To provide for financial market investigation, oversight, and reform.
IN THE SENATE OF THE UNITED STATES
September 29 (legislative day, September 17), 2008
Ms. CANTWELL (for herself and Mr. LIEBERMAN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
A BILL
To provide for financial market investigation, oversight, and reform.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Financial Market Investigation, Oversight, and Reform Act of 2008'.
(1) TABLE OF CONTENTS- The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Establishing an independent, bipartisan Commission.
Sec. 3. Establishing a joint select committee on financial market oversight reform and investigations.
Sec. 4. Special Inspector General for financial markets oversight.
SEC. 2. ESTABLISHING AN INDEPENDENT, BIPARTISAN COMMISSION.
(a) Commission Establishment- There is established a temporary commission to be known as the Commission on Financial Regulatory Reform (referred to in this Act as the `Commission'). The Commission shall review the financial regulatory structure and propose a comprehensive framework for fundamental reform of financial regulation in the United States.
(b) Functions of the Commission-
(1) IN GENERAL- The Commission shall conduct a top-to-bottom review of the Nation's existing financial regulatory structure and the contribution of the current structure to the stability or instability of financial markets in order to develop a comprehensive framework for--
(A) reforming the laws governing our Nation's financial markets;
(B) strengthening and reconstituting regulatory agencies; and
(C) improving transparency and oversight.
(2) ANALYSIS- In the course of its activities, the Commission shall analyze--
(A) the impact of the financial regulatory structure on the health and stability of the United States economy;
(B) the strength, sustainability, and competitiveness of the Nation's financial institutions; and
(C) the financial well-being of American taxpayers, investors, and businesses.
(3) CONSIDERATIONS- The Commission shall review and consider all aspects of financial regulation, including the regulation of--
(A) bank holding companies, financial holding companies, commercial banks, investment banks, thrifts, credit unions, and industrial loan companies;
(B) payment and settlement systems;
(C) hedge funds, private equity funds, and the markets for alternative investments;
(D) special purpose vehicles and off-balance sheet financing for financial companies;
(E) the securitization of mortgages and other assets;
(F) exchange-based, electronic, and over-the-counter markets for financial derivative products;
(G) the mortgage finance industry, including mortgage brokers and mortgage lending institutions;
(H) equity markets, including short-selling practices, and commodity futures markets; and
(I) the insurance industry and its role in the financial markets.
(c) Powers of the Commission-
(1) IN GENERAL-
(A) HEARINGS AND EVIDENCE- The Commission or, on the authority of the Commission, any subcommittee or member thereof, may, for the purpose of carrying out this Act--
(i) hold such hearings and sit and act at such times and places, take such testimony, receive such evidence, administer such oaths; and
(ii) require the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, and documents, as the Commission or such designated subcommittee or designated member may determine advisable.
(B) FIRST MEETING- The first meeting of the Commission shall occur not later than 30 days after the date of enactment of this Act.
(2) CONTRACTING- The Commission may, to such extent and in such amounts as are provided in appropriation Acts, enter into contracts to enable the Commission to discharge its duties under this Act.
(3) INFORMATION FROM FEDERAL AGENCIES-
(A) IN GENERAL- The Commission is authorized to secure directly from any executive department, bureau, agency, board, commission, office, independent establishment, or instrumentality of the Government, information, suggestions, estimates, and statistics for the purposes of this Act. Each department, bureau, agency, board, commission, office, independent establishment, or instrumentality shall, to the extent authorized by law, furnish such information, suggestions, estimates, and statistics directly to the Commission, upon request made by the chairman, the chairman of any subcommittee created by a majority of the Commission, or any member designated by a majority of the Commission.
(B) RECEIPT, HANDLING, STORAGE, AND DISSEMINATION- Information shall only be received, handled, stored, and disseminated by members of the Commission and its staff consistent with all applicable statutes, regulations, and Executive orders.
(4) ASSISTANCE FROM FEDERAL AGENCIES-
(A) GENERAL SERVICES ADMINISTRATION- The Administrator of General Services shall provide to the Commission on a reimbursable basis administrative support and other services for the performance of the Commission's functions.
(B) OTHER DEPARTMENTS AND AGENCIES- In addition to the assistance prescribed in subparagraph (A), departments and agencies of the United States may provide to the Commission such services, funds, facilities, staff, and other support services as they may determine advisable and as may be authorized by law.
