Wm. Clay

Mr. CLAY

Mr. CLAY. Mr. Chairman, I yield back the balance of my time.

Mr. CLAY. Mr. Chair, I yield myself such time as I may consume. Mr. Chair, I rise in support of this bill, the Fannie and Freddie Open Records Act of 2017. I want to start by thanking the sponsor of this bill, Chairman Chaffetz, for working with the Democratic members of the Committee on Oversight and Government Reform to address concerns that we raised as well as concerns raised by the Federal Housing Finance Agency. The bipartisan cooperation that was demonstrated on this bill should be a model for this body. This bill would apply the Freedom of Information Act to Fannie Mae and Freddie Mac while they are in conservatorship or receivership. Fannie Mae and Freddie Mac are stockholder-owned, government-sponsored enterprises chartered by Congress to purchase mortgages and pool them into mortgage-backed securities to create liquidity in the mortgage market. Fannie Mae and Freddie Mac were brought into Federal conservatorship under the control of FHFA in September 2008. According to the CBO, during the financial crisis, Treasury purchased $187 billion of senior preferred stock from the two entities to ensure that they could continue to operate. Neither entity has drawn on Treasury support since 2012, both have returned to profitability, and the dividends they generate are paid to the Treasury. There are some practical concerns with the underlying bill because it would apply FOIA to these private companies for the first time. The amendment Chairman Chaffetz will offer addresses some of those concerns, which I will discuss when we consider this amendment. I would like to discuss some concerns with language that was added in this bill at the Rules Committee to address the estimated cost of the bill. CBO estimates that this bill would increase the administrative costs of Fannie and Freddie by $310 million, with $10 million of that resulting in direct spending. This bill would address those costs by requiring commercial requesters to pay for processing FOIA requests made to Fannie and Freddie. This would be a significant change from the way FOIA typically works. It is unclear how Fannie and Freddie could reasonably estimate how many FOIA requests they would receive or to know how to distribute administrative costs equitably among commercial requesters. The bill would allow Fannie and Freddie to determine how much they would charge commercial requesters. Whatever cost estimation methodologies Fannie and Freddie choose to use, the methodologies will almost certainly be challenged, potentially leading to litigation, which would be handled by the Department of Justice. It is highly likely that banks would file FOIA requests to obtain information about the business practices and holdings of Fannie and Freddie. The costs charged to them for their requests would then be passed on to consumers. I believe this language was intended to be helpful, but it is one result of applying to private companies a statute designed to apply to government agencies. We should carefully analyze this provision and its likely consequences as this bill moves forward in the legislative process. There may be a better way to address this issue. I also hope that the chairman will continue to seek ways of expanding transparency in government, and that the committee's next step will be to require the disclosure of White House visitor logs. The White House recently reversed what had been the Obama administration's policy of disclosing the records of who comes and goes from the White House. The president of Judicial Watch, Tom Fitton, said: ``This new secrecy policy undermines the rule of law and suggests this White House doesn't want to be accountable to the American people.'' I look forward to working with the chairman to address this very troubling reversal of a critical government transparency policy. Mr. Chairman, I reserve the balance of my time.

Mr. CLAY

Mr. CLAY. Mr. Speaker, I thank the gentlewoman from Ohio. I certainly appreciate her support. In closing, let me say that the student artist in question, my constituent, David Pulphus, is a great young man. He is academically gifted, artistically talented, and is now a freshman in college. He is doing everything that we encourage young Americans to do to become successful citizens. His winning entry is a colorful, symbolic representation of the great anger, pain, frustration, and deep deficit in trust for local law enforcement that many young African Americans feel in their hearts. The painting also reflects generations of struggle, sacrifice, abuse of power, and tenuous relationships between minorities and a system of justice that still provides equal justice for some, but not for all. So the larger, much more fundamental question is: Why does this young American feel that way, and what can we do as leaders of a compassionate and just nation to finally remedy that? I am so thankful for the remarkable public service of my exceptional pro bono legal team who are guiding this case, including Dr. Laurence Tribe of Harvard University School of Law, Dr. Erwin Chemerinsky of the University of California, Irvine School of Law, and others. As a Member of Congress who reveres the Constitution, I am confident that freedom and justice will prevail. Mr. Speaker, I yield back the balance of my time.

Mr. CLAY. Mr. Speaker, I yield to the gentlewoman from Ohio (Ms. Kaptur), my friend and dean of the Ohio delegation.

