, excluding any sales for which a fee is paid under 
subsection (c), except that for fiscal year 2007, or any 
succeeding fiscal year, such rate shall be equal to \1/800\ of 
one percent of such aggregate dollar amount of sale.].
          [(2) Limitation; deposit of fees.--Except as provided 
        in paragraph (3), no amounts shall be collected 
        pursuant to subsection (d) for any fiscal year, except 
        to the extent provided in advance in appropriations 
        Acts. Fees collected during any such fiscal year 
        pursuant to this subsection shall be deposited and 
        credited as offsetting collections to the account 
        providing appropriations to the Commission.
          [(3) Lapse of appropriations.--If on the first day of 
        a fiscal year a regular appropriation to the Commission 
        has not been enacted, the Commission shall continue to 
        collect fees (as offsetting collections) under this 
        subsection at the rate in effect during the preceding 
        fiscal year, until such a regular appropriation is 
        enacted.]
  [(e)] (d) Assessments on Security Futures Transactions.--Each 
national securities exchange and national securities 
association shall pay to the Commission an assessment equal to 
[$0.02] $0.0072 for each round turn transaction (treated as 
including one purchase and one sale of a contract of sale for 
future delivery) on a security future traded on such national 
securities exchange or by or through any member of such 
association otherwise than on a national securities exchange, 
[except that for fiscal year 2007 or any succeeding fiscal year 
such assessment shall be equal to $0.0075 for each such 
transaction. Assessments collected pursuant to this subsection 
shall be deposited and collected as general revenue of the 
Treasury.] except that for fiscal year 2007 and each succeeding 
fiscal year such assessment shall be equal to $0.0042 for each 
such transaction.
  [(f) Dates for Payment of Fees.--The fees required] (e) Dates 
for payments.--The fees and assessments required by subsections 
(b), (c), and (d) of this section shall be paid--
          (1) * * *

           *       *       *       *       *       *       *

  [(g)] (f) Exemptions.--The Commission, by rule, may exempt 
any sale of securities or any class of sales of securities from 
any fee or assessment imposed by this section, if the 
Commission finds that such exemption is consistent with the 
public interest, the equal regulation of markets and brokers 
and dealers, and the development of a national market system.
  [(h)] (g) Publication.--The Commission shall publish in the 
Federal Register notices of the fee or assessment rates 
applicable under this section for each fiscal year not later 
than April 30 of the fiscal year preceding the fiscal year to 
which such rate applies, together with any estimates or 
projections on which such fees are based.
  (h) Pro Rata Application.--The rates per $1,000,000 required 
by this section shall be applied pro rata to amounts and 
balances equal to less than $1,000,000.
  (i) Deposit of Fees.--
          (1) Offsetting collections.--Fees collected pursuant 
        to subsections (b), (c), and (d) for any fiscal year--
                  (A) shall be deposited and credited as 
                offsetting collections to the account providing 
                appropriations to the Commission; and
                  (B) except as provided in subsection (k), 
                shall not be collected for any fiscal year 
                except to the extent provided in advance in 
                appropriation Acts.
          (2) General revenues prohibited.--No fees collected 
        pursuant to subsections (b), (c), and (d) for fiscal 
        year 2002 or any succeeding fiscal year shall be 
        deposited and credited as general revenue of the 
        Treasury.
  (j) Recapture of Projection Windfalls for Further Rate 
Reductions.--
          (1) Annual adjustment.--For each of the fiscal years 
        2003 through 2011, the Commission shall by order adjust 
        each of the rates applicable under subsections (b) and 
        (c) for such fiscal year to a uniform adjusted rate 
        that, when applied to the baseline estimate of the 
        aggregate dollar amount of sales for such fiscal year, 
        is reasonably likely to produce aggregate fee 
        collections under this section (including assessments 
        collected under subsection (d)) that are equal to the 
        target offsetting collection amount for such fiscal 
        year.
          (2) Final rate adjustment.--For fiscal year 2012 and 
        all of the succeeding fiscal years, the Commission 
        shall by order adjust each of the rates applicable 
        under subsections (b) and (c) for all of such fiscal 
        years to a uniform adjusted rate that, when applied to 
        the baseline estimate of the aggregate dollar amount of 
        sales for fiscal year 2012, is reasonably likely to 
        produce aggregate fee collections under this section in 
        fiscal year 2012 (including assessments collected under 
        subsection (d)) equal to the target offsetting 
        collection amount for fiscal year 2011.
          (3) Review and effective date.--An adjusted rate 
        prescribed under paragraph (1) or (2) and published 
        under subsection (g) shall not be subject to judicial 
        review. Subject to subsections (i)(1)(B) and (k)--
                  (A) an adjusted rate prescribed under 
                paragraph (1) shall take effect on the later 
                of--
                          (i) the first day of the fiscal year 
                        to which such rate applies; or
                          (ii) 30 days after the date on which 
                        a regular appropriation to the 
                        Commission for such fiscal year is 
                        enacted; and
                  (B) an adjusted rate prescribed under 
                paragraph (2) shall take effect on the later 
                of--
                          (i) the first day of fiscal year 
                        2012; or
                          (ii) 30 days after the date on which 
                        a regular appropriation to the 
                        Commission for fiscal year 2012 is 
                        enacted.
  (k) Lapse of Appropriation.--If on the first day of a fiscal 
year a regular appropriation to the Commission has not been 
enacted, the Commission shall continue to collect (as 
offsetting collections) the fees and assessments under 
subsections (b), (c), and (d) at the rate in effect during the 
preceding fiscal year, until 30 days after the date such a 
regular appropriation is enacted.
  (l) Definitions.--For purposes of this section:
          (1) Target offsetting collection amount.--The target 
        offsetting collection amount for each of the fiscal 
        years 2002 through 2011 is determined according to the 
        following table:

