Providing for Consideration of H.R. 3574, Stock Option Accounting Reform Act
PROVIDING FOR CONSIDERATION OF H.R. 3574, STOCK OPTION ACCOUNTING REFORM ACT -- (House of Representatives - July 20, 2004)
Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 725 and ask for its immediate consideration.
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Mr. MARKEY. Mr. Speaker, I thank the gentleman for yielding me this time.
The problem with this bill is that it has so many flaws in it that it just would not work in the real world. How can there possibly be an argument made that the four highest paid executives, plus the chief executive of a company, their stock options would be counted one way and all the other stock options of the other employees would be counted another way inside of the same company? It makes no sense at all.
But the biggest detour into accounting Never-Never Land that the bill provides is when a company is calculating the expense of the options to these five executives, it must assume that the stock price has zero volatility. That is right, zero.
So let me read the language, which appears on page 4 of the bill. "To the extent that an option pricing model is used to determine the fair value of an option, the assumed volatility of the underlying stock shall be zero." It will be zero. Volatility for stocks is zero. We are legislating that here on the floor of Congress today.
Now, there are lots of assumptions, which this Congress could actually begin to write right into the law, and I am sure the Republicans would like to do that. When it comes to the budget, the Republican Party is a great proponent of dynamic scoring as a way of getting the numbers to come out right. Here is an alternative, static scoring, no volatility whatsoever. Let us just legislate that.
How about the cost of the war in Iraq? We could assume that the volatility is zero. It would be zero, after all, if we simply assumed that we have already won the war, transformed Iraq into a pluralistic, secular, capitalistic democracy. So easy, we just declare the war won and we go home. No messy occupation, no truck bombs, no terrorism. Just hold a big parade to celebrate.
Hey, I have got an idea for the banner too. It could just read, "Mission Accomplished." No volatility in Iraq. Let us just legislate that out here on the floor as well.
Al Qaeda, pay no attention to Al-Jazeera broadcast. We just assume that terrorism has ended as well. We will just legislate. No volatility in terrorism.
And while we are at it, let us just legislate that if we have a couple of hot fudge sundaes every day, it will have no impact on our weight, no volatility in our weight. We will just legislate it down here. Let us just legislate.
That is what they are saying today, that stocks have no volatility. Tell them who tune into CNBC and Bloomberg all day long with their eyes glued to the set, no volatility.
What are we doing here in Congress? We have no right, we have no right, ladies and gentlemen, in making that assumption for all of the investors in our country.