Mr. CLAY. Mr. Speaker, let me thank my friend from Maryland who, as we heard, his 25 years of knowledge on the U.S. Constitution bodes well for this entire body, and I appreciate his friendship and his support. Mr. Speaker, I yield to the gentlewoman from Illinois (Ms. Schakowsky), a member of the Energy and Commerce Committee.

Mr. CLAY. Mr. Speaker, let me also thank my friend from Tennessee who happens to be a member of the House Judiciary Committee. As he stated, we are working together on police reform legislation. I appreciate his services.

Mr. CLAY. Mr. Speaker, I thank the gentlewoman from North Carolina for her thoughts, her words, as well as her expertise in the field of art. She is probably the only qualified art critic serving in Congress today. So thank I thank her so much. Mr. Speaker, at this time I yield to the gentleman from Tennessee (Mr. Cohen), my friend, an attorney and former legal adviser to the Memphis Police Department.

Mr. CLAY. Mr. Speaker, I thank my friend from Michigan, the ranking member of the House Judiciary Committee. At this time, I yield to the gentlewoman from North Carolina (Ms. Adams), my friend, an art education Ph.D., a gallery owner and artist, and member of the Congressional Arts Caucus.

Mr. CLAY. Mr. Speaker, 10 months ago, I was pleased to welcome David Pulphus, a very talented young constituent of mine from St. Louis, to the U.S. Capitol complex, as we unveiled his painting entitled, Untitled #1, which you see here tonight. David's work was a unanimous first-place winner in the annual Congressional Art Competition in Missouri's First Congressional District. I have been pleased to sponsor this competition in St. Louis for the last 16 years without interruption and incident. For those of you who may not know, many other Members of Congress conduct this contest in their districts as well. In fact, this painting was one of more than 400 student entries from across the Nation that were reviewed, accepted, and approved last June for public display in the Cannon tunnel by the Architect of the Capitol. Members of Congress do not select the artists. We do not approve or disapprove of any of the artistic concepts, and we have no role in judging the competition. We simply provide a public forum for the most talented young artists in our districts to display their winning artwork in the U.S. Capitol complex. Yet, without cause or reasonable process and after being viewed repeatedly by Members of Congress, congressional staffers, and thousands of visitors without incident or concern, my constituent's winning entry was removed in an act of politically motivated, unconstitutional, retroactive censorship. That injustice was initiated by pressure from certain alternative- right bloggers and Mr. Eric Bolling, a host on FOX News channel, who created a mean-spirited and factually inaccurate media campaign to improve his ratings on the back of a young man, and to ultimately force the painting to be removed by the Architect of the Capitol. After repeated acts of petty theft by renegade Members of Congress who removed the painting without any authorization and after a storm of rightwing media pressure, the Speaker of the House forced the Architect of the Capitol to trample on the rights of my constituent by ruling that this painting, which he had already approved 10 months ago, was retroactively disqualified. This unwarranted, arbitrary, and unconstitutional act of censorship will not stand. Now, let me be clear: I do not approve or disapprove of this painting. I did not approve or disapprove the concept of the artwork. I did not judge the competition, but the Architect of the Capitol reviewed, approved, and accepted this student's artwork for public display without incident, comment, or concern, just like every other entry that is displayed in this public exhibition. Only after the most hateful, intolerant, and reckless media campaign, combined with enormous political pressure from the Speaker and other Members, the Architect of the Capitol miraculously traveled back in time to disqualify the very same painting that he had approved 10 months ago. Perhaps we should advise the National Academy of Sciences of the Architect of the Capitol's newfound ability to bend the space-time continuum in order to retroactively respond to the most extreme voices in the majority so that they could more easily suppress the rights of my young constituent. It did great harm to an innocent young man who tried to do the right thing. Because of this outrageous act of censorship, David Pulphus has been subjected to the most vile, racist, and hateful attacks on social media and on talk radio. He has also been deprived of the honor of listing his first place victory in the Congressional Art Competition on his resume. He has even been attacked by the Speaker of the House who called his award winning work ``disgusting.'' So on top of depriving David of his First Amendment rights, the majority and the Architect of the Capitol have placed a terrible personal burden on this bright, talented young man. David does not deserve that. That is wrong. That is totally unacceptable, and the Speaker and the Architect of the Capitol should be ashamed of themselves. This shameful decision also sent a chilling message to young Americans. It told young Americans that their views are not valued. Their voices are not respected. Their creativity and passions are not welcome, and that is, sadly, here, in the people's House, their First Amendment rights are no longer protected. That is a terrible precedent to set for future generations who look to us to defend their freedoms. So my friends, this is really not about a student art competition anymore. It is about defending the Constitution. It is just pathetic that some Republican Members and rightwing media types who constantly refer to themselves as constitutional conservatives don't think that that same document protects the fundamental free speech rights of my young constituent. You can be certain that I will fight to defend this young man's right to express himself because his artwork is true for him, and he is entitled to that protection under the law. Mr. Speaker, I yield to the gentleman from Michigan (Mr. Conyers).

