Alfonse D’Amato

Mr. D'AMATO

Mr. D'AMATO. Mr. President, today I introduce legislation that will create a new homeownership opportunity with a proven method of building affordable housing. Current low-income housing production in the United States is driven largely by the low-income housing tax credit. The credit supports the development of 94 percent of all federally assisted multi-family affordable housing construction. Under current law, however, only rental housing can be developed with the credit. Everyone would agree that building homeownership is better than simply building homes for people. Homeowners are invested in their communities, take pride in their property, and will do what it takes to preserve the security and appearance of their homes. The legislation that I propose today will enable housing cooperatives and mutual housing associations to be developed with the credit. With these types of multi-family homeownership, tax credit investors can become non-resident shareholders of the developed property while allowing the residents to own their share of the property as well. From the very start, the residents will have a real ownership stake and control over their homes. A study undertaken by Abt Associates, Inc., commissioned by the National Cooperative Bank found that this legislation could result in the annual production of 1,600 units of low-income housing within five years of enactment. That means as many as 15,000 renters could be homeowners within five years. Mr. President, I urge my colleagues to join me in cosponsoring legislation to help bring the American dream of homeownership to many more Americans. Mr. President, I ask unanimous consent that the complete text of the bill be placed in the Record.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, today I introduce legislation that will create a new homeownership opportunity with a proven method of building affordable housing. Current low-income housing production in the United States is driven largely by the low-income housing tax credit. The credit supports the development of 94 percent of all federally assisted multi-family affordable housing construction. Under current law, however, only rental housing can be developed with the credit. Everyone would agree that building homeownership is better than simply building homes for people. Homeowners are invested in their communities, take pride in their property, and will do what it takes to preserve the security and appearance of their homes. The legislation that I propose today will enable housing cooperatives and mutual housing associations to be developed with the credit. With these types of multi-family homeownership, tax credit investors can become non-resident shareholders of the developed property while allowing the residents to own their share of the property as well. From the very start, the residents will have a real ownership stake and control over their homes. A study undertaken by Abt Associates, Inc., commissioned by the National Cooperative Bank found that this legislation could result in the annual production of 1,600 units of low-income housing within five years of enactment. That means as many as 15,000 renters could be homeowners within five years. Mr. President, I urge my colleagues to join me in cosponsoring legislation to help bring the American dream of homeownership to many more Americans. Mr. President, I ask unanimous consent that the complete text of the bill be placed in the Record.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, today Senator Sarbanes, the distinguished Ranking Member on the Senate Banking Committee, and I have announced that we will hold hearings on June 17th to begin the process of Senate consideration of the Financial Services Act of 1998, recently passed by the House of Representatives. America is the financial leader of the world, and New York is the capital. But we cannot remain complacent. We must recognize that the world is changing and global competition is tougher than ever. We must meet this change head on. If we are to remain competitive and maintain our preeminent position in the marketplace, we must provide a climate that allows our financial system to be as efficient, and competitive as possible. Mr. President, simply put, financial modernization will provide consumers with more choices. Financial institutions will be able to provide even more diverse services. Insurance companies, securities firms, brokerage houses, local banks and other institutions will be allowed to compete fairly with one another. But we must remember that while expanding the freedom of every American to make their financial choices, we must not sacrifice the safety and soundness or place the taxpayers at risk. The issues surrounding financial modernization have in the past proven to contentious. Our hearing next month will allow an open and frank dialogue with the Administration, industry groups and consumers.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, I rise today to comment on an issue that concerns many Americans, religious intolerance in Europe. As Chairman of the Commission on Security and Cooperation in Europe, I chaired a hearing on September 18, 1997, on ``Religious Intolerance in Europe Today.'' We heard compelling testimony on the rise of religious intolerance in Europe from representatives of the Muslim and Jewish faiths, Orthodox Church, Roman Catholic Church, an evangelical Protestant church, the Church of the Latter Day Saints, Jehovah's Witness, and the Church of Scientology. The testimony indicated the following: Muslims in Europe have been subjected to genocide, mass killings, forced migration and torture, including rape, in the former Yugoslavia; harassment, including police brutality and attacks and other hate crimes by extremist groups against Muslims have been reported throughout Europe, particularly in Germany, France and the United Kingdom; Muslims have been denied permits to build or repair mosques in the Czech Republic, Bulgaria, and elsewhere in Europe; Muslim women are frequently the subject of attacks, discrimination and other forms of abuse and harassment because they choose to wear a head covering; Struggling Jewish communities in Eastern Europe are often made the scapegoats for the pain of the transition from centrally planned economies to market capitalism; the desecration of Jewish cemeteries and memorials has been on the rise; and anti-Semitic publications, such as The Protocols of Zion, and neo-Nazi computer games have received wider distribution accompanied by the rise of skinhead gangs and hatemongers throughout Europe; The Greek Orthodox Ecumenical Patriarchate has been subject to recurring acts of violence, and faces serious obstacles imposed by the Government of Turkey, including