```

[House Report 108-63]
[From the U.S. Government Publishing Office]

108th Congress                                             Rept. 108-63
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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

 
      ACCOUNTANT, COMPLIANCE, AND ENFORCEMENT STAFFING ACT OF 2003

                                _______
                                

                 April 8, 2003.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 658]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 658) to provide for the protection of investors, 
increase confidence in the capital markets system, and fully 
implement the Sarbanes-Oxley Act of 2002 by streamlining the 
hiring process for certain employment positions in the 
Securities and Exchange Commission, 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..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Committee Cost Estimate..........................................     7
Congressional Budget Office Cost Estimate........................     7
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis......................................     8
Changes in Existing Law Made by the Bill, as Reported............     9
Additional Views.................................................    11

                               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 ``Accountant, Compliance, and 
Enforcement Staffing Act of 2003''.

SEC. 2. ACCOUNTANTS, ECONOMISTS, AND EXAMINERS APPOINTMENTS.

  Section 4(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78d(b)) is amended--
          (1) by redesignating paragraph (3) as paragraph (4); and
          (2) by inserting after paragraph (2) the following new 
        paragraph:
          ``(3) Accountants, economists, and compliance examiners 
        appointments.--
                  ``(A) Appointment authority.--
                          ``(i) This subparagraph applies with respect 
                        to any position of accountant, economist, and 
                        securities compliance examiner at the 
                        Commission that is in the competitive service.
                          ``(ii) The Commission may appoint candidates 
                        to any position described in clause (i) in 
                        accordance with the statutes, rules, and 
                        regulations governing appointments in the 
                        excepted service, and notwithstanding any 
                        statutes, rules, and regulations governing 
                        appointments in the competitive service.
                          ``(iii) The appointment of a candidate to a 
                        position under authority of this subparagraph 
                        shall not be considered to cause such position 
                        to be converted from the competitive service to 
                        the excepted service.
                          ``(iv) For purposes of this subparagraph, the 
                        terms `competitive service' and `excepted 
                        service' have the respective meanings given 
                        them under chapter 21 of title 5, United States 
                        Code.
                  ``(B) Reports.--No later than 90 days after the end 
                of fiscal year 2003 (for fiscal year 2003) and 90 days 
                after the end of fiscal year 2005 (for fiscal years 
                2004 and 2005), the Commission shall submit a report 
                with respect to its exercise of the authority granted 
                by subparagraph (A) during such fiscal years to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, Housing, 
                and Urban Affairs of the Senate. Such reports shall 
                describe the changes in the hiring process authorized 
                by such subparagraph, including relevant information 
                related to--
                          ``(i) the quality of candidates;
                          ``(ii) the procedures used by the Commission 
                        to select candidates through the streamlined 
                        hiring process;
                          ``(iii) the numbers, types, and grades of 
                        employees hired under the authority;
                          ``(iv) any benefits or shortcomings 
                        associated with the use of the authority;
                          ``(v) the effect of the exercise of the 
                        authority on the hiring of veterans and other 
                        demographic groups; and
                          ``(vi) the way in which managers were trained 
                        in the administration of the streamlined hiring 
                        system.''.

                          Purpose and Summary

    The purpose of H.R. 658, the Accountant, Compliance, and 
Enforcement Staffing Act of 2003, is to address a longstanding 
recruitment issue at the Securities and Exchange Commission 
(SEC or Commission) which has recently been brought to the 
forefront by the need to fill a large number of new positions 
during the current fiscal year. The legislation provides the 
SEC with the ability to hire certain professional staff on an 
expedited basis, without having to undergo the time-consuming 
procedures that have applied to the hiring of those staff 
positions in the past. This enhanced authority will enable the 
SEC to fill a large number of new positions during the current 
fiscal year, and to adequately respond to future staff 
attrition.
    Specifically, the legislation allows the Commission to hire 
accountants, economists, and securities compliance examiners 
under the procedures applicable to excepted service positions, 
which are the procedures it--like all other Government 
agencies--currently uses to hire attorneys. Once hired, such 
staff will be members of the competitive service for all other 
purposes, including probationary periods, seniority protections 
in the event of a reduction-in-force, and the ability to 
compete for jobs in other Federal agencies. This authority does 
not expire.