Mr. CLAY. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to include any extraneous material on the subject of my special order.

Mr. CLAY. Mr. Speaker, he is an art critic. Mr. Speaker, at this time I yield to the gentleman from Maryland (Mr. Raskin), my friend, a Constitutional scholar and professor.

Mr. CLAY

Mr. CLAY. Mr. Speaker, I rise today to honor a legendary American musical genius; An inaugural member of the Rock n' Roll Hall of Fame; And a former neighbor and friend of the Clay family for six decades . . . The father of Rock n' Roll; the immortal Chuck Berry. Mr. Berry, a legendary singer, songwriter and guitarist who created the original American art form that would come to be known as Rock n' Roll, died on March 18 at the age of 90. He began singing in the Antioch Baptist Church choir in St. Louis when he was just six years old. In 1952, when jazz pianist Johnnie Johnson lost his saxophonist, Alvin Bennett, to a stroke on Christmas Eve, he called on Mr. Berry to join the Sir John Trio. The group played at the famed Cosmopolitan Club in East St. Louis. Although he was a new guitarist, Mr. Berry added vocals and showmanship to the group and was soon its leader. During a 1955 visit to Chicago, legendary Blues man Muddy Waters suggested that Berry should reach out to Leonard Chess at Chess Records. Mr. Berry sent him four demos; one was his iconic single . . . Maybellene. He got the contract. The high-octane Maybellene became his first hit single. As the civil rights movement was awakening the nation to the struggle for justice and equality for African Americans, Chuck Berry's music smashed the color barrier. He was one of the first Black artists to become as popular with white audiences as he was with Black audiences. In 1958, he did an ode to teenage-hood: Sweet Little Sixteen. It grabbed the No. 1 spot on the R&B chart and No. 2 on the pop chart. Then came Johnny B. Goode, his anthem that was part autobiography, part tribute to his piano player, Johnny Johnson. It's about a poor country boy with a gift for playing the guitar and dreams of someday seeing his name up in lights ``saying Johnny B. Goode tonight.'' In 1987, his self-titled autobiography was published and the enduring documentary film about his life, Hail! Hail! Rock n' Roll, was released. Mr. Berry appeared as himself in the 1978 film, American Hot Wax, and performed at the Carter White House in 1979. A career that transcended hate and racism, and outlasted hardship, began winning long-overdue recognition in the '80s. In 1985, he received the Grammy Lifetime Achievement Award and was inducted into the Blues Foundation's Blues Hall of Fame. In 1986, after more than 40 years in show business, Chuck Berry was inducted into the Rock n' Roll Hall of Fame as a member of its inaugural class. Two years later, Chuck Berry received his star on St. Louis' Walk of Fame. In 2011 . . . a larger than life statue of Mr. Berry was installed near his star, across the street from the world-famous Blueberry Hill on Delmar Boulevard in the heart of my Congressional District. The Beatles, The Rolling Stones and many other world-class groups owe their success to the innovative genius of Chuck Berry. Mr. Berry's most recent award, the Polar Music Prize, aptly stated: ``Every riff and solo played by rock guitarists over the last 60 years contains DNA that can be traced right back to Chuck Berry.'' Charles Edward Anderson Berry was born Oct. 18, 1926 in St. Louis' historic Ville neighborhood. He was the fourth of Martha Bell Banks Berry and Henry William Berry Sr.'s six children. Mr. Berry is survived by his wife, Themetta, and his four children, Ingrid Berry, Melody Eskridge, Aloha Isa Leigh Berry and Charles Berry Jr. On behalf of the Clay family, I want to express our deepest condolences to our old friends . . . the Berry family. And on behalf of music fans everywhere, I want to give thanks for the life of this legendary artist . . . whose legacy and unique sound will live on for generations to come. A true St. Louis legend and an American treasure . . . Chuck Berry.

