[Congressional Record Volume 140, Number 30 (Thursday, March 17, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 17, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS ACT OF 1993

  The PRESIDING OFFICER. Under the previous order the clerk will now 
report Calendar No. 259.
  The legislative clerk read as follows:

       A bill (S. 1275) to facilitate the establishment of 
     community development financial institutions.

  The Senate resumed consideration of the bill.

       Pending:
       Riegle-D'Amato amendment No. 1525, to provide for fair 
     trade in financial services.

  The PRESIDING OFFICER. The Chair, in his capacity as a Senator from 
Colorado, suggests the absence of a quorum.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. RIEGLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                           amendment no. 1525

  Mr. RIEGLE. Mr. President, we are continuing now on the bill from the 
Banking Committee that we brought to the floor yesterday. Several of us 
had to be at Senate Budget Committee this morning for a sequence of 
votes beginning shortly after 10 a.m., which we have now completed. 
Other votes will occur later in the day in the Budget Committee. But 
that has required us to start a little later on the floor this morning 
than we otherwise had intended.
  Pending before the Senate now is an amendment dealing with fair trade 
and financial services. This is an amendment that was a bill recently 
reported favorably out of the Senate Banking Committee. Our bill on 
fair trade and financial services now has passed the Senate three 
previous times. The amendment we are considering this morning was 
introduced on October 7 of last year on a bipartisan basis by a 
majority of the members of the Senate Banking Committee. It is designed 
to give U.S. negotiators new leverage to obtain the same quality of 
competitive opportunity for financial firms in the United States 
operating in foreign markets that we extend to foreign firms operating 
here in our own U.S. market.
  On October 26 of last year, the committee held a hearing in which 
this bill I am now referring to, and which is now pending in amendment 
form, received united Clinton administration support, as well as 
support from the financial services industry. And then on February 10 
of this year, the committee reported this bill out favorably by a vote 
of 17 to 2, which shows the strong bipartisan support that it enjoys.
  The act builds on provisions of the 1988 Omnibus Trade and 
Competitiveness Act that require the Treasury Department to identify 
countries that deny U.S. financial firms de facto national treatment, 
meaning equality of competitive opportunity and effective market 
access. If negotiations to obtain national treatment fail to succeed, 
the act allows but does not require the Secretary of the Treasury, the 
U.S. negotiator on trade and financial services, to publish in the 
Federal Register a determination that a given country is discriminating 
against U.S. financial institutions.
  Following any such publication the Treasury Secretary may, after 
consultation with the U.S. Trade Representative and the Secretaries of 
State and Commerce, recommend to the appropriate Federal financial 
services regulator that it deny applications filed by banking or 
securities firms from the discriminating country. Such denials would 
only affect opportunities for future expansion in the U.S. market and 
would not force foreign financial firms to have to actually shrink 
their existing operations here in the United States. So it would be a 
prohibition against future growth, but it would not shut down their 
existing operations.
  So the bill, I think, is fair and balanced in that respect. It is 
designed to give our U.S. negotiators new leverage to force open 
foreign financial markets that are now closed to our firms when the 
firms from that very country have open access here in the United 
States.
  President Clinton has spoken out on this issue forcefully, and I 
appreciate the fact that he has given new leadership to this question 
of fighting for fairness in the international markets with respect to 
those people from the United States who provide financial services.
  On January 26 of this year, Senator D'Amato and I received a joint 
letter from Secretary Bentsen and Trade Ambassador Kantor urging swift 
enactment of the Fair Trade and Financial Services Act because, they 
wrote, it is ``an essential component of our strategy'' to open foreign 
financial markets to U.S. institutions. The legislation is critical to 
the success of United States negotiators in both the ongoing 
negotiations under the auspices of the General Agreement on Tariffs and 
Trade, as well as the stalled United States-Japan Framework for New 
Economic Partnership discussions.
  Under GATT, financial services are included within the General 
Agreement on Trade in Services, which establishes a multilateral 
framework of principles and rules for trade in financial services. 
However, the commitments made by many countries to open their markets 
to U.S. financial institutions under that framework were far less than 
the United States had hoped for. The United States has, therefore, 
taken the most-favored-nation trade exemption for banking and other 
financial services, including insurance, but will suspend it for 6 
months after the GATT agreement goes into effect. Until that time, 
negotiations will continue within the GATS framework outlined above.
  In their January 26 letter, Ambassador Kantor and Secretary Bentsen 
explained why the passage of the Fair Trade in Financial Services Act 
is needed to help complete a successful GATT agreement on financial 
services.
  In that letter they stated, and I want to read one key paragraph:

       We agreed on a framework for trade in financial services 
     but did not obtain the full commitments on market access we 
     had sought. However, the financial services agreement 
     provides for continuing negotiations within the GATT context 
     to seek improved commitments. In the event we are not able to 
     achieve sufficient progress in these negotiations, this 
     legislation [Fair Trade in Financial Services] will help 
     ensure that we will have incentives to encourage other 
     countries to liberalize in the future. The success of this 
     effort will provide increased competitive opportunities for 
     U.S. financial services and enhance their ability to 
     facilitate U.S. exports.

  Of course, I should add that means U.S. jobs. We are talking here 
about strengthening the U.S. economy, broadening our own job base, 
being able to compete fairly in foreign markets where we are now being 
blocked out.
  So I urge my colleagues to heed this strong call for swift enactment 
of this legislation now incorporated in the pending amendment.
  Mr. President, I ask unanimous consent that the letter that I just 
quoted from be printed in the Record following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. RIEGLE. Finally, the fair trade in financial services is 
absolutely critical to be accomplished at this time. We have been at 
this now for years. The negotiations that I have just cited illustrate 
the fact that we are not going to get the progress we need until we 
have this in place as a constructive lever to force open arbitrarily 
closed foreign markets.
  So the time to do this is now. It is good for America. It is good for 
our economy. It will help our financial services sector as they fight 
for competitive equity in these foreign settings. And this is an 
opportunity for us to accomplish a piece of work that will well serve 
the American people.

                               Exhibit 1


                                   Department of the Treasury,

                                 Washington, DC, January 26, 1994.
     Hon. Donald W. Riegle, Jr.,
     Chairman, Committee on Banking, Housing, and Urban Affairs, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: We are writing to urge swift enactment 
     of the Fair Trade in Financial Services legislation. The 
     Administration supports the objectives of the legislation as 
     introduced and will continue to work closely with Congress to 
     complete the final details. We believe that the original 
     intent of S. 1527 and HR 3248 provides an effective 
     foundation for legislation.
       The passage of this important legislation is a priority 
     matter for the Administration, and an essential component of 
     our strategy to continue multilateral negotiations to open 
     foreign financial markets to U.S. financial institutions.
       The Administration is very pleased with the results of the 
     recently completed Uruguay Round of multilateral negotiations 
     conducted under the auspices of the General Agreement on 
     Tariffs and Trade (GATT). The lowering of trade barriers 
     achieved there will help ensure a continued and equitable 
     expansion of world trade and contribute to the prosperity of 
     American industry and workers in the years ahead.
       In financial services the outcome was more modest. We 
     agreed on a framework for trade in financial services but did 
     not obtain the full commitments on market access that we had 
     sought. However, the financial services agreement provides 
     for continuing negotiations within the GATT context to seek 
     improved commitments. In the event that we are not able to 
     achieve sufficient progress in these negotiations, this 
     legislation will help ensure that we will have incentives to 
     encourage other countries to liberalize in the future.
       The success of this effort will provide increased 
     competitive opportunities for U.S. financial services and 
     enhance their ability to facilitate U.S. exports.
       This Administration has clearly stated its objective to 
     open foreign financial markets. Fair Trade in Financial 
     Services legislation will complement our multilateral, 
     bilateral and regional efforts to gain access to foreign 
     markets on the basis of national treatment and equality of 
     competitive opportunity. The proposal would give the 
     authority to act to the Treasury Department, after 
     appropriate interagency consultation and subject to the 
     specific direction of the President.
       It is our view that enactment of the Fair Trade in 
     Financial Services legislation is needed at the earliest 
     possible time to safeguard the progress we achieved in the 
     Uruguay Round and to support additional market opening talks, 
     both within the GATT framework and on a bilateral basis.
       Thank you for your attention to this matter which is so 
     important to America's financial firms. We look forward to 
     working with you to achieve early enactment of this critical 
     legislation.
           Sincerely,
     Lloyd Bentsen,
       Secretary of the Treasury.
     Michael Kantor,
       U.S. Trade Representative.

