Richard Bryan

Mr. BRYAN

Mr. BRYAN. I send an amendment to the desk, and I ask for its consideration.

Mr. BRYAN. Mr. President, I ask unanimous consent that I be recognized next, for the purpose of offering an amendment, at the conclusion of the debate on the Santorum amendment.

Mr. BRYAN. Mr. President, this is an amendment, the identical contents of which was before the Senate last fall and was approved overwhelmingly by a vote of 62 to 36. It seeks to cap the Market Promotion Program at $70 million. Under the current proposal, that funding level would rise to $100 million on an annual basis. It precludes the payment of market promotion moneys to foreign corporations. Under the current law, foreign corporations may receive money. It also precludes payments being made to large corporations that would exceed the small business size and scope, and it would make it possible for moneys to continue to be received by cooperative organizations who are advertising on behalf of nonbranded promotions. I urge its adoption. As I say, it has been before us previously and enjoys the support of the chairman of the committee and the ranking member. Mr. COCHRAN addressed the Chair.

Mr. BRYAN. Mr. President, I ask unanimous consent that the Bryan amendment be in order.

Mr. BRYAN. Let me say briefly that I believe the Senator from Idaho ought to support this amendment. All it does is give the taxpayers' dollars to be used by foreign corporations with respect to the granting of promotions, like McDonald's. This says, look, no longer are they to be subsidized. We protect the rights of the co-ops to continue to participate in this program. I think we are in agreement, as I understood the thrust of his argument. I urge my colleagues to support this amendment, as they did on September 20 of last year.

Mr. BRYAN. I thank the Chair. I yield myself 7 minutes. Amendment No. 3447 to Amendment No. 3184 (Purpose: To provide that funds made available for the market promotion program under this Act may be used to provide cost-share assistance only to small businesses or Capper-Volstead cooperatives and to cap the market promotion program)

Mr. BRYAN. I thank the Chair. For the Record, I want to make sure that the Record reflects that this amendment is a joint amendment by my distinguished colleague from Massachusetts, Senator Kerry, Senator Bumpers, and Senator Reid. Mr. President, I think that those who have followed the debate on agricultural issues know that this Senator has not been a supporter of the Market Promotion Program. In the limited time that I have available this morning, I want to offer an amendment that was previously approved on the floor of the Senate on September 20 of last year by 62 to 36. My preference would be to eliminate the Market Promotion Program, which has cost the American taxpayer more than $1 billion, because I think it is a poster child for corporate entitlements in America and is without justification. I yield to the pragmatic consideration that, although I have attempted on a number of occasions, joined by my friends on the floor, Senator Kerry and Senator Bumpers, to eliminate this program, we have been unsuccessful. So last September we crafted a compromise which said, among other things, that we will limit this program so that foreign corporations will no longer be eligible to receive payments. I might say parenthetically that in the last year in which there is data available, some $12 million of taxpayer money went to foreign corporations to help them supplement their advertising budgets. In addition, some of the largest corporations in America are beneficiaries under this program--companies that ought to be charged with handling their own advertising and promotional expense without reference to taxpayer subsidies. Here are some of the major corporations in the country in 1993, 1994: Ernest & Julio Gallo, $7.9 million; Dole, $2.4 million; Pillsbury, $1.75 million; Tyson Foods, $1.7 million. And the list goes on. This amendment would limit the branded promotion programs to those that fall within the definition of the small business company under other provisions of the Federal Code. It is my view that we should adopt a responsible compromise that has enjoyed the support of my colleagues on both sides of the aisle to place a limitation on this program in each of the two specifics which I have just mentioned, and also to cap the program at $70 million. Under the current proposed legislation which we are debating on the floor, the Market Promotion Program would continue in each of the 7 years at a $100 million annual funding level. We have talked a lot about curtailing Federal expenditures, taking a look and making some of the tough decisions, downsizing Government. I have listened to a great many speeches on both sides of the aisle. This is our opportunity to strike a modest blow for fiscal sanity by putting a cap on this program and limiting the expenditures to $70 million annually. There can be no conceivable justification for providing taxpayer-assisted funding to supplement the advertising budgets of companies the size of those that are listed in this exhibit that I have offered on the floor. I might add further that the number of companies who have received assistance, of the 200 largest corporate advertisers listed in the 1992 Standard Directory of Advertisers, 13 of those companies received market promotion programs involving some $9 million in 1992. So we think that this is something that has been before the Senate. It has enjoyed bipartisan support. We think it makes sense, and we ask for its consideration. I reserve the remainder of my time and am prepared to yield 5 minutes to the distinguished Senator from Massachusetts.

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

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to pay tribute to Geraldine M. ``Jeri'' Mellon, who passed away on January 7, 1996 in Henderson, NV. Jeri's courage and determination helped to convict Charles Keating, the former owner of Lincoln Savings and Loan, who was responsible for the Nation's worst savings and loan swindle in history. The innocent victims of the savings and loan collapse were mostly elderly bondholders who lost their life savings. Jeri testified about the fraud before Los Angeles County Court in 1991, where she represented 23,000 bondholders. She moved the courtroom to applause with her emotional speech about the swindle. In 1993, Jeri also testified against Keating in Federal court, helping to secure his conviction. Jeri's efforts to assist the victims of the S&L scandal went far beyond testifying in court. She helped organize and lead Lincoln- American Continental Corp. Bondholders Action Committee, a support group for the victims. Through the group, a lawsuit was filed against Keating and others that resulted in the bondholders' recovery of approximately 60 percent of the money they had lost. I had the opportunity to meet this dedicated woman when she came to Washington, DC to testify before Congress. Jeri recently helped me lead the fight against a bill in the Senate that would undermine investors' rights in cases of fraudulent investment schemes. Unfortunately, the legislation passed. Before her retirement, Jeri was a registered nurse and also served in hospital administration. She was extremely active in her field and was a member of many health organizations. I am certain she was as successful and dedicated to her career as she was to her later endeavors. Jeri will be remembered and missed by her many family and friends who loved her. She will also never be forgotten by the thousands of individuals she stood up for in a most difficult time. I am pleased to recognize Jeri Mellon for her life of service.

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to honor Congresswoman Barbara F. Vucanovich for her many years of public service, particularly in the House of Representatives. She has represented the State of Nevada's Second District for 14 years and is the first woman from Nevada elected to Federal office. Representative Vucanovich has served in many leadership capacities during her time on Capitol Hill, including her current position as secretary of the House Republican Conference for the 104th Congress. She is a member of the House Appropriations Committee, and chairwoman of the Military Subcommittee. Congresswoman Vucanovich is also a member of the Subcommittee on the Interior, the Subcommittee on Veterans' Affairs, Housing and Urban Development, and Independent Agencies. As members of the Nevada delegation, Congresswoman Vucanovich and I have worked together to prevent the practice of source taxation, which unfairly burdened the residents of our State. Representative Vucanovich has also been an ally in our fight to protect Nevada from becoming a high-level nuclear waste repository. She has been active in promoting travel and tourism to benefit Nevada's economy. Representative Vucanovich demonstrated remarkable personal courage in her battle with cancer. She never permitted the disease to slow her down, never missing a congressional vote in the midst of her treatment. She has worked to help increase public awareness of this disease and how it may be detected and treated. I am pleased to recognize Congresswoman Barbara F. Vucanovich for her many years of public service and dedication to the State of Nevada and the people she represents, and I wish her and George the very best in the future.

