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Wednesday, June 18, 2003

Republicans in Drag

Reported by Sean Hanna, Editor in Chief

Was that Harvey Fierstein putting on a special appearance in the Rayburn Building today? Those showing up for Rep. Richard Baker's show, er hearing, for his new Mutual Fund Integrity bill surely saw one of the best cross-dressing performances off-Broadway, Hairspray notwithstanding. Yes, you could nominate Rep. Paul E. Kanjorski (D, Pennsylvania) for a Tony Award.

Kanjorski -- the ranking Democrat on the Capital Markets, Insurance and Government subcommittee -- hammered away at the issue of the bill's costs, raking the unfortunate Paul Roye over the coals. Indeed, the theme of the morning session of the hearing was whether the bill passes a cost-benefit analysis. While Democrats belabored that point, Republican's lined up to toss softball questions Roye's way. The funny thing was, Democrats sounded like Republicans and Republicans sounded like Democrats. Someone wearing a blindfold would have pointed left when asked what way was right.

"How many enforcement actions did the SEC take against the 30,000 fund last year," Kanjorski asked Roye.

Roye squirmed before answering.

"I could probably count them on one hand," he finally answered.

"You mean that there were less than five?" Kanjorski rebutted.

Kanjorski then zeroed-in on what seemed to be the Democrat's theme for the hearing -- are the benefits of the Baker bill worth increases in cost? Kanjorski asked Roye if the problems at funds uncovered annually by the SEC costs shareholders less than $100 million. Roye agreed that the figure was a fair estimate.

Earlier, though, Government Accounting Office (GAO) head Richard Hillman has testified that the cost of compliance with the new disclosures would be $266 million, or 0.38 basis points, according to a GAO estimate.

"Have you done a cost benefit analysis?" queried Kanjorski. A question that prompted Roye to admit that no one had done anything like one.

That exchange caused Kanjorski to make one of the most surprising statements of the morning. A statement that revealed just how strange the Baker bill is at its heart.

"Frankly, this [debate] has caused me a bit of schizophrenia," mused the Democrats top subcommittee member. "Usually on this side of the aisle we are supposed to be for more government regulation."  

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