  Mr. RIEGLE. Mr. President, I see no one else seeking recognition at 
this time. So I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Shelby). Without objection, it is so 
ordered.
  The Senator from Delaware is recognized.
  Mr. ROTH. Mr. President, I send an amendment to the desk----
  The PRESIDING OFFICER. The Chair will inform the Senator from 
Delaware that there is a pending amendment, the Riegle-D'Amato 
amendment.
  Mr. ROTH. I ask unanimous consent that we lay aside that particular 
amendment.
  The PRESIDING OFFICER. Is there any objection? Without objection, it 
is so ordered.
  Mr. ROTH. I am sorry, I am sending this amendment as an amendment to 
the Riegle amendment.
  Mr. KERRY. Mr. President, reserving the right to object, and I do not 
intend to necessarily.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. It is my understanding that under a unanimous consent 
agreement, the Senator from Texas was to bring an amendment; is that 
correct?
  The PRESIDING OFFICER. That was the order.
  Mr. KERRY. So now we would proceed to the amendment of the Senator 
from Delaware instead. I ask unanimous consent that I be permitted to 
proceed to an amendment following the Senator from Delaware.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. KERRY. I thank the Chair.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.


                Amendment No. 1533 to Amendment No. 1525

  Mr. ROTH. Mr. President, I send an amendment in the second degree to 
the desk.
  The PRESIDING OFFICER. The clerk will report the amendment by number.
  The bill clerk read as follows:

       The Senator from Delaware [Mr. Roth] proposes an amendment 
     numbered 1533 to amendment No. 1525.

  Mr. ROTH. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       After section 403 of the Reigle amendment insert the 
     following new section:

     SEC. 404. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT 
                   FOR INSURERS AND REINSURERS.

       (a) Purpose.--The purpose of this section is to encourage 
     foreign countries to accord national treatment to United 
     States insurers and reinsurers that operate or seek to 
     operate in those countries.
       (b) Identifying Countries That Deny National Treatment to 
     United States Insurers or Reinsurers.--The President or the 
     President's designee shall identify whether and to what 
     extent foreign countries deny national treatment to United 
     States insurers or reinsurers--
       (1) according to the most recent report under section 3602 
     of the Omnibus Trade and Competitiveness Act of 1988 (or 
     update thereof); or
       (2) based on more recent information that the President 
     deems appropriate.
       (c) Determining Whether Denial of National Treatment Has 
     Significant Adverse Effect.--
       (1) In general.--The President shall determine whether the 
     denial of national treatment to United States insurers or 
     reinsurers by a foreign country identified under subsection 
     (b) has a significant adverse effect on such organizations.
       (2) Factors to be considered.--In determining whether and 
     to what extent a foreign country denies national treatment to 
     United States insurers or reinsurers, and in determining the 
     effect of any such denial on such insurers or reinsurers, the 
     President shall consider appropriate factors, including--
       (A) the size of the foreign country's markets for the 
     financial services involved, and the extent to which United 
     States insurers or reinsurers operate or seek to operate in 
     those markets;
       (B) the extent to which United States insurers or 
     reinsurers may participate in developing regulations, 
     guidelines, or other policies regarding new products, 
     services, and markets in the foreign country;
       (C) the extent to which the foreign country issues written 
     regulations, guidelines, or other policies applicable to 
     United States insurers or reinsurers operating or seeking to 
     operate in the foreign country that are--
       (i) prescribed after adequate notice and opportunity for 
     comment;
       (ii) readily available to the public; and
       (iii) prescribed in accordance with objective standards 
     that effectively prevent arbitrary and capricious 
     determinations;
       (D) the effects of the regulatory policies of the foreign 
     country on--
       (i) the licensing policies of the insurance regulator of 
     that country;
       (ii) capital requirements applicable in that country;
       (iii) restrictions on acquisitions or joint ventures and 
     operations thereof by insurers or reinsurers in that country; 
     and
       (iv) restrictions on the operation and establishment of 
     branches in that country.
       (d) Publication of Determination.--
       (1) In general.--If the President determines under 
     subsection (c) that the denial of national treatment to 
     United States insurers or reinsurers by a foreign country has 
     a significant adverse effect on such organizations, the 
     President--
       (A) may, after initiating negotiations in accordance with 
     subsection (f) publish that determination in the Federal 
     Register;
       (B) shall, not less frequently than annually, in 
     consultation with any department or agency that the President 
     deems appropriate, review each such determination to 
     determine whether it should be rescinded; and
       (C) shall inform State insurance commissioners of the 
     publication of that determination.
       (2) Exception for countries that are parties to certain 
     agreements governing financial services.--Paragrah (1) shall 
     not apply to a foreign country to the extent that any 
     authority under that paragraph would permit action to be 
     taken that would be inconsistent with a bilateral 
     or multilateral agreement including any dispute resolution 
     procedures contained in such agreement that governs 
     financial services, including insurance, that--
       (A) the President entered into with that country; and
       (B) the Senate and the House of Representatives approved;