the closing of the Theological School of Halki, which have a detrimental impact on the activities of the Patriarchate and Orthodox believers in Turkey; Catholic believers face harassment and violence in parts of Bosnia- Herzegovina and Croatia as well as Northern Ireland, and they face serious impediments to the practice of their faith elsewhere in Europe, including in Belarus, Russia, Greece, Turkey, and Romania; Some evangelical and charismatic Christian churches have been denied registration by the Governments of Bulgaria, Uzbekistan, Azerbaijan, and Greece and have been harassed, as well as have reportedly had religious materials confiscated; at least one charismatic church in Germany has come under intense scrutiny by the local officials and the German Bundestag's Commission of Inquiry on So-called Sects and Psycho- Groups, faced other forms of harassment, and been the target of vandalism and threats of violence; Jehovah's Witnesses have been denied registration in a number of OSCE participating States, including Armenia, Austria, Bulgaria, Greece, and Latvia; have been subjected to various forms of harassment, including the prohibition on importation of religious literature and denial of the freedom to assemble for worship services; France's Parliamentary Commission on Sects has categorized Jehovah's Witnesses as a ``criminal sect'' for its prohibition against blood transfusions; Germany's Federal Administrative Court has denied legal status to the Jehovah's Witnesses; Mormons have been subjected to continued acts of harassment, including confiscation of religious materials, and assault, in Bulgaria; and are prevented from freely sharing their beliefs in several OSCE participating States, including Greece and Turkey; and Scientologists, including U.S. citizens, have been subjected to pervasive civil, political and economic discrimination, harassment, surveillance, and orchestrated boycotts in Germany. In the months following this hearing, the Helsinki Commission has noted a chilling effect on religious liberty from actions taken by national parliaments. A law passed on December 10, 1997 by the Austrian Parliament requires that a religious group prove a 20-year existence, have a creed distinct from previously registered groups, and have a membership of at least 0.02% of the population or 16,000 members before they are granted full rights under law. Concerns over this law were raised in Vienna by a Helsinki Commission delegation this past January. A similar law was passed in 1997 in Macedonia. In January 1998, a Helsinki Commission delegation, lead by Co-Chairman Christopher Smith, traveled to Moscow to discuss concerns with the 1997 Russian religion law with Russian government officials, minority religious groups, and the Russian Orthodox Church. Some governments have passed laws creating government information centers to alert the public to ``dangerous'' groups. The Austrian and Belgian governments have set up hotlines for the public and, through government sponsored advisory centers, distribute information on groups deemed ``dangerous.'' In official Austrian literature, Jehovah's Witnesses are labeled ``dangerous'' and members of this group report that the stigma associated with this government label is difficult to overcome in Austrian society. These information centers directly violate the commitments that Austria and Belgium have made as participating States of the OSCE to ``foster a climate of mutual tolerance and respect,'' in paragraph 16 of the Vienna Concluding Document, and represent excessive governmental intrusion into the public discussion on religious matters. Several western European Parliaments have or are currently investigating and reporting on the activities of minority religious groups. These parliamentary investigations have also had a chilling effect on religious liberty and appear to cause a public backlash against groups being investigated or labeled ``dangerous.'' For instance, the German Parliament is currently conducting its investigation into ``dangerous sects'' and ``psycho-groups'' and issued an interim report in January 1998. At the Helsinki Commission's September 18 hearing, at least one independent evangelical church reported a direct correlation between the harassment, vandalism and threats of violence they experience and the investigation by the German Parliament's commission. The French Parliament's report contained a list of ``dangerous'' groups in order to warn the public against them and the Belgian Parliament's report had an informal appendix which was widely circulated, which included allegations against many mainline Catholic groups, Quakers, Hasidic Jews, Buddhists, and the YWCA (although not the YMCA). On Wednesday, May 20, 1998, a coalition of religious groups, including Hasidic Jews, Hindu, Bahia, Seventh Day Adventist, evangelical Protestant and charismatic Catholic communities, Plan to hold a press conference in Brussels to announce that they are about to launch a court challenge to the Belgian Parliamentary Report and the Belgian Government's Advice and Information Center. The premise of the legal challenge is that these actions by the Belgian government violate Belgium's international commitments to religious liberty. I am pleased to see these and other groups such as Human Rights Without Frontiers standing up for this fundamental freedom, and acting to highlight and challenge the actions by European governments that violate the Helsinki Accords and other international commitments on religious liberty. Mr. President, the recent action by the House adopting the Freedom From Religious Persecution Act, and pending consideration of that bill and parallel measures in the Senate, clearly show that this issue is one that concerns Americans. Many Americans have family or friends who are citizens in countries that have solemnly promised to protect religious liberty, but then restrict it or deny it. Many Americans, through their own religious affiliations, make donations to support the work of their denominations outside this country, or take part in that work themselves as a personal expression of their beliefs. Actions taken by foreign governments that have promised to protect religious liberty and then violate these promises can and do directly affect American citizens during their travels for business or pleasure, when they support the overseas religious efforts of their faiths by donations or personal participation, or through negative effects on their relatives and friends who reside in these countries. Accordingly, I call upon my colleagues to remain vigilant on this subject, and assure them and all Americans that the Commission will remain active and engaged as we seek to document violations and protect the rights of affected persons.