Mr. CLAY

Mr. CLAY. Mr. Speaker, I rise to honor a legendary American musical genius, an inaugural member of the Rock and Roll Hall of Fame, and a former neighbor and friend of the Clay family for six decades, the father of rock and roll, the immortal Chuck Berry, who died this past Saturday at the age of 90. I grew up just a few blocks away from the Berry residence. My sisters and I came up with his kids, and our families knew each other very well. Chuck Berry was one of the first Black superstars whose innovative music was not only popular with African-American audiences, but with young music fans around the world. Since his death, tributes from across every spectrum of music have poured in, including The Rolling Stones, U2, Sir Paul McCartney, Stevie Wonder, Bruce Springsteen, and hundreds of other internationally known artists who were deeply influenced by Chuck Berry's magical music. On behalf of my family, I want to express our deepest condolences to the Berry family; and on behalf of music fans everywhere, I want to give thanks for the life of this legendary American treasure whose legacy and unique sound will live on for generations, a true St. Louis original, the real king of rock and roll: Chuck Berry.

Mr. CLAY

Mr. CLAY. Mr. Speaker, I attended Senate confirmation hearing for U.S. Attorney General in Judiciary Committee. Had I been present, I would have voted ``nay'' on rollcall No. 32, ``nay'' on rollcall No. 33, and ``yea'' on rollcall No. 34. personal explanation

Mr. CLAY

Mr. CLAY. Mr. Chairman, I demand a recorded vote.

Mr. CLAY. Mr. Chair, just in closing, let me say that, again, this amendment will bring some balance to the legislature and ensure that the bill is targeted to provide relief to our Nation's startup and small businesses, and I urge its adoption. Mr. Chair, I yield back the balance of my time.

Mr. CLAY. Mr. Chair, I move for the adoption of the amendment. This amendment, combined with Velazquez amendment, if adopted, would ensure that the bill strikes the appropriate balance between capital formation and investor protection. First, the Waters amendment would prohibit event sponsors from collecting finders' fees for connecting potential investors to companies. This prohibition helps ensure that event sponsors, including colleges, nonprofits, and trade associations, don't have perverse incentives to drum up sales of stock. Second, the Waters amendment would require the company selling securities to be a company operating in the real economy, not a hedge fund, shell company, or company going through bankruptcy. Not only does this provision protect investors from purchasing shares of an opaque or speculative firm, but it also ensures that the bill is targeted to provide relief to our Nation's startups and small businesses. These two provisions are commonsense changes that I hope will receive bipartisan support. I move for the adoption of the amendment. Mr. Chairman, I reserve the balance of my time.

Mr. CLAY. Mr. Chairman, I rise as the designee for Ms. Waters' amendment to improve H.R. 79.

Mr. CLAY. Mr. Chairman, I yield myself the balance of my time. Mr. Chairman, both Democrats and Republicans want to help facilitate capital formation, particularly for groups such as angel investors, who have substantial experience in the private securities market, and for small companies like startups who are seeking funding to innovate and grow. But as Members of Congress, we also have the responsibility to protect investors and ensure that the rules of the road are reasonable and appropriate. This is especially important for retail investors, those of us who are looking to save for retirement or to buy a house or to support our children's education. That is what concerns me about the bill we have before us today. We cannot create loopholes in the securities laws that could have a serious negative impact on Americans' nest eggs, so we must strike the right balance between capital formation in our securities markets and investor protection. It is with these goals in mind that Democrats supported the current rules in place. Companies can raise money to grow and support their businesses in our securities markets under the purview of the SEC and State regulators. The regulatory framework we have set up allows for different activities and oversight depending on the nature of the security offering. For example, public offerings provide robust information to investors about the risks and rewards of a particular securities purchase. They require the SEC or State securities regulator to preapprove and review an offering, and they provide legal recourse to investors that may be deceived. This is a strong regulatory framework that ensures our markets are safe and sound. In exchange for complying with these rules, companies can advertise and sell their stock to anyone in the general public. On the other hand, private offerings do not come with the same regulatory requirements and protections, which can make it easier and less costly for firms to raise money. This means less information for investors, less legal recourse, and little to no scrutiny by regulators. So we put in place procedures to ensure these private offerings, which are inherently riskier, are only sold to accredited investors. Private offerings now play a significant role in the market. Unregistered securities have surpassed registered securities in terms of capital formation. They have accounted for more than $2 trillion in new capital. Moreover, $71 billion has been raised since 2012 through the general solicitation and advertising exemption that we put in place in the JOBS Act. This is clearly an important and growing segment of our market, and, as such, I believe we need to be even more cautious about who is participating in it. In fact, the SEC's Investor Advisory Committee said we should do more, not less, to protect investors in the general solicitation and advertising market for private offerings. They think we don't have enough guardrails in place. And yet this bill would do the opposite, by expanding the exemptions on general solicitation without similarly protecting the investor. The bill also undercuts an important amendment Ranking Member Waters offered to the JOBS Act, which was approved unanimously. It required companies to verify that the purchaser is an accredited investor and is financially sophisticated enough to bear the risks involved in private offerings. By effectively allowing purchasers to ``self-certify'' at or after demo days sponsored by certain groups, the bill could open the door to financial ruin for a retail investor who may not have understood the consequences of his or her investment. So I oppose this bill. I yield back the balance of my time.