     before the date of enactment of this section.
       (e) Sanctions.--
       (1) Actions by the president.--
       (A) In general.--The President may recommend to the state 
     insurance commissioners that they deny a foreign insurer's or 
     reinsurer's request for authorization which is filed after 
     the date of publication of a determination under subsection 
     (d)(1) by a person of a foreign country listed in such 
     publication if the President determines that--
       (i) such action would assist the United States in 
     negotiations to eliminate discrimination against United 
     States insurers or reinsurers;
       (ii) negotiations undertaken pursuant to subsection (f) are 
     not likely to result in an agreement that eliminates the 
     denial of national treatment; or
       (iii) the country has not adequately adhered to an 
     agreement reached as a result of negotiations undertaken 
     pursuant to subsection (f).
       (B) Exercise of authority.--If the President delegates his 
     authority under Sec. 4(b), the designee's authority under 
     subparagraph (A) shall be exercised according to the specific 
     direction (if any) of the President.
       (C) Compliance exceptions.--If the state insurance 
     commissioners do not act within 90 days on the President's 
     recommendations in subsection (A), or if the President 
     determines that the procedure outlined in subsection (A) is 
     either inappropriate or impractical to achieve the purpose of 
     this section, the President may take such action as he or she 
     considers necessary and appropriate to encourage foreign 
     countries to accord national treatment to United States 
     insurers and reinsurers that operate or seek to operate in 
     those countries.
       (2) Standards for exercise of discretion.--In exercising 
     any discretion under subsection (e), the President shall 
     consider, with respect to an insurer or reinsurer, branch, or 
     other affiliated entity that is a person of a foreign country 
     and is operating in the United States--
       (A) the extent to which the foreign country is progressing 
     toward according national treatment to United States insurers 
     or reinsurers; and
       (B) whether the foreign country permits United States 
     insurers or reinsurers to expand their activities in that 
     country, even if that country determined that the United 
     States did not accord national treatment to the insurers or 
     reinsurers of that country.
       (f) Negotiations.--
       (1) In general.--The President--
       (A) shall initiate negotiations with any foreign country 
     with respect to which a determination made under subsection 
     (c)(1) is in effect; and
       (B) may initiate negotiations with any foreign country 
     which denies national treatment to United States insurers or 
     reinsurers to ensure that the foreign country accords 
     national treatment to such insurers or reinsurers.
       (2) Exceptions.--Paragraphs (1) does not require the 
     President to initiate negotiations with a foreign country if 
     the President--
       (A) determines that the negotiations--
       (i) would be so unlikely to result in progress toward 
     according national treatment to United States insurers and 
     reinsurers as to be a waste of effort; or
       (ii) would impair the economic interests of the United 
     States; and
       (B) gives written notice of that determination to the 
     chairperson and the ranking minority member of the 
     appropriate Senate and House committees.
       (g) Report.--
       (1) Contents of report.--Not later than December 1, 1994, 
     and biennially thereafter, the President shall submit to the 
     Congress a report that--
       (A) specifies the foreign countries identified under 
     subsection (b);
       (B) if a determination is published under subsection (d)(1) 
     with respect to the foreign country, provides the reasons 
     therefor;
       (C) if the President has not made or has rescinded such a 
     determination with respect to the foreign country, provides 
     the reasons therefor;
       (D) describes the results of any negotiations conducted 
     under subsection (g)(1) with the foreign country; and
       (E) discusses the effectiveness of this section in 
     achieving the purpose of this section.
       (2) Submission of report.--The report required by paragraph 
     (1) may be submitted as part of a report or update submitted 
     under section 3602 of the Omnibus Trade and Competitiveness 
     Act of 1988.
       (h) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Insurer.--The term ``insurer'' means a party to a 
     contract of insurance who assumes the risk and undertakes to 
     indemnify the insured, or pay a certain sum on the happening 
     of a specified contingency.
       (2) National treatment.--A foreign country accords 
     ``national treatment'' to United States insurers and 
     reinsurers if it offers them the same competitive 
     opportunities (including effective market access) as are 
     available to its domestic insurers or reinsurers.
       (3) Person of a foreign country.--The term ``person of a 
     foreign country'' means--
       (A) a person organized under the laws of the foreign 
     country;
       (B) a person that has its principal place of business in 
     the foreign country;
       (C) an individual who is--
       (i) a citizen of the foreign country, or
       (ii) domiciled in the foreign country; and
       (D) a person that is directly or indirectly controlled by a 
     person or persons described in subparagraph (A) or (B), or by 
     an individual or individuals described in subparagraph (C).
       (4) President.--The term ``President'' means the President 
     of the United States or the President's designee.
       (5) Reinsurer.--The term ``reinsurer'' means an insurer 
     which contracts to indemnify a ceding insurer for all or part 
     of a risk originally undertaken by the ceding insurer.
       (6) Request for authorization.--The term ``request for 
     authorization'' means--
       (A) an application, registration, notice, or other request 
     to commence engaging in the business of insurance in a state; 
     or
       (B) an application, registration, notice, or other request 
     for renewal of authorization to engage in the business of 
     insurance in a state.

  Mr. ROTH. Mr. President, I rise to offer an amendment to the fair 
trade in financial services legislation to include one vital component 
of our financial services sector that is currently not covered under 
the legislation--insurance.
  On two previous occasions the Senate has passed fair trade in 
financial services legislation and it is now being offered again to the 
bill now before us--S. 1275--by our distinguished chairman of the 
Banking Committee.
  This important legislation would give the Secretary of the Treasury 
the authority to negotiate and, if necessary, recommend retaliation 
against countries which deny our banks and securities organizations 
access to foreign markets.
  The Banking Committee has long believed that this kind of market 
access and market penetration is critical to these financial services 
companies' efforts to increase exports in this sector. The House has 
refused to accept this legislation and the Reagan and Bush 
administrations opposed it until just before the end of the Bush 
Presidency.
  In contrast, this legislation is strongly endorsed by the Clinton 
administration.
  This legislation has become a key element in the Uruguay round 
agreement to continue negotiations in financial services beyond the 
December 15, 1993 concluding date.
  These negotiations, which are considered to be at the core of the 
attempt by the world's trading nations to bring for the first time 
services under GATT rules, include insurance as well as banking and 
securities. Unfortunately, S. 1527, as reported by the Banking 
Committee, does not cover insurance. My amendment would add this vital 
sector to the legislation. I believe it is critical that insurance be 
on an equal basis in these negotiations with the banking and 
securities.
  I would like to elaborate briefly on some of the reasons why I am 
offering this amendment.
  The first is that the continued Uruguay round negotiations include 
insurance but American negotiators' effort to obtain market opening 
concessions in insurance will not be viewed as credible unless the fair 
trade in financial services bill covers insurance as well as banking 
and securities. Lack of coverage for insurance will send the wrong 
message at the wrong time.
  A second important reason for this amendment is that insurance was 
one of the few sectors involved in the failed framework talks with 
Japan and the absence of insurance in the fair trade in services bill 
will be taken as another bad signal that the American Government has 
given up on attempting to open the Japanese insurance market.
  The Japanese insurance market is the second largest in the world 
after the United States, with a premium volume of $308 billion. After 
almost 50 years, the foreign share of the Japanese market is only 2.9 
percent. This contrasts with foreign penetration in the United States 
which is almost 10 percent. The breakdown in the framework talks makes 
the inclusion of insurance in this legislation all the more critical.
  A final point in support of this amendment is that the insurance 
industry is one of the most significant service industries in the 
world. Worldwide insurance premium income today is approximately $1.4 
trillion. The insurance sector is critical to the U.S. economy and its 
expansion into other markets is essential to the growth of jobs and 
expansion here at home.
  Mr. President, the insurance industry simply seeks equity with its 
sister financial services. The amendment I have offered mirrors the 
banking and securities provisions in S. 1527 with one major exception.
  Unlike those provisions under which a federal regulator could take 
retaliatory action against a foreign bank or securities firm, since 
insurance is regulate at the State level, my amendment provides only 
that the President or his designee, which I assume would be the U.S. 
Trade Representative, may recommend to the State insurance 
commissioners that they deny a foreign insurers' request for 
authorization.
  The State commissioners may ignore the request or respond to it. In 
either event, there is no attempt to affect in anyway the exclusive 
right of the State to regulate insurance.
  Mr. President, this amendment is supported by the insurance companies 
which either are or desire to do business in foreign markets and the 
trade associations representing those companies. Included are the 
American International Group [AIG], the Chubb Co., the American 
Insurance Association representing over 250 large property and casualty 
insurers, the Council of Insurance Agents and Brokers, and the National 
Association of Insurance Brokers.
  For all of the reasons mentioned above, it is absolutely critical 
that we include insurance as part of the fair trade in financial 
services legislation, and I urge the support of my colleagues for this 
amendment.
  I yield the floor.
  Mr. D'AMATO addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. D'AMATO. Mr. President, I ask unanimous consent that I be added 
as a cosponsor to the amendment of the Senator from Delaware.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. D'AMATO. Mr. President, I commend the Senator from Delaware. I 
think it is absolutely an excellent amendment. This is an important 
financial industry. It employs hundreds of thousands of people. It is 
important in the capital markets. It is important they be permitted to 
compete abroad, and I think that this will have an effect of sending a 
very clear message that we are serious about seeing to it that free 
trade is fair; that financial services, and certainly the insurance 
industry is one of those, is an area that we are not going to permit to 
be abused, abused by those who would compete freely in our marketplace 
and yet deny us the same access.
  So I commend the Senator from Delaware for this thoughtful 
legislation.
  Mr. RIEGLE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. RIEGLE. Mr. President, I, too, want to join the Senator from New 
York in commending the Senator from Delaware for offering this 
amendment. I think this strengthens fair trade in financial services 
and should include insurance. We have a number of very fine American 
companies that should be able to compete abroad that are now being 
prevented from doing so by arbitrary barriers to their entry.
  This is an important addition to our amendment and it is one I 
support. It now has been offered and at the desk as an amendment to our 
fair trade in financial services.
  If no one wishes to speak on it, I urge the adoption of the 
amendment.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, the question is on agreeing to the amendment.
  The amendment (No. 1533) was agreed to.
  Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the 
amendment was agreed to.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. Mr. President, I have three other amendments, technical 
in nature, that have been cleared on both sides. I would like to just 
move through those at this time.
  I ask unanimous consent to proceed to these three. I know Senator 
Kerry is locked in with his request to go next. These will only take 2 
or 3 minutes. I would like to do that and still preserve his rights.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. RIEGLE. Mr. President, I am offering a technical amendment on 
behalf of Senator Dodd, Senator Nunn, and Senator Coverdell to a 
previously agreed to amendment No. 1527, offered yesterday by Senator 
Dodd. This is technical in nature and has been cleared on both sides. 
Let me send it to the desk and ask it be reported.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. RIEGLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Akaka). Without objection, it is so 
ordered.
  Mr. RIEGLE. Mr. President, let me now ask unanimous consent that the 
amendment I have just sent to the desk also momentarily be set aside so 
that I might offer a replacement amendment for the moment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. RIEGLE. Now, we have been working on this fair trade and 
financial services issue. We had a disagreement with Senator Gramm of 
Texas. That has now been resolved. We have a modification that we want 
to make to our package which will enable us to incorporate his 
suggestion and thereby be able to move this matter at this time.
  So let me yield to Senator D'Amato so that he might present it to the 
Senate.