                                                       Target offsetting
Fiscal year:                                           collection amount

  2002..................................................   $585,720,000 
  2003..................................................   $679,320,000 
  2004..................................................   $822,240,000 
  2005..................................................   $976,320,000 
  2006.................................................. $1,148,040,000 
  2007..................................................   $880,880,000 
  2008..................................................   $892,080,000 
  2009.................................................. $1,023,120,000 
  2010.................................................. $1,161,440,000 
  2011.................................................. $1,321,040,000 

          (2) Baseline estimate of the aggregate dollar amount 
        of sales.--The baseline estimate of the aggregate 
        dollar amount of sales for any fiscal year is the 
        baseline estimate of the aggregate dollar amount of 
        sales of securities (other than bonds, debentures, 
        other evidences of indebtedness, and security futures 
        products) to be transacted on each national securities 
        exchange and by or through any member of each national 
        securities association (otherwise than on a national 
        securities exchange) during such fiscal year as 
        determined by the Commission, after consultation with 
        the Congressional Budget Office and the Office of 
        Management and Budget, using the methodology required 
        for making projections pursuant to section 257 of the 
        Balanced Budget and Emergency Deficit Control Act of 
        1985.

           *       *       *       *       *       *       *

                              ----------                              

                SECTION 6 OF THE SECURITIES ACT OF 1933

    registration of securities and signing of registration statement

  Sec. 6. (a) * * *
  (b) Registration Fee.--
          (1) * * *
          [(2) Fee payment required.--At the time of filing a 
        registration statement, the applicant shall pay to the 
        Commission a fee that shall be equal to the sum of the 
        amounts (if any) determined under the rates established 
        by paragraphs (3) and (4). The Commission shall publish 
        in the Federal Register notices of the fee rates 
        applicable under this section for each fiscal year.
          [(3) General revenue fees.--The rate determined under 
        this paragraph is a rate equal to $200 per $1,000,000 
        of the maximum aggregate price at which such securities 
        are proposed to be offered, except that during fiscal 
        year 2007 and any succeeding fiscal year such rate is 
        equal to $67 per $1,000,000 of the maximum aggregate 
        price at which such securities are proposed to be 
        offered. Fees collected during any fiscal year pursuant 
        to this paragraph shall be deposited and credited as 
        general revenues of the Treasury.
          [(4) Offsetting collection fees.--
                  [(A) In general.--Except as provided in sub-
                paragraphs (B) and (C), the rate determined 
                under this paragraph is a rate equal to the 
                following amount per $1,000,000 of the maximum 
                aggregate price at which such securities are 
                proposed to be offered:
                          [(i) $95 during fiscal year 1998;
                          [(ii) $78 during fiscal year 1999;
                          [(iii) $64 during fiscal year 2000;
                          [(iv) $50 during fiscal year 2001;
                          [(v) $39 during fiscal year 2002;
                          [(vi) $28 during fiscal year 2003;
                          [(vii) $9 during fiscal year 2004;
                          [(viii) $5 during fiscal year 2005; 
                        and
                          [(ix) $0 during fiscal year 2006 or 
                        any succeeding fiscal year.
                  [(B) Limitation; deposit.--Except as provided 
                in subparagraph (C), no amounts shall be 
                collected pursuant to this paragraph (4) for 
                any fiscal year except to the extent provided 
                in advance in appropriations Acts. Fees 
                collected during any fiscal year pursuant to 
                this paragraph shall be deposited and credited 
                as offsetting collections in accordance with 
                appropriations Acts.
                  [(C) Lapse of appropriations.--If on the 
                first day of a fiscal year a regular 
                appropriation to the Commission has not been 
                enacted, the Commission shall continue to 