                  Background and Need for Legislation

    During 2002, a series of highly publicized financial 
disclosure restatements by public companies, several of which 
ultimately failed, contributed to a crisis in confidence on the 
part of the investing public. Recognizing the extreme urgency 
of restoring this confidence, a foundation of the Nation's 
economy, Congress acted decisively to pass the landmark 
Sarbanes-Oxley Act, overhauling the regulation of public 
accounting, substantially expanding the scope and quality of 
corporate disclosures, and improving corporate governance.
    Congress has also recognized the key role that the 
Securities and Exchange Commission must play in restoring the 
investing public's faith in corporate disclosures. The 
Sarbanes-Oxley Act, the SEC's fiscal year 2002 supplemental 
appropriation, and the SEC's fiscal year 2003 budget, enacted 
on February 20, 2003, give renewed vigor, focus, and resources 
to the SEC to accomplish this priority in unprecedented 
timeframes. With funding provided in both the SEC's fiscal year 
2002 supplemental appropriation and its 2003 regular 
appropriation, over the next fiscal year the SEC will need to 
complete the hiring of over 900 new professional staff, 
including a substantial number of accountants, examiners, and 
economists, in addition to the hiring made necessary by staff 
turnover. The SEC currently estimates that additional resources 
provided by the fiscal year 2003 budget will result in the 
hiring of 200 lawyers, 250 accountants, 300 examiners, 10 
economists, and some other specialists. The SEC needs immediate 
help if it is to bring this many new staff on board as quickly 
as possible and continue implementing the letter and spirit of 
the Sarbanes-Oxley Act.
    This Committee has long been familiar with, and taken 
action concerning, staffing issues at the SEC. Just last year, 
the SEC was granted the authority to pay its staff higher 
salaries and provide additional benefits, bringing it into 
``pay parity'' with the Federal banking agencies. While this 
new pay authority has demonstrably eased the Commission's 
crisis in hiring and retaining attorneys, substantial 
difficulties still remain in its efforts to hire accountants, 
economists, and securities compliance examiners.
    The SEC's experience in filling positions funded by its 
fiscal year 2002 supplemental appropriation is the most recent 
example of these longstanding difficulties it experiences in 
the hiring process. Nearly all of the attorney positions funded 
by last year's supplemental appropriation have been filled. 
However, the SEC's experience in hiring accountants--who 
comprise the bulk of the additional new slots from the 
supplemental funding--has been far less successful. Despite the 
SEC's best efforts, only slightly more than half of the new 
accountant positions funded with last year's supplemental 
appropriation have been filled. The SEC has regularly 
encountered problems in filling these specialty positions, not 
only with respect to last year's supplemental appropriation but 
also in prior years. These problems will be compounded by the 
large numbers of such employees that the SEC must now hire.
     The Committee notes that while the hiring of Commission 
attorneys is currently excepted from civil service posting and 
competitive requirements, the hiring of Commission accountants, 
economists, and securities compliance examiners is presently 
not. In filling a vacancy under competitive service 
requirements, the process can take months to complete. Under 
excepted service authority, the hiring process can be completed 
in a few weeks' time because hiring officials can interview 
candidates much more rapidly. The delay entailed by the 
competitive service hiring process can act as a severe, at 
times insurmountable, obstacle to the hiring of the type of 
highly skilled, mid-career professionals that the SEC requires 
in large numbers to adequately discharge its responsibilities 
in protecting investors. Excepting the hiring of Commission 
accountants, economists, and securities compliance examiners 
from the competitive service process will allow the SEC to meet 
the challenges of its mission with the full resources that 
Congress intended as quickly as possible.
    While the immediate need to hire over 900 new professional 
staff was the catalyst for the introduction of H.R. 658, the 
Committee decided that excepted service hiring authority must 
be permanently granted to the SEC. The SEC constantly hires 
accountants, economists, and securities compliance examiners to 
replace those lost to attrition. Even with pay parity, the SEC 
will continue to have turnover in its professional ranks as its 
employees, with skills that are in high demand in the private 
sector, are regularly enticed to private-sector jobs that 
provide higher pay and better benefits. The need to replace 
employees lost to attrition historically becomes even more 
acute during economic expansions, precisely when the SEC's 
responsibilities also increase, putting stress on the SEC at 
critical times. In streamlining the SEC's hiring process on a 
permanent basis, this Committee intends not only to ameliorate 
the SEC's current staffing crisis, but also to prevent the next 
one before it begins.