                           Amendment No. 1534

  Mr. D'AMATO. Mr. President, I send an amendment to the desk on behalf 
of Senator Gramm from Texas and ask for its immediate consideration as 
an amendment to the fair trade provisions.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from New York [Mr. D'Amato], for Mr. Gramm, 
     proposes an amendment numbered 1534.

  Mr. D'AMATO. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       Beginning on page 5, line 17 of the amendment, strike all 
     after ``SERVICES.'' through page 6, line 2, and insert in 
     lieu thereof the following: ``--Paragraph (1) shall not apply 
     to a foreign country to the extent that any authority under 
     that paragraph would permit action to be taken that would be 
     inconsistent with a bilateral or multilateral agreement 
     (including any dispute resolution procedures contained in 
     such agreement) that governs financial services that--
       (A) the President entered into with that country; and
       (B) the Senate and House of Representatives approved; 
     before the date of enactment of this section.''.
       Beginning on page 16, line 23, strike all after 
     ``SERVICES.'' through page 17, line 7, and insert in lieu 
     thereof the following: ``--Paragraph (2) shall not apply to a 
     foreign country to the extent that any authority under that 
     paragraph would permit action to be taken that would be 
     inconsistent with a bilateral or multilateral agreement 
     (including any dispute resolution procedures contained in 
     such agreement) that governs financial services that--
       (A) the President entered into with that country; and
       (B) the Senate and House of Representatives approved; 
     before the date of this section.''.

  Mr. D'AMATO. Mr. President, this amendment deals with Canada, Mexico, 
and Israel. What the amendment says in essence is that notwithstanding 
our attempt to see to it that the financial interests of our country 
are protected as it relates to the financial services area, this 
amendment will preclude and does not include Canada, Israel, or Mexico, 
and that it does not in any way disrupt those treaties that we have 
with these countries; that since those treaties do have their own 
enforcement and bilateral agreements with us, we want to make it clear 
that this effort in no way affects Canada, Israel, or Mexico.
  Mr. RIEGLE. Mr. President, I appreciate the effort that has been made 
on both sides to resolve this issue in a proper manner. It has now been 
done.
  The amendment is at the desk and I now urge its adoption.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, without objection, the amendment is agreed to.
  So the amendment (No. 1534) was agreed to.
  Mr. RIEGLE. Mr. President, I move to reconsider the vote.
  Mr. D'AMATO. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                     Amendment No. 1527, as Modified

  Mr. RIEGLE. Mr. President, having settled the fair trade and 
financial services issue, let me now move back to the matter which I 
had proposed just before that, and let me restate my request.
  I ask unanimous consent that amendment No. 1527 be modified with the 
language that I have now sent to the desk.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered. The amendment will be so modified.
  So the amendment (No. 1527), as modified, was agreed to, as follows:
       Strikes Sec. 334. (d)(3) Commencement of Issuance and Sec. 
     334. (d)(4) Sunset Provision and replace with:
       Sec. 334. (d)(3) Period for Issuance.--The Secretary shall 
     issue coins minted under this Act during the period beginning 
     on January 15, 1995, and ending on December 31, 1995.

  Mr. D'AMATO. Mr. President, I move to reconsider the vote.
  Mr. RIEGLE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                Amendment No. 1535 to Amendment No. 1525

  Mr. RIEGLE. Mr. President, on behalf of Senator Mack, on page 31, 
line 7 of amendment No. 1525, we wish to add the following as a new 
section, section 405, the heading of which is ``Federal Reserve Report 
on the Foreign Bank Supervision Enhancement Act of 1991.''
  I will not read the remaining text, but instead send it to the desk 
and ask that it be stated at this time.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Michigan [Mr. Riegle], for Mr. Mack, 
     proposes an amendment numbered 1535 to amendment No. 1525.

  Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 31, line 7, of amendment No. 1525 add the following 
     as a new Section 405:

     SEC. 405. FEDERAL RESERVE REPORT ON THE FOREIGN BANK 
                   SUPERVISION ENHANCEMENT ACT OF 1991.

       The Federal Reserve shall submit to the House and Senate 
     Banking Committees within 60 days of enactment of this 
     legislation a report on the Foreign Bank Supervision 
     Enhancement Act of 1991 including:
       (a) the number of applicants received and from what 
     countries;
       (b) the number of applications approved and from what 
     countries;
       (c) the amount of time taken on each application between 
     receipt and approval or rejection of the application;
       (d) other agencies involved in the approval process, how 
     much time is taken by those agencies, and any problems 
     encountered with these agencies;
       (e) coordination of processing applications and length of 
     time for processing between the regional bank's and the 
     Federal Reserve Board's staffs;
       (f) efforts to define consolidated home country supervision 
     on an international basis, and;
       (g) suggestions for streamlining the process.

