Providing For Consideration of H.R. 2990, Credit Rating Agency Duopoly Relief Act of 2006

PROVIDING FOR CONSIDERATION OF H.R. 2990, CREDIT RATING AGENCY DUOPOLY RELIEF ACT OF 2006 -- (House of Representatives - July 12, 2006)

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Ms. MATSUI. Mr. Speaker, my amendment to the rule provides that immediately after the House adopts this rule, it will bring H.R. 2429 to the House floor for an up-or-down vote. This bill will gradually increase the minimum wage from the current level of $5.15 an hour to $7.25 an hour after about 2 years.

This bill has 136 cosponsors and a discharge petition to bring to the House, the bill to the floor, and has the signatures of 190 Members of the House. This bill is also identical to language as included in the Labor-HHS appropriations bill that was blocked by the leadership just last month.

Mr. Speaker, it is unconscionable that this Congress has refused to help America's low-income workers and their families by increasing the minimum wage. Somehow there is always time for another tax break for multimillionaires who don't need the money, but nothing to ease the financial struggle that low-income families face each day.

The minimum wage is now at its lowest level in 50 years. A full-time, minimum-wage earner earns just $10,700 a year, an amount that is $5,000 below the poverty line for a family of three. It takes a full day's pay just to pay for a tank of gas.

Mr. Speaker, I urge all Members to vote ``no'' on the previous question so that we can help millions and millions of American workers who would directly benefit from an increase in the minimum wage.

I yield back the balance of my time.

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Ms. MATSUI. Mr. Speaker, I yield myself such time as I may consume, and I thank the gentlewoman from West Virginia for yielding me the time.

(Ms. MATSUI asked and was given permission to revise and extend her remarks.)

Ms. MATSUI. Mr. Speaker, the issue we are debating today may not be glamorous, but I want to emphasize for our constituents its importance. H.R. 2990 will significantly affect the guidance investors receive on the soundness of all kinds of investments.

The type of debt rating that a company or municipality receives is an essential guidepost for investors, and the degree to which that rating is accurate has far reaching consequences. So by reforming the way that firms receive the stamp of legitimacy to offer these ratings, Congress is making a significant change.

As we have seen during the past few years, financial investments can have a huge impact on our constituents. Just ask anyone who held stock in Enron or WorldCom. This is about protecting investors, whether you manage your own portfolio or you rely on a pension for your retirement.

So we need to tread carefully as we consider how we determine which firms should be deemed nationally recognized statistical ratings organizations. Established in the 1970s, only credit agencies that receive this designation have the legitimacy to assess the likelihood of a company or a municipality to default on its debt. In other words, they tell investors whether they are likely to get paid back.

Today, there are only five firms that are nationally recognized by the Securities and Exchange Commission. The purpose of H.R. 2990 is to add to that number, increasing competition in the credit ratings market. This is a worthy goal. I know the Financial Services Committee has been exploring the best way to achieve it. Unfortunately, in its pursuit of quantity, this bill will sacrifice quality. This is a risky proposal that I do not believe the House should accept.

H.R. 2990 would allow virtually any firm to be considered a nationally recognized credit rating agency. The SEC would no longer be able to ensure that such firms are producing reliable and credible ratings. Under this new voluntary regime, any ratings agency that has been around for 3 years and discloses its performance data can become nationally recognized. That is a pretty low bar.

I know the majority will argue that H.R. 2990 would allow market forces to sift the good credit rating agencies from the bad. While Democrats do not object to letting the market play a role in ensuring quality, why not let the experts at the SEC also evaluate the quality of the ratings firms? Congress needs to strike a balance between quantity and quality, but this bill falls short of that goal.

Under this bill anyone can open up shop and 3 years later be nationally recognized. That means we may be allowing firms that will offer an investment grade rating to anyone willing to pay, regardless of whether that rating is based on sound facts. As long as a rating firm continues to provide certain disclosures, it will still be nationally recognized, even if it issues credit ratings of the lowest possible quality.

Additionally, this bill could lead to a series of unintended consequences. Federal, State and local agencies, as well as many private sector entities, rely on the current definition of a nationally recognized credit rating agency. By undermining the credibility of this established benchmark, this bill could impose a significant burden on all of these groups, possibly increasing risks and imposing new costs for a wide swath of Americans.

Certainly, the House can increase competition in a more responsible way. Representative Kanjorski, the ranking member on the Capital Markets Subcommittee, with the support of Ranking Member Frank, has offered a logical substitute. It will ensure quality while moving to increase competition in the credit ratings market. I am pleased that the rule will allow a vote on this commonsense proposal.

The Kanjorski substitute would direct the SEC to expeditiously complete rulemaking on nationally recognized statistical ratings organizations. In doing so, the SEC would, for the first time, publicly define what constitutes a nationally recognized credit rating agency. It would also direct the SEC to design a process to identify new nationally recognized credit rating agencies. These steps would bring an unprecedented level of transparency and scrutiny to the selection process. The result will increase competition in the credit ratings market without the negative consequences associated with H.R. 2990.

The Kanjorski substitute will also encourage the establishment of a voluntary framework for industry self-regulation. This will further protect investors from conflicts of interest and other abusive practices.

To ensure that all of these reforms are effective, the Kanjorski amendment will require annual hearings on this topic for the next 5 years.

So Members have two options today. Both will increase competition in the

credit ratings market. However, only the Kanjorski substitute will ensure that investors continue to receive credible and reliable credit ratings from nationally recognized agencies.

I urge my colleagues to support this wise approach.

Mr. Speaker, another responsible policy that Members will have an opportunity to support today is an increase in the minimum wage. Just as the credit rating bill seeks to safeguard average Americans in the long term, so should Congress protect their immediate financial needs by increasing the minimum wage.

Mr. Speaker, I reserve the balance of my time.

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Ms. MATSUI. Mr. Speaker, my amendment to the rule provides that immediately after the House adopts this rule, it will bring H.R. 2429 to the House floor for an up-or-down vote. This bill will gradually increase the minimum wage from the current level of $5.15 an hour to $7.25 an hour after about 2 years.

This bill has 136 cosponsors and a discharge petition to bring to the House, the bill to the floor, and has the signatures of 190 Members of the House. This bill is also identical to language as included in the Labor-HHS appropriations bill that was blocked by the leadership just last month.

Mr. Speaker, it is unconscionable that this Congress has refused to help America's low-income workers and their families by increasing the minimum wage. Somehow there is always time for another tax break for multimillionaires who don't need the money, but nothing to ease the financial struggle that low-income families face each day.

The minimum wage is now at its lowest level in 50 years. A full-time, minimum-wage earner earns just $10,700 a year, an amount that is $5,000 below the poverty line for a family of three. It takes a full day's pay just to pay for a tank of gas.

Mr. Speaker, I urge all Members to vote ``no'' on the previous question so that we can help millions and millions of American workers who would directly benefit from an increase in the minimum wage.

I yield back the balance of my time.

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