Mr. BRYAN

Mr. BRYAN. I thank the distinguished Senator from Maryland. Mr. President, this vote is on an important piece of legislation, but it also sends a message about what this Congress is all about and what its Members stand for. First, I would like to compliment the proponents of this legislation. They have done an artful and a masterful job in framing the issue in the context of the lawyers, and this is lawyer bashing. No one loves lawyers, and no would fails to acknowledge that there is clearly some abuse on the part of some lawyers, but if we listen to the arguments the proponents have advanced this morning, you would think that a relatively small group of lawyers, who specialize in representing consumers and small investors in class actions, who have been swindled as a result of investor fraud, would be responsible for all of the ills that confront modern civilization, from the Federal deficit that we wrestle with today, to the spread of communism in the 1950's, 1960's, 1970's, and 1980's. At the same time, the proponents of this legislation have obscured the fact that troubles me most, and that is that this legislation will affect a lot of innocent people who have lost money as a result of investor fraud. Somehow, the voices of seniors and consumers, small investors, firefighters, policemen, attorneys general, mayors and securities regulators, State treasurers, local government treasurers, treasurers involved with universities and colleges, somehow their concerns which have been advanced and articulated have been ignored. If I impart nothing else to my colleagues today, I would like everyone who is listening to this debate to know that this bill will, in fact, adversely affect meritorious lawsuits and small investors who find it much more difficult to recover their savings. There is no doubt that this bill will address frivolous lawsuits. But that could have been done, Mr. President--nobody disagrees with the need to correct those abuses. We could have crafted a narrow piece of legislation that would have addressed that issue and yet, at the same time, protected small investors. What will the impact be of precluding countless meritorious suits being filed? Nobody knows, but it is safe to say crooks will be emboldened, investor confidence in our markets will go down, and defrauded investors will not be compensated. The integrity of America's security markets, the envy of the world, will suffer as a consequence. As some indication as to how overreaching this piece of legislation is, how one-sided it is, can anyone tell me what the logic is to say if a plaintiff's lawyer files a frivolous motion the attorney pays the cost of the entire lawsuit, but if a defense lawyer files a frivolous motion, he or she pays only the cost of that motion? It seems to me what is sauce for the goose is sauce for the gander. There ought to be equal sanctions both as to plaintiff's lawyers and defendant's lawyers who act in an irresponsible, frivolous fashion. I have yet to hear an argument advanced on the floor as to why we do not extend the statute of limitations as has been requested. Why should a crook who disguises his fraud for 3 years be able to avoid the class action penalty? I know of no reason why we should not correct a situation which currently exists that those who aid and abet fraud currently face no liability. What is the logic of that? What does that have to do with frivolous lawsuits? That, Mr. President, is why I am so deeply troubled by the message that we send today. President Clinton has said he is prepared to sign a good bill. Senator Sarbanes, Senator Boxer, and others who have taken the floor to express concerns, we are prepared to support legislation that deals with frivolous lawsuits. But what we have is a piece of legislation that moves to the floor and apparently will now move to be enacted that is not designed solely for frivolous lawsuits but goes much further. What happens if the President's veto is sustained? The sponsors can come back with a bill that fixes the excesses. We are going to have securities litigation reform legislation this Congress. President Clinton has said he is prepared to sign a good bill, and there is unanimity that measures to curb abuses should be enacted. What we are in disagreement over is will we enact balanced, reasonable reforms or will we go overboard in our zeal. What message are we sending by overrriding the President's veto today? We are saying forget about balance, forget about reasonableness. If you got the votes to crush small investors and consumers, go for it. I can honestly say this bill is the most one-sided, anticonsumer bill I have seen. This will be a sad day if we fail to sustain the President's veto. I urge my colleagues to vote ``no'' on this override and let us come back and send the President a balanced bill.

Mr. BRYAN

Mr. BRYAN. Mr. President, I am most grateful for the very generous and kind remarks. Let me just say by way of response before returning to the issue of the day, the Senator from New York, the very able chairman of this committee, takes a back seat to no Member in this institution or in the other body in terms of his tenacity, in terms of his persistence and effective advocacy on behalf of the causes in which he believes. I can recall when the Senator occupied a different chair on this floor, more to the rear of the Chamber, where he was absolutely dedicated to a proposition which affected the citizens of his State and spoke, I do not recall whether it was 10, 11 or 12 hours. This is the kind of advocate that you get. So I have learned from experience that he is always civil in disagreement, he has always been courteous and very fair to me, and we have worked together on a lot of issues. I acknowledge and appreciate that. I would rather have him on my side, because when he is with you, things not only happen on that committee but on the floor of the Senate. I appreciate his advocacy. Again, I pledge to him we are going to continue the discussion we have on this measure and any other on which we might find ourselves honestly and sincerely having a difference of opinion in the same spirit in which our relationship has always been, and I thank him for the very generous comments. We were talking about the underpinning of this legislation and what has been said as an arguable predicate for its enactment, and I shared a couple of myths. I think it would be helpful if I mentioned two or three more and then comment on a couple of things before yielding the floor to the distinguished chairman. It has been asserted in defense of the legislation that is before us that security suits are filed without reason. Every time a stock price goes down 10 percent or more, there is a lawsuit. We have heard the strike lawyers are out there kind of prowling, and any time there is a dip in the stock price, bam, they are out there and they have these suits. That may occur on occasion. I am not here to say there is no abuse. I reemphasize somewhat ad nauseam that when there is abuse, we need to change the law to make sure that kind of conduct is punished in a way which is most understood and that is a financial sanction. But here is the data, here are the facts, not the anecdotal information, not the story that someone heard about someone who had been sued in a securities suit. Here are the facts. The empirical data established that over 95 percent of the companies whose stock falls more than 15 percent in one day are not sued. These recent detailed studies document the falsity of the argument of the proponents of the legislation. A comparison of the number of stock price drops 10 percent or more in one day between 1986 and 1992, and a number of suits filed against those companies whose stock price dropped revealed that only 2.8 percent of those companies were sued. A second study by the University of California at Berkeley, completed in August of last year, 1994, tested a sample of 589 cases of large stock price declines following a quarters earnings announcement. Extensive research revealed that only 20 lawsuits, amounting to about 3.4 percent of the sample, were filed. This finding is hardly consistent with the widespread belief that shareholder litigations are automatically triggered by large stock price declines. The study was consistent with yet a third study conducted by academics at the University of Chicago in March of 1993. That study revealed that out of 51 companies that had sustained 20 percent or greater declines in earnings and sales, only one company of those 51 was the target of a shareholders' suit. Again, one of these myths that have assumed lifelike reality that is being asserted is that the suits are filed every time a stock price goes down. That simply is not borne out by the evidence. Let me address just a couple more of these myths. Another one is that securities class action suits do not help investors, and private litigation is, in fact, the only way for individual citizens to collect damages from those who commit fraud. For most small investors, who do not have the resources to file their own lawsuit, class action representation is the only hope they have of collecting damages from wrongdoers. The Securities and Exchange Commission may prosecute some securities frauds, but it does not have, as I indicated earlier, the resources to help all victims of fraud recover their losses. That is the province and responsibility of private legal actions, which the Securities and Exchange Commission has repeatedly termed a ``necessary supplement'' to its activities. Finally, let me just say the other myth that we hear a good bit is that plaintiff lawyers get all the money in these suits, and victims are left with pennies. The average attorney's fee and expense award is 15.2 percent of recovery, according to the authoritative Journal of Class Action Reports. The Journal based its findings on a most comprehensive independent study of attorney's fees in class action lawsuits involving 334 securities class actions, in which $4.2 billion was recovered for victims of fraud. The same journal reported in 1993 that, on average, for every dollar recovered in securities class actions, approximately 83 cents has been distributed to shareholders, and only 17 cents has gone to attorneys, including their expenses. Let me just say that I have heard the argument here from a number of my distinguished and very able colleagues that we have to