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Legislation - Page Four
Senator Peter G. Fitzgerald to former Enron Chairman Kenneth Lay
Finance Bill SkullduggeryNew York Times – by Alison Mitchell – February 14, 2002
WASHINGTON, Feb. 12 — In a final scramble to defeat a broad overhaul of the campaign finance law, House Republican leaders struggled today to shape a rival bill and a strategy to fracture the coalition of Democrats and Republicans who want to ban unlimited contributions to the political parties.
After a day of nonstop negotiations and meetings, Republican strategists said party leaders would make several attempts to try to scuttle the Shays-Meehan bill to ban soft money by proposing even more stringent constraints on political donations.
Although the House leaders have long opposed a soft money ban, their new approach was seen as a way to give undecided Republican moderates political cover to look as if they are taking a stand against big money even as they help kill campaign finance overhaul. If the House passes alternative legislation to the Shays- Meehan bill, campaign finance overhaul is likely to be dead for the year.
At the same time, in a concession of their own designed to nail down some final votes, the sponsors of legislation to ban soft money, Representatives Christopher Shays, Republican of Connecticut, and Martin T. Meehan, Democrat of Massachusetts, changed their bill so it would not take effect until Nov. 6, the day after the hotly contested elections in which control of the House and Senate are at stake. Their opponents charged them with insincerity.
"It's a bit hypocritical," said Representative John A. Boehner, Republican of Ohio. "If they really believe it is the right thing to do, why not do it now?"
Republicans plan to offer an amendment on Wednesday to make the Shays-Meehan bill instantaneously effective and to force the parties to return the soft money already collected.
The frenzied maneuvering promised to produce a topsy-turvy and confusing House debate with each side promoting itself as purer than the other. Passage of a more stringent bill would throw the House into compromise negotiations with the Senate, which last year passed a bill nearly identical to the Shays-Meehan one. That would give the opponents another chance to stop or weaken the legislation.
"I hope they don't think their constituents are so stupid," Mr. Shays said of the tactic, calling it cynical.
With no one quite sure who will prevail when the final votes are taken late Wednesday night or early Thursday morning, the Capitol was the scene of frenetic behind-the- scenes lobbying and vote counting. And the maneuvering took place on a day that showed all the complicated political crosscurrents that have put the House on the brink of the most intensive effort to change the campaign laws in years.
The nerve center of opposition to the campaign finance effort was the Capitol suites of the three senior Republican leaders. Lobbyists for an array of interest groups swarmed Capitol Hill backing one bill or another or seeking change, working sometimes in odd-couple alliances. Their united purpose was to defeat Shays-Meehan or some of the bill's provisions.
Backers of the Shays-Meehan bill found new fuel for their fight in the Senate, where Kenneth L. Lay, the former chairman of the Enron Corporation, whom some are calling the poster boy for changing the system of large contributions, was citing his Fifth Amendment rights and refusing to testify.
Mr. Meehan said Enron would help him pick up some surprise votes.
"Enron's millions of dollars in soft money contributions has tarnished all of us in the public eye, and we're tired of it," he said.
Representative Bob Ney, an Ohio Republican who is pushing his own campaign bill, called it "shameful" for his opponents to use Enron to propel their cause.
Representative Richard A. Gephardt of Missouri, the House minority leader, made calls seeking new Democratic votes for Shays-Meehan, and Representative Nancy Pelosi of California, the minority whip, had her vote-counting organization getting Democratic votes. Most Democrats are expected to support the bill along with 20 Republicans. That makes another 20 or so Republican moderates the swing voters. Speaker J. Dennis Hastert of Illinois, who has warned Republicans that they could lose control of the House without unlimited donations, held strategy meetings as his aides made calls.
Representative Dick Armey of Texas, the majority leader, was assembling the new Republican bill.
Representative Tom DeLay of Texas, the majority whip, deployed his organization to work on undecided Republicans, and his aides gave out talking points describing the Shays- Meehan bill's "critical flaws."
In a sign of the intense, last-minute struggle for an edge, Republican plans to unveil their own new bill in the last afternoon were abruptly scrapped. Aides said the leaders were still trying to peel away votes from the other side and that they also wanted the advantage of utmost secrecy about just what they planned to bring to the House floor.
Several Republican lawmakers acknowledged that they had an uphill task because the House has twice approved a version of the Shays- Meehan bill, in 1998 and 1999, and members' votes were on record. "This is going to be tough," said John P. Feehery, a spokesman for Mr. Hastert.
The supporters of the Shays-Meehan bill were more optimistic but unwilling to declare victory.