  Mr. RIEGLE. Mr. President, this has been cleared on both sides. I now 
urge its adoption.
  The PRESIDING OFFICER. Is there further debate on this amendment? If 
not, without objection, the amendment is agreed to.
  So the amendment (No. 1535) was agreed to.
  Mr. RIEGLE. I thank the Chair. Mr. President, I move to reconsider 
the vote.
  Mr. D'AMATO. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 1536

(Purpose: To make a clarifying amendment relating to the Comptroller of 
           the Currency and the Office of Thrift Supervision)

  Mr. RIEGLE. Mr. President, I now offer the remaining amendment and 
will be sending that to the desk. Its purpose is to make a clarifying 
amendment relating to the Comptroller of the Currency and the Office of 
Thrift Supervision.
  I am going to send it to the desk now, and before it is reported by 
the clerk I will just add this commentary.
  I am offering this amendment, together with Senator D'Amato, to 
supplement a previously agreed-to amendment clarifying the authority of 
the OCC and the OTS and giving them equivalent authority.
  This amendment clarifies that the autonomy of the Director of the OTS 
and the Comptroller of the Currency extends to agency rulemaking 
proceedings and enforcement actions, a very important point.
  Mr. D'AMATO. Mr. President, I am pleased to join in this effort. I 
wish to commend Senator Riegle for this amendment. We need this 
legislation regardless of who is in the White House, Republican or 
Democrat. Independent agencies must be protected, their integrity to do 
the job as they see fit, and that is what this legislation does.
  So I commend Senator Riegle.
  Mr. RIEGLE. I thank the Senator from New York. I now urge adoption of 
that amendment.
  The PRESIDING OFFICER. Without objection, the pending amendment will 
be set aside and the clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Michigan [Mr. Riegle], for himself and Mr. 
     D'Amato, proposes an amendment numbered 1536.

  Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the appropriate place in title III of the bill, insert 
     the following:

     SEC.   . CLARIFICATION OF PROVISION RELATING TO 
                   ADMINISTRATIVE AUTONOMY.

       Section 3(b)(3) of the Home Owners' Loan Act (12 U.S.C. 
     1462a) is amended by striking everything after ``Director'' 
     and inserting in lieu thereof ``(including agency rulemaking 
     proceedings and enforcement actions) unless otherwise 
     specifically provided by law.''.
  The PRESIDING OFFICER. Is there further debate? If not, without 
objection, the amendment is agreed to.
  So the amendment (No. 1536) was agreed to.
  Mr. RIEGLE. I thank the Chair. Mr. President, I move to reconsider 
the vote.
  Mr. D'AMATO. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. Mr. President, let me also say, if I may, if I can have 
the attention of the Senator from Texas, Mr. Gramm, who is in the 
Chamber, I just want to indicate that I appreciate the cooperative 
effort with respect to resolving that last matter on fair trade and 
financial services. We just incorporated that amendment prior to the 
Senator's arrival in the Chamber.
  But I appreciate the effort to work it out, and I think we have a 
package here that can help us a great deal with respect to opening up 
the game for American companies overseas.
  I appreciate the cooperation of the Senator.
  Mr. GRAMM. Mr. President, if the chairman will yield, I want to thank 
him for his cooperation. I think, basically, what I wanted to be sure 
of is in trying to open up markets for American financial companies 
that we did not in any way interfere with NAFTA. I think we have 
achieved that goal. I appreciate the chairman's help.
  Mr. RIEGLE. I thank the Senator.


                           Amendment No. 1525

  Let me now say to the Chair, I would like to move the adoption of 
amendment number 1525, which is the fair trade and financial services 
amendment.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, the question is on agreeing to the amendment.
  The amendment (No. 1525), as amended, was agreed to.
  Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the 
amendment was agreed to.
  Mr. D'AMATO. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. I thank everyone who has been involved in that. That is a 
very major hurdle, jump, and I think very much in the interest of our 
country.
  Mr. President, I have now sent to the desk all technical amendments 
of which I am aware. So I know Senator Kerry has kindly deferred so 
that we could handle this matter prior to his bringing forward the 
issue that he now wants to present.
  I thank him for his courtesy in doing so.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Massachusetts [Mr. Kerry].
  Mr. KERRY. Mr. President, I thank the Chair, and I thank the 
distinguished manager of the bill. Also I thank the Senator from New 
York for his forbearance and for his counsel on this.
  Mr. President, I am not yet about to send to the desk the amendment 
that I am contemplating in the hopes that a meeting that we have 
scheduled shortly with a couple of the principals dealing with this 
issue will bear fruit.
  It is my hope that we will be able to reach some kind of 
accommodation. But I want to try to share with my colleagues a little 
bit of the background as to why I am considering an amendment at this 
moment, and what the stakes are for the Senate and for all of us as 
representatives of taxpayers.
  The amendment that I am contemplating sending to the desk is an 
amendment with respect to flood insurance reform. As every Member 
knows, over the course of the last years we have seen increased amounts 
of damage being done by earthquakes, storms, flooding, hurricanes, and 
so forth.
  In 1968, in recognition of the very large sums of money that the U.S. 
Government was paying on an annual basis to make up for bad choices 
people were making about where they would live, Congress created in 
1968 the flood insurance program, the National Flood Insurance Program. 
This program was created with the view to trying to minimize the amount 
of damage that was being done to the flood plain areas and to homes in 
those areas.
  Now we have reached a point where we are recognizing the number of 
studies that have been done--the Office of Technology Assessment, the 
National Academy of Sciences and others--and all of them have 
concluded, without any dissent, that we need to do a better job of 
mapping these hazards, of understanding the risks, and of making the 
flood insurance program sound. The fact is that we have only about a 
19- or 20-percent compliance with this program of the millions of 
homes, some 11-plus million homes that are within what we call the 
flood plain. Only about 2.6 million actually carry flood insurance. 
They are all supposed to carry it. But enforcement has been 
nonexistent, and the result is that people let their flood insurance 
lapse. They do not pay into the fund.
  Very recently, the fund borrowed $100 million from the Treasury. We 
have paid out something like $4 billion of disaster assistance in the 
last years for flood-related damages. Nevertheless, we continue to 
ensure people in a way that makes it easier for them, attractive for 
them, to go build in a place where we know a disaster is going to take 
place. The result is not just the cost in terms of the loss to the 
flood program itself, which is self-sustaining for the moment.
  Within the flood plain zones there are enough people still paying in 
that they have been able to cover the damage. I am not asserting that 
that is not happening. But what is happening is we are exposing 
ourselves to larger and larger numbers of homes which are increasing 
the overall liability of the U.S. Government, and there are costs that 
are not up-front costs of the loss of a home.
  For instance, the insurance fund may pay for the actual structure 
that was lost. But the community has to pay for the clean up. The 
community has to pay for all of the incidental costs of infrastructure, 
telephones, sewer, roads, and all of the other things that go with that 
development. The community has to pay for the time of its public 
officials that are caught up dealing with these problems as a 
consequence. Ultimately, the taxpayers, broadly speaking, are at risk 
and paying.
  The $100 million that is currently paying the deficiency of flood 
insurance for people living in areas where we know that there is going 
to be a disaster is being paid by people from the central part of 
Oklahoma, from western Massachusetts, from Nebraska, and a whole bunch 
of States that do not benefit or have nothing to do with it.
  I am not going to go into all of the details of this flood insurance 
program. But I do want to point out a couple of things that I hope my 
colleagues will take note of as we think about this debate.
  First of all, I would like to share with my colleagues what the 
National Taxpayers Union says in supporting my amendment. They say 
that:

       The 250,000-member National Taxpayers Union strongly 
     urges--

my colleagues--

     to support this amendment which would stop the fiscally 
     irresponsible practice of subsidizing development on land 
     prone to flooding. The National Flood Insurance Program is 
     now $100 million in debt. This debt could increase since the 
     bulk of the program's policies, roughly 80 percent, insure 
     development in areas prone to expensive losses from erosion, 
     flooding, and storms, the Nation's coasts. In just the past 4 
     years, the flood insurance program last paid more than three-
     quarters of a billion dollars in claims from just 4 coastal 
     storms: Hurricanes Hugo, Andrew, Iniki, and the December 1992 
     northeaster that hit the mid-Atlantic. It is folly to 
     continue to subsidize new development in areas that have been 
     hit and will be hit by destructive storms. We strongly 
     support the rights of property owners to develop their own 
     land. There is no right, however, to taxpayer subsidies for 
     private development.