(5) GIFTS- The Commission may accept, use, and dispose of gifts or donations of services or property.
(6) POSTAL SERVICES- The Commission may use the United States mails in the same manner and under the same conditions as departments and agencies of the United States.
(d) Non-Applicability of Federal Advisory Committee Act-
(1) IN GENERAL- The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Commission.
(2) PUBLIC MEETINGS AND RELEASE OF PUBLIC VERSIONS OF REPORTS- The Commission shall--
(A) hold public hearings and meetings to the extent appropriate; and
(B) release public versions of the reports required under this Act.
(3) PUBLIC HEARINGS- Any public hearings of the Commission shall be conducted in a manner consistent with the protection of information provided to or developed for or by the Commission as required by any applicable statute, regulation, or Executive order.
(e) Composition-
(1) IN GENERAL- The Commission shall be composed of 12 members, selected not later than 15 days after the date of enactment of this Act, of whom--
(A) three persons shall be appointed by the majority leader of the Senate, after consultation with the Chairman of the Committee on Banking, Housing and Urban Affairs;
(B) three persons shall be appointed by the minority leader of the Senate, after consultation with the ranking minority members of the Committee on Banking, Housing and Urban Affairs;
(C) three persons shall be appointed by the Speaker of the House of Representatives, after consultation with the Chairman of the Committee on Financial Services; and
(D) three persons shall be appointed by the minority leader of the House of Representatives, after consultation with the ranking minority member of the Committee on Financial Services.
(2) QUALIFICATIONS- An individual appointed may not be an officer or employee of the Federal Government or any State or local government. It is the sense of Congress that individuals appointed to the Commission should be have national recognition as financial sector experts, and may include former government officials, private market participants, and representatives of the academic community,
(3) OFFICERS- Officers of the Commission are to be chosen by the Commission's membership.
(f) Final Report of Commission- Not later than 120 days after the date of the enactment of this Act, the Commission shall submit to the President and Congress a final report containing such findings, conclusions, and recommendations for corrective measures as have been agreed to by a majority of committee members.
(g) Compensation of Commission Staff-
(1) IN GENERAL-
(A) APPOINTMENT AND COMPENSATION- The chairman, in consultation with vice chairman, in accordance with rules agreed upon by the Commission, may appoint and fix the compensation of a staff director and such other personnel as may be necessary to enable the Commission to carry out its functions, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates, except that no rate of pay fixed under this subsection may exceed the equivalent of that payable for a position at level V of the Executive Schedule under section 5316 of title 5, United States Code.
(B) PERSONNEL AS FEDERAL EMPLOYEES-
(i) IN GENERAL- The executive director and any personnel of the Commission who are employees shall be employees under section 2105 of title 5, United States Code, for purposes of chapters 63, 81, 83, 84, 85, 87, 89, and 90 of that title.
(ii) MEMBERS OF COMMISSION- Subparagraph (A) shall not be construed to apply to members of the Commission.
(2) DETAILEES- Any Federal Government employee may be detailed to the Commission without reimbursement from the Commission, and such detailee shall retain the rights, status, and privileges of his or her regular employment without interruption.
(3) CONSULTANT SERVICES- The Commission is authorized to procure the services of experts and consultants in accordance with section 3109 of title 5, United States Code, but at rates not to exceed the daily rate paid a person occupying a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code.
(h) Compensation and Travel Expenses-
(1) COMPENSATION- Each member of the Commission may be compensated at not to exceed the daily equivalent of the annual rate of basic pay in effect for a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day during which that member is engaged in the actual performance of the duties of the Commission.
(2) TRAVEL EXPENSES- While away from their homes or regular places of business in the performance of services for the Commission, members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703(b) of title 5, United States Code.
(i) Reports of Commission; Termination-
(1) INTERIM REPORTS- The Commission may submit to the President and Congress interim reports containing such findings, conclusions, and recommendations for corrective measures as have been agreed to by a majority of Commission members.
(2) FINAL REPORT- Not later than 4 months after the date of the enactment of this Act, the Commission shall submit to the President and Congress a final report containing such findings, conclusions, and recommendations for corrective measures as have been agreed to by a majority of Commission members.