"This is the hardest bill to pass that there is," Mr. Gephardt said, "because it's a bill that contains material that affects every member's election and re-election."
The Republican National Committee, closely tied to the White House, was working against the bill. But to the annoyance of some House Republican leaders, President Bush stood above the fray.
"The president is not lobbying, no," said Ari Fleischer, the White House spokesman.
Under the rules for debate, Wednesday will be a vote marathon, with the final outcome known late at night or Thursday morning. Three campaign finance bills will compete against each other, and the one that survives will be subject to many efforts for amendments.
The Shays-Meehan legislation bans large unlimited donations to the political parties, which rose to nearly $500 million in the last election. But in a bow to the concerns of black Democrats who fear that the soft money ban will hinder drives to get out the vote, the bill allows individuals to make up to $10,000 contributions to state political parties for get- out-the-vote and registration efforts.
The legislation also prohibits outside groups from running advocacy advertisements that are really thinly disguised campaign advertisements 30 days before a primary and 60 days before a general election.
A rival bill sponsored by Mr. Ney and Representative Albert R. Wynn, Democrat of Maryland, would allow individuals to donate up to $75,000 as year to each of the six national political party committees. It would not limit donations to state parties.
Mr. Armey was also working on his measure on behalf of the Republicans and very late this evening completed a proposal that would ban all soft money with no exceptions and stop an array of outside interest groups from spending money on get- out-the-vote drives.
Both sides were drawing up amendments. Republicans were looking for ways to fracture the fragile Shays-Meehan coalition and were considering ideas like striking out the $10,000 donations to state parties dear to black Democrats or restoring an immediate effective date to the soft money ban. That too might scare Democrats who desperately want to win control of the House in November. They were also looking at offering a slightly different version of the Shays-Meehan bill from a few years ago. Late tonight, senior Republican staff members said Republicans would move on Wednesday to try to impose a total soft money ban through an amendment.
Mr. Shays and Mr. Meehan said they would put up three amendments to test the sentiment of the House on several issues. One would parallel action taken by the Senate last year and allow individual donors to give House candidates $2,000 per election in regulated donations, instead of the current $1,000. Another would allow the House to decide whether to go ahead with provisions forcing television stations to charge the lowest possible rate for political advertising. A third measure would give candidates leeway to take more donations if running against wealthy candidates paying for campaigns.
Hard Choice on Soft MoneyNew York Times – by David E. Rosenbaum – February 14, 2002
WASHINGTON, Feb. 12 — Most of the two dozen or so House Republicans who profess to be undecided about how to vote on the campaign finance legislation on Wednesday were not talking today, at least not publicly.
But at least one who had been on the fence, Representative Jack Quinn of New York, jumped off today. In an interview this afternoon, Mr. Quinn, whose district includes downtown Buffalo, said he had decided to vote for the Shays- Meehan campaign finance bill and against any amendments that would reduce its chances of becoming law.
The pressures from his party's leaders to vote against the bill were intense, Mr. Quinn said.
"Denny's message was loud and clear," Mr. Quinn said, referring to Speaker J. Dennis Hastert, who told the Republican rank and file at a closed meeting last week that the party's control of the House would be jeopardized if the legislation was enacted.
But Mr. Quinn said he concluded that the main feature of the Shays- Meehan bill, a ban on unlimited donations to national political parties known as soft money, would not hurt Republicans. He decided, he said, that "if we miss this opportunity this week, it's going to be a long, long time before we get any change in the system."
Mr. Quinn, in his fifth term in Congress, voted for similar legislation sponsored by Representatives Christopher Shays, Republican of Connecticut, and Martin T. Meehan, Democrat of Massachusetts, in 1998 and 1999. Then, the measure was sure to be killed in the Senate.
But after the Senate passed an almost identical bill last year, Mr. Quinn did not sign the petition that forced the bill to the House floor over the objection of Republican leaders. Until today, he had not said how he would vote this year.
"It's obscene the way we have to raise money for elections," he said. "We have to get control of the system."
Two other Republicans, both freshmen, are in an awkward position because they signed a pledge circulated by Common Cause during their 2000 campaigns promising to support "a complete ban on soft money."
One of the two, Representative Ed Schrock of Virginia, said today that he would vote against the campaign finance bill on Wednesday and did not believe he was breaking his word. Because the bill would allow $10,000 donations to state and local political parties for get-out- the-vote drives, it was not a "complete ban," Mr. Schrock said.