    The authority granted to the SEC by H.R. 658 does not 
represent a departure from practices already in place at other 
Federal agencies. Other positions in the Federal government 
that may be filled under similar, targeted exceptions from the 
government-wide competitive service include: all positions in 
the Federal Bureau of Investigation; employees in the Office of 
the National Counterintelligence Executive; health care 
professionals (doctors, dentists, nurses, and others) employed 
by the Department of Defense; Defense intelligence employees; 
employees in the Department of Education's Performance-Based 
Organization for Federal student financial assistance; and air 
traffic controllers hired through the Federal Aviation 
Administration's College Training Initiative Program.
     Nothing in H.R. 658 would exempt the SEC from its 
obligations to administer its excepted service hiring authority 
in conformance with the principles of a merit system. It is the 
Committee's expectation that the SEC's personnel management 
system will provide for a systematic review of individual 
qualifications, and provide preference to eligible veterans. It 
is also the Committee's expectation that the SEC will ensure 
that all employees are appointed, promoted, and assigned only 
on the basis of merit.
    Finally, once hired, staff members who join the Commission 
under the authority conferred by H.R. 658 will be members of 
the competitive service for all purposes. This treatment will 
ensure that those employees are not disadvantaged relative to 
other Federal employees with regard to the length of their 
probationary period, the conduct of any reductions-in-force by 
the Commission, or prioritization for transfers between Federal 
agencies.

                                Hearings

    On March 6, 2003, the Subcommittee on Capital Markets, 
Insurance, and Government Sponsored Enterprises held a hearing 
on H.R. 658. The following witnesses testified: Mr. James M. 
McConnell, Executive Director, Securities and Exchange 
Commission and Ms. Colleen M. Kelley, National President, 
National Treasury Employees Union.

                        Committee Consideration

    On March 20, 2003, the Subcommittee on Capital Markets, 
Insurance, and Government Sponsored Enterprises met in open 
session and approved H.R. 658 for full Committee consideration, 
as amended, by a voice vote.
    On March 26, 2003, the Committee on Financial Services met 
in open session and ordered H.R. 658 reported to the House, 
with an amendment, by a voice vote, a quorum being present.

                            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 to the House with a 
favorable recommendation was agreed to by a voice vote.
    The following amendment was considered by a record vote:
          An amendment by Mr. Kanjorski, no. 1, terminating the 
        appointment authority of the SEC after five years, was 
        not agreed to by a record vote of 26 yeas and 30 nays, 
        (Record vote no. FC-4).

                                              Record vote no. FC-4
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..  ........  ........  .........
Mr. Leach......................  ........        X   .........   Mr. Kanjorski...        X   ........  .........
Mr. Bereuter...................  ........        X   .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....        X   ........  .........
Mr. Castle.....................  ........        X   .........   Mr. Gutierrez...  ........  ........  .........
Mr. King.......................  ........  ........  .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....  ........  ........  .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).        X   ........  .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................        X   ........  .........   Mr. Sherman.....        X   ........  .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........  ........  .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........        X   ........  .........
Mr. Jones (NC).................  ........  ........  .........   Mr. Gonzalez....        X   ........  .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........        X   .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..        X   ........  .........
Mr. Shays......................  ........        X   .........   Mr. Crowley.....  ........  ........  .........
Mr. Shadegg....................  ........        X   .........   Mr. Clay........  ........  ........  .........
Mr. Fossella...................  ........        X   .........   Mr. Israel......        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........        X   ........  .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy           X   ........  .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....        X   ........  .........
Mr. Kennedy (MN)...............  ........  ........  .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).  ........  ........  .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..        X   ........  .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........
Ms. Harris.....................  ........  ........  .........
Mr. Renzi......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------
 *Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee 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 establishes the 
following performance related goals and objectives for this 
legislation:
    The Securities and Exchange Commission will utilize the 
authority granted by this legislation to rapidly hire necessary 
accountants, economists, and examiners to fully implement the 
Sarbanes-Oxley Act and restore the Nation's confidence in the 
capital markets.