do something, that innocent investors get only a small pittance of the amount recovered in these class actions. Let us assume, for the sake of argument, that were true--assuming but not conceding. Mr. President, not one single thing in this legislation would alter that--nothing. There is nothing in this legislation that would provide any type of change in our present system that would increase the amount of money that would be allocated in a recovery between plaintiffs' attorneys' fees and the amount of money that the individual plaintiff recovers. Now, it is argued that this legislation is being introduced on behalf of the small investor, that we are really doing this, the proponents assert, because the small investor needs protection out there; that we have all of these ravenous lawyers here taking advantage of the system and taking advantage of the small investors, and that we really strike a blow for truth, justice, and the American way, and small investors if we support this legislation. Regardless of how little or how much you may know about this area of law--and I am frank to disclaim any expertise other than what I have gleaned from my review of this legislation as it has been processed--I think it is fair to say, who would best represent small investors in protecting their interests? Let us set aside the lawyers for a moment because, hey, look, clearly they make money as a result of these lawsuits. There is no question about that. Let us set aside the accountants, let us set aside the brokerage folks, let us set aside the companies that are issuing stock. I think it can be conceded that each of those groups across the philosophical divide have a vested interest. No question about it. So let us look to other groups that are not lawyer-based or involved in securities industry work, or its allied fields, and let us see what those folks say about this legislation as it has been processed. I think it is fair to conclude that this legislation is proposed by every major consumer group--every one of them, including the Consumer Federation of America; all major senior citizens groups, including the AARP; all major State and local organizations responsible for investing taxpayer pension funds; the Conference of Mayors; the League of Cities; the Association of Counties; Government and Finance Officers; Law Enforcement Officials; the North American Securities Administrators Association; a good many State attorneys general; the Fraternal Order of Police; educational institutions, and others, all have opposed it. Now, any one of those groups may not be your cup of tea. You may have some reason, philosophically to disagree with positions they have taken on other matters of public policy, or other legislation before this Congress. But I think it taxes credibility beyond the point of being sustained to conclude that each and every one of these groups oppose this legislation, even in the conference form, unless they were asserting that in their own judgment, representing the organizational interests that they do, that they honestly and sincerely believe that this is not in the best interest of the small investor. These are the folks, unless we assert that there is some monstrous conspiracy organized by these ravenous plaintiff lawyers that has corrupted these organizations, ranging from the Consumer Federation to the Conference of Mayors, to the League of Cities, to the Association of Counties, to the Fraternal Order of Police--let me say, even those that are enamored with the Oliver Stone approach to life and film, I suspect, have some difficulty believing that--unless one subscribes to the conspiracy theories in history--there is a conspiracy of this magnitude involved. I respectfully submit, Mr. President, that these organizations express their opposition because they believe it is not in the best interests of consumers. The North American Securities Administrators Association is not a partisan group. There are 50 States--parenthetically, a majority of those States, I think, or a fair majority, are now States that have Republican Governors. So I offer this context so that it not be asserted that there is any partisan bias that may be reflected by this statement. Here is a letter sent by way of fax yesterday, December 20. I think it is worth sharing because, you will recall, I mentioned that in terms of the enforcement mechanisms that are provided to police for monitoring the securities markets in America--public protection, investor protection, if you will, are predicated upon three pillars: The Securities and Exchange Commission at the Federal level, the private class action investor lawsuit which we have talked about in our discussion this afternoon, and finally, at the State level, the North American Securities Administrators Association, which I would daresay, without having reviewed the legislative structure of each of the States, is subject to appointment through the executive branch of Government, either the Governor's office or the Attorney's General Office. Here is what that group has to say, representing the States. I think a State perspective, and rightly so, have taken on an enhanced appreciation in this Congress. I commend my colleagues on the other side of the aisle for focusing much attention in terms of what is occurring at the State level. I think we can gain considerable insight. Here is what their correspondence of yesterday said with respect to this legislation: Dear Senator: I am writing today on behalf of the North American Securities Administrator's Association to urge you to sustain President Clinton's veto of H.R. 1058, the Securities Litigation Reform Act. In the U.S., NASAA is the national organization of the 50 State securities agencies. While everyone agrees on the need for constructive improvement in the Federal securities litigation process, the reality is that the major provisions of H.R. 1058 go well beyond curbing frivolous lawsuits and will work to shield some of the most egregious wrongdoers from legitimate lawsuits brought by defrauded investors. NASAA supports reform measures that achieve a balance between protecting the rights of defrauded investors and providing relief to honest companies and professionals who may unfairly find themselves the target of frivolous lawsuits. Unfortunately, H.R. 1058 does not achieve this balance. NASAA is concerned with H.R. 1058 go beyond the concerns articulated by President Clinton in his veto message. In sum, NASAA has the following concerns with 1058. Mr. President, I will give these abbreviated treatment. The bill fails to incorporate a meaningful statute of limitations. I will say more about that later during the course of our discussion this afternoon and this evening. I assure my patient colleague that I will wind these comments up so he may have a chance to express his views. The bill's safe harbor lowers the standard for assuring truthfulness of predictive statements about future performance. My colleagues will recall it was not until 1974 that future or predictive statements were even permitted, because of the inherent risk and the temptation of those who were involved in selling and marketing, to overstate propositions to the decided disadvantage of prospective purchasers of securities. No. 3, the bill fails to include aiding and abetting liability for those who participate in fraudulent activity, and a provision of the bill's proportionate liability section is unworkable and disfavors older Americans. Mr. President, I am very interested, and I am sure that those who support the bill will be addressing themselves on this, but I do not know, how do we impeach the integrity of their comment? These are 50 securities administrators who tell us that in their judgment small investors are losing a great deal in terms of protection by this legislation, while acknowledging, as do I, that we need some balance. That, clearly, frivolous lawsuits ought not to be tolerated. Some of that is occurring. We ought to come down with a heavy hammer, in my view, to preclude that activity. I think it is instructive to listen to what that group had to say. Let me be parochial for a moment and then I will leave the floor to my good friend. The State of Nevada, for whatever it is worth, a plurality of registered voters in my State are Republican. I offer that in the context of what I am about to say in terms of the kinds of letters that we are getting and the position taken. Churchill County, a small rural county in our State, expresses their opposition to this legislation; the city of Boulder City; the city of Carlin, through the mayor; the city of Las Vegas, expressing its opposition to the Treasurer; the city of Lovelock, another small community; the city of Mesquite, our newest incorporated city, through the mayor; the city of Reno; The city of West Wendover; Clark County, the largest county in our State, the county treasurer expresses his strong opposition; the Clark County school district; the Douglas County Board of Commissioners; the Elko County Board of Commissioners; the Eureka County Board of County Commissioners; the Nevada League of Cities; Nevada Public Agency Insurance Board; the Pershing County Board of Commissioners; the Reno Sparks Convention Visitors Authority; the Nevada Attorney General; the State of Nevada Employees Association in Washoe County school district, White Plain County, to name just a few. I find it incomprehensible to believe that all of these folks are simply tools of class action plaintiff lawyers. I just do not think that a fair analysis--just using our own intuitive judgments, why would all of those folks in our State, as many other States, have expressed those concerns? They have expressed those concerns, Mr. President, because cities and school boards rely upon the securities market. They have investor portfolios. They are potential victims of fraud. The Orange County situation is one that each of us is familiar with. They want to be sure on behalf of the local county or city or school district, whatever the entity might be, that if indeed they are victimized by fraud, they can be covered on behalf of the constituents whose money ultimately is what is at risk. That is why I have asserted every American has an interest in the outcome of this legislation. I yield the floor and I thank the chairman for his great courtesy in allowing me to proceed at some length when I know he has been waiting a while.