Mr. D'AMATO

Mr. D'AMATO. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 2416

Mr. D'AMATO

Mr. D'AMATO. Mr. President, I ask unanimous consent that I may be permitted to proceed for up to 5 minutes as in morning business.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, I see the Senator from California on the floor and I would like to give her whatever part of my time that might be left because this is in regard to legislation that I think is so important. It is important for the psychology of the women of America who, unfortunately, will be diagnosed with breast cancer. It is important in their medical treatment. It is important to their families. It is important to the community. It is important to let people know we are serious in our battle to win the fight against breast cancer and to see that those who are diagnosed get the proper treatment and don't have some medical plan or medical director who says that--as a result of the ERISA laws passed more than 20 years ago--we don't have to provide you basic coverage; we don't have to say that reconstructive surgery is covered. And, indeed, we have had plans today in America where millions of women face being denied basic coverage as it relates to cancer and its treatment and the reconstructive surgery that is necessary. On January 30, 1997, Senator Feinstein and myself, along with a dozen or more colleagues--now 21--introduced the Women's Health and Cancer Rights Act. We have amended that and, indeed, put some provisions aside, and we have reduced it to two main parts. No. 1, no bean counter, no statistician can set an arbitrary limit on the length of time that a woman takes after a medical procedure for breast cancer. Some plans limit her stay to 24 hours. Imagine that. If there are complications, it is too bad. She and her family then have to pay for any longer stay. That is unconscionable. The decision in terms of the length of stay should be predicated upon the needs of that patient. That determination should be made according to the medical necessity and by her physician, not some bean counter who arbitrarily looks at a policy and says, ``We won't pay for more than 24 hours.'' We say that decision should be made as the medical necessity requires. The second major provision of that bill is that reconstructive surgery will not be treated as something optional or cosmetic. Let me refer to the case of a young woman. This past February, not that long ago, her doctor called me. Dr. Wider of Long Island said to me, ``Janet Franquet, a 31-year-old woman, needs a radical mastectomy. When I contacted her medical plan, the medical director said that they would not authorize payment for reconstructive surgery.'' Here is a young woman, 31 years of age. I called the director of that plan, Dr. Hodos, and I said to him, ``How could you be saying that this is not necessary?'' He said, ``Replacement of a breast is not medically necessary and not covered under the plan.'' Then he said, ``This is not a bodily function and therefore cannot and should not be replaced.'' That is not an isolated case, Mr. President. The women of America-- our mothers, daughters, sisters, neighbors, friends--should know that they are covered. Let me tell you something. The sorry history of this legislation is that, in spite of Senator Feinstein, myself, Senator Snowe, and I think every woman Senator who signed on to support this bill--I have colleagues who say we should not legislate by body part. Imagine that. We should not mandate that. You are right, we should not have to mandate it. But the situation requires that. Then we get others who say, oh, no, we are not going to let you have a vote on this bill until or unless you let us have a vote on some other legislation. What nonsense--to hold the women of America captive. Senator Feinstein and I, and a number of colleagues, have decided that we will bring this legislation up and offer it as an amendment on every piece of legislation that goes through here that is vital, where there is a bipartisan interest in seeing this pass. We are going to put it on. Indeed, at some point in time, we may hold this assembly hostage. When the wheels slow down--understand, it is almost a year and a half now we have been trying to get this vote. I don't want people saying we are attempting to work our will against the majority. We backed down on the education bill; we took it off the IRS reform bill. We introduced this bill on January 30, 1997, 14 months ago. We brought it up during the consideration of IRS reform. We lost in committee. We got six votes. We brought it up again. In terms of the package that has just gone by, we brought it up and it was rejected 6 to 6 during the A+ education bill. We brought it up on the IRS bill during committee and we lost 8 to 10. We brought it up again today and we won 11 to 9. It is on the tobacco bill and it will be coming to this floor. When people say ``what relevance,'' we are talking about the health of American women. Indeed, I am prepared to offer it as an amendment to the defense bill, because we spend defense funds, as Senator Feinstein says, for cancer research and the defense of the families, and the women of America should not be shelved by partisan considerations or some ideological philosophy that says we can't have mandates. We have mandates every day. And some of the same people who voted against this bill vote for mandates every day. That is nonsense. It is too bad we need this. So this has been reported out 11 to 9 and will be on the tobacco bill. I thank the 11 members on the Finance Committee who voted for it. But understand, this Senator is serious. We are going to continue until this ``win'' turns into a real win and America's women do not have to be held hostage any longer. I yield the floor.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, I simply would like to say that I have never encountered such graciousness, such tenacity, such great dedication to a cause than the Senator from California has given to this effort for the past almost year and a half; and what a great fighter she is for all of the families of this country. I thank her. And it is a great privilege and pleasure for me to have the opportunity to work with her in this endeavor.

