Maxine Waters

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I yield such time as he may consume to the gentleman from Rhode Island (Mr. Cicilline).

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, H.R. 2201 would create an unnecessary and potentially dangerous loophole in Federal and State securities laws by allowing companies to sell unregistered securities without important safeguards that normally apply to such transactions. Specifically, the bill would allow a company to raise up to $500,000 from 35 or fewer investors, subject only to the requirement that each of these investors has a substantive preexisting relationship with the company. Currently, before a company can offer or sell its securities, it must either register the offering with the Securities and Exchange Commission--that is the SEC--or qualify for at least one of several existing exemptions from registration. These exemptions provide reduced regulatory requirements for businesses conducting the offerings, but are limited to investors who have the financial sophistication to understand the risks, or enough assets to bear losses without the full protections of the securities laws. Additionally, unlike H.R. 2201, these existing exemptions include several critical investor protections, such as notice to regulators, limitations on advertising, and restrictions on resale. For example, securities offered pursuant to rule 506 of regulation D are restricted, meaning they cannot be resold for at least a year without registering them; that is, re-registering them. Additionally, the re-registration exemptions available under the crowdfunding rules and regulation A impose limitations on the amounts an individual can invest in a year, thereby placing a cap on potential losses. H.R. 2201's lack of basic safeguards would leave investors vulnerable to an array of investment scams. For example, a purchaser of securities offered pursuant to H.R. 2201 would be able to immediately resell the securities in secondary transactions. In the past, the failure to restrict the resale of unregistered securities has exposed secondary investors to ``pump and dump'' schemes, a form of fraud that involves hyping up cheap junk stock in order to resell it at a higher price to unwitting investors. Additionally, investor and consumer advocates, like Americans for Financial Reform, Center for American Progress, and Public Citizen, oppose H.R. 2201 because it would enable a particularly deceptive scam known as ``affinity fraud.'' Bad actors perpetrating affinity fraud could use H.R. 2201 to prey upon religious communities, ethnic groups, and the elderly. Just a few years ago, the SEC shut down a scheme targeting the Hispanic community in southern California. The perpetrators raised more than $800,000 by representing to close friends and family members that their investment would be used to develop a financial services firm serving the Hispanic community. The SEC found that, instead of developing the purported business, the scammers ``used a large part of the investors' money to engage unsuccessfully in high risk `day-trading' of stocks; pay personal living, travel, and entertainment expenses; or make other unexplained expenditures with no connection to the purported startup business activities.'' H.R. 2201 would provide a roadmap for bad actors to similarly rip off investors. The bill's $500,000 cap on offerings does not eliminate the need for robust safeguards against fraud and abuse. In fact, these protections are even more important for offerings of this size, given the proliferation of investment schemes in the smaller offering space. The SEC has found that ``fraud in the micro cap stock markets is of increasing concern to regulators, as such markets have proven to be fertile grounds for fraud and abuse.'' While $500,000 may not seem like a lot on Wall Street, for Main Street Americans, losing even a fraction of that amount would destroy the hope of one day retiring with dignity. Existing exemptions such as those available under the SEC's regulation D, regulation A, and crowdfunding rules provide ample opportunities for companies to raise capital while also protecting investors. H.R. 2201 would only expose hardworking Americans to a new and wholly unnecessary risk. For these reasons, I urge my colleagues to vote ``no'' on H.R. 2201, and I reserve the balance of my time. General Leave

Ms. MAXINE WATERS of California. Mr. Speaker, on that I demand the yeas and nays.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I yield as much time as she may consume to the gentlewoman from New York (Mrs. Carolyn B. Maloney), the author of the bill and the sponsor of the bill.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, H.R. 3972 would expand the definition of ``accredited investor'' to organizations known as family offices and their family clients. Family offices manage the financial interests of wealthy families. Deeming family offices and family clients to be accredited investors would allow them to more easily invest in private, unregistered security offerings. Today, each family client, family member, and associated employees and entities must independently meet the accredited investor definition. This would require, for example, that each individual in a family independently meet certain income or net worth thresholds. As I understand it, this process can be cumbersome for private funds that may lose their private, unregistered status if they fail to appropriately verify their investors as accredited or otherwise qualified to invest in private offerings. If there is any doubt, a private fund could deny a family office or family client the opportunity to invest. This bill seeks to remedy that problem by recognizing that family offices and family clients are financially sophisticated in their own right. Thanks to an amendment by Representative Maloney that was unanimously accepted during the committee markup, the bill ensures that these family offices and family clients have the financial wherewithal and knowledge to invest as accredited investors in typically risky, illiquid private security offerings. Specifically, the bill would apply the same standards