  So what we are talking about here is whether or not we ought to 
engage in a broad encouragement, incentive, if you will, a subsidy, for 
people to be able to build in areas that create disasters.
  Let me share with my colleagues what James Witt, the Director of 
FEMA, says about this.
  He says:

       I want to reiterate my strong support for the goals of 
     Senate 1405. It furthers our goals--

skipping a couple of parts--

     our goals to strengthen mitigation in disaster-prone areas 
     while enforcing compliance. Both the Northridge earthquake 
     and the Midwest floods have reinforced our shared concern 
     that mitigation is underutilized throughout the country. The 
     State and community mitigation assistance program and the 
     mitigation insurance benefits will lower the number of 
     structures vulnerable to flooding and reduce expenditures 
     from the fund. In addition, it enables victims to overcome 
     personal hardships by supporting efforts to elevate or 
     relocate out of harm's way.

  Director Witt goes on to say:

       The increased lender compliance provisions will expand the 
     number of structures protected by flood insurance. Fewer 
     flood victims will turn to Government grants and low-interest 
     loans for assistance through the insurance mechanism. They 
     will pre-firm their own recovery.

  Director Witt met with us the other day and reinforced a study called 
Managing Coastal Erosion. This is a study that was done by the National 
Academy of Sciences and the National Academy of Sciences says point 
blank:

       FEMA has not identified erosion hazards zones in 
     implementing the National Flood Insurance Program. An 
     accurate delineation of coastlines subject to erosion is 
     essential to effective erosion and flood loss reduction and 
     to an actuarially sound program.

  Mr. President, the reason I read that about erosion is that erosion 
is the one hangup right now, the one fundamental hangup. There are a 
couple of smaller ones, in preventing us from proceeding forward to 
perform the flood insurance program. We have reached a fundamental 
agreement on how we deal with compliance, with getting more people to 
take part in this program. And we have established a structure which 
will invite people--will require people, not invite--to escrow money 
through the home purchase plans. Wherever the Federal Government or 
Federal insured institution is involved, that will require their 
compliance.

  The second component is what I just talked about with Director Witt--
that is, the issue of mitigation. Mitigation, Mr. President, is the 
means by which we prevent these disasters from happening in the first 
place. We have learned a great deal about our ability to mitigate. For 
instance, we are currently engaged in many programs around the coasts 
of America in beach replenishment. We are currently engaged in programs 
to build jetties, or breakwaters, or other forms of preventing erosion 
damage or storm damage. We are engaged in a whole new set of standards 
for home building that resists the storm damage. Indeed, we know that 
those structures that have been built according to the standards, 
called post-firm standards, have far less damage as a consequence than 
those built before those standards were put in place.
  So we have agreement, I believe, on the fundamentals of approaching 
the two significant issues: How do we make the fund more solvent? How 
are we more fiscally responsible, and how do we deal with the question 
of mitigation? How do we encourage people to undertake efforts to 
reduce the amount of damage they may be exposed to? But we are finding 
people who are resisting the notion that we ought to broadly examine 
precisely what the National Academy of Sciences has told us we should 
understand. It is called erosion.
  Erosion is taking place on a constant basis. We know how to measure 
it. We have highly accurate means of measuring it. In fact, 15 States 
have already undertaken efforts to measure it and have standards with 
respect to erosion. But we are learning that erosion is not factored 
into the overall costs attendant to the flood insurance program. So, in 
effect, we are, all of us, subsidizing the damages that occur when 
people go and build in a place that they know is going to erode.
  Mr. President, it seems to me the smallest amount of common sense 
that the Federal Government should not be going out and insuring people 
at an unaffordable private sector cost. We should not be insuring 
people to build somewhere that is not going to be there in 30 years. 
What is the public policy that says we want to insure a home in a place 
that we know we are going to have to pay the damage and it is going to 
disappear in 30 years? In the private sector, you could not possibly 
afford that kind of insurance. You simply could not afford it.
  If the insurer looked at the risk of a particular spit of land 
disappearing, they would say: You are crazy. Do not build your home 
there. We are not going to insure that. It is going to cost you $10,000 
a year to insure that for the next 20 years for the cost of the home 
you are building.
  We in the Federal Government are willing to insure them by creating a 
pool of people within the flood zone, and we are willing to come in and 
say that the Federal Government is going to stand behind all of this 
liability. So we expose ourselves to increasing amounts of risk. The 
amount of risk we are now exposed to in the Federal Government is $250 
billion. The fund is $100 million out of money; that is where we are. 
It is fiscally irresponsible. That is why the National Taxpayers' Union 
is supporting this effort to create a fiscally sensible approach to 
this.
  Let me share with my colleagues an example of precisely what this 
means. Here are some photographs of some homes on a beach. They are all 
up on pylons. You can see these homes sitting nicely on their pylons, 
and they all have flood insurance. It is a great place to live for a 
while, until what is indicated in this other photograph happens. This 
white home right here is now this white home here on this photograph. 
That is the erosion that has taken place as a consequence of storms. We 
should not be allowing people to build in this kind of situation, with 
Federal flood insurance supporting it.
  My bill does not do anything to take their insurance away. For 
anybody who has a home, you are grandfathered in. We do not even raise 
your rate. We are not even saying you cannot build. We are simply 
asking people to map the erosion areas, so people can know, and the 
Federal emergency assistance people can know, whether or not we ought 
to be engaged in promoting people living in these conditions. This is 
the example of what happens afterwards: People living out in the water. 
These are homes that we are covering. This is the same picture of the 
earlier shot, a before and after. This home here with a white roof is 
``before''--this is an example of homes on the beach--and this is 
``after.'' Here is the home with the white roof, and here are the homes 
out here.
  This is an example of a clear situation where you run into this 
happening. There are not a lot of places like this. It is not something 
we ought to be frightened of doing. We ought to understand what the 
National Academy of Sciences has said, and I will read it one more 
time.
  The National Academy says:

       FEMA has not identified erosion hazard zones. An accurate 
     delineation of coastlines subject to erosion is essential to 
     effective erosion and flood loss reduction and to an 
     actuarially sound program.

  Let me share with colleagues from the Office of Technology Assessment 
study on ``Preparing for Uncertain Climate.'' This is the history of 
the program, and this is what the Office of Technology Assessment is 
telling us today:

       Congress made Federal flood insurance available in 1968 
     through the creation of the Flood Insurance Program. It was 
     enacted to limit increased flood control and disaster relief, 
     meet expenditures, and to provide a pre-funded mechanism to 
     more fully indemnify victims of flood-related disasters. It 
     was also intended to limit unwise development in flood 
     plains, while at the same time providing affordable Federal 
     insurance for structures located there.