Mr. D'AMATO

Mr. D'AMATO. Mr. President, today we begin consideration of S. 1260, the Securities Litigation Uniform Standards Act of 1998. The Banking Committee reported this bill on April 29 by an overwhelming vote of 14-4. This bill has strong bipartisan support. It comes as no surprise to anybody who has followed the progress of this legislation. This bill is the product of a great deal of hard work. It has been refined through the incorporation of comments from many sources, including the Securities and Exchange Commission. As a result of this process, this bill not only has been improved, but it actually enjoys the support of the Securities Exchange Commission and the White House. Mr. President, I am not going to ask unanimous consent now that letters from the SEC and the White House be printed in the Record as if read, which is something we generally do. I think it is so important that I am going to take the time to refer to both letters and read what has been said, so that my colleagues can hear, and those who are interested in this debate can follow. This is a letter, dated March 24, from the Securities and Exchange Commission, addressed to me as Chairman of the Banking Committee; Senator Gramm, Chairman of the Subcommittee; and Senator Dodd, who is the ranking member. Let me read it: Dear Chairman D'Amato, Chairman Gramm, and Senator Dodd: You have requested our views on S. 1260, the Securities Litigation Uniform Standards Act of 1997, and amendments to the legislation which you intend to offer when the bill is marked up by the Banking Committee. This letter will present the Commission's position on the bill and proposed amendments. The purpose of this bill is to help ensure that securities fraud class actions involving certain securities traded on national markets are governed by a single set of uniform standards.'' I think that is important, Mr. President. We should understand that those securities traded on national exchanges are governed by a uniform standard. I think that makes ample sense. While preserving the right of individual investors to bring securities lawsuits wherever they choose. . . So we should underscore that, as a premise, the SEC says, we are going to look for a single standard, but we will preserve the rights of individuals to bring securities lawsuits wherever they choose. . . . the bill generally provides that class actions can be brought only in Federal Court where they will be governed by federal law. As you know, when the Commission testified before the Securities Subcommittee of the Senate Banking Committee in October 1997, we identified several concerns about S. 1260. In particular, we stated that a uniform standard for securities fraud class actions that did not permit investors to recover losses attributable to reckless misconduct would jeopardize the integrity of the securities market. In light of this profound concern, we were gratified by the language in your letter of today agreeing to restate in S. 1260's legislative history, and in the expected debate on the Senate floor, that the Private Securities Litigation Reform Act of 1995 did not, and was not intended to, alter the well- recognized and critically important scienter standard. So, Mr. President, we have a concern that was expressed as it existed in the 1995 law, and what the Securities and Exchange Commission said is, look, we want in the new proposal, as it relates to uniform standards, to clearly identify that you did not do away with, but will recognize the scienter standards. That has been accomplished. And I will go back to that. Our October 1997 testimony also pointed out that S. 1260 could be interpreted to preempt certain state corporate governance claims, a consequence that we believe was neither intended nor desirable. In addition, we expressed concern that S. 1260's definition of class action appeared to be unnecessarily broad. We are grateful for your responsiveness to these concerns and believe that the amendments you propose to offer at the Banking Committee markup, as attached to your letter, will successfully resolve these issues. So I think it is obvious that there has been considerable ongoing dialog and work between the Chairman of the Subcommittee, Senator Gramm of Texas, the ranking member, Senator Dodd, the Banking Committee staff and the SEC, to look and to deal with what is not only the proposals that we put forth for the first time, but to deal with some of the imperfections and some of the unintended consequences that may have evolved as a result of the 1995 act. The ongoing dialog between our staffs has been constructive. The result of this dialogue, we believe, is an improved bill with legislative history that makes clear, by reference to the legislative debate in 1995, that Congress did not alter in any way the recklessness standard when it enacted the Reform Act. This will help to diminish confusion in the courts about the proper interpretation of that Act and add important assurances that the uniform standards provided by S. 1260 will contain this vital investor protection. We support enactment of S. 1260 with these changes and with its important legislative history. We appreciate the opportunity to comment on the legislation, and of course remain committed to working with the Committee as S. 1260 moves through the legislative process. Sincerely, Arthur Levitt, Chairman; Isaac C. Hunt, Commissioner; Laura S. Unger, Commissioner. At this time, I ask unanimous consent that the letter be printed in the Record so that it can be viewed in its entirety.

