Press Conference - The Mutual Fund Reform Act of 2004

Federal News Service

HEADLINE: PRESS CONFERENCE WITH SENATOR SUSAN COLLINS (R-ME); SENATOR PETER FITZGERALD (R-IL); AND SENATOR CARL LEVIN (D-MI)

TOPIC: THE MUTUAL FUND REFORM ACT OF 2004

LOCATION: THE CAPITOL, THE SENATE RADIO/TV GALLERY, WASHINGTON, D.C.

BODY:
SEN. FITZGERALD: Thank you for being here this afternoon. I'm pleased to be joined by my colleagues Senator Collins, from Maine, and Senator Levin, from Michigan, to announce the introduction, probably today or tomorrow-I guess the bill is drafted, and it's just a matter of getting me to the floor to introduce it formally-the introduction of the Mutual Fund Reform Act of 2004. The acronym for that would be M-F-R-A, MFRA, for short.

And I would just like to begin by describing in general terms what the bill does. We have very detailed white papers in your press kits that can describe all the intricate provisions of the bill for you.

There are four titles in the bill. The first title deals with fund governance. We would codify requirements that mutual fund boards of directors be independent and that they be chaired by an independent chairman.

We would also-and this is very important-we would give content and clarity to the fiduciary duty that fund directors owe fund shareholders. Right now that duty is ill-defined, and in fact there are very few cases out there ever finding a breach of fiduciary duties on the part of fund directors or fund advisors. And the bill also clarifies and strengthens the fiduciary duty of the fund advisors to fund shareholders.

There-it's almost an impossible burden right now in the law to ever find that fund advisors are charging an excessive fee, for example. The case law has set the bar so high that it's unlikely anybody could succeed in a case under the current law.

There have been two articles in the last couple weeks, one in The L.A. Times and one just on Saturday in The Washington Post, about a couple of index funds that were charging 150 to 170 basis points for-in expenses just for investing in index funds, which are not actively managed.

Vanguard, for example, only charges 18 basis points for their S&P 500 index fund. There are some mutual funds out there with fees nearly 10 times as high. And you would think that the courts would strike those fees down as being unreasonable and in violation of the fiduciary duty of the fund advisors to the fund shareholders. But in fact the law is now written in such a way that it's very hard to ever find the fund advisors in breach of a fiduciary duty.

So we would bolster the fiduciary duty, and we would give content to it. And that would be a very important protection for fund shareholders. The directors and the fund advisers would have to be on notice, for example, that their fees would have to be reasonable.

The second title of the bill deals with transparency. And I call it "transparency" and not "disclosure" for an important reason. Just creating more disclosure doesn't necessarily create more transparency. You all know, if you've been around Washington a lot, that sometimes politicians try to obscure disclosures by dumping too much documentation on the press all at one time, like on a Friday afternoon late in the day. You've probably all been working under such burdens before.

We try to simply the disclosures and to clarify them and limit the universe of allowable mutual fund fees, and then require them all to be very clearly disclosed. We would, for the first time, require funds to disclose their transaction costs. Right now, the average mutual fund has transactions costs that are about, on average, 75 bases points. So you may be paying 75 bases points in expenses plus 75 bases points in transaction fees. Oftentimes the transaction costs essentially double the cost of being in a fund over time. And a 1 percent increase in fund costs over a 30-year investment can cut your retirement returns by 35 to 40 percent. So these fees really do matter.

We would enhance disclosure. And some of the shadowy practices that have come under great criticism in recent weeks, such as revenue sharing, directed brokerage, soft-dollar arrangements-they would all be banned. We would simply no longer allow those objectionable practices. And by banning them rather than attempting to just try and have better disclosure of them, we make the disclosure simpler. You won't have to worry about those type of hidden costs.

Title 3 deals with straightforward fund transactions. That's where we prohibit the shadow transactions, such as revenue sharing, directed brokerage, and soft-dollar arrangements. Those arrangements are riddled with conflicts of interest; they serve no reasonable business purpose, and they simply drive up cost for investors.

And, of course, we address market timing, and we do so with mandatory redemption fees, as well as provisions that-by omnibus account intermediaries would have to provide basic customer information to funds to enforce their market timing so that the funds could enforce their market timing, redemption fee and breakpoint discount policies.

We require fair-value pricing and strengthening of late-trading rules.