The other Republican who signed the pledge, Representative Melissa A. Hart of Pennsylvania, would not consent to an interview today. But her spokesman, Brendan Benner, made the same argument about the pledge and the permissible donations to state and local parties. Mr. Benner said Ms. Hart had not decided how to vote on Wednesday.
Officers of Common Cause and other backers of the Shays-Meehan bill hold that the donations to state parties allowed by the bill would not be soft money because the contributions would not be unlimited. Mr. Quinn's district is heavily Democratic, and he is one of the few Republicans who enjoy strong labor union support. He often votes against his leaders on legislation important to organized labor. In this case, paradoxically, the unions oppose central parts of the campaign finance legislation that Mr. Quinn plans to support.
On issues not involving the pocketbook — abortion and the Clinton impeachment, for example — Mr. Quinn usually votes solidly Republican.
He said he expected his arm to be twisted firmly tonight and on Wednesday. "I'll take all the calls," Mr. Quinn said. "I'll go to the meetings. But I will not change my mind."
Poisoning Shays-MeehanNew York Times – Editorial – February 13, 2002
When campaign finance reform finally comes before the House on Wednesday, the lawmakers trying to kill the bill will come in many disguises. Rather than voting against the whole measure, they will proclaim their love for reform — a love so deep that it can best be expressed in a series of amendments to "improve" the bill. Today we say: Beware of such talk. The aim of almost all such "improvements" is to destroy the fragile coalition backing reform, or to pass a version that cannot immediately win approval in the Senate, thereby forcing the legislation into a House-Senate conference — and certain oblivion.
The bill, known as Shays-Meehan, would ban unlimited "soft money" donations by unions, corporations and rich individuals to national parties and greatly restrict them to state and local parties. These big-money donations have been consistently mounting until they threaten to bury our representative system of government under their weight. In 2004, they could approach $750 million.
The parade of poison amendments inspired by foes of Shays-Meehan is likely to be led by one attacking a provision that, when it was added in the Senate, solidified bipartisan support and enabled it to pass in that chamber last year. The provision allowed corporations, unions or individuals to give $10,000 to state and local party committees for certain campaign activities. In its current form, the Shays-Meehan bill would keep this provision but tighten it to bar the money from being spent for broadcast ads, and to bar federal officeholders or candidates from raising the money.
In a move of utter cynicism, foes of Shays- Meehan are planning to offer an amendment throwing out this small loophole, in hopes of forcing the bill into conference and killing it. At the same time, they will likely support an amendment widening the loophole to let state and local parties use the money in an unlimited fashion. There is really no principle at work by the foes of campaign reform. Their philosophy seems to be: Do whatever works to kill the bill, erode support or force the bill into a House- Senate conference, where Republican leaders in the House plan to bury it.
There are other killer amendments to guard against. One would lift the ban on sham issue ads financed with soft money raised by supposedly independent groups. If this amendment passes, any candidate barred from raising soft money for a political party would simply raise it for a paper organization. Another so-called poison pill would invalidate the entire Shays-Meehan measure if one small part is declared unconstitutional. Still another might try to bar unions from raising money through dues deducted from worker paychecks, or bar legal alien residents from contributing to campaigns.
We are not claiming that the Shays-Meehan bill is perfect. But we do urge lawmakers to beware of people saying they want to make it perfect. It is guaranteed that if the Shays-Meehan bill can overcome the malign intentions of its foes to kill it by stealth, and if it can get a straight up-or-down vote in the House, it will pass overwhelmingly. Lawmakers will be too afraid to vote against it. Many want to plunge in the knife and not leave fingerprints. Constituents need to tell their representatives that any attempt to amend the bill in the name of improving it should be seen for what it is — a plot to wreck the biggest opportunity in a generation to reform a corrupt system.
Employee Pension Freedom ActPress Release – Congressman George Miller – February 10, 2002
WASHINGTON -- In response to the collapse of the Enron Corporation and the revelation that employees were prohibited from selling company stock in their 401 (k) retirement plans while Enron’s share price plummeted, Congressman George Miller (D-CA) introduced legislation today to provide employees total control over their 401 (k) investments.
Miller’s bill, the, would prohibit employers from levying financial or other penalties against employees who sell any part of the company stock held in their 401 (k) plans and would prohibit black-out periods for selling company stock in those plans for any reason other than when administrative changes are made to the retirement plan.
“Employees should have 100 percent control over the manner in which their 401 (k) funds are invested, and that is the personal freedom my bill would provide,” said Miller, the senior Democrat on the House Education and the Workforce Committee, one of several House committees investigating the Enron-Arthur Anderson scandal.