                collect fees (as offsetting collections) under 
                this paragraph at the rate in effect during the 
                preceding fiscal year, until such a regular 
                appropriation is enacted.
          [(5) Pro rata application of rates.--The rates 
        required by this subsection shall be applied pro rata 
        to amounts and balances equal to less than $1,000,000.]
          (2) Fee payment required.--At the time of filing a 
        registration statement, the applicant shall pay to the 
        Commission a fee at a rate that shall be equal to $125 
        per $1,000,000 of the maximum aggregate price at which 
        such securities are proposed to be offered, except that 
        during fiscal year 2003 and any succeeding fiscal year 
        such fee shall be adjusted pursuant to paragraph (5) or 
        (6).
          (3) Offsetting collections.--Fees collected pursuant 
        to this subsection for any fiscal year--
                  (A) shall be deposited and credited as 
                offsetting collections to the account providing 
                appropriations to the Commission; and
                  (B) except as provided in paragraph (9), 
                shall not be collected for any fiscal year 
                except to the extent provided in advance in 
                appropriation Acts.
          (4) General revenues prohibited.--No fees collected 
        pursuant to this subsection for fiscal year 2002 or any 
        succeeding fiscal year shall be deposited and credited 
        as general revenue of the Treasury.
          (5) Annual adjustment.--For each of the fiscal years 
        2003 through 2011, the Commission shall by order adjust 
        the rate required by paragraph (2) for such fiscal year 
        to a rate that, when applied to the baseline estimate 
        of the aggregate maximum offering prices for such 
        fiscal year, is reasonably likely to produce aggregate 
        fee collections under this subsection that are equal to 
        the target offsetting collection amount for such fiscal 
        year.
          (6) Final rate adjustment.--For fiscal year 2012 and 
        all of the succeeding fiscal years, the Commission 
        shall by order adjust the rate required by paragraph 
        (2) for all of such fiscal years to a rate that, when 
        applied to the baseline estimate of the aggregate 
        maximum offering prices for fiscal year 2012, is 
        reasonably likely to produce aggregate fee collections 
        under this subsection in fiscal year 2012 equal to the 
        target offsetting collection amount for fiscal year 
        2011.
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances equal to less than $1,000,000.
          (8) Review and effective date.--An adjusted rate 
        prescribed under paragraph (5) or (6) and published 
        under paragraph (10) shall not be subject to judicial 
        review. Subject to paragraphs (3)(B) and (9)--
                  (A) an adjusted rate prescribed under 
                paragraph (5) shall take effect on the later 
                of--
                          (i) the first day of the fiscal year 
                        to which such rate applies; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for such fiscal year is enacted; and
                  (B) an adjusted rate prescribed under 
                paragraph (6) shall take effect on the later 
                of--
                          (i) the first day of fiscal year 
                        2012; or
                          (ii) 5 days after the date on which a 
                        regular appropriation to the Commission 
                        for fiscal year 2012 is enacted.
          (9) Lapse of appropriation.--If on the first day of a 
        fiscal year a regular appropriation to the Commission 
        has not been enacted, the Commission shall continue to 
        collect fees (as offsetting collections) under this 
        subsection at the rate in effect during the preceding 
        fiscal year, until 5 days after the date such a regular 
        appropriation is enacted.
          (10) Publication.--The Commission shall publish in 
        the Federal Register notices of the rate applicable 
        under this subsection and under sections 13(e) and 
        14(g) for each fiscal year not later than April 30 of 
        the fiscal year preceding the fiscal year to which such 
        rate applies, together with any estimates or 
        projections on which such rate is based.
          (11) Definitions.--For purposes of this subsection:
                  (A) Target offsetting collection amount.--The 
                target offsetting collection amount for each of 
                the fiscal years 2002 through 2011 is 
                determined according to the following table:

                                                       Target offsetting
Fiscal year:                                           collection amount
  2002..................................................    $512,500,000
  2003..................................................    $589,380,000
  2004..................................................    $650,385,000
  2005..................................................    $790,075,000
  2006..................................................    $949,050,000
  2007..................................................    $214,200,000
  2008..................................................    $233,700,000
  2009..................................................    $284,115,000
  2010..................................................    $333,840,000
  2011..................................................    $394,110,000

                  (B) Baseline estimate of the aggregate 
                maximum offering prices.--The baseline estimate 
                of the aggregate maximum offering prices for 
                any fiscal year is the baseline estimate of the 
                aggregate maximum offering price at which 
                securities are proposed to be offered pursuant 
                to registration statements filed with the 
                Commission during such fiscal year as 
                determined by the Commission, after 
                consultation with the Congressional Budget 
                Office and the Office of Management and Budget, 
                using the methodology required for projections 
                pursuant to section 257 of the Balanced Budget 
                and Emergency Deficit Control Act of 1985.

           *       *       *       *       *       *       *

             SECTION 307 OF THE TRUST INDENTURE ACT OF 1939

  qualification of indentures covering securities not required to be 
                               registered

  Sec. 307. (a) * * *
  (b) The filing with the Commission of an application, or of 
an amendment to an application, shall be deemed to have taken 
place upon the receipt thereof by the [Commission, but, in the 
case of an application, only if it is accompanied or preceded 
by payment to the Commission of a filing fee in the amount of 
$100, such payment to be made in cash or by United States 
postal money order or certified or bank check, or in such other 
medium of payment as the Commission may authorize by rule and 
regulation.] Commission.

           *       *       *       *       *       *       *

                              ----------                              

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

PART III--EMPLOYEES

           *       *       *       *       *       *       *

                  Subpart B--Employment and Retention

CHAPTER 31--AUTHORITY FOR EMPLOYMENT

           *       *       *       *       *       *       *

SUBCHAPTER II--THE SENIOR EXECUTIVE SERVICE

           *       *       *       *       *       *       *

Sec. 3132. Definitions and exclusions

  (a) For the purpose of this subchapter--
          (1) ``agency'' means an Executive agency, except a 
        Government corporation and the General Accounting 
        Office, but does not include--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) the Federal Election Commission; [or]
                  (D) the Office of the Comptroller of the 
                Currency, the Office of Thrift Supervision, the 
                Federal Housing Finance Board, the Resolution 
                Trust Corporation, the Farm Credit 
                Administration, the Office of Federal Housing 
                Enterprise Oversight of the Department of 
                Housing and Urban Development, and the National 
                Credit Union Administration; or
                  (E) the Securities and Exchange Commission.

