Robert Bennett

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. BENNETT. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. BENNETT. Mr. President, I ask unanimous consent that the pending amendment be set aside.

Mr. BENNETT. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BENNETT

Mr. BENNETT. Mr. President, I ask unanimous consent that the Subcommittee on Strategic Forces be authorized to meet on Tuesday, June 27, 1995, at 6:00 p.m., to markup the Department of Defense Authorization Act for fiscal year 1996.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Subcommittee on Social Security and Family Policy of the Committee on Finance be permitted to meet on Tuesday, June 27, 1995, beginning at 10:00 a.m., in room SD-215, to conduct a hearing on the solvency of the Social Security Trust Funds.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Subcommittee on Seapower be authorized to meet on Tuesday, June 27, 1995, at 4:00 p.m., to markup the Department of Defense Authorization Act for fiscal year 1996.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Subcommittee on Readiness be authorized to meet on Tuesday, June 27, 1995, at 9:00 a.m., to markup the Department of Defense Authorization Act for fiscal year 1996.

Mr. BENNETT. Mr. President, I ask unanimous consent that the Subcommittee on Airland Forces be authorized to meet on Tuesday, June 27, 1995, at 2:00 p.m., to markup the Department of Defense Authorization Act for fiscal year 1996.

Mr. BENNETT

Mr. BENNETT. Would this provision require courts to name any institutional investor as lead plaintiff?

Mr. BENNETT. Mr. President, I yield such time as he may consume to the Senator from Connecticut.

Mr. BENNETT. I ask unanimous consent that that be the state of the time from this time until we break for lunch.

Mr. BENNETT. Mr. President, I ask unanimous consent that the previous unanimous-consent be amended to be as the Senator from Maryland remembers it.

Mr. BENNETT. Yes, on the Sarbanes amendment there would be no motion to table.

Mr. BENNETT. Mr. President, I have no problem with that, but I cannot bind other Senators who may wish to make a motion to table. Mr. President, I would have no objection to that.