In summary, I would like to say that the market-timing and late- trading scandals that were discovered over the past six months are a blessing in disguise. They are only a minor part of the bill that we introduce today and tomorrow in the United States Senate. Mainly we are trying to improve disclosure, improve transparency, improve fund governance, and we believe that in so doing we will unleash competitive market forces on the mutual fund industry in a way those forces have never before been released. People will have a simpler and better means of comparing the cost between funds.

And with that, I'd like to first turn it over to the chairman of the Governmental Affairs Committee, that is Senator Collins from Maine. For five years, Senator Collins was the commissioner of professional and financial regulation in Maine, and she brought a great deal of expertise and experience at our hearings, and I thank her for her participation.

SEN. COLLINS: Thank you very much, Senator Fitzgerald. Let me start by thanking you for your tremendous leadership in tackling this very complex issue. The hearings that you chaired on the abuses in the mutual fund industry shone a much-needed light on some of the abuses that this legislation is intended to curtail.

I'm also very pleased to be here today with Senator Levin. We have joined on a lot of securities investigations when we were both serving on the Permanent Subcommittee on Investigations.

So I'm very pleased to be a co-sponsor of what is the most sweeping, comprehensive legislation dealing with mutual fund reform that has been introduced to date. Mutual funds have long been promoted as a safe haven for the small investor. As a result, some 91 million Americans use mutual funds to save for their retirements, college tuition or a home mortgage.

We need to make sure that mutual funds-which serve, often, people who are not as sophisticated in dealing with stocks and thus have chosen mutual funds to put stock picking in the hands of experts-we need to make sure that those mutual fund managers and executives are fulfilling their special fiduciary responsibilities, particularly to the small investors.

We want to make sure that the funds have the same rules whether you're a large institutional investor or a Maine family saving for retirement. This bill not only takes aim at abusive practices, such as late trading and market timing, but even more important, it takes aim at the hidden fees and excessive costs that often have more of an impact on the small investor than the abuses that grab the headlines.

I think this legislation will help ensure that there is more price competition among mutual funds. I'm particularly pleased that the legislation includes a directive to the Securities and Exchange Commission to issue regulations to improve the disclosure of the cost to the average consumer of investing in a mutual fund. Right now we can all tell what our checking account costs us each month by reviewing our statement, but an investor with a mutual fund has a very difficult time figuring out what the true costs are to holding that mutual fund. The provision we've put in the bill will direct the SEC to come up with a disclosure so that the small investor can look at the account statement and find out what the cost of investing in that fund really is.

I think that this legislation will help restore confidence in our mutual funds, and it will ensure that the rules are the same for large investors as well as small.

SEN. FITZGERALD: And I would just like to thank Senator Collins and introduce Senator Levin, who's going to talk about soft-dollar arrangements and so forth.

SEN. LEVIN: Thank you, Senator Fitzgerald and Senator Collins. It's great to be joining with you in some very essential reforms.

Recent mutual fund scandals have really opened up a box which has got a lot of secrets in them which have got to be brought out into the open and corrected. We've got to restore the lost public confidence in our mutual funds. It's a $7 trillion investment now in mutual funds by Americans, most of them, as Senator Collins has indicated, small investors.

And with that many Americans, over 90 million Americans, investing in mutual funds, putting, in many cases, their life savings and their hopes in these funds, we've got to make sure that these funds are honestly run and administered, and done so in a way which the average investor can both understand what fees they're being charged, but also understand what goes on behind the scenes, which currently is not out in the daylight.

If I go to a broker and say I want to invest in some stock or some mutual funds, I would expect that that broker would have my interests and only my interests at heart. That is a reasonable expectation that people have, it seems to me, in this country. One major broker says in their advertising the best investment strategy for you centers around your goals. Another major broker says that we help you plan according to your needs. Another one says that an investment professional at our place can help you by evaluating your financial objectives. Another one says find the funds that help meet your financial needs by looking at a certain place on our website. Their aim is at the investor, and yet there are inherent and very disturbing conflicts of interests that are rife in the mutual fund industry, and I think it's critically important that this bill eliminate those conflicts of interest.

There was an SEC study recently which conducted a review of the 15 largest Wall Street brokerage firms to determine the extent of revenue sharing among those firms and various mutual funds. The SEC found that 13 of the 15 brokerage firms received cash from mutual funds in exchange for steering their clients towards those funds. Now, when I go to a broker, I'm willing to pay a fee and I'm willing to pay a load up front or rear end at the whatever, front load or back load, but I don't expect that that broker is also being paid off by a mutual fund to promote stock to me or to sell me stock, and that payoff can come in many ways.