  So we had two purposes. We wanted to prevent people from locating 
there, and we wanted to provide affordable insurance to people who were 
stuck there.

       Between 1978 and 1992, 430,000 flood insurance claims were 
     made, and total payments, including claims from Hurricanes 
     Hugo, Andrew, Iniki, have been nearly $4 billion.

  We have paid out $4 billion, and all we are asking for in this bill 
is the right to spend $25 million to map erosion, so we can have true 
risk assessment in managing this program. We are not restricting 
anybody; we are not telling anybody you cannot build. We have not even 
restricted people at this point by saying: You cannot get the 
insurance. We are just saying: Map it so that you know what the risk 
is.
  Here is what Technology Assessment says to us:

       The National Flood Insurance Program has been only 
     partially successful. It has reduced somewhat the need for 
     taxpayer-funded disaster assistance and has been a factor 
     motivating local government mitigation efforts. Homes built 
     in compliance with their regulations are 70 percent less 
     likely to be damaged than those built before it.
  So here we are knowing that a home built by the standards afterward 
is 70 percent less likely to be damaged. Yet for some reason we are 
unwilling to make a measurement of where that risk may exist so we can 
get more homes 70 percent less likely to be damaged so we do not have 
to come back to the U.S. Senate and ask for billions of dollars of 
bailout in the future.
  This is a very important statement that the Office of Technology 
Assessment found--

       The program has also contributed to coastal development and 
     has been criticized frequently for not adequately fostering 
     prudent land use in hazardous areas.

  That was one of the original goals of this program.
  Mr. President, every scientific agency and all scientists who were 
involved in the study of erosion or the study of coastal management 
have agreed. There is not a dissenter. They agreed that we ought to 
proceed forward and have some means of understanding what the risk is 
from erosion.
  The Office of Technology Assessment has told us that. The National 
Research Council/National Academy of Science have told us that. The 
Federal interagency floodplain management task force has told us that. 
The Natural Hazards Research and Applications Information Center has 
told us that. FEMA, the Federal Emergency Management Agency, has told 
us that. The Association of State Floodplain Managers tells us that.
  Here are the experts, working on a regular basis to implement this 
program, saying to Congress, folks, if you want to save the taxpayers' 
money, if you want to act responsibly, then you have to begin the 
process of understanding what erosion is doing. If you do not, there is 
no way we can tell what the risk is. We cannot even arrive at actuarial 
rates that you are telling us we ought to charge.
  So, we have a question here as to whether or not we can allow this 
process adequately to begin.
  Mr. President, we have been working over the months--this has been 3 
years in the working--and on several other occasions. The committee has 
held off from attaching this particular effort in an effort to try to 
work out the differences between us. But it is our sense that unless we 
can get some capacity to begin the process of mapping erosion, we are 
at loggerheads. Then we are going to have to ask colleagues in the 
Senate to help us decide whether this is indeed something that we ought 
to do as prudent fiscal managers of the Nation's financing, whether or 
not we should allow more disasters like the ones in the photographs I 
have showed, homes in North Carolina that just drop off a cliff. You 
can tell it is going to happen. We have them in Nantucket, MA. It is 
going to happen. You can see the cliff disappearing on an annual basis.
  The question is whether we ought to be encouraging people to live in 
these kinds of conditions at the expense of taxpayers who are already 
hard enough pressed and who do not get to live on the beach to boot.
  We are not changing any of the existing policies. I want to emphasize 
that. There are no existing policy changes. We grandfather in all 
existing homes. Nobody's rate is going to go up, according to this. We 
are just asking people to make the assessment, report back to Congress, 
and tell us whether or not this is something we ought to have in the 
future.
  I think it is being prudent, and I think it is what we ought to do.
  There is a lot more I can say and may say about this. I ask unanimous 
consent that whatever remarks I make on this at subsequent times be 
considered as one speech, not as separate speeches.
  The PRESIDING OFFICER [Mrs. Feinstein). Without objection, it is so 
ordered.
  Mr. KERRY. I thank the Chair.
  Madam President, it is my hope to sit down with key colleagues on 
this and, hopefully, arrive at an agreement as to where we are going to 
proceed forward. This is an important measure.
  We should not, I think, want to continue with a situation where we 
know that there is an enormous risk to the Federal Treasury. We are 
unwilling even to take the steps to try to measure it better. Every one 
of our weather agencies, whether it is NOAA or the National Weather 
Service, et cetera, are all telling us that over the course of the last 
10 or 15 years we have lived through a very blessed period of reduced 
storms.
  If you look at the 100-year norm, or the 50-year or 25-year norm, you 
will see very significant storms like the 1992 northeaster or Hurricane 
Hugo, et cetera, that hit us regularly. We have actually seen a 
diminishment of that.
  But for all of us who lived through one of the toughest winters in 
modern history, I think we ought to be warned that there is something 
changing in weather cycles. We saw very tough storms last year as the 
weather maps indicate, and they are an indication of the difference. 
You can see, in the last 18 years, 1970 to 1987, very few storms, very 
few black lines here. But from 1957 to 1969, a period of 13 years, 
there was an enormous number of storms coming into the east coast and 
to Texas, and so forth.
  The far greater likelihood is that we are going to witness not a 
storm of the century once a century but we are going to have five or 
six storms of the century each year just as we did in the last couple 
of years.
  The point is no private insurance company would sit there engaged in 
this behavior. They could not afford to because they would be asked to 
hold reserves in order to cover the difference. But we are sitting here 
with $250 billion of exposed property with erosion playing away, and 
the fund $100 million in debt.
  It seems prudent, therefore, that while not penalizing anyone who 
lives where they live--they are there today, they got there for a whole 
lot of reasons--we do not want to penalize people and change land 
values. We do not want to do any injury, but we do want to try to look 
down the future and be fiscally responsible for whatever potential 
disasters may come down the road.
  The fact is where you have beach mitigation the prices of homes go 
up, the appraisals go up. Where you have good conservation measures, 
you, in fact, raise the property values of a community and you, 
therefore, raise the assessments to the community, and so forth.
  This is not just good environmental policy or something. This is 
good, sound fiscal policy with respect to a fund that is exposed to 
enormous damage.
  Madam President, it is my hope that we can reach agreement.


                           Amendment No. 1547

  (Purpose: To strengthen the National Flood Insurance Program and to 
    reduce risk to the national flood insurance fund by increasing 
 compliance, providing incentives for community floodplain management, 
      providing for mitigation assistance, and for other purposes)

  Mr. KERRY. Madam President, I am going to send this amendment to the 
desk at this point in time and ask that it be pending.
  The PRESIDING OFFICER. The clerk will read the amendment.
  The legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kerry] (for himself and 
     Mr. Daschle, Mrs. Murray, Ms. Moseley-Braun, Mr. Kohl, and 
     Mr. Metzenbaum) proposes an amendment numbered 1547.