Mr. BENNETT. Mr. President, I have heard the Senator from Maryland talk at great length about all of the hearings and the comments and the legal aspects of this. Once again, I would like to talk about it from the standpoint of the chief executive officer, struggling to maintain the investor confidence in his company, and bring an appropriate return to investors, and talk about how this safe harbor circumstance would actually work. A chief executive officer, having been one, sees dozens, maybe hundreds, of memorandum, every week. He engages in any number of conversations with individuals in the company in any given week about any particular subject. That is the fact against which I want to paint the picture of how this thing works. We have been having this discussion about weakening a standard, safe harbor; where should the threshold be? I think the issue comes down, do we want a safe harbor or not? If we want one, it has to be safe, or we should not go through the exercise. Now, the opponents have suggested that the safe harbor in the bill is, in fact, a pirate's cove. Let me list, Mr. President, the pirates who are not welcome in this cove. That is, the pirates who would be denied the right to sail into this particular harbor, by the bill. A blank check company, a blind investment pool that does not tell anybody how they invest, a penny stock company, a rollup transaction, a going private transaction. Not to imply these people are pirates, but they could not get into the cove. A mutual fund. It is very significant that that is on the list because that is where most of the seniors invest their money. They do not go out and individually pick stocks unless they have some experience at that. They buy a mutual fund. A mutual fund cannot come into this particular harbor. A limited partnership. A tender officer. Anyone filing certain ownership reports with the SEC. Or information in the financial statements is excluded. And of course any company that has recently committed a violation of the antifraud provisions of the securities laws cannot sail into the harbor. Those kinds of restrictions are already out there. So the safe harbor is not for the pirates. It is for the people who do not fall into those categories. Now, for those in the harbor, they have some requirements written into the bill. They must clearly state that any projection they are making is, in fact, a statement about the future, and they must clearly state, here in the words of the bill, ``The risk that actual results may differ materially from such projections, states, or descriptions.'' In other words, there is not a risk that we might be off a day or two. There is not a risk that we might be off a penny or two. There is a risk that the actual results may differ materially from the projections or estimates. Then, of course, we have the language that the bill does not permit companies to take advantage of the safe harbor if they act with ``the purpose and actual intent of misleading investors.'' This is the language of the bill that we have before us. Those are the requirements in this particular harbor; those that prevent people from coming in in the first place and those who govern the people who are there. Let me explain why it is important that we not further lower the threshold that we have established with the words ``purpose'' and ``actual intent of misleading investors.'' Here is how things work in an actual company, as I say speaking from experience as a chief executive officer. You gather all of your people around you. You look at the memos and the other reports that come out, and you inevitably find that there is a difference of opinion about just about everything going on in your company. Let us talk about a new product. Some of your people say to you, ``Oh. Our product, product X, will be available right on schedule in August. You can depend on it. You can take it to the bank.'' Others will say, ``No. We are a little worried. We may not make it in August. We have this problem. We have that problem. Our supplier may not come through. We may miss the target date.'' You are the chief executive officer. You have to decide. You have a meeting coming up with a group of security analysts, and they are going to ask you point blank, ``When will product X be on the market?'' You want to give them the very best information you can. So you sift through all of this and ultimately you have to make a decision. And you decide based on the track record of the people who are advising you that you think product X is a pretty good bet to be on line in August just as you anticipated it would. You go before the analyst meeting. And they say [[Page S 9122]] to you, ``When will product X be available?'' You say, ``Well, it is my best judgment that it will be available in August. I have to qualify that by saying that is my estimate. I tell you there are some people in the company who do not think it will be available in August. But the best I can tell, my guess, my prediction, is that we will deliver product X in August.'' He can maybe put some other caveats in. You know, this is very sophisticated. The analysts do not hear any of that. They are like pollsters. ``Who is ahead? Who is going to win the election?'' ``No. We want to know what your numbers say right now.'' And they do not listen to the caveats. The CEO can put in all the caveats he wants. But they are going to walk away saying, ``He predicted that is going to come out in August.'' Now we get to August. What happens? Any one of a number of things happens. Frankly, they do not have to be the kinds of things projected in the memo that the division manager who said it might not