Providing for Consideration of H.R. Encouraging Employee Ownership Act of and Providing for Consideration of H.R. Financial Institution Customer Protection Act of 2015

Floor Speech

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Mr. POLIS. Mr. Speaker, I thank the gentleman from Ohio for yielding me the customary 30 minutes, and I yield myself such time as I may consume.

Mr. Speaker, I rise in reluctant opposition to this rule today because it is close--it is close--to a rule that would have substantial bipartisan support.

The rule today provides for consideration of H.R. 1675, the Encouraging Employee Ownership Act of 2015, and H.R. 766, the Financial Institution Customer Protection Act of 2015.

In terms of process, there is some credit to be given under this rule. The rule was very close, with one major fault, which I will discuss in detail, to fulfilling the promises laid out by the new Speaker of the House of Representatives.

As you might recall, Mr. Speaker, there was a promise to all Members that each Member of this body would have a chance to consider his or her ideas on the House floor through a more open amendment process.

And you know what? That is a good idea.

Of course, if it was an idea that didn't have a majority of support, that is fine. But there would be a vote. We could debate it. We could vote on it.

If ideas came to the floor, were debated and considered worthy by a majority of this body, they would pass. Even if a particular committee chair of jurisdiction didn't like the bill, even if leadership on either side didn't like the amendment, the will of the body could be heard for commonsense improvements.

Now, this promise of regular order is so simple, so attractive, so desirable, by the American people who let us do our job, yet, unfortunately, it still remains elusive.

Now, on the first bill here today, H.R. 1675, the Encouraging Employee Ownership Act, there were seven amendments submitted to the Rules Committee, four of which I was a cosponsor of.

I am proud to say all seven amendments were made in order to be considered on the House floor. If that was all that this rule contained, I would be proud to support that rule.

In addition to that, H.R. 1675 is actually good legislation. Look, any one of us can say we don't personally agree with every word, and there are amendments to address some of the deficiencies in the bill.

But in its total, it is a package that should be considered for an affirmative vote by Members of both parties. I am confident that it will have strong bipartisan support in the underlying bill.

It promotes and makes needed updates in employee ownership, which is a great form of corporate governance that I think each Member of this body should support. We have companies in my district that use it.

The legislation also clears away red tape for small- and middle- market companies, which my good friend from Ohio (Mr. Stivers) spoke about here on the floor as well as in the Rules Committee.

I do believe that one of the bill's titles, in its current form, takes away and reduces market transparency in the wrong direction.

But I am proud to say, Mr. Speaker, we have amendments that will be considered today by Mr. Issa and Mr. Ellison, as well as cosponsored by myself, that would address that matter--to encourage transparency in financial markets--because financial markets are predicated on as- close-to-perfect information as we can achieve and step towards perfect information, enhance the efficiency of markets; steps away from perfect information, decreased efficiency of markets.

Now, the second bill, H.R. 766, unfortunately is a piece of legislation that again addresses a real need, but I can't support it.

Again, I would be proud to vote for the rule if it included a simple amendment which I will be talking about in a moment. But, unfortunately, the process through the Rules Committee shut that down.

I want to be clear. H.R. 766 takes a look at a critical, legitimate issue, the issue of the Justice Department and Operation Choke Point.

Now, unfortunately, what it does is it goes too far in limiting the tools that are available to DOJ to combat actual illegal activities, like Ponzi schemes, banking fraud, and situations where the banks themselves are complicit in committing the alleged fraud.

It also fails to deliver on what Mr. Stivers indicated its goal was, to allow legally operating businesses to access the banking system.

It fails to deliver on that because, while there were nine amendments that were made in order, a critical amendment offered by my colleagues, Mr. Perlmutter of Colorado and Mr. Heck of Washington State, was not allowed, an amendment that would have furthered the goal of this bill to allow legally operating businesses to access banking services.

It was a germane amendment. There were no points of order. In fact, a majority of the Members of this body have supported this amendment, in full or in part, in various floor votes in earlier times.

A majority of this body supports a real-world solution to a real- world problem, not just one we face in Colorado, but many States face. The fact that legal, legitimate marijuana-related businesses cannot interact with legitimate banking institutions is an enormous problem for economic growth and a security risk.

It is a problem for law enforcement that we hear from police and sheriff departments back home every day, and it is a problem for the safety of our communities.

It is simply not acceptable to meet the standard of an open and transparent process that the Speaker has promised to eliminate from even consideration and a vote, this very important amendment that addresses the accessibility of banking services to companies that are engaged in a legal State business. For 23 States and the District of Columbia, this is an enormous problem right now.

