Date: 2002-04-11
Speaker: GEORGE MILLER (democrat)
Chamber: H
State: California

Mr. Speaker. this is really about two different approaches to the protection of American workers retirement funds. Earlier this year. American workers all across this country were jolted by the fact that their 401(k) plans. which they are having to increasingly rely on for their retirement nesteggs. could be vulnerable and could be wiped out by incredible actions by corporate executives. But that is what happened to the people who worked for Enron. and that is what millions of Americans all of a sudden understood was possible with their plans. So we learned a lot of information about the Enron case and about the vulnerability of employee retirement funds. We learned first and foremost that many employees had no control over many of the assets that were put into their funds because corporations have said that employees have to hold on to them until you were 50 or 55. could not divest them for 5 or 10 years. and could not diversify their holdings. We learned that employees. even though the vast majority of these funds. or in fact all of these funds. were assets that belonged to the employees. that in many instances they were not given a voice on the pension board. and clearly. they were not at Enron. What happened. the members of the Enron pension board sold their stock. They never told the employees that they were selling. or that they thought the stock should be sold. They saved themselves millions of dollars. The employees got wiped out. Why? Because they had a conflict. Nobody represented the rankandfile employees on the pension board which was made up of executive vice presidents who were trying to get to the corner office. They also found out that the employers plans at Enron were ensured. They were guaranteed. So as Enron goes into bankruptcy. the executive elites. their retirement plans are guaranteed. They saved millions of dollars for their -future use through insurance plans and guarantees. The employees. wiped out. and at best get to stand in line and hope to get something from the bankruptcy court where they have no real protections. We also wanted to make sure when the employer. the executive elites. were making a decision to sell stock. that somebody would tell the employees. There is no requirement in the law today. And yet when Ken Lay was telling people he was buying stock. he was secretly selling stock to liquidate his personal debts at Enron. The employees had no way of knowing that. no timely notification. They lost their assets. the Ken Lays protected themselves. Finally. what we see is these employees have no real right of action for the misconduct of the executives of Enron. for the executives of Enron that have wiped out their retirement plans. We think that they should be made whole. that they should have a right to go after that. but under ERISA. they have no rights. Mr. Speaker. what is the distinction today between the Republican bill and the Democratic substitute? The Republican bill learns nothing from Enron. It lets executives continue to sell stock and not notify the employees. It continues to treat the executive retirement assets completely different than the employee retirement assets. It makes sure that the employees have no voice on the pension boArd. even though research shows that where employees have a voice on the pension board. they invest more money and. in fact. they do a little bit better on the rate of return on those investments. So they have learned nothing about protecting American workers as a result of the disaster at Enron. as a result of the greed at Enron. as a result of the selfdealing at Enron. as a result of the conflicts of interest. The Republicans have learned nothing. because their bill does nothing to provide further protections. Yes. they let them diversify. but it is a 3year rolling diversification. Three years ago. people were in the last stages of the greatest bull market in the history of this country. and today. people have lost many of their assets. Three years in the marketplace is a long time. How is it that we believe that we can lock up peoples assets for 5 years. and then for every 3 years after that? Finally. the final insult to the employees in this bill. and that is the investment advice provisions. For the first time under the Federal laws protecting these pension plans. conflicted advice will be allowed to be offered. That comes just 2 days after we learn of the Merrill Lynch conflicts where Merrill Lynch. as an investment banker. was making tens of millions of dollars on investment advice and arrangements for these companies and then were telling their people who were giving retail advice to investors all across the country that these were good stocks and good for retirement plans. when we find out that they did not believe that at all. Investment advice can be very important to Americans trying to secure their retirement. but it must be advice without hidden commissions. without hidden fees. and without hidden conflicts of interest. America got a rude awakening with Enron. but we have also learned that Enron is not unique. I appreciate that Members want to treat it as a onetime effort. We have seen other corporations that have locked up the pension assets of employees for their own convenience. for the good of the corporation. as opposed to the good of the workers. We have also seen other corporations where huge loans were secretly taken out. where stock was secretly sold. and the employees had no way of knowing it until after it was too late. After the famous ship that the President keeps talking about. where what is good for the captain is good for the crew. the -.crew was already underwater. The captain did not even have the courtesy for the workers of many. many years. did not even have the courtesy to bang on the abandonship horn as he went to the lifeboat. We owe Americas workers more. Mr. Speaker. this is the one vote we are going to get about millions of workers. about almost all of our constituents in the workplace. about the security and protection and the advice and the control that they have over their retirement nestegg. Mr. Speaker. our committee was sadly treated to the testimony. as many other committees were. of workers at Enron and many other corporations who are in their 50s and 60s who thought that they had a great retirement ahead of them. and it has vanished. It was wiped out by incredible corporate greed. by a lack of total ethics -by corporate executives. by the doubledealing of corporate executives. by the conflicts of interest in the financial institutions and the accounting institutions. We cannot let that happen again. We must pass the Democratic substitute.