happen in August included. There could be a hurricane in Florida where one of your suppliers is and the supplier cannot provide the parts that you were depending on. There was no way you could predict that. There are any number of things that could have happened. But you get to August, and the company puts out a press release saying product X has been delayed and will not be introduced until sometime later in the fall. Bang--the analysts pound the stock. There is wild speculation. I have seen those. We have all seen those. They go through the marketplace-- all kinds of rumors, the company has serious problems, their management is in difficulty, so and so is going to get fired, the stock drops 10 percent, and within a week strike suits are filed naming the company, its chief executive officer, and a bunch of other officers for conspiring to put out false information about product X and misleading the marketplace. Product X comes out in September. It is a great hit. The stock price recovers. Presumably nobody is hurt. But, frankly, all of that is irrelevant because the legal machinery is now in motion and they do not care what is happening to the product or the company. Whether they want to or not, the top management of that company must now focus on an issue that is irrelevant to the management of the business; and, if I may, Mr. President, to the detriment of the investors in that company because the investors in that company want top management focusing on sales. They want top management focusing on efficiency. They want top management focusing on cutting costs and opening new markets. But instead they have a situation where in the name of the investors the legal machinery is forcing the top management of that company to focus on something totally unproductive--coming up with a defense against the charges that they mislead the public. Discovery: That great word in the legal lexicon; discovery starts, and it goes to every piece of paper that has to do with product X, and every memorandum that may have crossed the CEO's desk. And they find the memo from the fellow who says, ``I don't think we are going to be ready in August.'' And, bingo, we have a smoking gun. No reference is made to the other opinions now. In court the reference is all going to hammer in on this one fateful memo, and, ``Mr. CEO, did you read this memo?'' If, he says yes, he not only has knowledge that product X was not going to come in, he has actual knowledge, not just imputed knowledge, actual knowledge. He admits he read the memo. Nail him to the wall. That is what happens if he does not have the safe harbor that we have written into this act. Let us assume that this company is not one of those that is kept out of the harbor, the list I read in the beginning. It is one of those that is allowed into the harbor and without the harbor that is what happens. Now suppose we have the reckless standard that people have argued for. This would be a very easy standard for a plaintiff's lawyer to meet in the circumstance I have described. Arguably any projection about the future is reckless. ``You do not know, Mr. CEO, that the future is going to produce this product in August. It was reckless of you to say that you would have it in August. You may have believed it but it was a reckless statement.'' There is no protection for the CEO in this circumstance with the term ``reckless.'' No. He needs the safe harbor of the bill. And the question is how safe should that harbor be? Well, if we had the simple knowledge standard that the SEC suggests, the question is, ``Well, did you know that this product would not meet its date in August? Well, here is a memo in the company. It came over your desk. You read it. If you did not know, you should have known.'' Simple knowledge can be twisted in the hands of a careful lawyer, and the CEO has a very difficult time explaining this circumstance. So a knowledge standard, even an actual knowledge standard, is not going to be a safe harbor. It is not going to protect the CEO. And again the point, Mr. President, it is not going to be for the benefit of the investors because the CEO is not going to be able to be doing what he is hired by the investors to do--run the company. He is going to be worrying about this particular problem. This is the kind of thing that drives companies to settle out of court and to say, ``Well, we really did not do anything wrong but in order to get back to the business of making products and out of the business of prosecuting lawsuits, we will settle even though we are pretty sure we did not do anything wrong.'' No. What we need to have is what we have in this bill, a safe harbor that says not only did the CEO have knowledge but he acted with the purpose and actual intent of misleading investors. Now that no one can tolerate. That clearly must not be allowed. But it must be the purpose and actual intent of misleading investors before the CEO is driven out of the harbor. Why actual intent? Because without it intent can be implied in a number of circumstances. ``You saw this memo, the very fact that you decided to ignore it in your presentation to the security analyst, Mr. CEO, implies that you intended to deceive them.'' No. The standard must be higher than that. You must prove that he had the actual intent, that he had the purpose of deceiving investors before you drag him into that area. Is this a high threshold? I think it is an appropriate threshold because it fits the reality of the circumstances, and it prevents plaintiffs from accusing companies and officers of committing fraud simply because documents of differing opinions exist somewhere in the file. You have to go