Mr. D'AMATO. Mr. President, I took the time to go through this because I think it is important that we understand that this has not been the product of one staff or two staffs. This has not been the product of just the Banking Committee and those in industry who have come to express their concern as to how it is that their class actions are being brought in a frivolous manner, using the State courts to get around what Congress debated and what Congress voted overwhelmingly to bring, which is a standard of conduct that will discourage a race to the courthouse, simply to bring a suit and simply to extort moneys from those who have deep pockets, because these suits can be long, they can be frivolous, and they can be dragged out. The cost factor to the people being sued is enormous--the time, the distraction, particularly to startup companies, and particularly those who want to let people know what they are doing, but who felt restricted as a result of the suits that were brought. I am not going to bother going into the history and the comments that have been made by many. But indeed there have been many, which clearly are a stain on the rightful practice of law to ensure the rights of those who have been aggrieved and would hold people responsible for actions that are not tortious, malicious, malevolent, and indeed when there are no actions that should be sustained under any court, but because of the cost involved would have insurance carriers, accountants firms, securities firms, manufacturers, and others, be held to a situation where they have to settle. Who do they settle with? They settle with the moneys that come from the little guy--their stockholders. So while we say ``stockholder derivative actions,'' the people hurt are indeed the stockholders. Mr. President, I mentioned two letters. Let me read a second letter. The second letter is dated a month later to myself as Chairman of the Banking Committee, Senator Gramm as Chairman of the Subcommittee on Securities, Senator Dodd as ranking Member of that Committee, from the White House, dated April 28, 1998. Dear Chairman D'Amato, Chairman Gramm, and Senator Dodd: We understand that you have had productive discussions with the Securities and Exchange Commission (SEC) about S. 1260, the Securities Litigation Uniform Standards Act of 1997. The Administration applauds the constructive approach that you have taken to resolve the SEC's concerns. We support the amendments to clarify that the bill will not preempt certain corporate governance claims and to narrow the definition of class action. More importantly, we are pleased to see your commitment, by letter dated March 24, 1998, to Chairman Levitt and members of the Commission, to restate in S. 1260's legislative history, and in the expected debate on the Senate floor, that the Private Securities Litigation Reform Act of 1995 did not, and was not intended to, alter the Scienter standard for securities fraud actions. As you know, uncertainty about the impact of the Reform Act on the scienter standard was one of the President's greatest concerns. The legislative history and floor statements that you have promised the SEC and will accompany S. 1260 should reduce confusion in the courts about the proper interpretation of the Reform Act. Since the uniform standards provided by S. 1260 will provide that class actions generally can be brought only in federal court, where they will be governed by federal law, it is particularly important to the President that you be clear that the federal law to be applied includes recklessness as a basis for pleading and liability in securities fraud class actions. So long as the amendments designed to address the SEC's concerns are added to the legislation and the appropriate legislative history and floor statements on the subject of legislative intent are included in the legislative record, the Administration would support enactment of S. 1260. Sincerely, Bruce Lindsey, Assistant to the President and Deputy Counsel. Gene Sperling, Assistant to the President for Economic Policy. Mr. President, I make note that the SEC informed the Banking Committee and the Subcommittee Chairman and ranking member on March 24. It was fully a month thereafter, on April 28, that again the President reaffirmed his support for this action, and in so doing went out of his way to point out that we, indeed, will improve the present state of the law because of the colloquy that will take place and because of the manner in which the law was written. So here the President of the United States and the SEC and his Commissioner are saying you are improving upon the law as it stands now, in addition--we will talk about that--to closing a loophole that has been used by those who rush to the courts to bring suits because they are looking to enrich themselves, not to protect the little guy or the small investors. They are costing the little guy and small investors money. I think the broad-based support that this bill enjoys is a tribute to Senator Gramm. I want to say that for the record. He is here. He worked hard. His staff has worked hard. They have been reasonable. The chief sponsors of this legislation, Senators Gramm and Dodd have put together a tight bill intended to address a specific serious problem. The problem to which I refer is a loophole that strike lawyers have found in the 1995 Private Securities Litigation Reform Bill which was fashioned again on the most part by Senators Gramm, Dodd, and Domenici. Mr. President, the 1995 Act was passed in the last Congress in response to a wave of harassment litigation that threatened the efficiency and the integrity of our national stock markets, as well as the value of stock portfolios of individual investors. That is what is being hurt--the little guy, the small individual investor in whose