           *       *       *       *       *       *       *

Subpart D--Pay and Allowances

           *       *       *       *       *       *       *

SUBCHAPTER VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *

Sec. 5373. Limitation on pay fixed by administrative action

  (a) Except as provided in subsection (b) and by the 
Government Employees Salary Reform Act of 1964 (78 Stat. 400) 
and notwithstanding the provisions of other statutes, the head 
of an Executive agency or military department who is authorized 
to fix by administrative action the annual rate of basic pay 
for a position or employee may not fix the rate at more than 
the rate for level IV of the Executive Schedule. This section 
does not impair the authorities provided by--
          (1) sections 248, 481, and 1819 of title 12;
          (2) section 831b of title 16; [or]
          (3) sections 403a-403c, 403e-403h, and 403j of title 
        50[.]; or
          (4) section 4(b) of the Securities Exchange Act of 
        1934.

           *       *       *       *       *       *       *

                            DISSENTING VIEWS

    While many of us would agree with the supporters of H.R. 
1088, the Investor and Capital Markets Fee Relief Act, that 
ideally we should charge any user fee only at a level designed 
to cover its intended purposes, we remain seriously concerned 
at this time about both the substance of this legislation and 
the priority attached to it in the 107th Congress.
    Budget Priorities. Our primary apprehension about H.R. 1088 
is a broad policy concern related to budget priorities. In our 
view, our nation has other budget priorities that it should 
first address before committing to such a drastic reduction in 
revenue. H.R. 1088 will reduce federal receipts by 
approximately $14 billion between 2002 and 2011. An immediate 
rush to such a substantial reduction seems precipitous and 
imprudent, given the current debate in Congress about budget 
priorities, pending cuts in social programs--many within this 
Committee's jurisdiction--and the size of what seems an 
inevitable tax cut. In passing H.R. 1088, we may effectively 
spend money that we do not know we have. As the Minority's 
views of the Budget Committee's report on the fiscal 2002 
budget resolution point out: ``the bottom line is that no 
economic or budget forecast covering ten years, however 
conscientious, can be a sound basis for a plan to spend an 
available budget surplus down to precisely zero.'' We risk 
returning our nation to a pattern of deficit spending if we are 
not prudent.
    Although the House Budget Committee appears to have 
provided enough latitude in the Budget Resolution, which passed 
House last week, to accommodate the decrease in securities 
fees, the Senate has not considered its budget plan at this 
time and we have not reconciled the differences between the two 
bodies. Moreover, while those who wish to can certainly arrange 
things so that we comply with the technicalities of federal 
budget law, we cannot avoid the more fundamental issue of 
appropriate budget priorities.
    This Committee has responsibility for oversight over 
federal housing programs and the budget for the Department of 
Housing and Urban Development. The Bush Administration's budget 
blueprint would cut housing significantly, and a number of 
other areas that should receive priority treatment--education, 
health care, workplace safety--are being cut or have 
significant remaining unmet needs. Moreover, the Bush 
Administration did not even include decreases in securities 
fees in its budget blueprint. As a result, in this environment 
we find it difficult to argue that this legislation should be a 
top priority that deserves to move with such speed. Any debate 
about SEC fee reductions should occur within the context of a 
real discussion of budget priorities under a real budget.
    Furthermore, as presently crafted H.R. 1088 poses 
implications for the ``pay-as-you-go'' requirements established 
under the Budget Enforcement Act of 1990. This statute provides 
that direct spending and revenue legislation enacted for a 
fiscal year not incur a net cost on a cumulative PAYGO 
``scorecard.'' Unless Congress directs otherwise, a negative 
balance in the scorecard at the end of the year will trigger a 
sequester in which largely across-the-board spending cuts are 
put into effect automatically.
    In recently examining S. 143--substantially similar 
legislation to H.R. 1088 approved by the Senate earlier this 
month--the Congressional Budget Office noted that because S. 
143 would lower governmental receipts, pay-as-you-go procedures 