beyond that. You have to prove actual intent. If I may stray into waters that I probably should not, since I have not gone to law school, but I have had some experience in this area, it is a little like the standards that we apply in the first amendment. If a newspaper inadvertently prints something that is inaccurate, they cannot be held for libel unless it is proven that they acted with malice, with actual intent, if you will, to harm the reputation of the individual. Thus free speech is allowed to go forward unimpeded, however damaging it is to the individual involved. Having been the individual involved in some circumstances, I know how hard sometimes that is to accept. But that is the standard we have created in that circumstance, and I think the language in this bill holds that same kind of standard. Now, Mr. President, I come to the final question, which is what I think we should focus on here. Whom are we trying to protect? With all of this legislation, whom do we seek to benefit? What is the purpose of all of this? Are we trying to protect CEO's? Are we trying to protect lawyers? Are we trying to protect security analysts and newspapers that report things? Whom are we trying to protect at base by all of this legislation? The answer, Mr. President, is the investor. The purpose of this legislation is to protect the investor and his or her investment. Look at every issue that we are talking about here through that particular lens. Is it good for the investor or is it bad for the investor? Is it good for the investor to have the CEO feel constrained about talking about the prospects of his company? Is it good for the investor to have the CEO being hedged about by lawyers who tell him when he goes before the security analyst: You cannot talk about this; you cannot talk about that; you cannot make any speculation of any kind lest you run [[Page S 9123]] the risk of exposing yourself to these kinds of suits later on. I submit that it is good for the investor to have the CEO be as open and candid as he possibly can be and to say to the security analyst: Yes, it is my judgment that product X will be on the market in August. Because what if he is right and product X is on the market in August, and he did not tell anybody that and they did not have the opportunity to buy the stock in the expectation that that would be the case? Is it good for the investors to have him say: I have differences of opinion within the company; there are some people who do not think it will be. Yes, it is good for the investors to have him be as candid and open as possible. And the only way you can get that kind of candid, open discussion is if you have a safe harbor in which that honest CEO can sail knowing that he will be protected from the waves and whims of the shark suits that are out there. Is it good for the investor or is it bad for the investor to have the CEO's attention diverted into lawsuits that have nothing whatever to do with the management of the company? I submit it is bad for the investor to have the CEO concentrating on things other than the things for which he was hired. And ultimately, is it good for the investor or is it bad for the investor to have the company paying out millions of dollars in legal fees on issues that are tangential to the company's performance? I submit it is bad for the investor, and it becomes doubly bad for the investor when, as we have seen over and over again in the debate on this bill, the highest percentage of those fees and fines being paid out by the investor--those are the investor's moneys; those are not the CEO's moneys. When you say those are the company's moneys, there is only one source of company money, and that is the investor. That is the investor's money going out, with the vast bulk of it going out to the plaintiff's attorneys and not the investor. They say: Oh, look, we are protecting the investor. Look at the money that is going back to the investor. No, the money is going back to the lawyer, and in the meantime all of the money and attention and activity on behalf of the management of the company has been focusing on this suit. That is why they settle, Mr. President. They settle because it is good for the investors and for them to get this thing behind them. But it would be better for the investors if honest executives who have no intent and no purpose of deceiving have a safe harbor from which they can explain to the public the things that are going on in the company and make statements about the future fully hedged about with protections that say these are speculations so that the investor then has information from which to make his or her own intelligent decisions. So, Mr. President, I oppose the amendment by the distinguished Senator from Maryland. I enjoy serving with him on the Banking Committee. I enjoy the intellect and I enjoy the thoroughness with which he approaches these decisions, and I hope he recognizes it is not an act of disrespect on my part when I say I disagree with him on this amendment and intend to vote against it and urge my colleagues to do the same. Now, Mr. President, I ask unanimous consent that at 2:15 p.m. today, Senator Kassebaum be recognized in morning business for not to exceed 5 minutes, and that at the hour of 2:20 p.m. there be 40 minutes of debate on the Sarbanes amendment No. 1477, equally divided in the usual form, with the vote occurring on or in relation to the Sarbanes amendment at 3 p.m. today, with no second-degree amendments in order to the amendment; further, that following the disposition of the Sarbanes amendment No. 1477, Senator Sarbanes be recognized to offer an amendment regarding safe harbor.