   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 adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in 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, 2003.
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. 658, the 
Accountant, Compliance, and Enforcement Staffing Act of 2003.
    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 Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 658--Accountant, Compliance, and Enforcement Staffing Act of 2003

    H.R. 658 would exempt job candidates for accountant, 
economist, and examiner positions at the Securities and 
Exchange Commission (SEC) from some civil service system hiring 
rules and procedures. The bill also would require the SEC to 
issue reports to the Congress on the agency's implementation of 
the bill.
    CBO estimates that implementing H.R. 658 would not have a 
significant impact on the federal budget. The bill would not 
affect direct spending or revenues.
    H.R. 658 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect state, local, or tribal governments.
    The CBO staff contact for this estimate is Ken Johnson. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget 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 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  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.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    This section establishes the short title of the bill, the 
``Accountant, Compliance, and Enforcement Staffing Act of 
2003.''

Section 2. Accountants, economists, and examiners appointments

    To fulfill its mandate to administer the Federal securities 
laws, the Securities and Exchange Commission employs thousands 
of professional staff. In filling some of these professional 
positions (notably accountants, economists, and securities 
compliance examiners) the Commission currently must apply the 
statutory and regulatory procedures known as the ``competitive 
service'' process, while other positions (for example, 
attorneys) are expressly ``excepted'' from the requirements of 
the relatively inflexible competitive service hiring process. 
Whether a position is designated as belonging to the 
competitive service or the excepted service affects not just 
the applicable hiring process, but also certain post-hiring 
employment rights applicable to each category of employment.
    Section 2 changes existing law by granting the Commission 
the authority to hire applicants for accountant, economist, and 
securities compliance examiner positions that are in the 
competitive service using procedures applicable to the excepted 
service, and without regard to the statutes, rules, and 
regulations governing appointments under the competitive 
service. As a result of this change, the Commission will be 
able to hire applicants for accountant, economist, and 
securities compliance examiner positions in the same manner as 
it currently is able to hire applicants for attorney positions. 
Section 2 also specifically provides that, once hired, 
employees in these positions will be members of the competitive 
service, with all the rights and privileges conferred by that 
status.
    Section 2 also requires that the Commission submit a report 
to its congressional oversight committees 90 days after the end 
of fiscal year 2003 (for fiscal year 2003) and fiscal year 2005 
(for fiscal years 2004 and 2005) regarding the exercise of this 
new hiring authority during the specified periods. These 
reports will detail relevant information related to the use of 
the special hiring authority granted to the Commission in 
Section 2. These reports must describe the quality of 
candidates; the procedures used by the Commission to select 
candidates; the numbers, types, and grades of employees hired 
under the authority; the effect of the exercise of the 
authority on the hiring of veterans and other demographic 
groups, including minorities, women, and individuals over the 
age of 40; and the way in which managers were trained in the 
administration of the streamlined hiring system.

         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):

            SECTION 4 OF THE SECURITIES EXCHANGE ACT OF 1934

                   SECURITIES AND EXCHANGE COMMISSION

  Sec. 4. (a)  * * *
  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Accountants, economists, and compliance examiners 
        appointments.--
                  (A) Appointment authority.--
                          (i) This subparagraph applies with 
                        respect to any position of accountant, 
                        economist, and securities compliance 
                        examiner at the Commission that is in 
                        the competitive service.
                          (ii) The Commission may appoint 
                        candidates to any position described in 
                        clause (i) in accordance with the 
                        statutes, rules, and regulations 
                        governing appointments in the excepted 
                        service, and notwithstanding any 
                        statutes, rules, and regulations 
                        governing appointments in the 
                        competitive service.
                          (iii) The appointment of a candidate 
                        to a position under authority of this 
                        subparagraph shall not be considered to 
                        cause such position to be converted 
                        from the competitive service to the 
                        excepted service.
                          (iv) For purposes of this 
                        subparagraph, the terms ``competitive 
                        service'' and ``excepted service'' have 
                        the respective meanings given them 
                        under chapter 21 of title 5, United 
                        States Code.