currently in place for trusts so that, number one, the family office must have more than $5 million in assets; two, the family office and family clients must not be formed for the specific purpose of acquiring the securities offered; and, three, the family office and family client must be dedicated--or directed, rather, by a sophisticated person. These restrictions limit the potential unintended consequences of the bill so that, for example, someone who could not otherwise meet the accredited investor test alone could not circumvent the rules by investing with another family member as a ``family office.'' They would also prevent estranged family members, who could be up to 10 generations removed, from investing as an accredited investor without receiving any services of or otherwise being affiliated with the family office. I support the bill, and I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. The gentlewoman will happily not engage in personalities except to say that the rhetoric to call Kim Jong-un the little rocket man is not productive and it does not do us well. We have a situation in which nearly every high-level official in the U.S. Government believes the threats posed by the North Korean nuclear and missile programs must be front and center in U.S. national security decisionmaking. This is a time for U.S. diplomatic and foreign policy efforts to be aggressively focused on intensifying economic and diplomatic coordination with our allies and China in a strategy that would entail sophisticated policymaking capacity and coordination across the U.S. Government. Instead, a week ago, in a move that I believe history will strongly condemn, President Trump refused to recertify the Iran nuclear deal, throwing into question continued U.S. support for the landmark nuclear accord. Whether you support or hate the Iran nuclear deal, it is widely viewed, at least so far, as successfully containing Iran's nuclear ambitions, and will for many years. There can be no question that President Trump's threat to walk away from the international nuclear accord will have a direct and profoundly negative effect on our ability to convince Kim Jong-un or our allies that America will honor any commitment to integrate North Korea into the global community if it gives up its nuclear and missile programs. In short, the President's threat to withdraw from the Iran nuclear deal undermines our credibility as a negotiating partner and throws into question the prospect of any effective nuclear diplomacy with North Korea. At a time when we are facing a nuclear crisis with North Korea, raising questions about our commitment to the Iran nuclear deal not only defies strategic logic, but it also undermines our national security. On that issue, I would welcome, as I do with the legislation before us today, a stronger, more unified, bipartisan front. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. To my colleague on the opposite side of the aisle who was responding to part of my statement, of course there are many in this country who worry about President Trump's reckless threats, his promise of fire and fury, his vow to destroy the Kim regime, his name-calling, warmongering, and rejection of diplomacy. It directly contradicts his leading Cabinet officials who continue to stress the importance of imposing pressure on the Kim regime. It also demonstrates a Commander in Chief who lacks the discipline and the capacity to convince our allies to join us in dealing with the North Korean threat.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield an additional 1 minute to the gentlewoman from New York.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Mrs. Carolyn B. Maloney).

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. First, allow me to say that I am very pleased that, by naming this legislation after Otto Warmbier, we are able to honor him and let his family know that we will not forget him. Nor will we forget the brutal, lethal treatment of this young, decent American student by the Government of North Korea. There is simply no justification for the fury with which the Kim regime turned the massive power of the state on this young American man, who is alleged to have done nothing more than take a poster from a hotel. It is this kind of brutality--and the ongoing fundamental depravity of the North Korean regime--that will keep it from being a member of the global community of nations. This is also why the rapid acceleration in the scale and range of North Korea's nuclear and missile programs is so alarming, including the launch of two intercontinental ballistic missiles in July, one of which experts believe could have had the capacity to reach the continental United States. Then, in September, the regime tested its sixth nuclear explosive device, and, according to U.S. and international estimates, this thermonuclear test was significantly higher in magnitude and yield than any previous test. This has led to a bipartisan consensus in the Financial Services Committee that a new policy towards North Korea involving a maximum pressure campaign of financial isolation is the best chance we have to resolve this situation peacefully. Such a strategy must entail a dramatically greater level of pressure than North Korea has faced to date, one strong enough to change Kim Jong-un's calculus about whether he is safer with or without his nuclear program. The legislation before us today, H.R. 3898, calls for just such a U.S. strategy towards North Korea--and it is one that has the advantage of presenting an option other than a military-first response. As many experts have called for, this legislation takes a page from the Iran sanctions playbook by mandating the use of secondary sanctions, which were widely credited with forcing Iran to the negotiating table. In the context of North Korea, an American program of secondary sanctions wouldn't just ban U.S. companies from doing business with North Korea, it would also force companies, individuals, banks, and governments to make a choice: stop doing business with North Korea and its enablers or be cut off from the global financial system. Although we saw in the Iran context just how