Mr. BENNETT. Mr. President, I propound a unanimous-consent request that the time between now and 12:30 be equally divided on this issue, and leave the unanimous-consent request as to the exact time of the vote for a later request.

Mr. BENNETT. Mr. President, I would like to confer with the chairman of the Banking Committee before agreeing to that. I have no personal objection to it. I would think we ought to bring Senator D'Amato into the discussion.

Mr. BENNETT. Mr. President, I ask the Senator from Maryland to pay attention closely to this since it concerns him directly. I ask unanimous consent that the vote occur on or in relation to the Sarbanes amendment No. 1477 at 2:15 today and that the time between the beginning of the debate and 2:15 be equally divided in the usual form.

Mr. BENNETT

Mr. BENNETT. I shall conclude so that we can move to the amendment of the Senator from Maryland. We should understand that this debate and conversation about what may or may not have been the case in the Keating circumstance had S. 240 been in place is, in fact, irrelevant to the purpose of this legislation and to the direction that it will take in the future. The Keating codefendants could remain fully liable if S. 240 had been in place. The aiders and abettors would still be held accountable. The Keating claims are within the current statute of limitations, and the other 10(b)(5) reforms do not affect the recoveries. So, Mr. President, I hope as we examine this whole circumstance, we keep in mind the purpose for which S. 240 was written in the first place. It is to deal with those people who file lawsuits without any expectation that they will ever come to trial but in the hope that the economics of the circumstance will force people to settle with them short of a trial, so that they can enjoy what, as I say, the Senator from New Mexico calls the ``perfect'' law practice--a law practice without clients and a law practice that does not require you to ever go to court, to ever hold discovery, to ever go through any procedure-- simply file a set of papers and wait, as the lawyer in New York did who dealt with my father, for the check to arrive in the mail. That kind of thing is bad--it is bad for investors, it is bad for the country. That is the reason we are supporting S. 240. I now yield the floor to the Senator from Maryland. Amendment No. 1472 (Purpose: To amend the proportionate liability provisions of the bill)

Mr. BENNETT. I will be happy to yield.