Miller said his bill, introduced with over 50 co-sponsors from both parties, makes several important changes to U.S. pension laws.
“The most important change my bill makes is to provide employees total control over the investments in their 401 (k) plans,” he said. In addition, Miller said his bill would:
“Over the past month, this nation has been shocked at the revelations about how Enron Corporation employees lost their entire retirement savings through the actions of high-ranking company officials,” Miller said.
“As the value of Enron stock plummeted last Fall, Enron employees were prohibited from rescuing their own savings -- estimated at over 1 billion dollars -- by a company-imposed lockdown of Enron shares, and by an outright prohibition on selling company contributions until an employee had reached age 55,” Miller said.
“And employees in other corporations, such as K-Mart, face other penalties and restrictions on the sale of company stock in their 401 (k) plans. For example, in K-Mart and other companies, if you sell company stock in your 401 (k) plan before a certain age the company withholds its employer contribution to your plan for six months. There should be no such restriction or penalty.
“The spectacle of company executives hiding billions of dollars of debt from investors and employees through secret, off-shore partnerships of Enron, while simultaneously cashing out company stock for themselves is an audacious assault on our pension and security laws and offends our sense of fairness and justice.
“These executives ignored their responsibilities to investors and their own employees by cooking the books, making misleading statements about the company’s health, and locking down the ability of employees to save themselves from Enron’s collapse.
“Clearly, there are two sets of rules when it comes to company stock. The Kenneth Lays and other executives of the world have one lucrative set of rules while average employees have a more restrictive set of rules when it comes to company stock in a 401 (k) plan.
“Now, the question is whether Congress will respond, or will employees get rhetoric and a few tweaks that leave the antiquated pension laws pretty much in place to the employees’ disadvantage?
“Under my bill, employees would have total control over the investment of money that they earned and contributed to their retirement plans and that their employer contributed to their plans as part of their compensation.
“This change is critical to help avoid the problem we just witnessed with Enron. It will provide employees the ability to rescue their nest-eggs and to diversify and manage their investments consistent with the advise of financial professional and the goals of their families.
“We also require that pension plans provide detailed investment information like that required under federal securities law, so that employees are fully informed about their investment options. And we significantly stiffen the penalties for companies that violate pension laws.
“Across this nation, as our constituents watch the Enron Scandal unfold and hear the heartbreaking stories of its pension victims, Americans are saying, ‘I can’t believe this happened.’ Well, it did happen. And it happened in part because the archaic pension laws let it happen. Laws that treat employees like children unable to manage their own money; laws that deny employees full participation in management and oversight of funds; laws that allow crucial information to be withheld.
“And it will happen again, and again, and again, unless we make a serious effort to modernize those laws and protect our constituents from the next Enron scandal and other inappropriate company restrictions.”
THE EMPLOYEE PENSION FREEDOM ACT
Introduced January 29, 2002
I. IMPROVED DISCLOSURE
ANNUAL BENEFIT STATEMENTS: pension plans would be required to provide annual pension benefit statements to participants and beneficiaries including notification of employee and employer contributions that consist of employer stock and the importance of a well balanced and diversified investment portfolio for long term retirement security.
ACCURATE FINANCIAL INFORMATION: in all pension plans where participants make investment decisions, the employer and plan administrator must provide all material investment information to participants as required under securities law to make investment decisions. Prohibits the employer or plan administrator from making any misleading statements to participants regarding the value of employer stock or other investments available under the plan or from omitting information relevant to the value of the stock or other investment options.
II. STRENGTHENED EMPLOYEE DIVERSIFICATION RIGHTS
UNRESTRICTED EMPLOYEE CHOICE OVER EMPLOYEE CONTRIBUTIONS: in pension plans where participants make investment decisions, participants will have the right to allocate employee contributions to any plan investment option (eliminate current law rule permitting employers to require 10% employer stock holdings).
UNRESTRICTED EMPLOYEE CHOICE OVER EMPLOYER CONTRIBUTIONS WHEN VESTED: the plan administrator must notify all participants upon vesting of the right to transfer employer stock matching contributions to other plan investment options; the plan administrator would have up to 30 days to effect any requested transfer; in an ESOP, employees may diversify employer matching contributions after 10 years of service.
III. IMPROVED EMPLOYEE ACCOUNT ACCESS
FASTER VESTING FOR EMPLOYEES: covered employees will be vested in their employer contributions after completion of one year of participation in the plan (many plans currently vest after five or more years and some, like Enron, do not permit employees to transfer employer contributions even following vesting).
