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

Mr. Speaker. I yield myself such time as I may consume. Mr. Speaker. we have heard a great deal today and over these past many months about the Enron scandal. I think there is general agreement throughout the halls of Congress and throughout this Nation that it was. in fact. a scandal. that we saw the very worst in human behavior with respect to corporate responsibility. and the responsibility of employers to employees. of the corporation to its shareholders. of the corporation to the general public. But this legislation is more than about Enron. because Enron is in bankruptcy. Enron may very well cease to exist as an ongoing financial entity. Its parts are being sold off. Its parts are being salvaged and people are trying to get hold of their lives again after the financial collapse. But Enron was also a beacon of warning to millions of American workers about what their particular situation might or might not be with respect to the security of their 401(k) plan. a 401(k) plan of which the workers are being told over and over again they are going to have to rely on more and more for their retirement because companies refuse to provide a defined benefit plan which would provide them much more security and much more future security with their retirement. something that they could count on. So what have we learned from Enron? We learned from Enron that many employees did not have control over that part of the stock that was contributed by the corporation. We also found out that many employees were prevented from having any control over that stock until age 50 or 55. But we also found out that that was not unique to Enron. That was true of many corporations. of the Fortune 500 and unnamed corporations that we do not know a lot about. but that was true of them and a holding period for the employees not to divest themselves of the stock. That was done for the convenience of the corporation. That was done because the corporation believed it made their employees more loyal. But when the plans went wrong with their financial future. the company went wrong. we found out that the employees were locked into a situation from which they could not extract themselves. So this legislation takes the Enron lesson and says we ought not let that happen to other employees in other corporations. So we say that after 3 years of employment. you ought to be able to diversify your 401(k). your 401(k). in a manner which you think is best for your retirement. The 3 years is a maximum period of time which you ought to be able to force the employee to hold onto the stock. because markets move fast. financial markets move fast. and the future of corporations changes all the time. The Republicans do not do that. They have a rolling 3 years. They have a. 5year phaseout. We do not think that that is fair to the worker. We think the worker ought to have that control. It is interesting now that as corporations review their plans. they are moving toward the Democratic bill. Chevron. in its merger with Texaco. decided that people could diversify immediately. Time Warner decided that people in AOL could diversify immediately. Walt Disney. Gillette. Quest Communications. Procter & Gamble. McDonalds. CocaCola. Pfizer. Abbot Laboratories. So this is not a radical approach. People realize this is what workers are entitled to now because the 401(k) is made up. 100 percent. of the assets that belong to the worker. We also said that if this is the employees assets. if this is their money. this is their stock portfolio. this is their retirement. maybe they ought to have a say on the board. At Enron we saw that they had no say on the board. that the board was made up of executive vice presidents who did not want to deliver any bad news to the corporation. who when they found out bad news did not tell the employees. did not tell the pension board. went off and privately sold their own stock. But we have also seen that that has been true in other corporations beyond Enron. We have seen that family members have been selling stock when the corporations are in trouble. Obviously somebody whispered to their son or daughter. "The company is not doing so well. sell the stock." Why should the employees not have that information? We believe there should be a rankandfile member on the pension board since the pension represents 100 percent of the employees money. Research has shown us that where we have rankandfile members on the pension board. people tend to invest more in their retirement plans and they do a little better on the rate of return. We think that that is important. That is a lesson of Enron that is important for other corporations and for the employees. We also saw the situation where employers were dumping stock. where Ken Lay was telling people in emails that he was buying stock. But he was not really buying stock. he was trading stock and. in fact. he was selling the stock to liquidate the large loans. personal loans. that he had taken from the Enron Corporation. Again. as we have seen the fortunes of companies change over the last several months in a down economy. in a changed dotcoin society. we have seen that many employers have been dumping stock. We think that maybe the employee ought to know that when the corporate heads of the company decide to dump the stock. that they ought to be told about that. Today you. can hide that sale of stock for 6 months or a year. Six months or a year can be an economic disaster for the employees if you are caught behind that wave. So we say when you sell $100.000 of shares. inform the pension board. inform the employees. What is it that we cannot trust these employees to understand? They will make the decision if they want to also sell their stock. like the CEOs and the FAO of the corporations. We also decided and we learned from Enron that there was much corporate misconduct. where the employees who were devastated by that conduct had no right to proceed against those people who defrauded them. who had looted the companies. Again. tragically. not unique to Enron. but we have seen the same instances in a