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Senate Proceeding on May 5th, 2010 :: 2:54:40 to 3:08:45
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Judd Gregg

2:54:28 to 2:54:48( Edit History Discussion )

Judd Gregg: mr. gregg: mr. president? the presiding officer: the senator from new hampshi is recognized. mr. gregg: thank you. i rise to speak about another part of the bill, but i want to congratulate the chairman and his work with t ranking member, senator shelby, on reaching this agreement, on resolution in too big to fail. it an important step forward on this piece of legislation. a critical part of the legislation.

Judd Gregg

2:54:40 to 3:08:45( Edit History Discussion )
Speech By: Judd Gregg

Judd Gregg

2:54:49 to 2:55:09( Edit History Discussion )

Judd Gregg: and i think it shows that there is really a lot of places where we can reach bipartisan consensus on this bill. it's my sense that the great and very positive work which was done here on resolution authority will hopefully -- i would hope would carry over with things like the derivatives

Judd Gregg

2:55:10 to 2:55:31( Edit History Discussion )

Judd Gregg: issue which needs to be worked on, issues like underwriting standards which need to be worked on, how the regulatory structure is created and how the chairs are moved around in that ar. all these issues, i think, have -- a fertile ground for reaching consensus, and i know the senator from connecticut has been very constructive in his

Judd Gregg

2:55:32 to 2:55:53( Edit History Discussion )

Judd Gregg: efforts to reach across the aisle, and i just hope we can make progressn all these items because this bill can be a very strong and positive piece of legislation. and i hope it will end up that way. i think this is a strong -- a good step in that direction, a very good step, the announcement by the chairman on agreement on resolution authority.

Judd Gregg

2:55:54 to 2:56:14( Edit History Discussion )

Judd Gregg: i wanted to speak about a part of the bill that has really been ignored because there have been so many other big issues. that's what happens when you floor -- it's over here. 1,400 pages. it's a big bill. it's got a lot of language in it. it had to be a because it deals with a complex issue. but included in this

Judd Gregg

2:56:15 to 2:56:35( Edit History Discussion )

Judd Gregg: is some language whichas sort of baggage thrown on the train is the way i would describe it. it's in the area oforporate governance. in fact, to a large degree, by its own definition, it has virtually nothing to do with financial regulatory reform. this language does a series of things.

Judd Gregg

2:56:36 to 2:56:56( Edit History Discussion )

Judd Gregg: primarily it federalizes coorate law relative to the manner in which stockholders and directors are vetoed, and executives of corporations. not limited to financial institutions but to any publicly traded company.

Judd Gregg

2:56:57 to 2:57:18( Edit History Discussion )

Judd Gregg: parents what's known as proxy access under federal law. that's a right that has traditionally been set states. it sets up standards for how directors are elected under federal law, for all companies. that's a right that's usually been reserved for the states.

Judd Gregg

2:57:19 to 2:57:39( Edit History Discussion )

Judd Gregg: it even puts in place a requirement the corporations disclose certain information which has absolutely no relevance at all to finance reform because it deals with every company in america that's publicly held, such as the ratio of

Judd Gregg

2:57:40 to 2:58:01( Edit History Discussion )

Judd Gregg: different workers within a company, and the manner in which boards of directors are elected whether they are all elected at once or whether they are elected under staggered terms. it is a major push by the federal government into an arena which has always historically

Judd Gregg

2:58:02 to 2:58:23( Edit History Discussion )

Judd Gregg: been primarily the role of states, and it really steps all over states' rights. and, in my opinion, the right of shareholders to have companies which they are comfortable with, are being well managed for the purposes of returning a reasonable return to the

Judd Gregg

2:58:24 to 2:58:44( Edit History Discussion )

Judd Gregg: shareholders, and it will undermine shareholders' rights, in my opinion, not increase them. if you look at the proposal specifically, let's take proxy access, this is a term of art which essentially says that any group of shareholders would be able to put on a proxy statement

Judd Gregg

2:58:45 to 2:59:05( Edit History Discussion )

Judd Gregg: a proposal for how the company should be run. if you want to balkanize the company, there is probably no quicker way to do it than to have unilateral proxy access for any issue that is of concern or interest to some group that buys shares. this type of