To be clear, what we are talking about is not just people who run medical marijuana dispensaries, but also highly regulated growing operations. Even farmers producing industrial hemp are turned away from opening bank accounts, cannot accept credit cards, have to haul around large amounts of cash to pay their employees every day, placing themselves and their employees at enormous risk of physical assault and robbery, as well as detracting from the very law enforcement ability to trace transactions that our law enforcement officials are clamoring for.

Due to Congress' inaction, hundreds of businesses in Colorado and 22 other States are forced to operate on a dangerous, untrackable, cash- only system that raises serious public safety concerns, increases tax fraud, and is an enormous burden on our economy.

Now, those are facts that are not in dispute. I know that there are many Members on both sides of the debate about how we should treat hemp and marijuana, whether they should be legal or illegal. That is not the issue.

The issue is that 22 States and the District of Columbia have chosen to legalize it under State law. It is illegal under Federal law. We are not debating that here now either. That is fine. That wouldn't be germane for this bill, to say let's legalize it federally. That is not even what we are talking about here.

What we are talking about is, in the States that it is legal, it is absolutely critical from even a law enforcement perspective--even if you want it to continue to be illegal federally--that the interactions are through our normal banking system in a traceable way.

These are facts that are not in dispute. My good friend from Ohio knows these issues. In the lead-up to Ohio's possible consideration of legalization, I am confident that many Ohioans had conversations with law enforcement, walking through officials on the issue of making this a cash-based business.

That was a significant issue in the Ohio election and in other States.

The issues of taxation and recordkeeping are critical. But do you know what, that points to the necessity of this legislation. Do you know what, Mr. Perlmutter's amendment would likely have passed this body with Republican and Democratic support. It would have won a majority of bipartisan support this week. It is not the job of the Rules Committee to pick winners and losers. If it is particularly objectionable for the Rules Committee to abuse its power to kill a measure that has demonstrated a bipartisan level of support, that is not an appropriate use of the discretion of our committee or our chair to have their personal opinions guide what amendments are forwarded to this body for full consideration.

What else can Members do? We write thoughtful amendments that solve real-world problems in our State. We garner support for these amendments year by year talking to Republicans and Democrats. And then what, it just dies because we can't get it to a floor vote? How is that an open and transparent process? It is not.

Mr. Speaker, if we defeat the previous question, I will offer an amendment to the rule to bring up a bill to help prevent mass shootings by promoting research into the causes of gun violence and making it easier to identify and treat those prone to committing violent acts.

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Mr. POLIS. To further discuss our proposal, I yield 4 minutes to the distinguished gentleman from California (Mr. Honda).

Mr. Speaker, I thank the gentleman from California. I look forward to discussing with him his bill next week and seeing whether it is something that I can support.

I strongly believe in encouraging employee ownership through ESOPs options. This bill does part. We can do a lot more. It is a big thing that we can do to address the increasing income disparities that this country has in making sure that workers can participate in capital formation and capital growth along with owners and executives. We look forward to working with the gentleman on that bill and contacting the gentleman as well.

The gentleman from Ohio said that somehow legal operating businesses must have access to banking resources, the goal of this bill. He said, oh, wait a minute, I mean Federal ones not State ones, not Federal not State. This is where you have a difference. Of course, you won't have any disagreement that there is an ambiguity here with regard to types of businesses that are legal at the State level and are not legal federally. But this is where you will find that most Democrats believe very strongly in States' rights.

Most Republicans believe here, with the exception of the other gentleman from California who just spoke and a number of others who would allow a majority to support this bill, but apparently the gentleman from Ohio believes in an overarching Federal definition telling States what they can and can't do indirectly through the banking system, effectively constraining their ability to allow banks to serve businesses that might sell types of firearms that are illegal federally, or types of marijuana or hemp or other products that might be illegal federally. Effectively, they are arguing that the Federal Government should tell them what to do and impose a one-size-fits-all solution on States that are as diverse as Texas and California and Colorado and North Dakota.

I disagree with that premise, as do most of the Democrats here today. We feel that while this body, of course--and I agree with the gentleman-- should continue with the discussion about the regulatory structure of legal treatment of cannabis products federally, that should in no way, shape, or form stand in the way of a simple fix that says, whether you want it to be legal or illegal, transactions should be traceable, safe, through the banking system for businesses that are legal at the State level.

Let me address H.R. 1675, the Encouraging Employee Ownership Act, also being named the Capital Markets Improvement Act. It is a good piece of bipartisan legislation that I think can be made even better through the amendment process.