(3) TERMINATION-
(A) IN GENERAL- The Commission, and all the authorities of this Act, shall terminate 60 days after the date on which the final report is submitted under paragraph (2).
(B) ADMINISTRATIVE ACTIVITIES BEFORE TERMINATION- The Commission may use the 60-day period referred to in subparagraph (A) for the purpose of concluding its activities, including providing testimony to committees of Congress concerning its reports and disseminating the final report.
(j) Funding-
(1) TRANSFER FROM THE DEPARTMENT OF THE TREASURY TARP PROGRAM- Of the amounts authorized to be appropriated by this Act and made available in public law for the, not to exceed $5,000,000 shall be available for transfer to the Commission for purposes of the activities of the Commission under this Act and should include assistance for participating Federal agencies.
(2) DURATION OF AVAILABILITY- Amounts made available to the Commission under paragraph (1) shall remain available until the termination of the Commission.
SEC. 3. ESTABLISHING A JOINT SELECT COMMITTEE ON FINANCIAL MARKET OVERSIGHT REFORM AND INVESTIGATIONS.
(a) Establishment and Composition-
(1) IN GENERAL- There is established a multi-disciplinary Joint Select Committee on Financial Market Oversight Reform and Investigations (referred to in this section as the `joint select committee'). The Senate majority leader, Senate minority leader, the Speaker of the House, and House minority leader shall jointly determine the number of members who shall serve on the committee, with equal representation from each the Senate and the House of Representatives, and from the majority party and minority party.
(2) PURPOSE- The purpose of the joint select committee shall be to conduct a full investigation of the causes of the financial turmoil and propose corrective actions to the appropriate committees of jurisdiction.
(3) VACANCY- A vacancy in the joint select committee shall not affect the power of the remaining members to execute the functions of the joint select committee, and shall be filled in the same manner as the original selection.
(4) LEGISLATIVE AUTHORITY- The joint select committee shall not have any legislative authority.
(b) Investigation and Report-
(1) INVESTIGATION- The joint select committee shall--
(A) conduct a full investigation of the causes of the financial turmoil; and
(B) possess full investigative authority, including subpoena power, to investigate misdeeds, manipulative schemes, or malfeasance by executives and traders of financial sector firms involved in the current financial crisis, as well as failures of Federal oversight agencies to meet their regulatory responsibilities.
(2) REPORT-
(A) IN GENERAL- The joint select committee shall submit to the appropriate committees of jurisdiction of the House of Representatives and the Senate a report of its findings and recommended corrective actions not later than 12 months after the date of enactment of this Act.
(B) FRAUD- The report shall include recommendations whether to increase criminal and civil penalties for fraud and malfeasance.
(C) MAJORITY VOTE REQUIREMENT- No recommendation shall be made by the joint select committee except upon the majority vote of the members from each House, respectively.
(D) RULES PROCEDURE- Notwithstanding any other provision of this section, any recommendation with respect to the rules and procedures of one House that only affects matters related solely to that House may only be made and voted on by members of the joint select committee from that House and, upon its adoption by a majority of such members, shall be considered to have been adopted by the full committee as a recommendation of the joint select committee.
(3) HEARINGS- In conducting the investigation under paragraph (1), the joint select committee shall hold not fewer than 5 public hearings.
(c) Resources- The joint select committee may utilize the resources of the House of Representatives and Senate.
(d) Dissolution- The joint select committee shall cease to exist 30 days after the submission of the report described in subsection (b)(2).
SEC. 4. SPECIAL INSPECTOR GENERAL FOR FINANCIAL MARKETS OVERSIGHT.
(a) Purposes- The purposes of this section are to--
(1) provide for the appointment of an Inspector General to conduct, supervise, and coordinate investigations into whether ethics violations or conflicts of interest between regulators and their regulated entities or markets may have affected agency decision-making between January 2002 and August 2008; and
(2) use the forum of President's Council on Integrity and Efficiency and Executive Council on Integrity and Efficiency to share findings and best practices with regards to ethics, conflicts of interest, oversight, and accountability.
(b) Office of Inspector General- There is established the Office of the Inspector General for Financial Markets Oversight.