Judd Gregg

2:59:06 to 2:59:27( Edit History Discussion )

Judd Gregg: essentially put in to promote special interest activity. now, we all hear around here about how terrible special interests are. well, this language is special interest language for the purposes of promoting special interest groups, starting with the trial lawyers, of course. but followed up by various people who have a social justice

Judd Gregg

2:59:28 to 2:59:48( Edit History Discussion )

Judd Gregg: purpose relative to some corporation. let's take a group, a com like mcdonald's. let's say that some group feels that much food that creates the opportunity for people to eat too much and causes obesity.

Judd Gregg

2:59:49 to 3:00:09( Edit History Discussion )

Judd Gregg: you could have a special interest group and force a proxy statement fight over what type of food mcdonald's should sell. it doesn't stop there, of course. there are all sorts of issues that special interest groups want to promote and change corporate governance about. now, how you manage a

Judd Gregg

3:00:10 to 3:00:31( Edit History Discussion )

Judd Gregg: corporation isupposed to be primarily in the hands of the boards of directors who are answerable to the stockholders and the purpose, of course, is to increase the value of the stockholders as a whole and their return on investments. in most instances, that's the primary purpose of a corporation.

Judd Gregg

3:00:32 to 3:00:53( Edit History Discussion )

Judd Gregg: but this proxy asset is all about the opposite. it's about pushing the agenda on to the management through the board of directors through the proxy and vy special oriented and narrow and not direct at return on investment for the stockholders. just the opposite, in fact.

Judd Gregg

3:00:54 to 3:01:16( Edit History Discussion )

Judd Gregg: short-term objectives become the standard of the day under this type of approach rather than a long-term view which is what most of your board of directors are supposed to take relative to these decisions. the immediate -- the cause of the day, the cause could be any number of things, you know, that happens to be the activist view

Judd Gregg

3:01:17 to 3:01:38( Edit History Discussion )

Judd Gregg: of the day becomes the issue under corporate governance v. the purpose of managing the corporation well over a long term in order to get adequate to run it's inappropriate idea -- an inappropriate idea, especially the feder it buried in this bill.

Judd Gregg

3:01:39 to 3:02:00( Edit History Discussion )

Judd Gregg: it applies to every publicly traded corporation in america, this language, not just the financial institutions. so why is it buried in this bill? it shouldn't be in here. the same can be said of the way this bill -- approaches directors and how -- what the are relative to directors. these have historically been state decisions.

Judd Gregg

3:02:01 to 3:02:22( Edit History Discussion )

Judd Gregg: in fact, the state of delaware, which is the leading state on the issue of corporate governance and really has developed the uniform corporate governance state of new hampshire tracks delaware, to a large degree. that has been the law of the

Judd Gregg

3:02:23 to 3:02:43( Edit History Discussion )

Judd Gregg: land for all intents and purposes, settled law, predictable law the purpose of which is to have fair an adequate corporate governance where the directors are responsible to the shareholders under a structure that knows the rules and which is controlled by the states. and, yet, this bill comes in and

Judd Gregg

3:02:44 to 3:03:05( Edit History Discussion )

Judd Gregg: does fundamental harm to that. for what purpose? well, becausehere's an agenda in this congress to usurp the state's rights to be able to manage corporate law and to put in place ideas which are only supported by a very narrow group of special interests who basically have gotten the ears of people

Judd Gregg

3:03:06 to 3:03:26( Edit History Discussion )

Judd Gregg: in this -- in this congress. i mean this is the ultimate special interest legislation. and the implications for these various companies is that it's going to be darn expensive if you're a smaller, middle-sized company to deal with this type of -- this type of federal interference with the management

Judd Gregg

3:03:27 to 3:03:47( Edit History Discussion )

Judd Gregg: of the company and the proxy process. very inappropriate initiative. furthermore, you create this atmosphere where nobody's really going to know who's governing what because you're going to now have state law and you're going

Judd Gregg

3:03:48 to 3:04:09( Edit History Discussion )