Mr. BRYAN. Mr. President, I am looking around the gallery today, as citizens visit our Nation's Capitol, and those that are tuned in on television across the country are saying to themselves, ``I do not understand what this debate is all about. Are there not bigger problems that the Nation faces?" Clearly, we are in a state of paralysis here in Washington today. Part of the Federal Government is shut down. There is no clear path, as I speak at near 2 o'clock in the afternoon, eastern standard time, as to how we are going to break this gridlock or logjam that has gripped us in this confrontation as to how we balance the budget in 7 years, and the road we use to get it. That is a major issue. No question about that. Let me try to put this debate into some context because I acknowledge that the country's attention is focused on the macroeconomic picture, the kind of thing that will affect the future of our country and of our Nation. What is at stake here? Is this an argument between a handful of greedy lawyers, as the proponents of this legislation argue, in disagreement with a small group of people on Wall Street--brokers, accountants, entrepreneurs--who wish to access the capital markets of our country and issue stock? Is that what this thing is all about? I say to our visitors and Americans across the country, this is a far, far bigger issue. I acknowledge that it is terribly esoteric, arcane, highly technical. Why should somebody listening in on this debate have an interest or concern in the outcome? Anyone who has a single share of stock in any publicly traded corporation has an interest in the outcome of this legislation because that individual, he or she, could become a victim of a fraudulent action. The ability of that individual to recover as a consequence of that fraud is, in my judgment and those of us who have fought this legislation, severely limited and compromised. That is tens of millions of people. In addition, there are probably tens of millions of people more who do not own a direct interest and say, ``Look, I have never invested in the stock market. I have no money. My wife and I and my family are lucky if we have a few dollars in the local credit union or the bank. I don't deal with these Wall Street issues. What do I have at stake in this debate? You lawyer types and Senators have sure lost me in this debate. I do not understand what I have involved.'' The answer, that there are tens of millions of people out there in this country, good people who have worked all of their lives, who have retirement funds--their security, their safety blanket--these people have tens and tens of millions of shares invested across America in retirement funds. Those retirement funds could be victimized by fraudulent actions, and as a consequence of that fraud, those retirement funds can be severely impaired financially, devastated, and depending upon the magnitude of the fraud could, conceivably, be wiped out. What does the average American have that interests him in this piece of legislation? His or her retirement could be at risk if they are not able to adequately recover against those malefactors, those that have been involved in perpetrating a fraud. So those who have money in a retirement out there, whether a company-sponsored family or one of the many variations of a 401(k), you have an interest in this debate and your children have an interest in this debate, because some of you are hoping that you have a little money put away, and maybe their inheritance can be affected, as well. Broadly stated, 260 million Americans have an interest in the outcome of this debate because we are all taxpayers, every single one of us, directly or indirectly. That is why such widely divergent groups such as State financial officials, State treasurers, State controllers, State financial officers--Democrat and Republican, East and West, big cities and small towns--have expressed their opposition and concern; because they know that their community, their village, their town, investing money on behalf of the taxpayers in a securities portfolio, that they can be victimized as well. They do not want to jeopardize their ability to recover on behalf of the taxpayers of their town or their community or village. That is why they have joined in opposition. I do not doubt relatively few if any are lawyers or stockbrokers or involved as entrepreneurs. So it is their interest on behalf of each of us as American citizens that has dictated that they write us to inform us they are gravely concerned and strongly oppose this bill. I will go into some of the reasons in a moment. University and college officials who are involved in the management of investment portfolios of American colleges and universities--whether they be private universities, private colleges, or the great State- supported institutions in our country--they, too, have called and written. They strongly oppose this legislation because they know that the investment portfolio upon which their college or university depends can be impaired and financially wiped out if investor fraud occurs and they are unable to recover on behalf of those funds the losses sustained as a result of that fraud. So we are here today, not talking about 90 greedy lawyers or the entrepreneurs. I think all of us in this country, irrespective of our political leaning or philosophical inclination, are highly supportive of the entrepreneurs in America. They do provide the mainstream for our free enterprise system. But this issue is much broader than that debate. Every citizen in America has an interest in the outcome of what we do. It has been said that only the dead have seen the last of war. Tragically, I suspect that is true, as much as we would hope that is not the case. Let me just say that only the dead have seen the last of investor fraud in America. The Wall Street Journal, in a fairly recent publication, has told us that investor fraud has increased. In another article we are told that, notwithstanding the efforts of the Securities and Exchange Commission--no partisan commentary is intended--that indeed they have fallen behind. Maybe to some extent we are losing that fight, in terms of pursuing with the kind of diligence that every American would want us to pursue those individuals who practice fraud in the securities markets and who rip us off. So why are we here talking about this thing less than a week before Christmas? It is because every American is affected. Let me try to say a few words about our system, the system we have created, Democrats and Republicans alike, over a period of some six decades and a little more now, to protect investors, to protect them against fraud. To those people out there who are motivated by greed, who cut corners a little tightly and whose primary interest is to line their own pockets and who care not a whit about whom they hurt--there are still those people out there in America. Unfortunately, they are still involved in investor securities activities. We set up, over the years, a system that depends upon three pillars to protect the consumer, the investor, the American taxpayer in this broad sense. One, we have empowered the Securities and Exchange Commission. It is a Federal agency. They are out there monitoring the market, responding to complaints. That has been true under Republican and Democratic administrations alike. The agency traces its origin back into the aftermath of the collapse in the Great Depression in the 1930's. And they are out there. By and large they do a good job. Sure, some of us may have some criticism of this or that. Criticism can be found with each of us. But they are out there doing a good job. But the system does not depend, in terms of the enforcement and the policing of the markets, solely upon the Securities and Exchange Commission. Its premise and predicate contemplates that there are two additional pillars upon which investor protection is predicated. Another one of those is what we have done at the State level. If I might say for a moment, as my colleagues know, I have had some experience in the State level serving as the chief executive of my State. They are banded together in a group called the North American Association of Securities Administrators. Their job is to try to protect their citizens in each of the 50 States against the kinds of frauds that occur in our society with respect to the issuance of securities. By and large, I think they do a good job as well. They are not lawyers per se; accountants, per se. They are individuals appointed, by and large, by the respective Governors of their States to help to protect citizens of those States against the kind of securities fraud that occurs. So they, too, have written us in the strongest, most urgent, compelling language to say in our considered judgment this would limit the ability to protect the citizens of our State. We do not speak as lawyers. We do not speak as accountants. We speak as one who, like yourself, is impressed with the public trust to protect the citizens of our State. That is the way our system works. Finally, the system, contemplated and acknowledged by all, that notwithstanding the fact that we have people at the Federal level and at the State level who are part of our system of Federal and State government who are charged with protecting the consumer, particularly as it relates to investor fraud in the securities market--it is contemplated that the private investor, through his or her ability to file class actions in the Federal court system of America, is a very important adjunct to this system. It is absolutely indispensable; absolutely indispensable. Those statements can be heard from Republicans who have Chaired the Securities and Exchange Commission, by Democrats, and by all commentators, that the private sector is critically important in terms of monitoring the market and in terms of recovering for investors who are defrauded as a result of security fraud. In point of fact, that is going to be even more important. Whether one characterizes himself or herself as liberal or conservative or middle of the road, everyone in this Chamber, and I think most people in America, would acknowledge today that our budgets over the next few years are going to be tighter and tighter and tighter. And that means, no matter how much we would like to allocate to certain programs, there is going to be less money. So the notion that somehow we are going to be able to provide the Securities and Exchange Commission with more money to monitor and enforce in the marketplace so that there needs to be less reliance upon the private sector and its ability, through class actions, to bring lawsuits, is simply misplaced. Nobody in this Chamber and nobody in the other body believes for one moment that we are going to have those kind of resources, wish as we may. The budgets are going to be tighter next year and the year thereafter and the year after that. I say that, Mr. President, as one who recognizes that, who supports the need for that, who is one Democrat who believes that a constitutional amendment to require a balanced budget is a necessary and desirable objective. And I recognize that there are going to be some constraints. So there is going to be less money available. This legislation delivers a series of crippling blows to the small investor to recover through the process of a class action securities case. Having said that, is there no problem out there? Is nothing wrong? The answer to both of those questions is yes, there is a problem out there, yes, there are some things that need corrections. I acknowledge that. The focus ought to be the frivolous lawsuit. I am a lawyer. I am proud to be a lawyer. I was never involved in this type of work at all, have never represented plaintiffs in class actions, mercifully have never been sued as part of a class action, and have never defended anybody. But there are lawyers out there who abuse the process, and who abuse the courts, and I have absolutely no sympathy at all for those kind of lawyers. As I have said previously on the floor, let Heaven and Earth and the wrath of God Almighty fall upon those lawyers who abuse the system, and there are some. So the focus, it seems to me, ought to be to deal with the frivolous lawsuits and to deal with some of the problems that exist in our present regulatory structure. Let me tell you, there are some things that we can agree upon and that I think are good in this legislation, things