Title I of this bill, which will revise the SEC's rule 701 by raising and indexing for inflation the threshold under which companies can issue stock to employees without running into government red tape, is a commonsense, good piece of legislation. I hope it is something that most of my colleagues on both sides of the aisle agree with. I am an early cosponsor of this legislation, and I think we should promote and applaud the structure, the indexation, and, of course, allowing employees to have a stake in their companies.

That is not the only solution. The gentleman from California (Mr. Rohrabacher) might have some other ideas I look forward to discussing, as do I. But if you want to help solve some of our Nation's issues with income inequality and the wealth gap, then we should applaud and promote companies that incorporate employee stock or option ownership.

Whether you issue stock in the manner under this bill or whether you operate in ESOP or any of the other forms that allow workers to benefit from the growth of your company, we should find ways to work together to promote and encourage this style of corporate governance.

Title II is a safe harbor for investment research, a bill that will help improve available market information for investors and something that has broad bipartisan support. I know my colleague from Delaware (Mr. Carney) will also be pleased to see this pass, as an original sponsor.

My colleague from Ohio, who is a co-chair with me of the Congressional Caucus for Middle Market Growth, spoke yesterday and today about how this overall package of legislation will help grow companies in the all-important middle market. This is Main Street America. These are companies that might not be big enough to be multinational, multibillion-dollar brand names, and they are not startups or small companies, but it is the engine of our economy, the portion of the market that is a vital piece of our economic engine creating jobs on Main Street.

Title III of this bill will work to reduce red tape for these very middle market companies.

These provisions have broad bipartisan support, and I applaud them. The SEC has largely agreed with this. In fact, the only argument against it has been we already do this, and I think that is a weak argument because we ought to put it in statute. The SEC has agreed and has taken action, but, unfortunately, some of their actions have added in some increased investor impediments as well.

I hope the administration can work with Congress to improve this bill if there are specific issues they have with it. But the bill is necessary. It is better to fix things in statute. I think that we can work together to reduce red tape to grow small- and middle-sized companies.

Title V of the bill is another bipartisan piece of legislation that is in line with the sort of regulatory review that we already ask in many agencies. It is the sort of good government legislation I think both sides of the aisle can find agreement on and hopefully support now.

Title IV of H.R. 1675, unfortunately, is a bit of a step in the wrong direction, and it is something we discussed extensively in the committee yesterday. Fortunately, for this provision, there was an open process. Mr. Issa and Mr. Ellison have amendments that will be considered that improve the portion of the bill or remove it entirely. Unfortunately, the bill, as written, is a move away from searchable financial reporting that can be done digitally. It is a step away from sortable and downloadable formats. It is a return to the pen and paper and inefficient world of the 20th century rather than a step forward to the open data transparency world of the 21st century.

Across the board, market participants, investors, and regulators want information that is already required--we are not talking about any new requirements--information that is already required, financial information, to simply be available in a digital, searchable format. That is all we seek to preserve and not eliminate.

It is an odd and outdated use of government resources to deal with this information by hand, by pen, by paper. It puts investors and others at an enormous disadvantage, and it prevents and reduces the amount of information in the marketplace. Searchable and sortable data can be better used to track trends, find anomalies, find investment opportunities, and help regulators notice trouble spots in markets and hopefully catch the next Enron before it explodes.

Just as importantly, investors need information. So do entrepreneurial folks, who want to take this information and package it in new and interesting and exciting ways and sell it on to institutional and individual investors. We heard yesterday from detractors who said investors aren't asking for this information.

We also heard that the committee didn't include any investors in their testimony; they only included operating companies. I am not sure who they are speaking for; but in my conversations, I have never heard any investor say, ``I want less information,'' or, ``I want information to be harder to search or find.'' No investor says, ``I want to know less about a company's earnings. I want it to be in an archaic pen and paper format.'' That argument that this information isn't welcome by investors is simply incorrect, and it is counter to anything you will ever hear from anyone in the investment community.

Hopefully, we will fix these issues through amendment. Overall, I believe this package should merit serious consideration and support from my colleagues on both sides of the aisle.

H.R. 766, the Financial Institution Customer Protection Act, does address a very important issue, and that is the inexcusable actions of Operation Choke Point, which, at best, could be described as an overzealous use of the Department of Justice's power, or, at worst, as a pernicious attempt to root out activities that are determined to be politically unpopular.

Unfortunately, as we examine this bill, it looks like it has some unintended consequences which are not addressed through the amendment process. The amendment process also fails to include a simple amendment that would further the goals of this bill with regard to the regulated marijuana industry in 22 States.

I hope that we can address the Operation Choke Point issue. I hope we can prevent this administration and future administrations from engaging, having DOJ engage in this kind of troublesome use of authority to coerce closures of accounts for otherwise legitimate and legal customers of local financial institutions.