That payoff, which creates an essential and inherent conflict of interest, could be, for instance, that the mutual fund agrees that it will buy its stock for its own inventory from that broker. The payoff could come in the form of a mutual fund sharing some of its profit or income with that broker, unbeknownst to me. Or that payoff could come in the form of a mutual fund agreeing to buy certain services from that broker.

Those are inherent conflicts of interest because what it means is that when the broker is steering me towards a mutual fund, it's not, as these advertisements say, just for meeting my goals, my needs, my financial objectives as an investor, but there's a payoff in there that I don't know about that creates a conflict of interest where that broker is benefiting by getting a share of the profits of a mutual fund that I'm not aware of or is getting money by way of having stock purchased from that broker by that mutual fund that I don't know of.

And this bill eliminates those conflicts of interest. And that's one of the most valuable parts of this bill and it's an essential reform-not just to simply disclose the conflicts, because even disclosures can be confusing at times, but since these are such inherent, basic conflicts of interest, it seems to us that they ought to be prohibited.

SEN. FITZGERALD: Thank you, Senator Levin.

And I just want to close by also telling you that the bill repeals SEC rule 12b-1. And that may be one of the more controversial provisions in the bill. There actually is a movement-even the fund industry is coming around to supporting the abolition of soft dollar arrangements, revenue sharing and directed brokerage. But our bill goes farther and repeals rule 12b-1.

The reason we repealed that rule-it was adopted in 1980 and the original rationale for the rule was that if they allowed mutual funds to pay for their distribution and marketing cost out of their fund shareholders' money, the thought was it would help the funds grow larger and with economies of scale, the expenses as a percentage of the funds would go down.

Well, we examined whether the original purpose of 12b-1 had actually worked. And what we found was since 1980 mutual funds have indeed grown; they've gone from about $115 billion industry in 1980 to over $7.2 trillion today. So there's been about a six-mutual funds have grown 60 times over since 1980. But what's happened to the fees? Have the fees gone down as a percentage of the fund assets? No, they haven't. Fees for mutual fund shareholders have gone up 90 times.

So 12b-1 is not meeting its original purpose and in addition we heard testimony from Lipper, which showed that at least two-thirds and maybe as high as 95 percent of 12b-1 fees are now going as payments to the brokers to steer people in to certain mutual funds.

That makes 12b-1 fees, in most cases, simply a disguised load.

Most investors know now that they should avoid mutual funds that have a front-end or a back-end load. And many investors think they've found-they've gotten a mutual fund that is no-load, and they don't realize they're being charged a 12b-1 fee, which is simply a load paid over time. It can be as much as one percentage point a year, and it's all going to the broker who steered them into the fund. And if it's 1 percent a year of your investment going to the broker, over 30 years of investing, that will lower what you have at retirement by 35 to 40 percent.

So think of that. You put up 100 percent of the investment, take 100 percent of the risk. Your broker puts up no capital, takes no risk, and your broker gets 30 -- over 30 percent of your investment. That's not right.

And we intend to repeal Rule 12b-1. We would still permit loads, under the theory that there's nothing wrong with a load if it's disclosed up front and the buyer knows that he or she is paying a load. And mutual funds will be able to have front loads. They'll still be able to have back loads, or they can have a level load or an installment load, paid over time, if it's disclosed and the mutual fund shareholder is made aware of this.

And so with that, we'd like to open it up to questions. Yes?

Q Is it your feeling that the SEC isn't acting swiftly or strongly enough at this point?

SEN. FITZGERALD: I think the SEC has actually been doing a pretty good job, and they are getting more and more aggressive. And I think the more they're looking into this, the more they are coming to the conclusion that many of these practices that we are banning in our legislation should be banned. And in fact even last week there was an article that hit the wires that suggested they were re-looking at Rule 12b-1 and questioning it. And it's possible that they could come around to the same conclusion that 12b-1 should be changed or abolished.

So I think the SEC is actually doing a pretty good job. What I would point out to you, though, is that they cannot do this on their own. They don't have the authority to do all the things that need to be done on their own. And in fact it's necessary for Congress to legislate to clean up the law. The law regarding mutual funds is a bizarre weave of statutes passed by Congress and rules promulgated by the SEC.

In some cases, the SEC hasn't really had authority to promulgate the rules it's promulgated, so it's resorted to a roundabout form of rule- making.