that I have agreed to support, and indeed things that I have sponsored in other pieces of legislation and which my distinguished colleague from California, who spoke so eloquently a moment ago, would agree on. So there is some consensus. Let me talk about those for a moment because I am not opposed to legislation to correct the problems in the market. I support that enthusiastically. There has been a practice that has grown up that ought to be eliminated. That is the payment of referral fees to brokers. We ought not to give incentives to brokers to refer potential security fraud to class action lawyers. So this legislation, my friends, prohibits the payment of referral fees to brokers. That is a good and desirable reform. I am for that. There has been a practice that has grown up that sometimes in class actions certainly plaintiffs' lawyers are given bonus payments. That, too, is a practice which is wrong, and we ought to eliminate the so- called ``bounty'' payments or bonuses. This legislation limits the class representative's recovery to his or to her pro rata share of the settlement for final judgment, no bonus payments, and I agree with that. That has been an abuse that we need to correct. And there are occasions in which lawyers are involved in a conflict of interest. This Senator has no sympathy for those lawyers, and we ought to eliminate that practice very wisely, and correctly. This legislation does so. I agree and wholeheartedly support that provision. We need to make sure that, before any settlement is effected, that the person for whose benefit the lawsuit was commenced in the first instance--that is, the investors themselves in the class who have lost money--ought to be adequately informed as to the proposed settlement and what it means for them. That is reasonable, is proper, and we ought to make sure that is done. This legislation improves the information requirements to make sure that meaningful information about the terms of the proposed settlement are included, that it would also include the average amount of damages per share that would be recoverable--and the settlement parties can agree on the proposed figure--and it also must explain the attorney fees and costs. Let me emphasize that point again. The lawyers have to be up front, and their clients ought to know what they are getting out of any recovery. I agree and support that as well. Finally, there is the provision which empowers the court to monitor and to limit attorney fees to make sure that no small investor is gouged as a consequence of lawyer fees. We agree with this. Let me go a little bit further. I have sponsored a piece of legislation called the Frivolous Lawsuit Prevention Act in which I believe that the provisions of rule 11--that is one of the Rules of Civil Procedure--which, in effect, requires a lawyer who files a lawsuit to, in effect, show that it is a meritorious lawsuit, not that the lawsuit will in fact be won. There are few certainties in life, and certainly filing lawsuits and being certain that you are going to win is not one of them. I tried a number of lawsuits in my time, not in this field. I have won cases that I thought I had very little chance of winning, and I have lost cases that I thought were about as certain as could be possible. So the standard is not whether you are going to win, but is it meritorious? There are some lawyers who file frivolous lawsuits. My friends who support this legislation and I would agree, as I have said previously, about strong sanctions. I favor enhanced sanctions through the rule 11 mechanism that would require a judge who finds that there has been frivolous conduct on the part of an attorney to impose sanctions, costs and fees. But let me say that not only plaintiffs' lawyers abuse the process in the system. Defense lawyers do as well. Those sanctions in the provisions that attach ought to apply equally to both sides. It is some indication of the bias of this legislation that the sanctions that we provide for, the enhanced sanctions, essentially apply in a very disparate way only with respect to the lawyers who represent the plaintiffs. Those lawyers should in fact be subject to the sanctions. But their counterparts who are involved in defending actions, if there are frivolous actions undertaken by the defendants' lawyers, those lawyers ought to be subject to similar sanctions. There is an old expression, ``What is sauce for the goose is sauce for the gander.'' I do not think you have to be a Harvard law graduate to understand the fairness and the soundness of that policy. Unfortunately, this legislation does not do that. What has happened as this legislation has been developed is something that is characteristic of what has happened in this Congress. Most of the legislation that has been introduced--not all, but most of it--is designed to deal with the problem in which in a very broad and generic sense there is some legitimacy. Yes, there is a problem there that requires action. But if this Congress is noted for anything, it is noted for its propensity to overreach. Yes, there is a problem. But rather than just addressing the problem, what occurs is that the gates are opened up, and those folks who, again, are motivated by greed see an opportunity to make them immune from liability, fail to address the statute of limitations which has nothing to do with the merits of the lawsuit, but just when can an injured or defrauded party be able to file the lawsuit under the law. And this is a classic case of overreaching, and it is, in my view, an extravagance. It is also, it seems to me, litigation that takes flight and lift only because of some of the myths that are repeatedly mentioned in this Chamber. Myth No. 1, securities class action suits are exploding in number. Mr. President, as I indicated earlier in my comments, this legislation derives much of its support from anecdotal evidence, information, and from what I call a number of myths that have circulated through the Chamber and around the country that have taken on a life of their own and have assumed the stature of uncontradicted fact. I want to take some of these myths for a moment and discuss them. We are told that we need this legislation with all of the overbreadth, in my view, that is contained in it because there is a securities class action lawsuit explosion crisis in America, that the courts are literally being overwhelmed by these actions that have been filed, and, therefore, the Congress must take action to address that situation. I want my comments to be placed in the context in which I earlier commented. I recognize the need, and do in fact agree with reforms addressed to the frivolous lawsuit. But here are the facts with respect to the assertions that there is a security class action lawsuit explosion crisis that is overwhelming and inundating our court system and that we must urgently address. The Administrative Office of the United States Courts--that is the organization that keeps the statistical records, what is happening in the court system. No one has suggested that it has any bias on behalf of plaintiffs' lawyers or investor fraud plaintiffs nor with respect to defense lawyers or securities folks. This is an outfit that collects the data. Here is what they have to say. According to the Administrative Office of the United States Courts there were 305 securities class action lawsuits filed nationwide 2 decades ago in 1974. That would be 21 years ago. There were some 305 security class actions filed. And slightly less--let me emphasize that--slightly less than that, some 290, in 1994. So rather than the class action explosion argument, in point of fact there is approximately a 5 percent decrease. This is at the same time in which the country has grown substantially. There are nearly 260 million people in this country. So our population has grown by millions and millions of people, and yet the number of lawsuits in this area have declined. They go on to say, ``These numbers count multiple filings in the same case before the actions are consolidated. So the actual number of new cases is far less. Over the last several years on average suits have been filed against approximately 120 companies annually''--about 120 companies annually--``out of more than 14,000 public corporations reporting to the Securities and Exchange Commission. Out of the total of 235,000 new Federal court civil filings,''--a civil filing is as opposed to a criminal proceeding--under this total of 235,000 new civil court filings, in fact even using the preconsolidation figure of 290 cases, ``security class actions represent 0.12 of a percent of the new Federal civil cases filed in 1994.'' Those are the facts. I know that sometimes my colleagues who are so much more eloquent than I, sort of from these lofty heights make it appear that we have had a litigation avalanche. But the facts are that there are in fact fewer cases filed today in this area than there were in 1974, and that approximately 120 companies annually, out of more than 14,000, are subjected to these filings, which represents about .12 of the new Federal civil cases filed in 1994. I do not, by making that observation, suggest that all 120 may be meritorious. There may be indeed some frivolous lawsuits that indeed the reforms that I and I think all of our colleagues can agree upon-- there are some things we can do and we ought to do in that area. Let me just share a little insight. The Rand Corp. indicates that business-to-business contract disputes, that is one business filing a lawsuit against another business, constitutes by far the largest single category of lawsuits filed in Federal court. Although corporate executives claim that minuscule numbers by individual victims cause them to lose time, divert resources and lessen their ability to compete, I think it is fair to question why 120 suits nationwide are taking such a toll, while thousands upon thousands of suits brought by one business against another business presumably has no impact whatsoever. As The Wall Street Journal has noted: Businesses may be their own worst enemies when it comes to the so-called litigation explosion. I think the Rand Corp.'s observation is of some insight here because this legislation before us, this conference report, does absolutely nothing with respect to business suits filed against other businesses. Its scope is designed to limit private lawsuits brought as class actions to recover for investors who have lost money as a result of a securities fraud. Here is another myth. We hear this, it is repeated, and the volume is overpowering: Securities class action suits are hurting capital formation, we are told, and that is a legitimate question. If it is hurting capital formation, we need to examine to see if it is true and, if it is true, what corrective action might be appropriate for us to consider. But here are the facts, Mr. President. The volume of initial public stock offerings has risen exponentially over the past several years, and the number and size of public securities offerings has been at an all-time high. The number of initial public securities offerings over the past 20 years has risen by 9,000 percent. That is the volume of the offerings, setting aside for a moment the amount of the capital that is sought to be raised through those offerings. So we have had an increase of 9,000 percent. Let me say, I think that is good for America, that is good for job creation, that is good for the economy, and I am pleased to see that. The proceeds raised during that period of time from 1974 to 1993 increased by 58,000 percent from $98 million in 1974 to $57 billion in 1993. So in slightly less than 20 years, or approximately 20 years, the amount of capital raised through these offerings has increased from $98 million in 1974 to $57 billion in 1993, and during the same period of time, the number of securities class actions filed had actually declined by 2.3 percent. So, Mr. President, I would say that the notion that somehow capital formation has been impeded or restricted or limited simply does not bear out, under a careful analysis, for the data that is available, and, as I say, I think this is extraordinarily good news for entrepreneurial companies and their investors, for jobs, for the economy. I note the distinguished chairman of the Senate Banking Committee has risen to his feet. If he needs to interject, I certainly would be happy to accommodate him, because I may be a bit longer.