would apply. We can expect that the Congressional Budget Office 
will reach a similar conclusion when evaluating H.R. 1088. 
Consequently, under PAYGO procedures, these cuts in securities 
fees could ultimately result in cuts in other important 
government programs, like Head Start, medical research, and 
transportation infrastructure improvements, at the end of the 
year.
    Adequate Funding Of Investor Protection. We have other 
serious concerns about approving this legislation at this time. 
We are not fully convinced that this bill will provide the full 
amount of funding actually needed to cover all of the 
government's activities related to the nation's securities 
markets.
    H.R. 1088, if passed in its present form, will provide a 
substantial reduction in the existing user fees charged by the 
Securities and Exchange Commission (SEC). The bill attempts to 
ensure that SEC funding needs are adequately safeguarded. But 
what neither the bill nor the Committee is addressing is 
whether current SEC enforcement and oversight efforts are 
adequate given a continually changing, and potentially 
troubling, market situation. Moreover, each day the securities 
marketplace is becoming ever larger and more complex while SEC 
resources have in recent years remained comparatively very 
static, as we will further detail below.
    In recent months, we have experienced a $5-trillion loss in 
the value of publicly traded securities. Certainly, some of 
that loss results from over-speculation by investors. But much 
of that loss has other causes. For example, the SEC, as we 
understand, is currently investigating the accounting practices 
of a number of companies that may have been partially 
responsible for this dramatic decline in market capitalization. 
The SEC has also noted that earnings restatements in the last 
three years at Cendant, MicroStrategy,McKesson, Columbia-MCA, 
Oxford Healthcare, Sunbeam, Green Tree, Waste Management, and RiteAid 
have alone cost approximately $40 billion in market capitalization. The 
SEC needs appropriate resources to complete these and other 
examinations.
    We also live in an increasingly interconnected global 
economy and securities marketplace, in which the United States 
and the efficacy of its regulatory oversight play a pivotal 
role. SEC enforcement actions are increasing in number and 
significance. Investor complaints have increased in recent 
years. The many special problems posed by Internet transactions 
have also placed further strains on the agency's limited 
resources. To obtain a better sense of the difficulties the SEC 
faces in addressing this new technology, one need only to refer 
to a report by the SEC's Office of Compliance Inspections and 
Examinations entitled ``Examinations of Broker-Dealers Offering 
Online Trading: Summary of Findings and Recommendations.''
    We have additional concerns about the SEC's resources at a 
time of increasing market complexity. We have, for example, 
experienced enormous increases in the number of companies going 
public in recent years. Should this trend continue, it would 
place additional burdens on the agency. Furthermore, millions 
of Americans who once only had bank savings accounts have now 
directly or indirectly become participants in the securities 
markets and income from that participation will help determine 
the strength of their household incomes, options for their 
children's education, their access to health care, and the 
security of their retirement. In an environment where Americans 
are becoming a nation of investors rather than a nation of 
savers, funding for investor protection and the agency 
responsible for it should take on an increased, not a 
decreased, priority.
    Moreover, the evidence before us at this time unfortunately 
appears to indicate that our programs designed to protect 
securities investors may lack the resources needed to function 
properly. ``Many Holes Weaken Safety Net for Victims of Failed 
Brokerages''--an article that appeared in the New York Times on 
September 25, 2000--notes that ``[a]t a time when millions of 
United States citizens have taken their money out of federally 
insured banks and put it into brokerage firms, the Securities 
Investor Protection Corporation's charge of protecting the 
investing public has never been more important. * * * But a 
close look at this little-understood organization shows that 
the safety net that investors believe the corporation offers is 
in fact full of holes.'' Furthermore, an article appearing in 
USA Today on January 9, 2001 entitled ``Conned Investors May 
Never See Refunds, SEC Collection Rate Falls Sharply Since 