number of other corporations. so we said those people ought to be able to proceed to recover their retirement nest egg. to recover their financial future. to recover the plans that they have made for themselves and their families because somebody acted in an illegal fashion. Today those people can do that. And under ERISA there is no right of recovery. so this is beyond the Enron employees. This is about the millions of other employees who are out there in this same situation. What else did we learn from Enron? We learned that the employees had one plan. a 401(k) plan. and that the executives had another 401(k) plan. The executives plan was insured. It was guaranteed. So as Enron goes on the rocks. as it becomes bankrupt. the executives leave with life preservers in the lifeboat. The employees leave with nothing. We think that if you are going to insure the executives plan. insure the employees plan. Both of them are contributing to making the wealth of the company. Both of them are creating the earnings of the company. It is not like the Enron employees were not working hard in this company. They just did not get a chance to be protected like the executives. So this is really about whether or not we are going to continue to accept a system where we have an elite group of executives that get insured pension plans. get incredible compensation. are able to buy multimilliondollar homes in Florida or in Texas that are. exempt from bankruptcy. that can have insurance plans that guarantee a payout. and then there are the employees who go to work every day. who build the financial future of the company. who do the job for which they were hired and can be left with nothing. This really is about equity. This is about fairness. This is about what we owe the workers in these companies. Mind you. these very same companies made a decision that this was really good for the executives. for the top corporate elite. that these were all good things to do. But now when you suggest that maybe you should do them for the employees. for the rankandfile people who are on the line working every day. that somehow it is radical or it is unAmerican or it is against the free enterprise system. I think President Bush got it about right. In his first public statement after the Enron case down in North Carolina. I believe it was at a naval base. he said. "What is good for the captain should be good for the sailor." That is what the Democratic substitute says. It says that we ought to recognize the dignity and the hard work of the employees and they should not be put in a position of disadvantage. They should not be put in a position where they could lose everything when the executives are in a position of losing nothing. That is a very important principle. It is a very important principle for this Nation. The President recognized it. but the Republican bill does not. The Republican bill concentrates on getting the employees better investment advice. and that is a good idea. Clearly. even the Enron employees did not understand the real value of diversification. Sogood investment advice makes sense as people are trying to plan for their retirement. We believe that that advice should not be conflicted. The Republican bill does not provide for that kind of protection. We recognize. as we have seen. where Arthur Andersen was deeply conflicted between the commissions. it was making on consulting from Enron and auditing the books they were presenting to the public. to the shareholders. and to the employees about the health of the company. We have now seen all of the labyrinth of commissions and fees and financial arrangements that had distorted the financial marketplace. the most recent of which is Merrill Lynch. where Merrill Lynch was seeking to make millions. tens of millions of dollars as an investment bank. but it was doing business with the same people whose stock it was touting. so it did not want to say "dont buy ABC stock" when it was trying to negotiate a commission worth tens of millions of dollars. so it had its people keep saying "buy ABC stock" and even those people said. "That is lousy stock. Its no good." They were conflicted. Yes. investment advice is good. but it ought to be independent. It ought to be independent of those commissions. of those holdings. of those conflicts. And they run throughout the financial markets. If America got any lesson from Enron. through Arthur Andersen. through Global Crossing. through so many others. they learned that there really are two systems. a system for the privileged. for the elite. for the executives. and another system for the employees who are investing in these companies. That is why we have introduced the substitute. because half of the Republican bill is missing. Yes. it deals with investment advice. but it does not deal with the lessons of Enron. It does not deal with the peril of millions of Americans who are leaning very hard on their 401(k) to help provide for their retirement. It does not deal with the unethical behavior of corporate executives who are not in Enron. It does not deal with the ability of corporate executives to hide their transactions from their employees and from the investors. And it does not deal with the fairness of the treatment of those two parts of the corporation. The Democratic substitute does it. It does it in a way that does not place a burden on the system. It is really about disclosure. It is really about fairness. And it is making sure that as we walk away from the Enron disaster. that we really in fact have changed the manner in which we are doing business to make sure that there is fairness in treatment and there is protection for the American worker. The bill as presented to us today is incomplete in that fashion. The Democratic substitute will complete that part of the story. to provide that kind of protection for the American worker. I will hope that our colleagues in this House on both sides of the aisle will embrace this substitute and discharge their obligation that we have to provide for the retirement future and protection of the American worker. Mr. Speaker. I reserve the balance of my time.