For example, with 12b, they wanted more directors to be independent, but they didn't have authority to mandate that, so the SEC, in Rule 12b-1, said if you want to take advantage of 12b-1 fees, you have to have an independent board. And it's really made the law very complex and confusing. And I think by Congress stepping in, we can simplify this, and we can also lock this SEC and future SECs into place so that they can't go beyond what we've authorized. I don't think that Rule 12b-1, which the commission in 1980 put in place, was well-advised. And we don't want to allow a future commission to put in a poor rule like that again in the future.

SEN. COLLINS: Could I add just one point to that?

SEN. FITZGERALD: Yes.

SEN. COLLINS: The law governing mutual funds is a 65-year-old law. It needs an overhaul. It doesn't reflect the changes in the marketplace, it doesn't reflect how many people are now investing in mutual funds. We have an 85-year-old industry that is governed by a 65-year-old law. So what we're trying to do is to update the underlying law that the SEC has to administer.

SEN. FITZGERALD: You have nearly half of America, 95 million Americans invested in funds too today. It's just enormous. And a third of all stocks held are held by mutual funds.

Yes?

Q On the 12b-1 fee, you say if they're going to charge this load, it would have to be disclosed. In your paper it sounds like you're saying that if advisers want to pay for distribution or commissions-I'm not --

SEN. FITZGERALD: Yes, this --

Q-that would come out of their pockets?

SEN. FITZGERALD: Yes. We still permit distribution expenses, but we would authorize advisers to pay distribution expenses out of their own fees. Part of the rationale for 12b-1 originally was that there was no statutory authorization for advisers to pay for distribution expenses. So that was another pretext for coming up with Rule 12b-1. We repeal 12b-1, but we amend the Advisers Act, I believe it is, to permit advisers to pay for distribution expenses out of their own pocket.

Q And distribution expenses include commissions and loads? is that what --

SEN. FITZGERALD: No, it would probably be marketing or advertising, okay? So the adviser, if the adviser believes it's in the best interest of the fund to try and get bigger, it can pay out of its own pocket for advertising to make the fund bigger.

And they would, presumably, try to recover that cost in negotiating with the now newly empowered, independent board of directors of the fund itself.

Q And the load charge, that would be listed separately.

SEN. FITZGERALD: And distribution expenses that are really just paying the broker in the form of a load, you can still do that, but you're going to call a load a load, you're not going to call it an ongoing asset-based distribution fee that nobody knows what that is. I don't know how many people I've met that think they're in a no-load mutual fund, but that fund bears a 12b-1 fee, which is just a hidden load. That's wrong. We're going to ban that.

Yeah?

Q How much money are they raising with these 12b-1 fees? Are you following that?

SEN. FITZGERALD: Hoo, boy. I think Lipper might have a study on that. Let me have my staff investigate that before I make a-I don't have that figure off the top of my head. It's billions. It's billions and billions. And we're taking the brokerage community off the gravy train by repealing 12b-1.

Q (Off mike.) Why not wait for the Banking Committee to get around to doing some of this?

SEN. FITZGERALD: Well, the Banking Committee certainly has legislative jurisdiction. Our subcommittee has oversight jurisdiction, and we have held extensive hearings on it. We also have specific legislative jurisdiction over federal retirement benefits.

We did hearings on this. We introduced this bill. We feel reasonably confident we know what the issues are.

We want to participate in the Banking Committee's hearings. They're going to have a series of hearings. I've met with Senator Shelby. I expect that the Banking Committee will ultimately mark up a bill. It would be our hope that many of the provisions or even our bill be one they choose to mark up.

In any case, I do think Senator Shelby is committed. He's a reformer. And I am very encouraged by his words that he is not going to let the industry write the bill. As you know, the ICI is a very powerful industry around here.

Q Can you give us, then, some sort of a timeline and a scenario for how does this gets passed? I mean, what's going to happen? And will it be done before the August break?

SEN. FITZGERALD: Well, I certainly would like us to appear before the Banking Committee, present our bill. The Banking Committee will, I'm almost certain, be marking up a bill, but first they're going to do five hearings, I think they have planned. And so there will be a couple months of hearings and discussions. And my hope is that we could, perhaps, by early summer get a markup on the bill in the Banking Committee.

And my hope would be to pass this bill on the-through the Senate and the House before I retire from the Senate in January of 2005.

Q How about co-sponsors?