If a bank or credit union has a legal business, it is legal in the State, they deem it creditworthy, they are a good customer and they want to open an account with them, they should be able to serve that customer. The Federal Government should not use the bank itself as an intermediary in a dispute. If the DOJ has a dispute with a bank's customer, that should be resolved between the DOJ and the customer, not the bank.

I hope that there is groundwork for bipartisan legislation in this area that can ensure that this President and future Presidents and the future Department of Justices do not abuse their authority in this area.

One real-life, everyday issue where this concept comes up of the Department of Justice and the Federal Government interfering with the bank working with its legal customer would have been addressed by the Perlmutter amendment that I spoke about earlier. It is not just a Colorado issue. Frankly, if this bill addressed that issue, despite it being overarching in other areas, I would probably support it.

Thus is the importance of this issue from local law enforcement in our State. But, unfortunately, not even a minute, not even a second of debate is allowed on the issue. The gentleman from Ohio claimed that we were having that debate.

To be clear, we are not. We are debating the underlying rule. There is no time for the sponsors of the amendment to make their case or for opponents of the amendment to make their case. We are outlaying the time for other amendments. Many amendments have 10 minutes; many amendments have more. There is not even a second for the debate of that amendment sponsored by Mr. Perlmutter. That is why I cannot support this rule.

213 million Americans live in a State or jurisdiction where the voters have allowed for some legal marijuana use. Colorado tried to solve the problem locally, but we were rejected by Federal banking regulators in courts, so Congress needs to be the one to make this change. Only Congress can address this issue.

While there remains a need to align Federal and State laws, while the DOJ and Treasury have issued some guidance, some institutions are providing banking services to the DOJ and Treasury guidance issues, the guidance does not solve the problem, which is why we need to change the law and provide certainty, which this very simple amendment that has bipartisan support and likely would have passed on the floor would have done. But it is completely shut down under this rule even though it furthers the actual goal of the legislation, is germane to the legislation, is consistent with the legislation, and yet it is completely shut down in a closed process that runs contrary to the Speaker's stated goal of allowing Members on both sides of the aisle to contribute to making things better.

In closing, I appreciate the committee of jurisdiction's work and the Rules Committee's work to make 9 out of 10 amendments submitted in order today--that is 9 out of 10. But I have to reiterate again that the one that is most important to not only my home State, but the jurisdictions in which 213 million Americans live--22 States plus the District of Columbia--is omitted from consideration in its appropriate, germane bill.

I strongly object to the unnecessary gatekeeping of the Rules Committee and what they have engaged in and the way that they have treated this excellent idea and real-world solution from Mr. Perlmutter and Mr. Heck.

Access to banking services is an issue of fundamental importance for all businesses, as the proponents of this bill have argued. Do you know what? That includes State legal marijuana businesses. Just because some Members of Congress--and they are in the minority, by the way, and they are decreasing every day--object to the very existence of these businesses does not mean that they should obstruct the entire legislative process and shut down our ability to make it possible for these businesses to exist, grow, and succeed.

The Perlmutter-Heck amendment is a germane, thoughtful solution to a real-world problem, and I hope this House will atone for its error today by swiftly taking up legislation--and there is a stand-alone bill--to solve this banking issue once and for all.

This was a discussion that we had in our committee yesterday, but, unfortunately, it is a discussion that we are not allowed to have on the people's floor of the House of Representatives. There is not an amendment that would have somehow legalized or have made any judgment about the legality or the morality of marijuana. It simply would have addressed a banking issue that both proponents and opponents of marijuana law reform agree needs to be addressed. Now, I am happy to have that conversation about how we should treat marijuana federally at a separate point. That is fine. I have legislation to regulate marijuana like alcohol, and others have other ideas.

Those who are following at home need to know that the Perlmutter-Heck amendment is not that discussion. It was germane to the bill we were discussing, and it, frankly, gets at the issue of why our banks are being used as a chokepoint for doing business with otherwise legal and legitimate customers as determined by the States.

Mr. Speaker, for these reasons, while I support one of the two underlying bills--and I would like to be here to support the other if it would simply deal with the urgent issue of 213 million Americans who live in jurisdictions that face it--I urge my colleagues to vote ``no'' and defeat the previous question and to vote ``no'' on the rule.

I yield back the balance of my time.

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Mr. POLIS. Mr. Speaker, I demand a recorded vote.

A recorded vote was ordered.

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Mr. POLIS. Mr. Speaker, I demand a recorded vote.

A recorded vote was ordered.

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