[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.