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

Mr. Speaker. I yield myself 4/2 minutes. Mr. Speaker. the challenge today is whether or not the House of Representatives is prepared to take the lessons of the Enron scandal and use those lessons to apply to greater security of the millions of workers 401(k) plans across the country. I would suggest that. in the Republican bill. they have failed to do that. Later. we will offer a Democratic substitute that I believe provides for that greater security. greater control. and greater say by the employees of the assets that belong to them that make up much of their retirement nest egg. so we do not again see. as we saw on Enron. where. because of unethical behavior by corporate executives. where because of greedy behavior by corporate executives. where because of illegal behavior by corporate executives. where because of conflicts of interest by corporate executives. the employees lost everything. They were never given advance notice. They were never told what was really happening with the corporation. They never had a representative on the pension board which was controlling the assets which 100 percent belonged to the employees. So we will have an opportunity with that substitute to reject the Republican bill that fails to learn any lessons and provide those greater protections to the workers of this country. and to. in its place. provide for an employee representative. a rank and file employee representative. on the pension boards so we do not have the situation that we had at Enron and other corporations where members of the pension board who were executive vice presidents have a conflict of interest between their career track and taking care of the beneficiaries. the employees. of the corporation. where they sold their stock but never told the pension beneficiaries that they were selling. or that they thought it was the right thing to do. We are going to make sure that a rank and file member is a member. so they will have access to the information and they will be able to make determinations for their fellow employees. We are going to make sure that. after 3 years. they have a complete right to divest. so if they want to diversify their portfolio. if they want to make other decisions about their retirement. they will be free to do it. In the Republican bill. which you see. it takes 5 years to be fully able to diversify. and every 3 years a new period starts with a new contribution. Three years ago we were in the throws of a bull market. the greatest bull market in modern history. And today. many of those same people have lost much of their retirement because they were locked into it. Three years is a very long time. and a rolling 3year period is an unacceptable time to lock up peoples assets that belong to them so they cannot make a determination about their retirement. We will also make sure people are treated equally. What we see in Enron and many corporations today is that the retirement plans are ensured for the executives. The retirement plans are guaranteed. The benefits of the 401(k) plans are guaranteed for the executives but not for the employees. So while Enron or other corporations go into bankruptcy. the executives are taken care of. They are taken care of. They walk away with millions. The employee. they have to walk around the corner and stand in line at the bankruptcy courts and hope that there is something left over at the end to see if they can put back together their retirement. This is really about a fundamental test. about the workers of this Nation who now have got a rude awakening call. and through the tragedy of the workers at Enron that their 401(k) plan that they are being required to lean on more and more for their retirement as vulnerable beyond their expectations. is far more vulnerable than they were led to believe. Finally. we say yes. investment advice is important. but that advice should not be conflicted. We have just witnessed this week once again the incredible conflicts in the financial institutions of the country where Merrill Lynch was offering retail advice to people to buy their stocks. and in their email traffic they were making jokes about the stock. They were raising ethical concerns about offering these stocks for sale because they knew their company was conflicted because it was earning fees as an investment bank from the very clients whose stock it was touting. The investment advice can be offered and it can be helpful. but it cannot be conflicted. The Republican bill allows that investment advice to continue to be conflicted. Mr. Speaker. I reserve the balance of my time.