30 DAYS ADVANCE NOTICE OF PLAN ”LOCKDOWNS”: the plan administrator must provide at least 30 days advance written notice of any plan change that would restrict a participant's access to his or her account.
NO MORE THAN 10 BUSINESS DAYS FOR LOCKDOWNS: an employer or plan administrator may not limit participant access to his or her account for a period of more than 10 business days.
IV. ADEQUATE LEGAL PROTECTION FOR EMPLOYEES
FIDUCIARIES MUST HAVE INSURANCE OR BE BONDED: all defined contribution plan fiduciaries shall maintain sufficient fiduciary insurance or bonding to cover financial losses due to breach of fiduciary duty as determined by the Secretary of Labor.
EMPLOYEE PENSION PLAN REPRESENTATION: in pension plans that permit employees to direct control of their pension investments, the plan must include an equal number of employer and employee trustees to oversee the plan. Many plans today have no employee trustees overseeing employees' funds.
NO WAIVERS OF LEGAL RIGHTS: Employers may not require participants to sign waivers of statutory pension rights as part of a termination or severance agreement.
RIGHT TO BE MADE WHOLE IN COURT: in cases of fiduciary breach of duty by a fiduciary or knowing participant in a breach, the plan or participants may be made whole by the court.
IMPROVED LABOR DEPARTMENT ASSISTANCE: the Department of Labor shall establish an office of the Participant Advocate which shall monitor potential abuses of employee pension plan rights and assist pension plan participants in preventing and resolving abuses.
FEASIBILITY STUDY FOR GUARANTY INSURANCE: the PBGC shall study and report to Congress no later than 3 years after enactment the options for and feasibility of developing an insurance guarantee system for defined contribution plans.
$62 Billion in Taxpayer HandoutsTaxpayers for Common Sense – Press Release - February 2, 2002
Already Out-of-Control Government Giveaways to Oil, Coal and Nuclear Power Could Double, Groups Say
WASHINGTON, DC-Government subsidies to oil, coal and nuclear power industries could double if the Senate passes the House energy bill (H.R. 4), according to a report released today by the Green Scissors Campaign. "Running on Empty: How Environmentally Harmful Energy Subsidies Siphon Billions from Taxpayers" details new and existing subsidies to oil, coal, gas and nuclear power industries that would total $62 billion over the next 10 years.
"The richest polluters in the land are already raking in enormous, mind-boggling handouts," said Erich Pica, Friends of the Earth, Director of the Green Scissors Campaign. "And our leaders want to give them more while our economy is struggling? It's time for President Bush and Congress to put a stop to this outrageous waste of taxpayer dollars," he added.
"Running on Empty" estimates that existing subsidies and tax breaks to polluting energy industries totaling $33 billion will nearly double, to $62 billion, if the House energy bill (H.R. 4) is signed into law. Coal, oil and nuclear industry allies in Congress are promoting these new subsidies despite the erosion of a four-year budget surplus into a $100 billion deficit.
The report documents some of the tax breaks and subsidies that energy giants such as Enron, which paid no corporate income tax in four of the last five years, lobbied for and got in the House energy bill. Enron would benefit enormously from tax breaks on pipelines as well as royalty subsidies in the House bill. These handouts, combined, total $4.9 billion dollars to industry over ten years.
But Enron is just the tip of the iceberg. Both ChevronTexaco and British Petroleum have vast assets in the Gulf of Mexico and could potentially benefit from royalty relief and research and development programs targeted towards activities in the Gulf.
The Senate is poised to begin debate on its own energy bill (S. 1766) in the next few weeks. While the legislation is currently incomplete, some dirty energy subsidies are already emerging. "Profitable energy companies are gunning for this money at a time when we have a growing budget deficit, " said Cena Swisher, Senior Program Director for Taxpayers for Common Sense. "The fuel gauge for the Federal Treasury is on empty and we can't afford these outrageous giveaways to big energy."
"The subsidies and tax breaks in H.R. 4 reward the oil, coal and nuclear industries that dirty our water and foul our air," said U.S. PIRG Staff Attorney Pierre Sadik. "The Senate should reject these enormous polluter giveaways, and move us toward a cleaner, smarter, and more secure energy future."
Since 1995, the Green Scissors coalition, led by Friends of the Earth, Taxpayers for Common Sense and the U.S. Public Interest Research Group (PIRG), has produced analyses of the federal budget that identify wasteful spending that harms the environment. Over the last eight years, the Green Scissors coalition has helped cut or eliminate $26 billion of environmentally harmful spending programs from the federal budget. The special report released today focuses on energy programs already in the federal budget in addition to those included in the energy bill passed by the House of Representatives in August, which the Senate will soon begin to consider.