Mr. BRYAN

Mr. BRYAN. I thank the distinguished Senator from Maryland. Mr. President and colleagues, I intend to offer a more lengthy statement, but I was tied up on other matters. I want to offer a dimension on the attorney-client privilege that I think is helpful for our colleagues to be aware. The question of attorney-client privilege has arisen on a number of occasions recently and I just share an experience of how it was handled in a bipartisan, and I think a most responsible fashion. My colleagues are much aware in the recently concluded Packwood matter there was the issue of a diary. Aside from that, during the course of our investigation, a number of times arose in which a question of attorney-client privilege was asserted. First let me say, on a bipartisan basis with every member of the Ethics Committee in concurrence, we agreed with respect to those assertions of privilege, that we ought to subject those to an independent outside nonpartisan review. In that context, by coincidence, in light of the role that this was later to play, I engaged the services of Ken Starr, and he independently reviewed and the committee accepted his recommendations in each and every case. Not only were there questions of conversation but there were also questions of documents. In a similar vein to the concern that the President of the United States has legitimately voiced today, Senator Packwood's counsel was understandably concerned that if any particular document was released, that that may be deemed a waiver with respect to other documents that were covered under the attorney-client privilege. Let me say in that context, once again, the committee agreed in bipartisan fashion not to assert that the privilege has been waived with respect to any subsequent conversation or any subsequent document which might come to the attention of the Ethics Committee that would be arguably a predicate for arguing that a prior submission of a document constituted a waiver. That is the bipartisan way of doing it. The President faces a Hobson's choice. In one instance he has come forward and indicated he wants to make the contents of those notes available--no ifs, ands or buts. The problem that he faces in doing so without getting the signoff by others who would have jurisdictional basis to proceed, is that the waiver doctrine might be asserted against him. I think what my colleague, Senator Sarbanes, has done by way of the amendment that he has offered here today provides a responsible way for us to achieve what we ought to be interested in: That is, the contents of the document. Yet we respect and recognize the attorney-client relationship. Madam President, as a member of the Banking Committee I oppose this resolution, and I am very disappointed that the Republican members of the committee are taking this step. I believe it is premature and counterproductive and totally partisan. The heart of this issue revolves around notes taken by Associate White House Counsel William Kennedy at a meeting held on November 5, 1993. Notes that have already been offered to the Banking Committee. This meeting raises several legitimate and serious attorney-client privilege issues that must be resolved before the Senate charges ahead into these unchartered waters. We may be setting precedents here today that have far reaching implications. For those truly interested in knowing the content of Mr. Kennedy's notes, and in a timely manner, this resolution will only retard any efforts to secure those notes which have already been offered to the committee. Only through good faith negotiations will we be able to accomplish the goal of securing the notes and protecting legitimate privilege issues at the same time. The Supreme Court has stated that the Attorney-client privilege ``is the oldest of the privileges for confidential communications known to the common law.'' The purposes of the privilege are to encourage full and frank communication between attorneys and their clients and to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice. The privilege applies with equal force among a client's attorneys, whether or not the client is present during the conversation. It is well-settled that the attorney-client privilege extends to written material reflecting the substance of an attorney-client communication. Every person at the November 5, 1993 meeting was an attorney who represented the Clintons in either their personal or their official capacities. As an attorney myself and a former attorney general, I strongly believe this meeting was fully covered by the attorney-client privilege. I dare say any citizen of this country who was told he could not have a confidential communication with his attorney would be outraged. This is a crucial point: This all could be avoided if the Senate would take the same position that Special Prosecutor Kenneth Starr took just yesterday when he agreed that the release of the document did not constitute a waiver of the President's privileges. How foolish the Senate looks today--wasting our time and resources-- when this could be so easily resolved. Any independent observer must be drawn to the conclusion that the reason we are forcing this issue is an attempt to embarrass the President. Why else would we not take the same approach that the independent prosecutor has taken? If the President were to turn over these documents without an agreement on the privileges, what would be the consequences? Clearly what we have here is an attempt by the majority to put the President in a catch-22 situation. If he releases the document without first securing an agreement, he could be waiving his attorney-client privileges with his attorney David Kendall on all Whitewater related matters. If he exercises his legitimate privileges, he is accused of a coverup. The courts will prove the President is taking the legally appropriate step in exercising his attorney-client privilege on this meeting. But we all know he will suffer from a public perception that he is hiding something. That is why the majority is forcing this issue today. It is clear how this issue should be handled if scoring political points were not the main goal here. The Senate's most recent experience with the attorney-client privilege claim arose during the Ethics Committee proceedings against Senator Bob Packwood. Apart from the diary dispute, the Ethics Committee had an assertion by Senator Packwood that certain other documents were covered by the attorney-client or work-product privileges. To resolve that claim, as Chairman of the Ethics Committee, I asked Kenneth Starr to make recommendations to the committee and both parties agreed in advance to accept his recommendations. With respect to the diaries, the committee agreed ``to protect Senator Packwood's privacy concerns by allowing him to mask information dealing with attorney-client and physician-patient privileged matters, and information dealing with personal, private, and family matters. Kenneth Starr reviewed Senator Packwood's assertions of attorney- client privilege. The committee abided by all of Mr. Starr's determinations and did not call upon the court to adjudicate any of the attorney-client privilege claims. In addition, the Ethics Committee on other occasions agreed with Senator Packwood's attorney upfront that to provide documents did not waive the attorney-client privilege. Let me read from one of the documents we released. This is a conversation between Mr. Muse, one of the Senator's attorneys, and Victor Baird, chief counsel for the Ethics Committee. Mr. Muse. Victor, what I don't want to do is get on a slippery slope with regard to waiver of any of the issues you and I have talked about, and with reference to your letter of January 31 on the other hand, there is a date that can be fixed based on the memorandum which attaches diary entries, and I'm prepared to give you that, and identify and show it to Mr. Sacks as a representative of Arnold and Porter, provided it is understood there is no waiver. It would simply reorient them to something they already know that they received, if that's acceptable to you. Mr. Baird. Right. And we understand that by your sharing the memo with them, and their being able to provide us with the dating information that we want if you will, that it is not going to waive the privilege so that we are entitled to look at the memo or anything like that. Mr. Muse. All right. This is clearly a better precedent for us to follow if we want to act in a bipartisan, professional manner. If all we are doing is scoring political points, we should proceed on the path we are heading toward today. The administration has asked the committee to agree that turning over the notes does not waive attorney-client privilege. The independent prosecutor has already agreed and can now proceed with his investigation, getting the material we are seeking without a lengthy and costly court fight. Why cannot this committee and this Senate accept Judge Starr's judgment and follow the same course. That is what the Ethics Committee did and in a bipartisan unanimous manner. Which brings up another question. If there is a respected former judge who has been given an almost unlimited budget and staff of highly trained attorneys and investigators, doing a thorough investigation of this issue, what is the purpose of this Senate Whitewater investigation? The Senate will spend millions on this. We do not have the capability or resources as does Judge Starr. It is taking countless hours of Senate time when we have a government shutdown, and important legislation like welfare reform, that is more properly our focus. The administration has asked the Banking Committee to agree that to give us the Kennedy notes does not waive the attorney-client privilege. The independent prosecutor has already agreed and can now proceed with his investigation. The Senate should do the same. Put this resolution aside today. And let the Senate operate in a more professional, noncombative, and bipartisan approach. This debate is an extraordinary waste of time.

Mr. BRYAN

Mr. BRYAN. I thank the Chair. Mr. President, I rise today to oppose the Department of Defense authorization conference report, and I do so with considerable regret. I, as a member of the committee, voted to support the original authorization bill because I think it did represent a very carefully balanced approach on some of the critical issues which I am going to comment on briefly. I acknowledge that there are parts of this bill that I think are quite good. The military pay provisions, the acquisition reforms are areas of particular interest to me. In my own State, money is provided for hydronuclear testing, some $30 million. Those and many other provisions I fully support. But the conference report now before us contains significant changes from the originally approved bill, particularly with respect to providing additional funding for the B-2 bomber, a position which the Senate opposed both in committee and on the floor. The report contains very dangerous language, in my opinion, with respect to the national missile defense provisions that, if enacted, would violate the U.S. agreement on the Anti-Ballistic Missile Treaty. The report contains a number of troubling ``special arrangements,'' such as a specific ship maintenance contract for a specific shipyard, which in my view would circumvent the competitive bidding process. The report also delineates line by line how the National Guard and Reserve may spend their allocated money for procurement, a position contrary to that taken by the National Guard and Reserve components. Moreover, Mr. President, I regret to say that the conference report does not have the full bipartisan support of the Senate Armed Services Committee. The minority members, the Democrats, were not even minimally notified or consulted with respect to major issues that were changed in the conference report. Last week, the Democratic conferees were asked to sign the conference report despite the fact that we had not been given the final language on a number of critical issues, most notably the language with respect to the B-2 bomber and the potentially explosive national missile defense language. I might note with specificity that when my office was notified that the final conference meeting would convene, we were provided about 30 minutes advance notice. I was able to attend, but a good many of my colleagues, not having any prior notice of the conference meeting, were not able to attend. This meeting convened rather late in the afternoon at approximately 6 o'clock, with such late notice many of my colleagues were unable to rearrange their schedules to attend a very important meeting. So for those reasons, and others, I do not intend to support this conference report today and I would not agree to sign the conference report last week. It appears that this conference committee has never been terribly serious about conducting bipartisan negotiations. As a matter of fact, the conference committee was disbanded a few weeks after it was convened. Therefore, there could be no meaningful bipartisan discussion of the funding levels, or any of the other outstanding issues in the context of a conference discussion. In point of fact, Mr. President, the conference was disbanded before any real, substantive discussions even began among the conferees. Due to the early disbanding of the conference, negotiations have taken place primarily between House and Senate Republicans behind closed doors for the past 95 days. Because the conference was officially disbanded, negotiators were not bound to follow the open meeting rule, nor were they required to notify all conferees of negotiation sessions or conference meetings. I am a relatively new member to the committee, Mr. President. This will be my third authorization bill. But I must say, in my experience it is unprecedented that the committee has operated in this fashion. I am told by my colleagues who have considerably more tenure than I do on the committee that this is without precedent. I must say when I was appointed to this committee in 1993, I was enthusiastic about that appointment, and I continue to be. One aspect that I particularly enjoy--having had the opportunity to serve on, among other committees here in the Senate, the Senate Armed Services Committee--is that it has historically had the reputation, which I found to be the case, that it really was bipartisan. That is not to say that there were not legitimate differences that divided us. There were, and there continue to be. But there was a virtual absence of partisanship as we processed the various policy questions within the jurisdiction of that committee. I regret to say, and I hope that this is a temporary aberration, if you will, that this is not an auspicious beginning for us if this is the way the Defense authorization conference is going to be conducted in future years. There are Members on both sides of the political aisle who have served many, many years in the Senate. These individuals have gained considerable expertise in very discrete areas dealing with the funding of our national defense effort, and I think their expertise would have been extremely helpful in the negotiations with our colleagues in the other body. I note further, Mr. President, that there are major parts of the conference report that were discussed at this meeting which I have described--the one which provided our office with about 30 minutes notice--that were only verbally described to Senators literally minutes before the report was presented to us for signature. With respect to some of these provisions, they are extremely complicated. Language is very important. Specifically, I note the conference report language change with respect to the national missile defense provision. I must say that engaged colleagues on both sides of the aisle worked on the Senate- passed compromise version of this language. In extraordinarily difficult and, I think, very instructive discussions, the Senate provisions were agreed to overwhelmingly when it was acted upon on the floor of the Senate. Unfortunately, this was not the experience with respect to the conference negotiation. The resulting conference language, in my view, is deeply flawed. It, indeed, may result in a violation of the ABM Treaty, and it seems to me that we send all the wrong signals to the Russians. In effect, by the deployment schedule specifically established in this bill at 2003, it seems to me, would make the Russians even more reluctant to negotiate any further nuclear arms reductions and give them considerable reason to believe that it is our intent to violate the ABM Treaty itself. Another of the issues that divided us is the additional funding of the B-2 bomber. It was defeated in the Senate Armed Services Committee this year, in a bipartisan vote, and not included in the Defense authorization bill which was passed in this Chamber. I find it particularly troubling that the provision itself that would increase funding to the B-2 bomber was not available at the time the conference report was presented to us and we were asked to approve. Again, this is one of the most difficult issues that the committee had to deal with, and I would submit that this is not the way in which we ought to be conducting conference negotiations. Moreover, this conference report imposes new restrictions on the President's ability to obtain contingency funding for military operations. This is in direct contravention of the President's constitutional role as our Commander in Chief. The report contains directed procurement of specific ships at specific shipyards without a clear requirement, undermining, in my opinion, the efficiency and cost-saving objectives which are of critical importance as we face very, very difficult budgets in the outyears. The conference report contains spending floors with respect to shipbuilding provisions. These are requirements to spend specified amounts on specified projects. Again, in the real world in which we live, where the budgets are going to be tighter next year and each of the outyears thereafter, I find this provision unfathomable. The conference report will create a special congressional panel on submarines. I must say that my colleagues on the other side of the aisle have made a number of very constructive comments over the years when they talk about streamlining Government and reducing the number of committees. Adding another committee, it seems to me, is duplicative and creates unnecessary additional staff involvement and the possibility of additional funding that is just not warranted. The existing panel, in which submarines are included in the jurisdictional portfolio, does a proper job in my judgment and a new panel just for submarines is redundant, unnecessary and unwise. The conference report designates every single line of the National Guard and Reserve procurement funds, rather than providing generic categories of funds. This, Mr. President, is contrary to requests made by the National Guard and Reserve. The conference report dictates to the Department of Defense what their procurement priorities ought to be. It allows them to spend the money on nothing but those items deemed appropriate by the House and Senate. I recall in a different context a lot of criticism about Congress micromanaging the Pentagon. Let me suggest that I believe this is a case in which micromanagement has become the operative order of the day. I mentioned previously Pacer Coin, a program of particular interest in my State. The Nevada Air National Guard would receive two of those planes. The conference report contains language on the Air National Guard's Pacer Coin mission that is patently false. The report reads, and I quote, ``The conferees understand that the National Guard Bureau has requested that the Air Force terminate the Pacer Coin program.'' This statement is not true. As a matter of fact, I have a letter dated December 8, 1995, from Maj. Gen. Donald Shepperd, Director of the Air National Guard. His letter states in part, ``The Air National Guard always has supported Pacer Coin and will continue to support the mission.'' General Shepperd's letter then goes on to say, ``It is our understanding that the Pacer Coin mission is a priority of the Commander in Chief, U.S. Southern Command.'' Mr. President, I ask unanimous consent that the full text of General Shepperd's letter of December 8, 1995, be printed in the Record.

