Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. I have a couple of minutes?

Mr. SARBANES. I yield 4 minutes to the Senator from Missouri.

Mr. SARBANES. What is the time situation?

Mr. SARBANES. Madam President, I ask for the yeas and nays.

Mr. SARBANES. Madam President, I move to reconsider the vote.

Mr. SARBANES. Was the Ensign amendment also on that amendment? I urge the adoption of the amendments.

Mr. SARBANES. Mr. President, I move to reconsider the vote.

Mr. SARBANES. Mr. President, we don't do this work by ourselves. We all know that very well. We rely very heavily on dedicated, absolutely dedicated staff members. I am going to take the closing time I have to simply read their names into the Record: Dean Shahinian, Steve Kroll, Lynsey Graham, Vincent Meehan, Sarah Kline, Judy Keenan, Jesse Jacobs, Aaron Kline, Marty Gruenberg and Steve Harris of the Banking Committee staff; Wayne Abernathy and Linda Lord of Senator Gramm's staff on the committee. There has also been the staff of the individual Members. I particularly want to acknowledge Mike Thompson and Katherine McGuire of Senator Enzi's staff, and Alex Sternhell and Naomi Camper, Jon Berger, Jimmy Williams, Catherine Cruz Wojtasik, Leslie Wooley, Margaret Simmons, Mat Young, Roger Hollingsworth and Matt Pippin. I express my very deep appreciation. The dedication these staff members demonstrated over the last few months was just extraordinary: Long nights, weekends, day in and day out. I hope very much they will take a measure of satisfaction in the sense that they have made a very important and significant contribution to better public policy in this country. I yield the floor. Vote On Amendment No. 4286

Mr. SARBANES. Mr. President, in the regular order we are back with the Edwards and Carnahan amendments pending?

Mr. SARBANES. Mr. President, I think the Senate is about to take a major step to contributing to the restoration of investor confidence. This legislation establishes a strong independent board to oversee auditors of the public companies. The board can set standards, investigate, and discipline accountants. It will be overseen by the SEC, but it will have independent funding and membership. I think this marks the end of weak self-regulation with respect to public company auditors. It addresses pervasive conflicts of interest by ensuring auditor independence by restricting them from providing a defined list of consulting services. Other consulting services on the part of the auditor can be permitted if preapproved by the company's audit company. This legislation strengthens corporate responsibility. It establishes safeguards to protect investment/analyst conflicts, and it gives the SEC expanded staff resources so it has the resources to carry out its mandate of protecting investors in this critical time. It is no exaggeration to say the crisis in our markets has put the plans and hopes and dreams of millions of Americans at risk. To restore market integrity on which investor confidence depends, we should move expeditiously to move this legislation into law. I want to express my deep appreciation to my colleagues with whom we have worked for many weeks: To Senator Gramm, the ranking member of the committee with whom we interact in an interesting and, on occasions, exciting fashion; to Senator Enzi, who made a major contribution; to Senators Dodd and Corzine on our side of the aisle who played an essential role and introduced vital legislation on this issue very early on; to Senator Durbin who also introduced significant legislation on this subject, and to many other colleagues; and to Senator Reid, who has been extraordinarily helpful here on the floor of the U.S. Senate.

Mr. SARBANES. Mr. President, I yield 4 minutes to the junior Senator from North Dakota.

Mr. SARBANES. I yield 1 minute.

Mr. SARBANES. Madam President, I move to reconsider the vote.

Mr. SARBANES. I appreciate the Senator's interest, and I hope his concerns can be addressed in conference.

Mr. SARBANES. And I understand that the terms of reference are such that it does not presuppose a particular substantive conclusion; it is, in effect, left open, or even level, however you want to describe it--a level playing field for FASB, the expert body that has been established to make these judgments to make its own independent judgment as to how these matters should be addressed, is that correct?

Mr. SARBANES. I look forward to consulting with both the Finance Committee and the Health, Education, Labor, and Pensions Committee as we go to conference to make sure the provisions are appropriately drafted. Corporate Responsibility for Financial Reports