Mr. BENNETT. Mr. President, I have listened to the debate on this issue from both sides of the aisle with great interest and have several observations that I would like to share with you and the others in the Senate as we come to this point. As is pointed out often to me, and sometimes as I have pointed out during my political career, I am not a lawyer. I have not been blessed with the experience of having gone through law school or passed the bar or practiced law or any of the other kinds of experiences that go with being an attorney, which so many of our colleagues in the Senate have. Indeed, a majority, Mr. President, of the Members of this body are lawyers. I have not kept exact tally, but I believe that the vast majority, if not 100 percent, of the people who have commented on this bill, have been lawyers. No, I must correct myself. Mr. President, the Senator from California [Mrs. Boxer] is not a lawyer, and she has been very forthright in her opposition to this bill. So I would back away from that. But most of the people who have spoken on this have been lawyers. And I have noticed that they have addressed this issue on the basis of what will happen in court if S. 240 were to pass. They have argued that back and forth, with lawyers saying: Oh, no, if S. 240 were passed, why, then this is how the courts would be forced to rule. And then other lawyers have risen and said: You are wrong; if S. 240 passes, the courts would not have that ruling at all; they would rule this way. Back and forth, so the argument goes between those who have had the experience of a legal education. I wish to share with the Senate my view of this, which is based not on a legal background but upon direct experience and observation with what has been happening with strike suits as these have come to be known. My first experience is a vicarious one, but I do my best to make sure that it is accurate. It is the experience that my father had after he left the Senate and began his last career, which was back in the business world serving on a variety of boards of directors. I have told this story in the committee hearing, but I think it is appropriate to repeat here because it makes the point I intend to make. One of the boards that my father went on after he left the Senate was a board of a mutual fund. The compensation of the directors was tied to the performance of the mutual fund. This is the kind of thing people are saying we ought to do with directors and chief executives, not just set a compensation and let it stay there, but have a compensation tied to the performance of the fund. Once a year, the compensation of the directors would be adjusted as a result of the better performance of the fund during the year, and since the fund, at least during the time my father served on the board, always did better each year, the compensation went up each year. My father received a stack of legal papers suing him for looting the assets of that particular mutual fund. He was a little startled, and he called the general counsel of the mutual fund and said, ``What is this all about?'' ``Oh,'' said the general counsel, ``don't worry about that, Senator, it is just because `Bennett' comes before all of the other directors in our alphabetical list, and there is a lawyer in New York who every year sues us, sues all of the directors, for looting the fund by virtue of the increase in compensation that comes as a result of the formula that we have.'' He said, ``Because, as I say, your name is first alphabetically, you are the one filed with the papers. You notice it says `Wallace Bennett, et al.' The `et al.' means all of the other directors. If we had another director whose name began with `A,' he would be the one on whom the papers would be served. Don't worry about it. We'll take care of it.'' Dad said, ``How are you going to take care of it? This is a very impressive lawsuit.'' ``Oh,'' he said, ``we have in the budget $100,000 to send to that lawyer in settlement of this lawsuit. We do this every year. He files the lawsuit, we send him a check for $100,000, he goes away. It is a standard kind of thing that we have built into our budget.'' ``Why in the world are we paying this man $100,000 simply to file the lawsuit?'' ``Well, Senator,'' he said, perhaps a little nonplused at my father's naivete, ``the legal bills of our fighting this suit would be substantially in excess of $100,000. So the financially responsible thing for us to do for our shareholders is to settle it at the lowest possible price, and we found that this fellow will go away if we send him $100,000. And, therefore, we do the financially responsible thing by sending him $100,000.'' Dad said, ``That's extortion, that's blackmail, that's like the protection rackets, if you will, that the mafia runs when they come in and say in a particular storefront, `You need some protection from somebody who might bomb this place.' '' He said, ``Well, Senator, we have better things to do than respond to these kinds of lawsuits. The cheapest way out of this dilemma is simply send the man his $100,000 every year.'' We are told during this debate, ``Oh, these are hypotheticals.'' We are told, ``Oh, we have to look at what might happen here, what might happen there.'' We are told, ``Oh, the proponents of the bill are raising scare tactics of the worst possible case, and that is not the normal procedure at all.'' I can assure you, Mr. President, this was an actual case, an actual circumstance where automatically the lawyer, by simply hitting the button on his word processor and turning out the same set of papers, received a check for $100,000 every year. As I understand the case, to finish the story, that particular lawyer is no longer doing that, simply because he got greedy. He started to overreach and do this not only with the funds where my father was serving as a member of the board but other funds, assuming he would get the same treatment. Finally, one of them, managed by Merrill Lynch, decided to call his bluff and go to court with him. Merrill Lynch had deeper pockets than the mutual fund on whose board my father sat, and they decided to reach into those pockets and pay the legal expenses necessary to close this operation down. So they called the man's bluff. They forced him to come up with the legal fees necessary to go to court, and he found he could not survive if he had to pay all the legal fees to actually prosecute the lawsuit and, thus, ultimately the whole thing was shut down. I cite that because of the rhetoric that has surrounded this bill. We are not talking about what will happen in court in a theoretical lawsuit when we are talking about the impetus behind the writing and filing of this bill. We are talking about the fact that the vast majority of these lawsuits never get to court and do not intend to go