                  (B) Reports.--No later than 90 days after the 
                end of fiscal year 2003 (for fiscal year 2003) 
                and 90 days after the end of fiscal year 2005 
                (for fiscal years 2004 and 2005), the 
                Commission shall submit a report with respect 
                to its exercise of the authority granted by 
                subparagraph (A) during such fiscal years to 
                the Committee on Financial Services of the 
                House of Representatives and the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate. Such reports shall describe the changes 
                in the hiring process authorized by such 
                subparagraph, including relevant information 
                related to--
                          (i) the quality of candidates;
                          (ii) the procedures used by the 
                        Commission to select candidates through 
                        the streamlined hiring process;
                          (iii) the numbers, types, and grades 
                        of employees hired under the authority;
                          (iv) any benefits or shortcomings 
                        associated with the use of the 
                        authority;
                          (v) the effect of the exercise of the 
                        authority on the hiring of veterans and 
                        other demographic groups; and
                          (vi) the way in which managers were 
                        trained in the administration of the 
                        streamlined hiring system.
          [(3)] (4) Leasing authority.--Nothwithstanding any 
        other provision of law, the Commission is authorized to 
        enter directly into leases for real property for 
        office, meeting, storage, and such other space as is 
        necessary to carry out its functions, and shall be 
        exempt from any General Services Administration space 
        management regulations or directives.

           *       *       *       *       *       *       *

                            ADDITIONAL VIEWS

    We each have made investor protection one of our top 
priorities for our work on the House Financial Services 
Committee. In our view, H.R. 658, the Accountant, Compliance 
and Enforcement Staffing Act, will improve investor protection 
by allowing the Securities and Exchange Commission to 
accelerate the hiring process for hundreds of accountants, 
economists, and compliance examiners in order to improve its 
oversight of U.S. corporations. It is also generally well 
crafted. As a result, we support this bill.
    During the last year, we have significantly augmented the 
resources available to the Securities and Exchange Commission, 
including increasing its annual budget by more than $270 
million. We believe that this increase in resources will help 
the Commission to effectively implement the Sarbanes-Oxley Act, 
which we enacted in 2002 in response to a series of large-scale 
corporate scandals at companies like Enron, WorldCom, Tyco, 
Global Crossing, Adelphia, and Rite Aid.
    The increased appropriations provided to the Commission 
during the last year will permit the hiring of hundreds of new 
professionals to police the securities industry. The increased 
funding provided in the FY 2003 appropriations process will 
result in an increase the Commission's total allowable 
workforce by 842 new positions. This increase in the 
Commission's labor force comes on top of the additional 125 
professionals that we allowed the agency to hire as a result of 
the FY 2002 supplemental appropriations.
    Unfortunately, as it has worked to implement the Sarbanes-
Oxley Act and restore investor confidence in our capital 
markets, the Commission has encountered some difficulties in 
identifying and expeditiously hiring the best workers for many 
of these new positions. H.R. 658 seeks to address this problem 
by streamlining the hiring process at the Commission for a 
number of specialized professions. The Commission, like all 
other government agencies, already has similar authority for 
recruiting and hiring attorneys.
    At our one hearing on this legislation, we heard from the 
executive director at the Commission about the need to expedite 
the hiring of accountants, economists, and compliance 
examiners. We also heard from the president of the National 
Treasury Employees Union, which represents the affected workers 
at the Commission, about the need to protect the post-
employment civil service rights of these individuals. At the 
hearing, the Commission and the National Treasury Employees 
Union both expressed an understanding of the objective of the 
other and recognized that these goals were not necessarily 
mutually exclusive.
    As a result, we joined with the Majority in requesting that 
the labor and management leaders at the Commission meet to 
draft an agreement to allow the Commission to hire certain 
professionals through expedited procedures while protecting the 
workplace rights of those individuals once hired. To their 
credit, the Commission's labor and management worked diligently 
and developed an agreement contained in the bill reported by 
the Committee. This legislative language will accelerate the 
hiring of mission-critical workers at the Commission, it will 
protect the rights of these employees, and it will advance 
investor protection. We support each of these worthwhile goals, 
and congratulate the Commission and the National Treasury 
Employees Union for their good work. Their joint efforts help 
to demonstrate the effectiveness of labor-management 
cooperation in the federal workplace.