Mr. BRYAN. I thank the Chair. I must say it has been difficult for me to understand, with two commanding generals who have in one instance a National Guard command authority and in the other instance an operational command of the Southern Command both expressing support for the program, how the conference report could question the viability of this program and conclude that this is a program that is not supported. I guess by way of general conclusion, Mr. President, I regret to say that this conference has not been conducted in its historical bipartisan manner. Democrats were cut out from any meaningful participation in the conference itself. And I must say the Secretary of Defense has indicated that he will recommend a veto of this conference report to the President. The National Security Council and the Pentagon find the national defense missile language in this report to be wholly unacceptable and quite dangerous. Finally, the President himself has sent a message to Congress saying that he will veto this bill in its present form. For these and the other reasons that I have referenced in my comments, I urge my colleagues to vote against the report. Mr. President, I yield the floor and in the absence of any other colleague in the Chamber I suggest the absence of a quorum.

Mr. BRYAN. I thank the Chair. I also have a letter from Gen. Barry McCaffrey, commander in chief of U.S. Southern Command dated June 2, 1995. His letter states, ``U.S. Southern Command supports retention of the Pacer Coin reconnaissance program in the Air National Guard and periodic deployments of the system in this theater.'' And again, Mr. President, I ask unanimous consent that the full text of General McCaffrey's letter dated June 26, 1995, be printed in the Record.

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to say to my colleagues that President Clinton's decision to send United States troops to monitor the peace in Bosnia should not be a partisan issue. The President has decided to send American troops on a NATO peacekeeping mission in Bosnia; as Commander in Chief, the Constitution empowers him to do so. President Reagan exercised this power to send troops to Lebanon and Grenada; President Bush used this power to send troops to Panama and the Persian Gulf. As a newly elected Member of the United States Senate, I supported President Bush in sending troops to Panama, and I was 1 of 11 Democrats to vote for a resolution in support of Operation Desert Storm. I intend to support President Clinton as well, notwithstanding any reservations I may have about sending troops to Bosnia. I do have serious misgivings about the deployment of American ground troops in the Balkan region; I wish that the President had not committed them. This is a high-risk mission, and the American people need to understand, as the President has stated, that casualties are almost inevitable. Some months ago I supported lifting the arms embargo, an embargo which prevented the Bosnian Moslems from securing the weapons necessary to defend themselves. Unfortunately, that embargo was never lifted. If it has been lifted, the Bosnian Moslems would have had the weapons they needed and American forces may never have been deployed. I have two primary apprehensions about the assignment of troops to Bosnia; I am concerned that the mission need to be adequately defined, and I am concerned about the details of the United States exit strategy. As a member of the Senate Armed Services Committee, I have had the opportunity to question closely Secretary of Defense Perry and Joint Chiefs of Staff Chairman General Shalikashvili when they appeared before the committee. They have assured me that the mission is narrowly defined and is confined to (a) the marking of the cease-fire line, inter-entity boundary line, and zones of separation, and (b) the monitoring and enforcement of the withdrawal of forces to their respective territories within the agreed period. With this mission so narrowly defined, I believe that we can avoid problems with mission creep we have faced in the past where troops have been committed without careful thought to what the goals of the mission were. Somalia is a case in point. Both Secretary Perry and General Shalikashvili are convinced that the Bosnia mission can be accomplished in 1 year. Furthermore, U.S. troops are not going to be responsible for nation- building, refugee relocation, or other humanitarian activities. They have also assured me that the decision to leave the region will be up to the United States and the United States alone, and other NATO countries have pledged to follow our lead. I believe the United States has played a critical role in this peace process. Without U.S. diplomatic involvement, the peace talks in Dayton would never have come about. Without the United States, this bloody war may never have ended. We have brought the Balkan peace process along this far, it would be terribly disingenuous for us to bail out now. The President has encouraged our allies to support this mission and all NATO countries with troops have pledged their support. It would be a tragedy for the United States to let the NATO countries down now, especially since we have done so much to promote peace in Bosnia. The Congress has taken responsibility in this process as well. We sought to define the mission and a bipartisan congressional coalition has worked to insure that the mission is strongly defined and the exit strategy is clarified. We have an obligation to insure that the mission can be successfully executed. We know that the U.S. uniformed services are the best in the world, and we should stand proudly behind them.