(c) Appointment of Inspector General; Removal-
(1) IN GENERAL- The head of the Office of the Inspector General for Financial Markets Oversight (referred to in this section as `Inspector General') shall be selected by and among the Inspectors General of agencies and commissions set forth in subsection (e)(3).
(2) TIMING- The nomination of an individual as Inspector General shall be made not later than 30 days after the date of the enactment of this Act.
(3) REMOVAL- The Inspector General shall be removable from office in accordance with the provisions of section 3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).
(4) STATUS- For purposes of section 7324 of title 5, United States Code, the Inspector General shall not be considered an employee who determines policies to be pursued by the United States in the nationwide administration of Federal law.
(5) PAY- The annual rate of basic pay of the Inspector General shall be the annual rate of basic pay provided for positions at level IV of the Executive Schedule under section 5315 of title 5, United States Code.
(d) Assistant Inspectors General- The Inspector General shall, in accordance with applicable laws and regulations governing the civil service appoint an Assistant Inspector General for Investigations who shall have the responsibility for supervising the performance of investigative activities relating to possible ethics violations and or conflicts of interest at the respective agencies.
(e) Duties-
(1) IN GENERAL- It shall be the duty of the Inspector General to conduct, supervise, and coordinate investigations into whether ethics violations or conflicts of interest between regulators and their regulated entities or markets may have affected agency decision-making between January 2002 and August 2008.
(2) ADDITIONAL DUTIES- In addition to the duties specified in paragraph (1), the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978.
(3) COOPERATION- In carrying out the duties, responsibilities, and authorities of the Inspector General under this section, the Inspector General shall coordinate with, and receive the cooperation of, each of the following:
(A) The Inspector General of the Securities and Exchange Commission.
(B) The Inspector General of the Treasury Department.
(C) The Inspector General of the Commodities Futures Trading Commission.
(D) The Inspector General of the Board of Governors of the Federal Reserve System.
(E) The Inspector General of the Office of the Comptroller of the Currency.
(F) The Inspector General of the Federal Deposit Insurance Corporation.
(f) Powers and Authorities-
(1) AUTHORITIES- In carrying out the duties specified in subsection (e), the Inspector General shall have the authorities provided in section 6 of the Inspector General Act of 1978.
(2) DUTIES- The Inspector General shall carry out the duties specified in subsection (e)(1) in accordance with section 4(b)(1) of the Inspector General Act of 1978.
(g) Personnel, Facilities, and Other Resources-
(1) PERSONNEL- The Inspector General may select, appoint, and employ such officers and employees as may be necessary for carrying out the duties of the Inspector General, subject to the provisions of title 5, United States Code, governing appointments in the competitive service, and the provisions of chapter 51 and subchapter III of chapter 53 of such title, relating to classification and General Schedule pay rates.
(2) SERVICES- The Inspector General may obtain services as authorized by section 3109 of title 5, United States Code, at daily rates not to exceed the equivalent rate prescribed for grade GS-15 of the General Schedule by section 5332 of such title.
(3) INFORMATION-
(A) IN GENERAL- Upon request of the Inspector General for information or assistance from any department, agency, or other entity of the Federal Government, the head of such entity shall, insofar as is practicable and not in contravention of any existing law, furnish such information or assistance to the Inspector General, or an authorized designee.
(B) REPORT OF NONCOOPERATION- Whenever information or assistance requested by the Inspector General is, in the judgment of the Inspector General, unreasonably refused or not provided, the Inspector General shall report the circumstances to the appropriate committees of Congress without delay.
(h) Reports-
(1) IN GENERAL- Not later than March 30, 2009, the Inspector General shall submit to the appropriate committees of Congress a report on whether ethics violations or conflicts of interest between regulators and their regulated entities or markets may have affected agency decision-making between January 2002 and August 2008.
(2) CONTENTS- The report on the Inspector General findings shall include recommendations on how to improve and strengthen financial market regulatory agencies to avert future ethics violations or conflicts of interest.
(i) Appropriate Committees of Congress Defined- In this section, the term `appropriate committees of Congress' means--
(1) the Committees on Banking, Housing and Urban Affairs, Homeland Security and Government Affairs, Finance, and Judiciary of the Senate;
(2) the Committees on Financial Services, Oversight and Government Reform, and Judiciary of the House of Representatives; and
(3) the Joint Select Committee on Financial Market Oversight Reform and Investigations.
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