Judd Gregg: to have federal law and you're going to have the s.e.c.'s responsibility increase dramatically. now we already know the s.e.c. is strained to do what we've asked them to do. and they've got some big responsibility. they've got big responsibility in the financial reform area,

Judd Gregg

3:04:10 to 3:04:30( Edit History Discussion )

Judd Gregg: they've got big responsibility in corporate governance generally. to put this further burden on them is really going to be very difficult for them to meet. i happen to be a strong supporter of having a strong, robust s.e.c. but we should not burden them with an unnecessary whole new

Judd Gregg

3:04:31 to 3:04:52( Edit History Discussion )

Judd Gregg: set of corporate governance rules which are already accurately and appropriately addressed by state law. primarily the delaware state law, but other states which have their own corporate rules. and, more importantly, we shouldn't undermine the rights of stockholders across this

Judd Gregg

3:04:53 to 3:05:13( Edit History Discussion )

Judd Gregg: country to be able to get a reasonable return on their investments by being reasonably assured that their management, specifically the directors of the company, are working for the purposes of the company's financial return and strength as versus for some special interest

Judd Gregg

3:05:14 to 3:05:35( Edit History Discussion )

Judd Gregg: group that wants to come in and put special interest legislation in the middle of the corporate governance effort. this is what this language is proposed for. that's why it's here. the only reason this language has come forward is that there are a lot of self-proclaimed social justice groups in this country who have decided they want better access to corporate

Judd Gregg

3:05:36 to 3:05:56( Edit History Discussion )

Judd Gregg: boards than to have this federal proxy access which will basically balnize the process of governing and leading these businesses which most americans are invested in. the vast majority of americans in this country either have a

Judd Gregg

3:05:57 to 3:06:18( Edit History Discussion )

Judd Gregg: pension fund, have i.r.a.'s, from 401(k)'s or are personally invested in the stock market. now and why do they invest? they invest to get a reasonable return on that investment. either in the way of appreciation or in the way of dividends or maybe a combination. that's what they do. and most of the savings, a lot

Judd Gregg

3:06:19 to 3:06:42( Edit History Discussion )

Judd Gregg: of the savings of this country are tied up in that. so why would this language appear which will basically undermine those stockholders' rights and ability to be, presume and expect that their directors are going to be managing for the purposes of the stockholders at large as versus for a single interest group within the stockholder group

Judd Gregg

3:06:43 to 3:07:03( Edit History Discussion )

Judd Gregg: that happen to want -- put a social justice agenda into the management of that corporation? makes no sense at all really unless you happen to be a special interest group. and so we rail around here all the time. i hear ironically from a lot of these groups who are sponsoring this, like "public citizen" that they're against special

Judd Gregg

3:07:04 to 3:07:24( Edit History Discussion )

Judd Gregg: interests and yet he we have the most significant piece of special interest legislation in this whole bill, it's an attempt to bootstrap up special interest groups' social agenda and force them on corporations and stockholders who would otherwise not pursue those agendas because they're interested in getting a

Judd Gregg

3:07:25 to 3:07:46( Edit History Discussion )

Judd Gregg: return on their investment. it is really going to, as i mentioned earlier, make it much more difficult for us to have a vibrant stock market and a -- and a corporate structure in this country which is rationed and certainly will undermine

Judd Gregg

3:07:47 to 3:08:09( Edit History Discussion )

Judd Gregg: significantly the states' in the area of corporate governance which have always historically been at primary responsibility for setting up the rules by which our corporations operate. so i would hope that as this bill moves down the road, this type of language, which is extraneous, totally extraneou

Judd Gregg

3:08:10 to 3:08:30( Edit History Discussion )

Judd Gregg: to the financial reform effort because it affects all public corporations, and ironically, the three financial corporations which -- which are at the core of the problem which we had in 2008 relative to visility -- a.i.g., lehman and i believe one other, maybe citibank -- had a couple of these rules in place anyway.

Judd Gregg

3:08:31 to 3:08:45( Edit History Discussion )

Judd Gregg: so obviously they -- it was -- they had nothing to do wi the -- with reducing the implications of the event. rather, this language is simply put in because some group had somebody's ear.

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