companies they had a share in were diminished in value as a result of these suits. This threat was particularly debilitating to the so-called high-tech companies who desperately needed access to our capital markets to raise the money needed for research, development, and production of cutting-edge technology. These companies, which have spearheaded our economy's resurgence, are particularly susceptible to strike suits because of the volatility of the price of their stock. Strike lawyers thrive on stock price fluctuations regardless of whether there is even a shred of evidence of fraud. Mr. President, this is the crux of the matter: That ultimately the cost of strike suits are borne by shareholders, including ordinary people saving for their children's education, or for their retirement. The average American goes into the stock market for long-term appreciation--i.e., to earn solid rates of return. They do not buy a stock simply to be positioned for a class action when the stock's price drops. It is those people, the ordinary investors, who foot the bill for high-priced settlements of harassment litigation. We are not talking about preventing legitimate litigation. Real plaintiffs with legitimate claims deserve their day in court. And we preserve that in this bill. But what we have seen in our Federal courts, and what we are now seeing in our State courts is little more than a judicially sanctioned shakedown that only benefits the lawyers. We are talking about lawsuits in which we have nominal plaintiffs, and the lawyers are the only real winners. One of these strike lawyers drove this point home best, one of the biggest and one of the largest, when he bragged that he had ``the perfect practice''. Why did he say that? He bragged about it. He said he has the ``perfect practice.'' This is the fellow who has the largest, has brought more suits, hundreds of millions of dollars, who said he has ``the perfect practice'' because he has ``no clients.'' Isn't that incredible? He has no clients. He recovers hundreds of millions of dollars. When it is recovered, who gets most of it? The lawyers do. The so-called clients get hurt because the company which they have stock in loses value. It loses time. It pays millions of dollars. It has higher insurance costs, higher costs for auditing. The auditors have to charge more because they get sued. The insurance companies have to charge more for their premiums because they wind up paying more. Who do you think gets hurt? The little guy. Who benefits? The fellow who says ``I have got the perfect practice.'' Now, let me say this to you. This is a very, very, very small part of the law practice, is very specialized, relatively a handful of attorneys who have this, but let me tell you they hold hostage the companies of America, the private sector of America, as a result of what they can do by bringing these suits, suits that have no merit. As I have previously mentioned, harassment lawyers found a loophole in which to ply their trade--the State court system. In the time since the 1995 Act was passed, we have seen these class-action lawyers rush to State courthouses. One witness before the Securities Subcommittee summarized this phenomenon well when he testified that the single fact is that State court class actions involving nationally traded securities were virtually unknown. In other words, prior to our 1995 Act, they just were not known. Now they are brought with some frequency. This is a national problem. Regardless of where class actions are brought, they impact on the national stock markets. Money is moved away from job-creating, high-tech firms. Money is taken from shareholders in the form of stock price decline as a result of litigation. And where does this money go? It goes into the pockets of a very select cadre of these attorneys. In addition, these lawsuits have a chilling, a chilling effect on one of the most important provisions in the 1995 Act and that is called the safe harbor provision. Until this loophole is closed, no company can safely risk issuing any forecast, even though the market desperately wants it. So you cannot get a company to say: ``This is what we predict; this is what we see,'' because they are subject to litigation. To do so is to invite a class action and a high-dollar settlement. If someone makes a prediction and he is off by a little bit, he is sued. If someone makes a prediction, he says: ``We think we are going to increase profits or sales by one-third,'' and he doesn't hit that target, he has a smaller than anticipated increase, that company is going to be sued. And so you cannot get the kind of advice that investors are looking for. That is not what we want today. The bill's detractors are wrong. It will not prevent shareholder derivative actions or individual lawsuits or lawsuits by school districts or municipalities or State securities regulator enforcement actions or lawsuits relating to ``microcap'' or ``penny'' stock fraud. Those actions will still be permitted. This is important legislation, and it is narrowly drawn to address a specific and serious problem. Time is short. There are very few legislative days remaining in the session, and I encourage my colleagues on both sides of the aisle not only to support this bill and to support the sponsors of this bill, but also that we move forward in a manner which can see that it is speedily enacted. Every day that we delay occasions more of these suits which needlessly cost consumers and stockholders and the American public millions and millions of dollars. Again, I commend the architects of this legislation, Senators Dodd, Gramm, and Domenici, and I also, again, would point out that we have worked very closely with the Securities and Exchange Commission and with the White House in coming to this point. I yield the floor.