Mr. BRYAN

Mr. BRYAN. I thank the distinguished Senator from South Carolina. Mr. President and my colleagues, I wish to express my profound disappointment that the U.S. Travel and Tourism Administration funding is not included in this bill. I know that my friend and the ranking member of the Commerce Committee, Senator Hollings, proudly and rightly proclaims himself as one of the founding fathers of this very important function. We are talking about something that in the current year is funded at a modest level of $16 million. It is a program which has enjoyed bipartisan support. I wish to emphasize that. When we came to the floor earlier this year to amend the Senate version to continue it for a 1-year transition, a 1-year transition of $12 million in funding, we had the support of Senators McConnell, Hollings, Murkowski, Inouye, Thurmond, Daschle, and many others. So the point I wish to make to my colleagues is that this is not an issue which had as a cutting or defining edge any sense of partisanship. We had broad bipartisan support. Why do I think this is such an important function? First of all, tourism is either the No. 1 or No. 2 or number No. 3 industry in every State in America. It generates $417 billion annually and is recognized as being, with the possible exception of the health care industry, the largest employer in America. In the context of our difficulty with the international trading accounts, where the United States suffers from an enormous trade imbalance, when all of those individual categories are added together, it is a shining example of where we enjoy a trade surplus, net trade surplus, of some $22 billion. So this is an agency that is worth every penny that is expended. Putting this in the context of what is happening in the world today, out of the 175 major countries in the world, we will be the only one without some type of a national tourism office. The timing of this, it seems to me, is particularly bad. We are talking about jobs, travel tourism provides 6.2 million direct jobs, and is growing at twice the rate of job growth in the national average. So this generates economic growth here at home, jobs, $417 billion in the economy. In terms of the international trade, we have a net surplus of $22 billion. And all we sought to accomplish in this bipartisan amendment was to keep the agency funded for one more year, one more year, at a level of $12 million. What the conference report did, it seems to me, is absolutely indefensible, both in terms of philosophy as well as pragmatism. It will cost us under the provisions of this conference report, to terminate this agency immediately, $8 million. We get nothing for that $8 million. It simply represents severance pay to existing employees and the various costs that are incurred in terminating existing contracts. I mean, in is like cutting off your nose to spite your face. This makes no sense at all, Mr. President. And I know the distinguished occupant of the chair from my neighboring State knows how important tourism is to his own State. We share a common interest in one of nature's great wonders in the Southwest, the Grand Canyon. International tourism is driven to a large extent in our part of the world because of the interest and desire in seeing this great wonder of nature. We spend less than Malaysia, Tunisia, countries that are not ordinarily identified as states that are in the vanguard of promoting tourism. So I must say that I think we miss a tremendous opportunity here. We just had a very, very successful White House conference on tourism. Bipartisan in every sense. It is the first time in the years that I have been involved in the tourism movement. And I was very much involved, as the Governor of Nevada, in putting together, in our State, a strategy at the State level to develop a comprehensive approach to tourism that compliments what is done with the local visitor and recreation authorities, particularly in the Las Vegas and Reno areas, where the two most active authorities exist, putting together that partnership which made it possible for us to generate the largest growth of tourism that has occurred in the history of Nevada. So I must say that I am extraordinarily disappointed in this. It is bipartisan in every sense. We ought to, it seems to me, in the interest of making some sense, see if we cannot at least keep this agency one more transitional year. In that sense I certainly would invite comment from either the floor manager or the minority floor manager here in terms of, do we have any chance, my colleagues, of getting this funding, as the President indicated he is going to veto the bill so it will come around again. I certainly would pledge to work with the distinguished floor manager from New Hampshire, my long-time friend, the former chairman of the Senate Commerce Committee and one who actually presided at the birth. This ought not to be an issue that divides us, Mr. President, on partisan grounds because it has broad bipartisan support. The Governors support it. The private sector is most energized, and as I say, this White House tourism conference was the first time in years I have been involved where we actually brought in every segment of the tourism industry, focusing on a strategy of how we can increase our international travel. I would certainly invite comments from my friend, the Senator from South Carolina.

Mr. BRYAN. I would appreciate it if the Senator will yield 10. I probably will use less.

Mr. BRYAN. I am not unmindful of the difficulties that occur in trying to reconcile differences between the two bodies. I say to the distinguished chairman of the subcommittee, the floor manager, the Senator from New Hampshire, I pledge to work with him as well to--this is not a partisan issue. And I would certainly, if he has any thoughts in terms of how I could be helpful, those of us who have spent a good bit of time in trying to work out a reasonable compromise, reorganizing that the agency is going to be terminated at the end of the next fiscal year under the proposal that we advanced as a compromise measure, I certainly would be happy to be guided by his suggestion in terms of how we might approach our [[Page S 18139]] colleagues in the House who are perhaps less informed about what this means to all of us. Whether we are from the West, the Northeast, the South, wherever, clearly we have an industry which is growing enormously. We are going to have 661 million people that will be traveling throughout the world by the turn of the century. And America is the travel bargain of the world. I certainly would be happy to yield to my friend from New Hampshire and take any suggestions that he might have in terms of how one might work with him and our Senate colleagues who understand how important this is.

Mr. BRYAN. Let me say, clearly the decision that we deal with is, what do we do during this critical year? I understand the concern that may be addressed as to, will there be a request next year or the year thereafter? I put my own credibility on the line and tell the Senator that, to his House colleagues and to our House colleagues who may have that concern, this is not a guise to come back next year or the year thereafter. This, I think, is a very practical way to deal with the situation, which we all acknowledge that the Agency is going to be terminated after the end of the year, as a practical matter. For $12 million, we get the benefit of a functioning Agency; for $8 million, we get no benefit at all and simply pay folks to terminate contracts and for severance pay. To the extent I want to be helpful, I assure the Senator I want to work with him and encourage him to use his own legendary persuasive skills as a former chief executive of his own State. I have some sympathy and understanding of how effective the Senator can be. Our distinguished friend from South Carolina also served as a chief executive of his State. So, together, we can work on this. We are only talking about $12 million. I think we may be able to get that back in. I thank the Senator.

Mr. BRYAN. I appreciate my friend's comments. If I might respond and engage him in a constructive colloquy. The $50 million that the Senator made reference to is $50 million of private-sector capital. As I am sure the Senator from New Hampshire is aware, at the White House conference one of the reasons that was part of the compromise--which was accepted by the Senate--that was crafted in the fashion in which it was was that we recognized that the agency would terminate at the end of this fiscal year under the proposal the Senate embraced. Therefore, during this transitional year the industry would have to come up with this $50 million. I say to the Senator--I know he knows this; perhaps our House colleagues have not followed as closely; again, I would certainly be delighted to work with him--that $50 million is not an attempt to come in sideways or in the back door to get $50 million Federal dollars. I can represent to the Senator from New Hampshire that, if we can get this compromise in a future conference report, because the President indicated he is going to veto this, that I will represent to him it will be my intention to oppose any attempt to extend the agency beyond that year, based upon a representation that we made on the floor. So I am not part of any effort, I can assure my colleague, to just keep it alive this year and then argue, ``Well, look, we need to keep it alive another year.'' This is $12 million. This is it. And this is the transitional year for the industry.

Mr. BRYAN. Will the Senator yield for the purpose of a single question?

Mr. BRYAN

Mr. BRYAN. Mr. President, I have come to the Senate floor a number of times to talk about prescription drug pricing, and to support Senator Pryor's efforts to control the costs of drugs. Today I am pleased to cosponsor Senator Pryor's amendment to correct the GATT treaty loophole that creates a windfall profit for certain prescription drug companies. The GATT treaty, voted on by Congress, included two important provisions that affected every product, company, and industry in the country. One, provided that all patents would be extended from 17 to 20 years; an additional 3 years of protection. Two, provided that a generic company, in any industry, would be permitted to go to the marketplace and compete on the 17-year expiration date, if the generic company had made a substantial investment, and was willing to pay a royalty. An unintended loophole was created, however, when the prescription drug industry was accidently excluded from the generic competition provision. The loophole means that prescription drug companies have a 3 year longer patent period, without any competition during that time extension from generic companies. This loophole has created a multimillion dollar windfall for certain drug companies that must be corrected. Seniors use prescription drugs more than any other age group. For them, this loophole means they will pay higher drug prices for 3 years because of a mistake. Without the ability of generic drug companies to compete, drug prices will remain artificially high during that 3-year period. There is no reason why seniors should suffer because of an unintended mistake that can be corrected today. What drugs are involved here? More than 100 drugs would be protected from generic drug competition. The world's best-selling ulcer drug, Zantac, would cost twice as much as it should because of the loophole. The hypertension drug, Capoten, will cost 40 percent more than it should because of the loophole. Additionally such drugs as Mevacor for lowering cholesterol, Prilosec for ulcers, and Diflucan, an antifungal agent are affected. This loophole will also affect the drug prices paid by the Medicaid Program. Medicaid already faces deep cuts in its funding. If this loophole is not corrected, Medicaid will be forced to pay higher drug prices during the 3-year period, further straining its ability to provide medical care for the most vulnerable in our country. Veterans will also suffer as the Veterans Affairs Administration will be forced to pay higher drug prices. People using public health services will also be affected. The bottomline is that taxpayers will pay more for the drugs used by these programs than they should, because competitive generic alternatives will not be available. There is no reason to allow some prescription drug companies an unintended windfall profit to the detriment of all Americans who depend on drugs for their continued health. Seniors, veterans, and the most vulnerable in our country particularly deserve our protection from unnecessarily high [[Page S 18204]] drug prices. I hope my colleagues will see this loophole for the mistake it is, and support this amendment to correct it.