Pension Reform PlansAssociated Press – by Ron Fournier - February 1, 2002
WASHINGTON - President Bush, reacting to the outcry over Enron's collapse, will ask Congress to revamp pension laws to allow workers to diversify retirement accounts heavy with company stock, White House officials said Thursday night.
The proposal also would require companies to provide workers more frequent reports about their 401(k) plans and increase employer accountability when workers are barred from trading on the retirement accounts, according to an outline of the plan provided by White House officials.
"About 42 million American workers own 401(k) accounts with a total of $2 trillion in assets," the statement says. "These workers need to have full confidence in the security of their pension plans."
Bush, long associated with Enron, was announcing the initiative Friday in a meeting with lawmakers, said the officials who spoke on condition of anonymity.
Enron's bankruptcy is the subject of criminal and congressional investigations, in part because workers said they did not know the extent of the company's financial woes and were unable to sell Enron stock in their 401(k) programs for several weeks.
Company stocks plunged after the bankruptcy, virtually wiping out workers' 401(k) savings and costing investors untold millions.
Bush's proposal came from a Cabinet-level task force that he formed on Jan. 10 - the same day the White House disclosed that two members of Bush's Cabinet received pleas from former Enron Chairman Kenneth Lay shortly before the company's collapse.
The disclosure raised questions about whether Enron received special treatment because of its deep ties to the Bush administration. Bush says -Enron gained nothing from its association with him and administration officials.
Lay is a longtime friend and supporter of the president, and several administration officials had financial ties to Texas-based energy-trading company. Enron officials met with Dick Cheney and his aides several times as the vice president drafted Bush's energy plan.
In addition, Lay gave the White House recommendations for appointment to a federal energy commission last spring. Bush eventually appointed two of the people on Enron's list.
Congressional hearings resume Monday, when Lay is due to testify.
Bush has said he was outraged that Enron investors weren't told more, and said his mother-in-law lost more than $8,000 in the firm's stock. He formed a Task Force on Retirement Security to review pension laws and determine how companies could be required to disclose more financial information, moves widely viewed as attempts to ease political backlash.
Officials said Bush will announce Friday that he has accepted the task force's findings, including plans to:
_Give workers the right to sell company stocks and diversify into other investment options after they have participated in the 401(k) plan for three years. Some companies allow workers to diversify quickly, but others impose holding periods that can last decades.
_Forbid senior corporate executives from selling company stock during times when workers are unable to trade on their plans. These so-called blackout periods occur when employers change pension plan features or administrators. Last year, Enron executives cashed in millions of dollars in stock while telling workers the company was doing fine.
_Make companies more liable during blackout periods. Under current law, when 401(k) plans are controlled by workers, employers are not responsible for the result of workers' investment choices. This "safe harbor" from liability would no longer apply during a blackout period. Employers would be responsible for what happens to worker investments if the company fails to act in the interest of the workers when they created the blackout period.
_Require firms to give 30 days' notice before any blackout period begins.
_Require firms to give workers quarterly benefit statements that include information about their accounts, including the value of their assets, their rights to diversify and the importance of maintaining a diverse portfolio. Under current law, the reports are due annually.
Bankruptcy Bill ReconsideredNew York Times – by Riva D. Atlas – January 26, 2002
In the wake of the bankruptcy filing by the Enron Corporation, some Democrats in the Senate are weighing whether provisions of a bill to overhaul the bankruptcy code should be reconsidered. They are also looking at changes that would make the bill friendlier to consumers.
Enron was clearly monitoring the bill before it filed for bankruptcy protection in December. The company lobbied the House on the matter, according to data gathered by the Center for Responsive Politics. The Senate and House each passed a version of the bankruptcy bill last March, but a conference to reconcile the two versions, scheduled for Sept. 12, was canceled. The first meeting of the conference committee was in November, but it was too late to push the bill through before Congress adjourned. Any changes by Democrats to the Senate bill will slow efforts to reconcile the versions and finally pass legislation.
Among the provisions being re- examined is a section in both versions that deals with certain asset- backed securities. As written, the bill would make it impossible for assets shifted off a company's balance sheet to a separate entity to be pulled back into a company's estate in a bankruptcy.
"If this goes through, the incentive for corporations will be to move more and more transactions off the books," said Elizabeth Warren, a professor at Harvard Law School and an expert on bankruptcies. Enron made use of similar financings, she said, to raise cash without the loans appearing on its books.