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise to note the release on July 15, 2002 of the first annual report of the U.S.-China Security Review Commission. Shortly after the enactment in the year 2000 of legislation giving China Permanent Normal Trade Relations, PNTR, the Congress, thanks to the leadership of Senator Robert C. Byrd, passed legislation creating the U.S.-China Security Review Commission. According to the law that established the Commission, its purpose is to ``monitor, investigate and report to the Congress on the national security implications of the bilateral trade and economic relationship between the United Stats and the People's Republic of China''. The legislation which created the Commission charges it to submit an annual report to the Congress with recommendations for action, if any. The bi-partisan Commission is composed of twelve commissioners, three of whom were appointed by each of the Congressional leaders in both the House and Senate. To prepare itself to issue its first Report the Commission held nine open hearings and took testimony from 115 witnesses on 35 separate panels. It also contracted for new research on China from a variety of sources including extensive translation and analysis of articles on economic, political, and trade issues that are appearing in influential Chinese publications. Members of the Commission also traveled to China, Taiwan, Japan, and the headquarters of the World Trade Organization, WTO, in Geneva. During its deliberations the Commission developed a broad bi-partisan agreement on the issues it was charged by Congress to study, and it adopted its first report by a vote of 11-1. Among its key findings are that the United States, by acting as China's largest export market and a key investor in the Chinese economy, has been a major contributor to China's rise as an economic power. It further notes that our trade relationship with China is not only our largest trade deficit in absolute terms, but is the most unbalanced trading relationship maintained by the United States. The Report further notes that while U.S. imports from China constitute over 40 percent of China's exports, U.S. exports to China represent only two percent of our total exports. It finds that the U.S. trade deficit with China is not only in low-skilled labor intensive items, but also in a majority of items found on the Commerce Department's list of advanced technology products. It further finds that there is plausible evidence that our burgeoning trade deficit with China will worsen regardless of China's entry into the WTO. The Report also discusses the fast increasing trade and investment linkages between China and Taiwan which the Commission notes ``could ameliorate tensions between the two'', but which are also increasing ``U.S. dependence on the items made in China for our computer electronics and other high technology products''. The Report makes a number of recommendations to better the chances for building a better long-term mutually beneficial economic and political relationship with China. Among these are: 1. That we put in place new programs to build a much wider expertise about China both in our society and among policymakers, and 2. that we take new measures to keep our industrial, scientific, and technological base from eroding as a result of our economic relations with a China whose government has adopted policies to expand its own base even at our expense. I think this first Report of the Commission makes a very valuable contribution to our policy deliberations on China. It will be very helpful to the Congress as we examine how to respond to the challenges to our country posed by China's strengthening economic, military, and political profiles. We can best craft sensible policies if we better understand the perceptions that Chinese leaders have of us and what their long-term goals are. Judging the Commission's Report will help us do both. I salute Senator Byrd for his wisdom in calling for the creation of the Commission and thank all of its Commissioners for the important contributions that their first Report makes to our knowledge of the U.S.-China economic and political relationship. I commend the Report to my fellow Senators.

Mr. SARBANES

Mr. SARBANES. Madam President, later I want to address a couple of points made by the Senator from Pennsylvania, but the Senator from Delaware is in the Chamber and wishes to speak. So I yield the floor.

Mr. SARBANES. Will the Senator yield?

Mr. SARBANES. Madam President, I simply want to say I think the subject matter with which the Senator's other amendment, that he just referred to, deals is a very important subject, and I think his observations are very much on point. Working with the other side, we are trying to work through the amendment. We are in the process of trying to do that. Of course, we will be continuing to talk with the Senator, and I hope we can resolve it. It would be very helpful. I appreciate his kind words.

Mr. SARBANES. Will the Senator yield for just a moment?

Mr. SARBANES. Mr. President, I move to reconsider the vote.

Mr. SARBANES. I asked the Senator to yield because I do want to underscore that the legislation that is before us takes a major step in trying to guarantee the independence of the Financial Accounting Standards Board in terms of how it provides for its funding, and that is a dramatic improvement of the situation because heretofore the standard board had to seek voluntary funding. So the standards board ended up going to the people for whom it was establishing the standards in order to get money to fund its operations. Well, when it came to the crunch--and this issue was one such crunch as far as the Financial Accounting Standards Board was concerned--the people from whom they were voluntarily getting the money said we are not going to give you any money. You are not going to be able to carry out your activities. So we moved in this legislation because one of the things we require is that the issuers pay a mandatory fee. If you are an issuer, you are registered with the SEC and you have to pay a fee. That goes into a fund and that fund pays for the budget of the Public Accounting Oversight Board and the budget of the Financial Accounting Standards Board, so they are assured a revenue source. I urge people to stop and think about that because it is a very important step to ensuring the independence of both boards. But here we are talking about the Financial Accounting Standards Board, and the dramatic change from its previous situation. So it really will have, at least on the budget side, the independence to go ahead and make these decisions as they choose to call them. The issue that becomes involved in all of this otherwise is the question, Should the Congress of the United States be itself actually establishing accounting standards? Of course, as the Senator indicated, when an opinion was voiced on that a few years ago, it went in one direction. And now people want the Congress to come along and express an opinion in another direction. I have some sympathy. Obviously, we have seen things happen. Most people might have sympathy. But we come back to the basic question, whether the Congress should be doing this. We set up this accounting standards board so it could make independent judgments. Unfortunately, there is no question about the fact that previously the standards board was subjected to tremendous pressure which affected its ability to make an independent judgment. It got tremendous pressure from industry groups, pressure from Congress reflecting the pressure of industry groups, and of course this exposure on its budget. We have tried in the legislation to address this very basic question of making sure this board has its independence. That does not reach to the specific issue the Senate is now addressing, but I wanted that on the record. It is important that be understood.

Mr. SARBANES. Furthermore, upon conclusion of the consideration of the Schumer amendments, we return to the regular order, which I take it would be the Edwards-Carnahan amendment.

Mr. SARBANES

Mr. SARBANES. Mr. President, I move to reconsider the vote.