'94,'' indicates that the SEC has fallen badly behind, having 
collected only 16.9 percent of more than $1.7 billion in 
illegal gains that securities fraudsters have been ordered to 
hand over since 1995. Furthermore, that collection rate fell to 
an abysmal 4.3 percent in 2000 according to the news report.
    The failure to protect legitimate investors from fraudulent 
broker-dealers, stock swindlers, and other securities scam 
artists, deserves serious examination both by the SEC and this 
Committee. In the upcoming months, the General Accounting 
Office will complete studies on the Securities Investor 
Protection Corporation as well as the SEC controls over 
disgorgement cases, and these comprehensive reports will 
hopefully provide us with more information about the extent of 
these problems and the reforms needed to address them. 
Unfortunately, H.R. 1088, by lowering SEC fees now, will limit 
the resources available to correct these and other problems in 
the securities industry later.
    Moreover, we especially note the findings contained in the 
SEC's ``Agency Resources and Industry Growth'' pamphlet of 
March 2001. It shows that SEC staff has grown only about 2.5 
percent from 1991 to 2000 while the volume on the national 
exchanges and NASDAQ have increased approximately 34 percent. 
SEC review staff during the same period has fluctuated between 
238 to 271 positions, with 245 full-time employees in 2000. In 
1991, there were 180 SEC staff positions for New York Stock 
Exchange oversight while the assets of the exchange's member 
firms stood at $604 billion. In 2000, New York Stock Exchange 
member assets stood at $2,344 trillion while oversight staff 
had only increased by 95 positions. In 1991, investment advisor 
assets under management were $5.4 trillion, and the SEC had 140 
inspection staff for those assets. In 2000, there were $17.5 
trillion of investment advisor assets under management, but the 
SEC inspection staff only stood at 273. These initial 
comparisons indicate the SEC's resources have not kept pace 
with the financial markets it is charged with regulating.
    In sum, we should not be judging the adequacy of SEC 
funding by looking at what has been enough in the past. We 
should instead be examining what is needed in this new world to 
ensure that the SEC has the necessary ability to adequately 
monitor what is happening in the securities marketplace and 
safeguard market stability and investor protection. And we 
should do that before, not after, we act on this legislation.
    Moreover, even if we could agree that H.R. 1088 provides 
the SEC with the resources required to meet its future needs, 
we have no assurances that the bill will provide sufficient 
funding to cover the costs of the government's other 
securities, regulatory, adjudicatoryand oversight activities. 
In H.R. 1088 we have not accounted for all of the government's 
securities-related activities, such as Federal Bureau of Investigation 
inquiries, Justice Department criminal prosecutions, judicial branch 
resources expended on securities cases, and congressional oversight, 
among other activities. Because we have not accounted for these 
activities, the proposed securities fee reductions contained in H.R. 
1088 may eliminate too much revenue needed for fully effective 
enforcement. We should have therefore inserted some consideration of 
these costs into the fee-setting process designed under H.R. 1088.
    During the Committee's consideration of H.R. 1088, we 
attempted to correct this oversight by offering an amendment 
that would have required the General Accounting Office (GAO) no 
later than January 1 of the years 2002 through 2012 to identify 
the agencies and institutions of the government other than the 
SEC that are involved in the enforcement, prosecution, and 
adjudication of matters arising under our securities laws. In 
its evaluation, the GAO would have estimated the total amount 
of appropriated funds reasonably likely to be expended in the 
upcoming fiscal year by such agencies and institutions in 
conducting such activities. The GAO would have then calculated 
for any such fiscal year such increases in the target 
offsetting collection amounts as may be necessary to recover 
such total amounts, and the SEC would have used these revised 
targeting amounts as the basis for establishing fee rates each 
year. Unfortunately, this amendment was not accepted.
    Examination Of Other Government Fees. Furthermore, if we 
are going to cut user fees, we should examine the government 
fee structure more broadly and consider the significance of the 
burden they impose, and on whom. The federal government 