to court. They are filed not because the lawyer has discovered some great evil on behalf of the investor. They are filed because the lawyer knows full well that the company or mutual fund or pension fund, or whatever it is that is being accused, will find it cheaper to settle out of court than go through the legal hassle of paying all the bills necessary to resolve the issue in the courts. During the hearing on this bill, Ralph Nader made the statement: No one settles out of court unless he has something to hide, and challenged me personally on that issue saying, no CEO who is responsible would ever settle a lawsuit out of court unless he had something to hide, and he then proceeded to lecture me as to what my duty would be assuming, perhaps erroneously, that I was a lawyer. I said to him and I say here on the floor today, again, I am not a lawyer but I was a CEO of a company who settled a suit out of court about which we had nothing to hide. Indeed, all of the issues that were involved in that lawsuit were clearly on the public record, but the legal bills to prosecute that lawsuit were bankrupting our company. Now, the company at the time was very, very small, it was very fragile and our legal bills were running $25,000 a month. I spoke to our lawyer and said, ``What happens if we go to trial?'' Our lawyer said, ``They will then go to a minimum of $25,000 a week.'' There was no way that company could survive the drain of legal bills of $25,000 a week. So I said, ``What will it take to settle?'' We signed an agreement settling that lawsuit that called upon us to pay the other party $2,500 a month. Some of our shareholders did not like it. They said, ``Oh, we think it is terrible we have to pay them anything, because we're convinced we're right.'' I said, ``Look, you can be convinced you're right all you want. The issue is, can we afford to continue to press our legal position at a $25,000 a month tab all the way into court and then $25,000 a week? Swallow your pride about saying we want our position absolutely vindicated, take the $2,500 a month settlement and put this behind us and get on with our business.'' It was one of the smartest business decisions we ever made. I pointed this out to Mr. Nader in the hearing. I resent the suggestion that the reason we settled out of court was that we had something to hide. And I say absolutely that settlements out of court are made, 90 percent of the time, on the basis of pure economics; it is cheaper to settle than to continue to litigate. And if it is, swallow your position about making a point, do the wise economic thing and settle this suit. That is where these strike suits come from--lawyers who recognize that reality. Settlements out of court are made on the basis of economics. They are not made on any other basis. That is why so many of these suits are filed. That is why the vast bulk of these suits are settled out of court, and that is why this has become--as the Senator from New Mexico [Mr. Domenici], pointed out--a magnificent way for some lawyers to practice because, as the Senator said, this is a practice without clients. What could be more fun than to be a lawyer with a practice without any clients, and with, in the case that I have cited in my father's circumstance, a guaranteed $100,000 per year income doing nothing more than mailing off a set of documents to a company that will write out the check because it is easier to do that than to go to court. I point out to those who say, ``Oh, this is not very widespread,'' that we had some testimony in the committee from a lawyer who says this is, in fact, never done. I asked him directly. I said, ``Are you telling us that no lawyer ever files a strike suit solely on the belief that he will get a settlement out of court and not have to litigate it?'' He said, ``Senator, no lawyer ever does that.'' At that point, the credibility of that witness disappeared, as far as I was concerned, because I knew that it was done. Well, this practice has created enough concern that we have a bipartisan basis of support for this bill. Indeed, the initial supporter, the initial mover and shaker on this bill was the Senator from Connecticut [Mr. Dodd]--not known for his hard right-wing propensities and leanings. He is one of my good friends. We disagree about a number of things. He is a liberal Democrat and I am a conservative Republican. But I consider him one of the more thoughtful Members of this body. He was the moving force behind this bill in the first instance. He knows that these suits are filed for the purpose of getting settlements, not ever going to court. He was joined by Senator Domenici. Senator Domenici told me over the weekend--we were in Utah together-- he has been accused of the fatal sin of being a moderate by some portions of the conservative press. I said, ``What did you do, plead guilty?'' This is one of the more thoughtful Members of the Senate, as well. He is a careful lawyer. He understands all of the legal issues. He has pushed this bill right from the very beginning, and he, along with Senator Dodd, is the principal cosponsor of the bill in this Congress. It is a smokescreen, in my view, to spend all of your time talking about what may or may not happen in court if S. 240 passes, because that ignores the fact that the purpose of S. 240 is to deal with those people who file suits without any intention of going to court. We need to understand that as we are debating this bill. Now, there have been some things said about this bill that I would like to set straight. One of the myths that has come out of this debate is that if S. 240 had been law at the time of the failure of the Lincoln Savings & Loan, Mr. Charles Keating would have gone scot-free and his victims would have been denied any kind of recovery. That is simply not the case, Mr. President. The safe harbor provisions of S. 240 would not have protected Keating and his codefendants. Keating's statements that bonds were federally insured and as safe as a bank deposit were fraudulent and obviously false and not covered by the safe harbor. The safe harbor applies to forward-looking projections, not to statements of fact that can be checked out in the past. For Keating to say the bonds were federally insured is not a forward-looking statement. Its very nature is a statement of past and existing circumstances, and they did not happen to be true. That is one of the reasons Mr. Keating is now out of the savings and loan business and under the protection and custody of the Federal Government.

Mr. BENNETT. I think my time has probably expired. I thank my colleague from Connecticut. I apologize that I was not listening to him when that was put into the Record. I will not ask that it be printed in the Record.

Mr. BENNETT. I have no objection.

Mr. BENNETT. Yes, I am happy to yield.