Mr. D'AMATO. If the Senator will yield for a question, is it not true, if we were to set aside this legislation and not go forward, there might be a question and that, indeed, what both the White House and the SEC are saying, as a result of our coming forward, we may be eliminating that question, that ambiguity, by moving forward in the way that we proposed in this legislation?

Mr. D'AMATO. I wonder if I might ask my friend and colleague. I know we are going to have some extended debate with some of the amendments. Senator Gramm, who has worked with the Senator from Connecticut, would like to be heard, and Senator Feingold has been waiting. He has an amendment that I believe is a very substantive amendment, and is one that might take hours to debate. But I believe we can dispose of it in a relatively short period of time if we were to permit the Senator to proceed.

Mr. D'AMATO. Madam President, I yield up to 3 minutes to the Senator from Texas and ask unanimous consent that Senator Feingold from Wisconsin be recognized thereafter for the purposes of introducing an amendment.

Mr. D'AMATO. It was never the Senator's intent nor would this impinge on the Senator's time. It was an effort to accommodate one of our colleagues.

Mr. D'AMATO. I request an additional 2 minutes.

Mr. D'AMATO. Madam President, I commend the Senator from Wisconsin for coming forth with this proposal. It is an amendment that he has been working on, for quite a period of time. As a matter of fact, it has been referred to the Judiciary Committee. Having said that, I think at the very least it should have, and requires, a thorough hearing. It is important, and it is important we understand the nuances. It is important that we get the case-by-case documentation as relates to those people who have suffered as a result of this area of the law. It is an area of great concern in terms of whether or not a person has to sign an agreement--and they do now-- prior to employment, that they give away or they agree that all matters will be settled by way of arbitration. Maybe it should not be ``all matters.'' Maybe there are certain matters that no one should ever be required to forfeit. I think we should look at that, because I think there are some very real questions. If there is a question of sexual harassment, do you mean to tell me that a person in that case should have to give up his or her right to bring a claim and that it will be settled in camera, behind the scenes, by way of arbitration? And there may be other areas where, indeed, the arbitration procedure should be the methodology of resolving a dispute. But I believe the Senator is correct, that there are some areas that really call into question whether or not a person must sign this agreement, otherwise he or she doesn't get the job. They just never get the job. They never get the promotion. So what do you think they are going to do? Of course they are going to sign. So this is serious. I believe we have an obligation to have a thorough, thoughtful analysis, and, indeed, the Judiciary Committee may want to look at certain aspects. But I believe since, indeed, the financial services community, the banking community, the securities community has to deal with this day in and day out, the proper jurisdiction does lie before the Banking Committee. With that in mind, I have indicated to the Senator that, before we leave, during the month of July or prior, it will be my intent to hold at least a full hearing, where witnesses to both sides, including the Securities and Exchange Commission--which I understand is studying this matter very carefully--will appear so we could have the benefit of their review, of their testimony, of people who have written and people who have been involved in this, those who have been aggrieved as well as those who can testify to the merits of certain