powerful this approach can be when carefully fashioned as part of a broad coalition, we must remember that sanctions alone are not a strategy. Sanctions are a tool, and in order for them to work, they must be linked to a broader strategic effort, with the high level of skill in their design and implementation, and with a clear understanding of the policy goals we are trying to achieve. According to Adam Szubin, who formerly served as the Under Secretary of the Treasury for Terrorism and Financial Crimes, when Congress adopted a series of secondary sanction measures in 2010, aimed at containing Iran's nuclear program, the administration was already staffed, well-resourced, and ready to immediately deploy senior officials around the world. Specifically, senior Treasury, White House, and State Department officials traveled around the world to explain the new U.S. sanctions regime and pressure governments, bankers, traders, and companies to enforce these sanctions in a tough and meaningful way. Today, there is widespread recognition that a successful strategy to isolate and pressure North Korea must not only entail the effective implementation of sanctions, but also arguably an even more complex and sophisticated degree of statecraft in order to coordinate with our allies, and, in particular, to convince China that we have shared objectives when it comes to addressing the increasing destabilizing North Korean threat. It is extremely concerning, therefore, that President Trump has shown virtually no capacity or willingness for the hard work necessary to secure concessions from North Korea, or enlist China and other key players to do their part to isolate the Kim regime. In fact, President Trump's reckless threats, his vow to destroy the Kim regime, his name-calling, warmongering, and rejection of diplomacy contradict key administration officials, and leading experts, who continue to stress the importance of imposing pressure on the Kim regime. It also demonstrates a Commander in Chief who lacks the discipline and quality of leadership it takes to convince our allies to join us in dealing with the North Korean threat. Given the high-stakes objectives; the lack of a unified, coherent policy from the executive branch; and concern about U.S. credibility on the global stage, I am pleased that, on this critical issue, Members from both sides of the aisle were able to come together behind a concrete strategic objective to force Pyongyang into nuclear diplomacy with the goal of permanently and verifiably limiting North Korea's WMD and ballistic missile programs. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I rise to recognize and congratulate the Harriet Tubman Press on the occasion of its first publication. The Harriet Tubman Press, an imprint of Tsehai Publishers, is an important new publishing platform based in Los Angeles, California. It is named after one of the great icons of American history, and it is one of the only imprints in the country dedicated to providing a platform for the voices of today's African-American scholars and writers. The Harriet Tubman Press is housed in the Marymount Institute for Faith, Culture, and the Arts at Loyola Marymount University, which is one of the centers of higher learning in my congressional district--the 43rd District in California. The first publication of the Harriet Tubman Press will be Voices from Leimert Park Redux, a diverse collection of poetry that beautifully captures the heartbeat of the Leimert Park community. For decades, this Los Angeles neighborhood has been a thriving beacon of African-American activism, culture, and the arts. At a time when gentrification and displacement threaten neighborhoods across Southern California, the preservation of African-American cultural heritage in Leimert Park could not be more important. I congratulate Loyola Marymount University, Tsehai Publishing, the Harriet Tubman Press, and all the members of the South Central Los Angeles community that worked so hard to make this first publication possible. Your dedication and fortitude is necessary to the preservation of the African-American voice. I'd like to further thank the artists, authors, and poets who stand up and propel that voice into our country's consciousness. Your voices are the only currency that can never be taken from you. May the first publication of the Harriet Tubman Press signal the birth of a new force devoted to propelling, celebrating, and highlighting African-American culture through literature.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, in the wake of the destruction that this historic hurricane season has wrought on Texas, Florida, the Virgin Islands, Puerto Rico, and the Gulf Coast, I am very pleased that, in addition to the emergency relief funds for wildfires that are burning on both ends of California, the bill also includes liquidity and emergency nutritional assistance for Puerto Rico, where they are facing particularly difficult challenges in their recovery efforts. This bill also provides for partial debt forgiveness of $16 billion for the National Flood Insurance Program. I am encouraged to see that the administration finally understands what we have been saying for a long time: we need to forgive the debt of the NFIP, which FEMA has repeatedly stated it will never be able to repay. Following the losses that will be incurred as a result of the recent hurricanes, the NFIP needs debt forgiveness more than ever. But let's be clear. The partial debt forgiveness will leave the NFIP with a crushing level of debt. Although this is a step in the right direction, we should forgive all of the debt that the NFIP has accrued from catastrophic storms like Katrina and Sandy instead of burdening the NFIP policyholders with hundreds of millions of dollars in interest payments every year. Before this hurricane season, NFIP policyholders were already paying more in interest than the entire NFIP spends on salaries and expenses or funding mitigation or paying for flood maps.