    We are also pleased that the legislation approved by the 
Committee, unlike the introduced bill, will require the 
Commission to conduct two studies about the implementation of 
this special hiring authority. The inclusion of this study 
provision will provide Congress with information on the use of 
the authority, including its impact on hiring of veterans and 
minorities and other demographic groups, that will be needed to 
enable Congress to evaluate the effects of this change in the 
law. It is our expectation that these new powers will not 
undermine efforts to increase the number of minority 
professionals at the Commission and that the SEC will use the 
expansion of its professional ranks as an opportunity to 
aggressively seek qualified minorities to serve at the 
Commission.
    Although we agree on almost every provision in this bill, 
we unfortunately differ with the Majority on one remaining 
issue: the length of time that the Commission should have this 
special hiring power. As currently drafted, H.R. 658 would 
provide the Commission with the permanent authority to bypass 
civil service rules in order to accelerate the hiring process 
for accountants, economists, and compliance examiners.
    We believe that this special authority, requested by the 
Commission in a time of urgency, should sunset so that the 
Congress can evaluate the effectiveness of the program at an 
appropriate time. Because H.R. 658 will make extraordinary 
changes in the normal hiring process and because this power has 
the potential to be abused, we believe the prudent course of 
action would be for the Congress to sunset the law on a date 
certain and determine at that time whether to continue it. In 
short, the Congress should jealously guard the special powers 
that it grants government agencies.
    Accordingly, during the consideration of H.R. 658 by the 
Committee we sought to sunset this special hiring power for the 
Commission at the end of FY 2008. Sunsetting our laws forces 
the Congress to regularly examine government programs in order 
to extend them, improve them, or end them. In the case of this 
legislation, the Commission needs this expedited hiring 
authority to ensure that it can quickly hire hundreds of new 
accountants, economists, and compliance examiners in the short 
term. Getting these new employees quickly into place will allow 
the Commission to implement the reforms called for in the 
Sarbanes-Oxley Act and better protect the interests of our 
Nation's investors. The Congress should support these important 
goals.
    In the longer term, however, the Commission will likely 
return to a more predictable hiring pattern, and this expedited 
hiring authority may no longer be necessary in the future. We 
therefore should limit this authority now so that the Congress 
can reevaluate it later, and we believe that a sunset at the 
end of FY 2008 provides sufficient time for the Commission to 
meet its short-term staffing needs.
    We should also note that many of our colleagues in the 
Majority on this Committee have previously strongly supported 
sunsetting the laws that the Congress creates. For example, 
when we considered H.R. 2764, the America's Private Investment 
Companies Act, in the 106th Congress the Majority strongly 
supported an amendment to sunset that program. This amendment 
narrowly passed the Committee by one vote. Every Member of the 
Majority who voted on that amendment supported it. We therefore 
hope that our colleagues in the Majority will reconsider their 
views on this matter as H.R. 658 proceeds through the Congress 
and work with us to make a good bill even better.
    In closing, H.R. 658 is pragmatic and desirable 
legislation. It will streamline the hiring process for hundreds 
of new professionals at the Commission, it will safeguard the 
civil service rights of these workers, and it will enhance 
investor protection. Notwithstanding our one reservation 
concerning a sunset, which we hope our colleagues on the House 
Government Reform Committee and/or in the Senate will fix 
during their consideration of this bill, we support H.R. 658. 
We also hope to continue to work in a bipartisan manner to move 
this legislation quickly through the Congress.

                                   Barney Frank.
                                   Paul E. Kanjorski.
                                   Carolyn B. Maloney.
                                   Luis V. Gutierrez.
                                   Melvin L. Watt.
                                   Gary L. Ackerman.
                                   Darlene Hooley.
                                   Brad Sherman.
                                   Gregory W. Meeks.
                                   Barbara Lee.
                                   Charles A. Gonzalez.
                                   Michael E. Capuano.
                                   Harold E. Ford, Jr.
                                   Ruben Hinojosa.
                                   Joseph Crowley.
                                   Wm. Lacy Clay.
                                   Steve Israel.
                                   Carolyn McCarthy.
                                   Joe Baca.
                                   Jim Matheson.
                                   Stephen F. Lynch.
                                   David Scott.
                                   Artur Davis.
                                   Bernard Sanders.


```