A letter critical of the section, signed by 35 law professors, including Professor Warren, was sent yesterday to Senator Patrick J. Leahy, the Vermont Democrat who is chairman of the Senate Judiciary Committee, and to F. James Sensenbrenner Jr., the Wisconsin Republican who is chairman of the House Judiciary Committee.
"Congress seems poised to adopt, as part of the proposed bankruptcy legislation now in conference committee, a `technical' amendment that would institutionalize and encourage one of the practices that has led to Enron's failure and its harsh consequences," the letter said. "Especially in this economy, with Enron only the latest example of what can happen when a company and its auditors do not make full public disclosure of financial circumstances, the Congress should not adopt this proposal."
The provision would give lenders an incentive to make loans to off- balance-sheet vehicles, knowing that their collateral would be protected in a bankruptcy filing, Professor Warren said. Without the benefit of the assets, some companies could go out of business.
Recently, a bankruptcy judge ruled that the LTV Corporation, the steel company, could retrieve inventory and receivables it appeared to have sold to special purpose vehicles. Without these assets, the judge said, LTV would be "forced to shut its doors and cease operations."
David Carle, a spokesman for Mr. Leahy, said the senator might hold a hearing to look at the section. "If a hearing would help the additional examination of the provisions and of the lessons to be learned from the Enron experience," Mr. Carle said, "then Senator Leahy has indicated he might call one."
Another element of the bankruptcy bill that has new relevance in the aftermath of the Enron filing is a provision in both the House and Senate versions that limits the ability of individuals filing for bankruptcy to shield their homes from creditors. Five states — Florida, Iowa, Kansas, South Dakota and Texas — have homestead exemptions that cover the value of the home. Given that Enron is based in Houston, the possibility exists that executives could use the exemption to shield assets if they filed for bankruptcy. With differences in the House and Senate approaches, the homestead exemption is expected to be a crucial topic for the conference committee.
Senator Herb Kohl, Democrat of Wisconsin, who sponsored the Senate's homestead amendment, has urged Mr. Leahy to hold a hearing on the Enron links to the bankruptcy bill "in which the homestead exemption would likely be one of the key issues," Lynn Becker, a spokeswoman for Mr. Kohl, said.
Democrats, led by Mr. Leahy, are also considering changes to the bankruptcy bill that they say would make it friendlier to consumers.
The bill is viewed by some lawyers and its opponents in Congress as biased toward lenders like credit card companies and tough on consumers, who may be more likely to file for bankruptcy during the economic downturn.
The bill would make it more difficult for individuals to file under Chapter 7 of the bankruptcy code, which permits consumers and businesses to shed most of their unsecured debts. Instead, more individuals would be forced to file under Chapter 13, which requires debtors to come up with a plan to pay off at least a part of their debts, usually over three to five years.
"The bill is pretty darn embarrassing in its present form, especially in the context of an economic downturn," said Senator Paul Wellstone, Democrat of Minnesota, who opposed the bill.
Among possible changes Democrats could make, Senate staff members said, could be a predatory-lending amendment, offered by Senator Richard J. Durbin, Democrat of Illinois, that was defeated by one vote. The amendment would disallow a lender's claim if that lender had violated the Truth in Lending Act.
With so many potential changes to the bill under consideration, lawyers and lobbyists said bankruptcy reform could be delayed another year. "I think the odds are 50-50 right now," said David Goch, a legal consultant for the Commercial Law League of America, which represents bankruptcy lawyers. "Anything happening quickly is unlikely."
How Patients' Rights Became a Fight
The New York Times - By MARION BERRY - September 1, 2001
When Congress reconvenes next Wednesday after a monthlong recess, preparations will begin for a conference of the House and the Senate to reconcile the differing versions of patients' rights legislation that they passed this summer. The negotiations are expected to be bitter and hard-fought, and it is unclear whether an agreement can be forged that will create a bill the president will sign.
This is a surprising turn of events since the House version of the bill was practically identical to the Senate version up until the evening before it passed. In fact, the lead bipartisan sponsors of both bills had closely coordinated their efforts to avoid the battle that will take place this month.
Now the conference promises to be extremely contentious because of a last-minute amendment that represented a political betrayal. Instead of ensuring important rights for patients and families, the House actually passed a health maintenance organization and insurance company protection act that would leave patients with even fewer options for legal recourse than they have now.
Here is the short version of what happened:
This year the Senate passed the McCain-Edwards-Kennedy bipartisan patients' rights bill, which, in addition to providing guarantees of medical care, gives patients the right to seek redress in court for decisions made by health insurance companies that result in injury or death. To this day, as a wholly unintended consequence of a 1974 law, health insurance companies cannot be held liable for their actions - they are the only businesses with such protection.