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Chairman, I rise in strong opposition to the Republican's 2018 budget, which would dramatically increase our deficit and debt by trillions of dollars to give millionaires and billionaires a massive tax cut. Don't be fooled. This plan directly benefits President Trump, his family, and his administration, including Treasury Secretary Mnuchin, Education Secretary DeVos, and Commerce Secretary Ross, but offers breadcrumbs for the middle class and nothing for low-income Americans. The craziest thing about all of this is that Republicans have been crowing for 7 years that the deficit is too large and that it is hurting our job growth, yet here they go abandoning their principles to cash out their rich benefactors. I also want to talk about some of the ways Republicans partially pay for this tax cut for the rich. During the same week that Equifax and Wells Fargo executives are testifying about the harm they have caused to millions of Americans, Republicans propose gutting the Consumer Bureau, which has successfully helped millions of our constituents receive compensation by effectively eliminating its funding and independence. What is more, Republicans would eliminate the backup authority to safely unwind failing megabanks without harm to our economy. Rather than eliminate this tool, we should instead be talking about how to break up bad megabanks like Wells Fargo, who repeatedly break the law and harm millions of consumers. Yet, both the Consumer Bureau and the megabank wind-down authority are sacrificed to pay for the richest 1 percent tax cut. So I would urge all of my colleagues to reject this measure.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, H.R. 1624, offered by Mr. Messer and Mrs. Maloney, represents a bipartisan effort to ensure that certain financial institutions will continue to hold municipal securities, while also supporting the spirit of an important bank guardrail in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Bank regulators promulgated the liquidity coverage rule to ensure that megabanks have a minimum number of assets that they could sell, even in the worst markets. The rule permits banks to count assets like Treasury securities, GSE debt, and investment-grade corporate securities towards the pool. Regulators found that these securities could be sold even in stressed environments, thereby allowing a megabank to weather the storm of an economic crisis. This rule, known as the liquidity coverage rule, is an important tool for banking regulators to guard against the type of contagion we saw during the financial crisis. However, the bank regulators excluded all municipal securities because they concluded that municipal securities, as a class, are difficult to sell in stressed markets. This may be generally true, but the investment-grade debt of my State of California has lots of buyers and sellers and has a liquidity profile similar to many corporate securities. So it makes sense that, if there are municipal securities like California's debt that meet the same eligibility standards as other corporate securities, they should also be counted toward a bank's liquid assets under the rule. The Federal Reserve quickly recognized this problem and has since adopted a correction to permit bank holding companies under its jurisdiction to treat municipal securities that are liquid, market ready, and investment grade the same as similar corporate securities. This bill, as amended, takes the relief adopted by the Federal Reserve and extends it to banks regulated by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. It isn't clear to me just how many municipalities will benefit from this legislation, and I imagine most would not, but even if only a handful of our States and cities qualify, the bill is worth passing because it could help to reduce financing costs for those governments. Mr. Speaker, I appreciate Mrs. Maloney's hard work and bipartisan efforts on this bill, and I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume, and I thank Mr. Messer for his leadership on this legislation. He is absolutely correct. He worked very closely with Mrs. Maloney. This is a bipartisan bill. He correctly stated that we do sometimes get together and work on issues in ways that we can be helpful, not only to our constituents in general but to cities and towns. We have talked an awful lot about wanting to improve our infrastructures, and this is one way that it certainly can be done. I would like to point out again the Federal Reserve's role in this because of the way that they recognized the problem and what they did to adopt a correction to the problem. So this bill again, as amended, takes the relief adopted by the Federal Reserve. Again, this is a case where we had Members who understood this problem, moved forward on it, and recognized that the Federal Reserve also recognized the problem. When you have several entities who have recognized a problem, it certainly makes good sense and good public policy for everybody to come together to correct it. So with the Federal Reserve having come forward and adopting this relief, it means that it is extended to banks regulated by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Again, I wish I could say that every city in the United States would benefit from it, but not all will. Not all need it. But for those who do, I think it is important for us to recognize that when we have the opportunity to come together and to help any part of our country, and when it is very easy to do so, I think we should do it. So I am very pleased that we have been able to do that. Mr. Speaker, I yield such time as she may consume to the gentlewoman from New York (Mrs. Carolyn B. Maloney), who is the lead Democratic cosponsor of this bill.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, on that I demand the yeas and nays.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I yield the balance of my time to the gentleman from Louisiana (Mr. Graves), a true expert on flood insurance issues.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield the gentleman an additional 30 seconds.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey (Mr. Pallone), the ranking member of the Energy and Commerce Committee.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield back the balance of my time.