(Sen. Fitzgerald confers off mike.)

SEN. FITZGERALD: What's that?

Q Co-sponsors?

SEN. FITZGERALD: So far it's just the three. We have not solicited beyond the original sponsors who are up here, but we will do that. We haven't given our white paper out beyond this room thus far, but we're going to make the pitch and I will be calling several of the members and ask them to take a look at our bill. And of course, my guess is some of-my hope is that the ICI sees the wisdom in some of these provisions because I ultimately think this will help the mutual fund industry, it will restore trust and faith in it, and I think mutual funds will be bigger and more prosperous years hence if we pass a bill like this.

Q Well, aren't you getting lobbied as much by the SIA at this point as the ICI, or by the brokerage community as by the ICI?

SEN. FITZGERALD: You know, my staff might be. I think they have been very active. There have been a lot of different groups. There are also some consumer groups out there, but of course they're not as well organized and they don't give campaign contributions like the industry groups.

Yes?

Q One of your-one of the provisions in the bill would be a study and report on the SEC's organizational structure with respect to investment company management. Can you talk about what you're concerned about here?

SEN. FITZGERALD: Well, some have suggested that we ought to have a separate mutual fund board that governs mutual funds, and we don't go that far. We think there's a lot of extra keys and resources in the SEC, and we think they're on top of the issue now. And we do not call for the creation of a separate mutual fund-only enforcement bureau, but we do think the issue is worth studying.

Q So it would be a study of whether there should be a separate bureau?

SEN. FITZGERALD: I think in part, and just how are they organized? Are they giving enough resources to their investment management group over there and whether they couldn't do things to improve.

Q Actually a question on another topic. I wanted to ask Senator Levin for your reaction to the president's interview with Tim Russert on "Meet the Press" yesterday, specifically involving --

SEN. LEVIN: (To Senator Fitzgerald) I think you may want to leave here.

SEN. FITZGERALD: He did a great job. I think he did a great job.

SEN. LEVIN: Yeah. I think Senator Fitzgerald may --

SEN. FITZGERALD: Do you have any more on mutual funds, just-could we just do the one more and wind that up?

SEN. LEVIN: Yeah, I think we ought to wind that up.

Yeah, and I would be happy to comment on it.

Q Yeah.

Q Do you change the definition of what constitutes an independent director --

SEN. FITZGERALD: We tighten it.

We tighten it. We see room to tighten there. I think we-in the white paper, it talks about that. And we talk about independence being compromised --

SEN. LEVIN: Just a second. Perhaps-should I just jump in on this? We do-is that all right?

SEN. FITZGERALD: Yeah.

SEN. LEVIN: We do tighten the definition of what is a non- interested director. We require that 75 percent be non-interested, and we define him as not having a material business relationship or other relationship that undermines their independence. So we think that's a little tighter --

SEN. FITZGERALD: Or a family relationship, as I recall.

SEN. LEVIN: -- yeah-than it is now.

SEN. FITZGERALD: The other thing is, we asked the SEC to study-if you're a director at a big fund complex, and you're on the boards of a hundred funds, and you get a lot of compensation, and that's ultimately really paid by those funds, which were set up by some advisor, we want the SEC to question at what point does so much pay that you're getting even compromise your independence.

Any other on the mutual funds? If not, thank you very much for coming. I'll let Senator Levin go ahead. Hey, thanks a lot. Yeah.

SEN. LEVIN: The key dividing line when it comes to an inquiry here as to our intelligence is whether we're going to look into the statements and representations of the policymakers, the administration here, prior to the war.

And on that issue, the president's executive order is worse than silent. It sets limits by the way in which it defines the mission of the intelligence-the commission that has been created. And I am very troubled by the fact that it appears from the definition of that mission that it is limited to the intelligence which was produced and comparing that intelligence to what was found in Iraq after the war, which means that that commission, created by the president, will then not have the authority to look at the exaggerated statements made by the administration prior to the war about the weapons of mass destruction being present in Iraq.

And I just-I think it's essential that both the Intelligence Committee here and that the commission that the president selected be an inquiry both into the mistakes, the errors that were made by the intelligence community in their assessment and analysis of intelligence, but also the statements made by the administration prior to the war which went beyond, way beyond, the intelligence that was given to them, the certainty with which it was stated.

And let me just give you one example. And it is an incredible example to me, and I'm sorry that the president was not asked about this, although I thought that the questions were pointed and pungent and good questions.

