Financial Services and General Government Appropriations Act, 2015

Floor Speech

BREAK IN TRANSCRIPT

Mr. SHERMAN. So much of what we do on this floor is so partisan, going over the same old issues. I bring to you an amendment that I cowrote with the Chamber of Commerce which deals with an issue that has not yet been discussed on this floor.

The Financial Accounting Standards Board is funded by the SEC through a convoluted process designed to claim that they are not a government agency, but they are funded by a mandatory tax, and if you don't follow their prescriptions, you can, indeed, face criminal, as well as civil, penalties.

If it is not broke, don't fix it. For 100 years, we had good rules on how to account for leases. The tenant pays rent, the owner of the building owns the building, and the financial statements disclose in the footnotes all the details any financial analyst would want to see.

Since it is not broke, the folks at the Financial Accounting Standards Board have decided to fix it. They want to list on every balance sheet in America the future amount that will be paid in all lease payments as a liability. The effect of that is to increase the liabilities shown on the balance sheets of American business by $2 trillion. That is right, this is a $2 trillion issue that has not yet been discussed on this floor.

The Financial Accounting Standards Board has done some outreach and taken some testimony. By the standards of the accounting world, they have listened. But by the standards of democracy that we are familiar with, trust me, far more is done before you permit a single three-story apartment building.

Mr. Chairman, almost 70 Members of Congress have urged the Financial Accounting Standards Board to stop. They keep going. They want to act in concert with the European International Accounting Standards Board, and that board is beholden to the European Parliament in Brussels. That is right. Those who, in effect, enact American law are not listening to Congress; they are listening to the only Parliament in the world held in lower esteem than Congress.

What will be the effect on our economy? Well, this will add $2 trillion to the balance sheet liabilities of American businesses. It will put a tremendous disincentive on businesses to sign long-term leases. If your tenant won't sign a long-term lease, you can't fund a new building project, a new shopping center, or a new industrial park. So that is why an economic study funded by the American Association of Realtors, the Economic Roundtable, the Business Owners and Management Association, and others says that the best-case scenario is that this will destroy 190,000 American jobs and reduce our GDP by almost $28 billion a year. The worst-case scenario is over 3 million jobs and nearly half a trillion dollars decline in our GDP.

It is time for us to tell the Financial Accounting Standards Board not to go down this road in an effort to fix something that isn't broken.

It is time, also, to focus on an additional disadvantage of this accounting proposal, and that is it will cause tens of thousands--hundreds of thousands--of businesses in this country to be in violation of their loan covenants, which means that they will have to immediately pay off their liabilities or renegotiate with their bankers, who will insist upon higher personal guaranties and higher interest rates, et cetera.

Thousands and thousands of long-term bonds that have been sold in the public market will be held to be in violation of their loan covenants and will become immediately due--not because the businesses were wrong, but because the accounting standards changed.

Now, I have often thought that accounting principles ought to be written by the Financial Accounting Standards Board and not by Congress. I am clinging to that belief. As I see this disaster unfold in the preliminary--in the discussions of the Financial Accounting Standards Board, it is harder and harder to cling to that belief. But I still retain hope that the accounting standards board will change direction and will not adopt this new policy, which solves no problem and which will add $2 trillion to the liabilities of American business and cost us hundreds and hundreds of thousands of jobs.

Mr. Chairman, because I am hopeful that they will change course, I ask unanimous consent to withdraw this amendment.

BREAK IN TRANSCRIPT

Mr. SHERMAN. So many have spoken on this floor in favor of states' rights. A majority of Americans live in States in which medical marijuana is legal, and yet we have this bizarre circumstance where these have to be all cash businesses. The result, as the gentleman from Colorado points out, is tax evasion--or potentiality for tax evasion--and also an invitation to crime--violent street crime--as people figure out how they can invade with guns a store that is licensed by my State or his State and try to steal huge quantities of cash.

It is absolutely absurd to tell people that they cannot use medical marijuana when they are in physical pain and they live in a State where that is allowed, and it is even more absurd to have to keep millions of dollars of cash there for the possible criminal taking because we have businesses that are actually operating that are outside the banking system.

BREAK IN TRANSCRIPT

Source