The version of the McCain-Edwards-Kennedy bill that was passed by the Senate contains strong employer protections, so that business owners will not be held accountable for any negligence in the services rendered by the health insurance companies they contract with.
This legislation is designed to hold H.M.O.'s just as accountable for their actions as any other business is - and, contrary to the claims of the insurance industry, it is not designed to promote a tide of reckless lawsuits that would put responsible business owners at risk or would increase the cost of health insurance for consumers.
As the Senate considered its bill, the group of House lawmakers that I have been working with for years - including Greg Ganske, a Republican from Iowa; John Dingell, a Democrat from Michigan; and Charlie Norwood, a Republican from Georgia - worked closely with the Senate sponsors to make sure that key provisions and amendments would be acceptable in the House. After the McCain-Edwards-Kennedy legislation passed, we decided to reintroduce our bill so that it was practically identical to the Senate-passed version.
Coordination increased as the prospect for House consideration became more likely, and our House group began meeting regularly with the Senate sponsors to find a way to bridge our differences with the White House and the Republican House leadership.
There were seven of us - the named sponsors of the House and Senate bills - participating in the negotiations, but the White House insisted on meeting with only Charlie Norwood, and all of us agreed to honor that preference. We trusted Charlie Norwood to work out a deal that would be a fair compromise. Every day he came back to us and told us what the White House wanted, and every day we tried to come closer to what increasingly seemed like impossible demands.
Then one day, six of us emerged to find our seventh partner - Charlie Norwood on live television. He was participating in a hastily assembled White House press conference, announcing to the nation that he had reached a deal with the White House. He never checked back with us, his House and Senate colleagues. He knew that he had agreed to terms we could never accept. And yet he and the White House called this a "compromise."
A compromise is not an agreement reached behind closed doors between two members of the same political party, especially when it contradicts the principles so fundamental to one side.
The so-called "Norwood amendment" that resulted from a handshake between Mr. Bush and Mr. Norwood was written overnight and then passed by the House the very next day by barely a majority.
The Norwood amendment gutted our bipartisan legislation, and this is why:
First, our original bill started with the premise that a health insurance company should be treated just like any other person or institution in the health profession. That is, if it makes a decision that results in harm to a patient, it should be held accountable for that action. The Norwood amendment creates a whole new category for H.M.O.'s. It gives them special protections that no other industry has - like new federal limits on damages in cases where a patient is hurt by the actions of an H.M.O.
Second, the amendment may pre-empt most state laws, so that already existing patients' rights laws in places like Texas, California and New Jersey could be rendered void. And in states where case law has been building in favor of patients' rights, the Norwood amendment would basically kill years of legal progress.
Third, the amendment calls for a legal device called "rebuttable presumption." Few people could tell you what this means, but we've figured out that it increases the presumption of innocence for H.M.O.'s, making it harder for a plaintiff to prove liability.
The big question for all of us as Americans has to be: Why is this happening?
Why did the White House oppose a real patients' bill of rights at every turn, even when a majority of Americans support one, and even when a coalition of Republicans and Democrats in both houses of Congress had united behind one? And why are we sitting here today without a law that holds health insurance companies accountable, when the health and livelihood of millions of Americans depend on such a law?
Could it be that the White House intended to create an impasse with the Senate, and leave us once again without managed care reform?
Those are the questions we should put to the White House.
In the meantime, the stage is set for a crucial House-Senate conference with a very difficult assignment. Consensus will be impossible without compromise on both sides. And without consensus, this nation will be left with a situation in which children, senior citizens and others will be unable to demand the care and treatment to which they are entitled.
Dirty Coal Billed as CleanDuke Energy Employee Advocate - http://dukeemployees.com - August 5, 2001
Douglas Jehl (The New York Times) reveals that coal, the country's filthiest fuel, is being billed as clean and netting energy companies government subsidies. These subsidies will triple if the bill passed by the House becomes law!
"‘Basically, there is no such thing as clean coal,’ said Kate Abend, an energy expert with the United States Public Interest Research Group, which is aligned with environmentalists.” Didn’t you always suspect this? How does dirty coal get to be called “clean coal” and companies get paid increased subsidies for its use? Well, the energy companies’ boy is in the White House. Expect even stranger things to come.
It will be hard for energy companies to use any technology that does not come with a government subsidy. Social Security and Medicare may suffer, but the energy subsidies will roll on. That is, of course, unless the Senate kills the bill.