The vice president of the United States, two weeks ago, said that the vans which were found in Iraq after the war were part of a biological weapons program. This is just two weeks ago. This is the vice president of the United States. And he said that the presence of those vans made him more certain than ever that there were weapons of mass destruction in Iraq prior to the war.

Now, that is an incredible statement, because David Kay, their top guy looking for weapons, has concluded those vans had nothing to do with a biological weapons program. And the CIA, in Tenet's speech, said the jury is still out. So you got the CIA saying they don't know, you got David Kay saying he's concluded those vans have nothing to do with biological weapons program, and then the vice president, just two weeks ago, says not only do those vans provided conclusive evidence that there was a biological weapons program, but that he had a weapons of mass destruction in Iraq prior to the war. Now, what's going on here?

And the reason it is so essential that some commission and the Intelligence Committee look at the statements made by the administration prior to the war to see how they were exaggerated and what they were based on is what is the basis for the vice president's statement now that those vans are evidence of a biological weapons program? What is his basis in intelligence? What intelligence does he have that nobody else has? Where did he get it from? Is that coming from the Feith group? Where does he get it from?

That's the kind of question which it seems to me must be asked: What is the basis in the intelligence for the exaggerated statements made before the war, and as recently as two weeks ago, by this administration relative to the presence of weapons of mass destruction. And unless that is within the jurisdiction of an investigating commission or the Intelligence Committee, we're going to get half a picture; you're only going to get the mistakes made by the intelligence community, you're not going to get the exaggerations which were used relative to that intelligence by the policymakers.

Q Sir, one of the questions he was asked yesterday dealt with prewar intelligence and the president said: "The Congress saw the same intelligence that I had and they looked at exactly what I looked at. And they made an informed judgement based on that information that Saddam Hussein should be removed."

Is that accurate? Did Congress have information --

SEN. LEVIN: The Congress --

Q-exactly what the president --

SEN. LEVIN: No. Well, first of all, the intelligence from 1998 was significantly different from the intelligence which existed in the year 2002. I mean, there are very significant changes that were made in the intelligence-many statements about possibilities and probabilities and "it is our current assessments" and likelihoods and degrees of certainty were changed very significantly immediately prior to the war by the intelligence community.

And if you want to analyze that, look at the Carnegie Institute analysis and they will show you item by item how the intelligence community went from much more nuanced, much more cautious, much more conditional assessments prior to 2002 than they did in October 2002, immediately prior to the war. So there were some significant changes in the intelligence assessments themselves.

Q So that's not accurate because what Congress saw didn't have the qualifiers?

SEN. LEVIN: Well, it depends on when you say Congress looked. I mean, it depends on exactly what moment in time the intelligence you're talking about-what moment in time are you talking about? If you're talking about pre-2002, for instance, the intelligence changed. If you're talking about pre- that National Intelligence Estimate in October, 2002, that is is a very different estimate in October of 2002 than prior to that.

If you're talking about the-what they call I think the executive summary in that finding, that is much less nuanced, much more certain than the underlying findings themselves. And on top of that, you've got the daily briefs that the president has from the CIA, which of course are not available to the Congress at all.

So I think the president exaggerated very much in terms what the Congress was looking at compared to him. But I think what he's driving at is that most people thought with one degree or another that there were weapons of mass destruction in Iraq. And I think that is true; most people believed that there were weapons of mass destruction. But many people, however, have not believed, number one, that there was an imminent threat-even if they had weapons of mass destruction, that they would use those weapons against us.

So there was a significant difference on that, difference of opinion on the imminent threat issue.

And there was a very-in any event, many members of Congress based their votes-according to them, not me, because I based it on what I felt was really absence of an imminent threat, which made it essential that we get the international community with us before we attacked Iraq. That was the basis of my alternative resolution. Many members of Congress-and they can speak for themselves-voted on the representations which were made by the administration that there certainly were weapons of mass destruction in the possession of Saddam, and relied on those conclusions and those statements of the CIA and the administration in various degrees of certainty.

But you'd have to, I think, speak to them in terms of whether or not they had-you know, whether they looked at the intelligence or not. My position was not based on whether or not there were. We assumed there were. It was based on, again, the absence of an imminent threat and the essential-the need to have the international community with us if we were going to attack Iraq in the absence of an imminent threat against us. So I'm not in that position, because my position was based on a different approach to the whole issue.

Okay. Thanks.