Securities Law Updates | New Proposed Legislation

January 21, 2010

House Passes by Voice Vote Bill Granting Expanded Powers to GAO to Litigate on Vital Federal Agency Records

Government Accountability Office Improvement Act of 2009
H.R. 2646, 1/13/2010

On motion to suspend the rules, the U.S. House of Representatives has passed by voice vote and without any amendment H.R. 6388,  otherwise known as the Government Accountability Office Improvement Act of 2008.

Chairman Henry A. Waxman and 18 other committee chairs introduced this legislation to strengthen the Government Accountability Office (“GAO”) and restore GAO’s authority to pursue litigation if documents are improperly withheld from the agency.

In addition, the bill authorizes the Comptroller General, for five years following enactment of this Act, to conduct reviews, including on-site examinations, of credit facilities established by the Board of Governors of the Federal Reserve System or any federal reserve bank, and of the establishment of such facilities, in: (1) carrying out any action or function approved by the Board under provisions authorizing a federal reserve bank to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when they are endorsed or otherwise secured to the satisfaction of the bank; or (2) in providing temporary assistance to private institutions as the lender of last resort.

The proposed legislation provides a list of credit facilities to which this section applies: (1) the Money Market Investor Funding Facility; (2) the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; (3) the Term Asset-Backed Securities Loan Facility; (4) the Term Auction Facility; (5) the Primary Dealer Credit Facility; (6) the Commercial Paper Funding Facility; (7) the Term Securities Lending Facility, including the Term Securities Lending Facility Options Program; (8) the Revolving Credit Facility; (9) reciprocal currency arrangements with foreign central banks; (10) the Mortgage Backed Securities Purchase Program, as well as the purchase of debt obligations from a government sponsored enterprise; and (11) any special purpose vehicle through which any such credit facility conducts any activity or lending. Requires the Comptroller General to report to Congress within 90 days of each review’s completion.

“At a time when our budget deficits are soaring to record levels, we cannot afford to waste billions on poorly managed contracts and bloated federal programs,” said Chairman Waxman. “We need a strong GAO to root out waste and corruption.”

One key provision of the legislation repudiates the district court decision in Walker v. Cheney and reaffirms GAO’s authority to go to court when agencies or the White House refuse to provide access to records.

Other provisions of this bill give GAO authority to interview federal employees and administer oaths. The bill also affirms GAO’s right to obtain records from three agencies that have sometimes thwarted GAO oversight by denying access to documents: the Centers for Medicare and Medicaid Services, the Food and Drug Administration, and the Federal Trade Commission.

Finally, the bill creates a reporting mechanism so that Congress will be informed when federal agencies do not cooperate.

The bill now goes on to be voted on in the Senate.

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Companies Mentioned

Securities Law

The following companies are mentioned in Securities Law Updates:

Securities and Exchange Commission

Banc of America Securities LLC

Citicorp USA, Inc.

Harris Associates, L.P.

Morgan Stanley & Co., Inc.

CIBC World Markets Corp.

Citigroup Inc.

Barclays Capital Inc.

Citigroup Global Markets, Inc.

Credit Lyonnais Securities (USA) Inc.

Florida State Board of Administration

Credit Suisse Securities (USA) LLC

Deutsche Bank AG

The Cleaners & Caulkers Local 1 Pension Fund

Credit Suisse, New York Branch

Ameriprise Financial, Inc. f.k.a. American Express Financial Corp.

The Public Employees’ Retirement System of Mississippi

Harris Nesbitt Corp.

California Department of Corporations

The Royal Bank of Scotland plc

RiverSource Investments, LLC

Asset Management Holding AG

Deutsche Bank

Consolidated Management Group, LLC

The Bank of Nova Scotia

Jan Charles Finance S.A.

Alex Brown, Inc.

Toronto Dominion Texas, LLC f.k.a. Toronto Dominion Texas, Inc.

Park East, Inc.

SG Cowen Securities Corp.

Tellabs, Inc.

Deutsche Bank Securities, Inc.

Mizuho International PLC

Lydia Capital, LLC

Suntrust Capital Markets, Inc.

Makor Issues & Rights, Ltd.

ABN AMRO Inc.

Tribune Company

Fleet Securities, Inc. n.k.a. Bank of America, N.A.

City of Philadelphia Board of Pensions and Retirement

Staples, Inc.

The Bank of New York Company, Inc.

CIBC, Inc.

Citibank, N.A.

Metal Management, Inc.

European Metal Recycling, Ltd.

Salomon Smith Barney Inc. n.k.a. Citigroup Global Markets, Inc.

Calyon Securities (USA), Inc. f.k.a. Credit Lyonnais Securities (USA) Inc.

Salomon Smith Barney, Inc.

Calyon New York Branch (successor by operation of law to Credit Lyonnais New York Branch)

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