[Text only of letters sent from the Commerce Committee Democrats]
The Honorable Newt Gingrich
Speaker
United States House of Representatives
H-232, The Capitol
Washington, D.C. 20515
The Honorable John A. Boehner
Chairman
House Republican Conference
1010 Longworth House Office Building
Washington, D.C. 20515
The Honorable Tom Bliley
Chairman
Committee on Commerce
2125 Rayburn House Office Building
Washington, D.C. 20515
Dear Mr. Speaker and Chairmen Boehner and Bliley:
Under the leadership of Chairman Bliley, this Committee ordered H.R. 10 favorably reported on October 30, 1997, by a vote of 33-11 with strong Democratic support. The Democrats on this Committee felt that we had been treated fairly in the processing of this bill and that the version of H.R. 10 reported by our Committee was balanced and responsible, if not everything that each of us would have wanted in all cases. We agreed to unprecedented compromises in order to resurrect what was at that time a dead bill. The Committee's securities provisions struck an appropriate balance between functional regulation for the protection of investors and the prudential regulation of traditional banking functions.
Press reports indicate that the Republican Leadership has given Republican Banking and Commerce Committee negotiators until tomorrow to reach agreement on H.R. 10, the Financial Services Act, or the bill will be written without the participation of the Commerce Committee. (Democrats have been excluded.) These reports also indicate that securities and banking trade associations have been asked by Republican leaders to rewrite the securities provisions of the bill and that this "compromise" will be included in the bill with or without the assent of the Commerce Committee. If true, this is an outrage.
I am transmitting letters from the Securities and Exchange Commission, the North American Securities Administrators Association, the Government Finance Officers Association, Consumers Union, Consumer Federation of America, and U.S. PIRG, all in strong opposition to the proposed securities amendments negotiated by the staffs of the Securities Industry Association (SIA) and the American Bankers Association Securities Association (ABASA). In their view, these changes would seriously harm individual investors, small businesses, State and local government entities and school districts and their taxpayers, and public and private pension plans, as well as undermine the integrity of this nation's premier securities marketplace. The proposed amendments create an uneven playing field for bank and non-bank distributors of securities and represent a significant deviation from the well-established standards currently in place under federal and state securities laws and SRO rules.
First, the proposed amendments are dramatic in scope and significantly negative in effect and, as such, deserve a full hearing in the Commerce Committee before any Floor consideration. Second, if any or all of these abominable changes are included in H.R. 10, I will withdraw my support for the bill and oppose its passage vigorously. I will encourage other Democrats and right-thinking Republicans to do the same. Financial modernization should not be an excuse for defrauding the public. If it does, then I want no part of it. I can think of no reasonable justification for eviscerating the established securities regulatory framework. The same standards of investor protection and oversight of sales practices and other supervisory concerns should be applied to every entity operating as a broker or dealer in this country.
Thank you for your consideration of my views along with those of the SEC, of NASAA on behalf of our state securities regulators, of the GFOA on behalf of over 13,500 state and local government officials and public finance specialists in their roles as debt and cash managers and investors of public employee pension funds, and of consumer groups, and all of us on behalf of the American public, the parties not represented in the industry negotiations.
Sincerely,
JOHN D. DINGELL
RANKING MEMBER
cc: The Honorable Richard A. Gephardt, Democratic Leader
The Honorable David E. Bonior, Democratic Whip
Commerce Committee Members
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