Mr. CLAY. Mr. Chairman, I have no further speakers, and I reserve the balance of my time.

Mr. CLAY. Mr. Chair, I continue to reserve the balance of my time.

Mr. CLAY. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in opposition to H.R. 79, the Helping Angels Lead Our Startups Act. This bill, under the guise of helping angel groups attract additional investors for small businesses and startups, would alter the balance between capital formation and investor protection that we sought to achieve in the JOBS Act. Let me remind my colleagues of what we did in the wake of the financial crisis when bank lending was scarce. Our Nation's startups had trouble getting off the ground and attracting new capital. Previously, they had done so using rule 506, which allows companies to sell private securities to accredited investors who are financially savvy and have the means to bear their heightened risks and lack of SEC oversight. As a condition to using rule 506, however, companies could not solicit purchasers from or advertise to the general public. This condition was viewed as a barrier to capital formation for startups. Therefore, Democrats worked with Republicans to provide companies in the JOBS Act with an alternative so that they could broadly advertise and solicit new investors. Recognizing the need to balance investor protection with this expansion, Ranking Member Waters offered an amendment requiring companies to take reasonable steps to verify that the ultimate purchaser was an accredited investor. This verification requirement is a necessary investor protection designed to prevent unsophisticated investors from purchasing--either accidentally or by fraudulent means-- risky, illiquid, and lightly regulated Rule 506 securities. I would remind my Republican colleagues that this amendment was agreed to unanimously, in part because the amended provision struck the appropriate balance between capital formation and investor protection. Nevertheless, here we are today seeking to alter it in H.R. 79. This bill would remove the verification requirement and allow companies to broadly solicit and advertise their private stock at any event sponsored by a college, nonprofit, government organization, angel investor group, or other group. That means that America's college students can walk into an event on campus and be talked into buying stock that they don't understand and may not ever be able to sell. Having created this initial relationship, the company can then sell the students stock without ever checking if they are accredited investors. What is more, the bill would make it much easier for fraudsters to swindle unsophisticated investors by, for example, encouraging the unsophisticated investors to buy stock in a fake or failing company, only to sell off their own stock at artificially inflated prices. Republicans claim that the bill is merely a clarification; that these demo days are not merely solicitations or advertisements in and of themselves and can be used by companies to generally discuss investment opportunities along with their products and services with the general public. But that is not the case. Companies can already go to a broadly advertised, widely attended demo day and discuss their businesses and not implicate the securities laws if they don't offer securities for sale or otherwise condition the market for their security, but the bill would allow them to offer securities or condition the market by describing the type and amount of stock they are offering, the intended use of the proceeds, or any of the other information in subsection (a)(4) of the bill. Therefore, today, a company discussing such information would have two options: one, to ensure that the event is limited to persons with whom they or the event organizer has a preexisting, substantive relationship or have been contacted through an informal personal network; or two, verify at the time of purchase that their investors are accredited by, for example, looking at bank statements, W-2s, or third-party verification letters. The bill would allow companies to avoid both options and broadly advertise their stock, solicit purchases from the general public, and never check to make sure they are financially sophisticated, accredited investors. The only limitation--that the stock offerings only be at events sponsored by certain groups--does not provide a meaningful investor protection. Phony private universities or nonprofits that may be guilty of fraud themselves can hardly be held accountable for policing it in stock offerings. So rather than clarify existing law and preserve the compromise we struck in the JOBS Act, H.R. 79 provides a potential loophole that is overbroad and harmful to investors. Mr. Chairman, I am even more troubled that Republicans have brought this bill and another Financial Services Committee bill to the floor this week without a hearing or a committee markup. In fact, there are 10 new Republican Members and 4 new Democratic Members on our committee that have never even considered this bill. Collectively, they represent millions of Americans that are being denied the right to better understand this legislation. It is deeply troubling that Republicans have decided to use their newfound power to rush through changes under cover of night without the benefits of an open, public process. For these reasons, I oppose H.R. 79. Mr. Chairman, I reserve the balance of my time.

Mr. CLAY. Mr. Chairman, I reserve the balance of my time.

Mr. CLAY. Mr. Chair, I reserve the balance of my time.

Mr. CLAY. Mr. Chair, I reserve the balance of my time.