aspects of having arbitration in some limited cases. But I must say for the record, I believe the Senator has touched on something that is very important and I would not like to move to table at this time. I think it would be unfair to the importance of this legislation. With that in view, I have indicated to the Senator that I will call these hearings, so we can fully explore this and then bring it to this floor as legislation that has had the benefit of the totality of the input from the SEC, from our staffs, after listening and hearing and getting the kind of in-depth review that I know that not only I feel should take place, but that most of the members of my committee would support.

Mr. D'AMATO. I thank my colleague and tell him that we look forward to working together in a cooperative way in helping to craft a package that will address the true abuses yet maintain the importance of arbitration where it is deemed appropriate, because I think in certain cases it is absolutely appropriate and I think in others it is absolutely indefensible.

Mr. D'AMATO. I would be happy to.

Mr. D'AMATO. I am sympathetic to the SEC's concerns. In acting now to establish uniform national standards, it is important that we make clear our understanding of the standards created by the '95 Reform Act because those are the standards that will apply if S. 1260 is enacted into law. My clear intent in 1995, and my understanding today, is that the PSLRA did not in any way alter the scienter standard in federal securities fraud lawsuits. The '95 Reform Act requires plaintiffs, and I quote, ``to the state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.'' The '95 Reform Act makes no attempt to alter or define that state of mind. In addition, it was my intent in 1995, and it is my understanding today, that the '95 Reform Act adopted the pleading standard applied in the Second Circuit.

Mr. D'AMATO. My friend from Connecticut is correct. The federal securities laws must include a scienter requirement that adequately protects investors. I was surprised and dismayed to learn that some district court decisions had not followed the clear language of the '95 Reform Act, which is the basis upon which the uniform national standard in today's legislation will be created.

Mr. D'AMATO. I say to the Senator from Connecticut that I would be pleased to work with him to introduce such legislation under those circumstances. I agree that investors must be allowed a means to recover losses caused by reckless misconduct. Should the court deprive investors of this important protection, such legislation would be in order.

Mr. D'AMATO. Mr. President, I know there are a number of amendments. I ask my colleagues, in the interest of moving forward if they would submit those amendments so we can start working on them.

Mr. D'AMATO. Mr. President, I believe that my colleague, the Senator from Maryland, is going to speak to this amendment. This amendment would indeed promote forum shopping for those lawyers to look for the State that had the longest statute of limitations. I point out the Lampf decision, which will be referred to. After that decision, in a sample of actions brought in the State courts, 43 of them were filed within the 4-year period of time--43 out of a total of 44. So we do not believe this amendment will do anything other than to promote forum shopping for the longest period of time, and that it really counteracts the Supreme Court's decision, which has not worked a hardship on plaintiffs who have a legitimate suit or seek to bring it. Mr. SARBANES addressed the Chair.

Mr. D'AMATO. Will the Senator yield for a question?

Mr. D'AMATO. Let me ask the Senator, does the underlying legislation in any way limit the Securities and Exchange Commission from bringing any action to recover for disgorgement where there is fraud?