collects an enormous number of user fees and administrative 
charges, and those collections may well be in excess of need in 
other areas. For example, there are fees on the recording of 
intellectual property rights of all kinds, fees related to air 
traffic, numerous user fees imposed by the Department of 
Agriculture for its services, fees on the use of national 
parks, etc. Surely, we should examine all such user fees and 
administrative charges before deciding to reduce so 
substantially only those affecting the securities industry.
    Moreover, there are proposals for fee reductions of equal 
or greater merit before our own Committee that we believe our 
Committee should first consider. There is, for example, a 
bipartisan bill pending before the Committee that would reduce 
the governmental user fees for low- and moderate-income 
policemen, firemen and teachers who cannot even afford to live 
in the communities they serve. The Congressional Budget Office 
estimates that this proposal would actually increase receipts 
for the government, rather than lose it as H.R. 1088 
contemplates, because of the increased number of loans approved 
by the Federal Housing Administration. But that important bill 
has not been brought to the Committee's attention. 
Unfortunately, the user fees paid by low- and moderate-income 
policemen, firemen and teachers do not appear to be a priority 
concern.
    Lesser Fee Reduction More Prudent. If SEC fees are to be 
cut despite the aforementioned concerns, the Committee should 
have pursued a more prudent approach in crafting this 
legislation. The brokerage firms who are market makers and 
floor specialists on the national exchanges would receive 
substantial benefits from H.R. 1088. While these institutions 
will receive very large breaks under the bill, about 20 percent 
of the estimated $14 billion decrease in securities fees over 
the next ten years, the individual sellers of stock will 
benefit by only a few dollars each year, if that much. The 
Ranking Member of the Capital Markets Subcommittee consistently 
noted during the consideration of this legislation that fees on 
the sale of stock are just 33 cents per $10,000 of 
transactions. In other words, individuals will likely presently 
spend more to feed a parking meter in front of their broker 
than they do on these transactions. They consequently will not 
receive the considerable relief supporters of H.R. 1088 contend 
they will obtain.
    At the end of the last session when this legislation was 
under discussion in the Commerce Committee, a meritorious 
compromise was developed by Mr. Towns and Mr. Dingell that 
would have only cut Section 31 fees--those fees that arguably 
impact most adversely on consumers. The cost of that fee 
reduction would be approximately $4.7 billion over 10 years, as 
opposed to the $14 billion cost of the bill before us. If it is 
the will of the Committee to have fee reductions, then this is 
an approach to SEC fee reduction that we find more persuasive 
at this time.
    Pay Parity. Finally, in the midst of our debate on the 
appropriate level of SEC fees, another issue--which is 
unrelated and of far greater import--has been included in the 
underlying bill: providing the SEC with the tools necessary to 
employ and retain competent staff by authorizing pay schedules 
similar to other federal financial regulators. While Congress 
has exempted other federal financial regulators like the Office 
of the Comptroller of the Currency, the Federal Reserve, the 
Federal Deposit Insurance Corporation, and the National Credit 
Union Administration from government employee pay schedules, 
the SEC continues to operate under the provisions of that law. 
This factor has led to considerable personnel instability at 
the SEC, which is now faced with handling sophisticated markets 
and attracting specialized and expensive employees to 
accomplish its mission. The Commission has been seeking to 
achieve ``pay parity'' with other financial regulators for a 
number of Congresses and the underlying bill provides them this 
needed support. We strongly support providing pay parity for 
the SEC and would work hard to gain passage of such provisions 
in a stand-alone bill.
                                   John J. LaFalce.
                                   Paul E. Kanjorski.
                                   Melvin L. Watt.
                                   Barbara Lee.
                                   Jan D. Schakowsky.
                                   Stephanie Tubbs Jones.

                                
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