  Mr. KERRY. Madam President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. KERRY. Madam President, so the Record is very clear, I want to 
make certain that there is no ambiguity and I do not want to 
misrepresent any facts here in the course of this process.
  A number of Senators and I have sat with FEMA over the course of the 
last days, and we have asked some good questions of FEMA to try to 
narrow down differences between us.
  There clearly is an ability of areas that are in the floodplain now 
to provide enough cash today to support the current rate of damage that 
is being done today in most of those areas.
  The $100 million that the fund is underneath today comes primarily as 
a consequence of what has taken place in the Midwest. But because of 
the effective erosion over a long period of time, absent mitigation, 
you could look to a future where obviously some of that could change. I 
cannot tell you that absolutely. I can tell you it will change in many 
places. I cannot tell you where. I cannot tell you when. I cannot tell 
you how much. And yet we continue to have a program out there that, 
notwithstanding that lack of knowledge, encourages people or helps them 
and assists them to be able to make these choices.
  No one can tell me, if the Federal Government is prepared to insure a 
home up to $185,000, that does not facilitate the community getting the 
bank involved, making the decision, and proceeding forward. Of course 
it does.
  So it is my sense that we ought to try to guarantee that we at least 
understand it.
  A good analogy is the following: if you are a smoker, smoking is 
taken into account by insurance companies. Now, if you are a smoker, 
you may smoke a pack a day, you may have just started last week, or 
something. Well, you are not going to drop dead tomorrow, probably, at 
least from smoking. But we all know that over a period of time the 
likelihood is greater that you will, and you will at some point, under 
certain odds, come up with some disease related to that smoking.
  It is the same thing here. Erosion works over a period of time. Sure, 
you can have a home sitting there or a bunch of homes in an erosion 
zone that are OK today, and the fund may be OK today to support them 
within that context. But we are saying, if we do not adopt this, that 
we are unwilling to find out whether the fund is going to be OK in 5 
years or 10 years. And more and more homes are coming under the fund 
and the exposure is getting greater and greater.
  Just a kind of classic example of this process taking place is a 
cartoon that appeared in the National Review in February of this year. 
The sign says, ``Welcome to Nevada,'' on the coastline.

       See? * * * I told you if we hung onto this chicken ranch 
     long enough, we'd be retiring to a nice spot on the ocean.

  Now, that is an exaggeration, but I will tell you something: In 
places in my home State this is happening. I could take you tomorrow to 
a home that is now 20 yards from the cliff, when only a few years ago 
it was 50 yards from the cliff. That house is going to drop off the 
cliff. Everybody knows it.
  And there are places in other parts of the country where that is also 
true. We should understand where those places are.
  The National Academy of Sciences tells us, ``Understand it.'' FEMA 
tells us we want to understand it. All of the responsible groups 
involved with this who make the studies tell us, ``Understand it.''
  Madam President, I suggest we ought to understand it, or we cannot 
have a fiscally sound fund. It is hard to go back to people who live 
way, way from the coast and say, ``Hey, you are paying for the 
privilege of these people to put their home there. You are paying for 
them to rebuild their roads every other year. You are paying for them 
to re-setup the sewers, to adjust all the damages. You are paying for 
them to move their homes, because we allowed them to get there in the 
first place.''
  And in a time when we are cutting education and cutting a lot of 
other plans, it is hard to explain to people why they ought to be 
paying for stupid development policies.
  Now, if they are not stupid, the mapping will come back and tell us 
that. If they are not stupid, the mapping will come back and say, 
``Senator, you are a `Chicken Little' crier. You are worried about 
something that is really a minimal problem. You should not be so 
worried about it. All of these scientists are wrong, and all of these 
academies and all of these groups we have set up to make a lifetime out 
of understanding this are somehow wrong. Let them do that.''
  But they will not, because the scientific underlying data is very 
clear as to what this process is doing, and it ought to be factored 
into a Federal program.
  So, Madam President, my hope is that we are going to be able to get 
an agreement here. But I wanted to explain to colleagues what it is 
that is holding this up and why we are dealing with this now.
  We have been at this for 3 years. We have known this fund is in 
jeopardy. We know there are serious problems with it; fifteen States 
have already mapped; fifteen States have already undertaken to put in 
place erosion policies. We have very strict ones in certain States; 
less so in others.
  But the Federal disaster fund that is making it up to those States 
that do not participate or do not want to should not continue as some 
great gravy train from a Federal Government that has endless amounts of 
money to throw around for these kinds of things.
  Director Witt has made it very clear: Mitigation makes a difference. 
If we can get people to participate in this program more, we will have 
more money in the flood insurance plan for mitigation grants, we will 
be able to do a better job of resisting, and ultimately we will not 
only be paying out less in the flood program itself, we will be paying 
out less in terms of the related disaster assistance and all the other 
losses that are caught up in it.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The absence of a quorum has been suggested. 
The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BOND. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Madam President, I would say to my colleagues and my good 
friend from Massachusetts, I apologize for not having been here for the 
discussion. I was advised we were meeting in his office at noon to talk 
about the compromise, so we did not have a chance to hear all of the 
discussions that went on about the flood insurance program.
  Let me say, and I believe I heard my friend from Massachusetts say, 
that we have been engaged in fruitful discussions about how we reform 
the flood insurance program, because the flood insurance program is 
vitally important in terms of those people who live and work in the 
flood-prone areas or the coastal areas which are subject to flooding 
and other devastation from water and wind.
  I believe that there are three main problems:
  No. 1, the fund does not have enough participants in it.
  No. 2, because, when the fund was established in 1975, there was a 
grandfather clause to protect those structures which existed prior to 
the passage of the law in 1975. The premiums paid into the flood fund 
for those homes was not adequate to carry the risk that those homes 
incurred. Thus, the fund has been put into a difficult condition 
because of the structures in place prior to 1975.
  The third problem is that there has not been enough focus on 
mitigation to assist communities and to assist home owners and owners 
of other structures to bring their structures up to standards which 
would resist the flood.
  I have only in the last few months begun to work on this matter. I 
know our colleague from Massachusetts has taken a leadership role, for 
which I commend him.
  We asked about a month ago for answers to some very difficult 
questions from the Federal Emergency Management Agency that is 
responsible for administering the fund. There is a great deal of 
confusion among ourselves, our staffs, and others as to what really is 
the significance of the condition of the flood insurance fund.
  I understand that FEMA had complemented the answers last week. By the 
time I left to go back to Missouri on Friday, those answers were not 
available to us. I returned to Washington, DC, at 11 p.m. on Monday 
night and got a long list of answers. We started off at 9 o'clock the 
next morning meeting with the Director, James Lee Witt, in the office 
of the Senator from Massachusetts, and we made progress.
  I really believe we are making progress towards meeting the needs 
that FEMA has identified. But we found that there were still major 
questions which had arisen as a result of their answers in the 
discussion.
  At this point, we have--and I say ``we'' speaking primarily for my 
colleague from Florida, Mr. Mack, and myself, and with a number of 
other Senators who have been very much interested in it--suggested that 
we are getting closer to agreement. We found some of the problems with 
the flood insurance were actually not what we thought they were.
  So we thought we were moving forward toward agreement. We had asked 
the Senator from Massachusetts not to offer this amendment because we 
believe we are close to achieving a workable compromise that could 
generate very significant support from at least the vast majority if 
not all Members of this body.
  There are a number of comments which I overheard earlier in the 
discussions that I do not believe are accurate. Just let me set the 
stage so I can give my colleagues the framework in which we are 
operating.
  The only problems, according to FEMA, that we have with the Flood 
Insurance Program are not, as has been suggested, the Midwest floods. 
It is the problem of the structures grandfathered in, called the pre-
FIRM, prior to the 1975 enactment of the law. They are the ones that 
are causing the losses that are putting the fund in jeopardy. So we 
have proposed, and we are working towards a system, to use some of the 
funds from the flood to bring those structures up to flood standard so 
they will be less likely to be damaged. Any homes or structures that 
are damaged have to be repaired and brought up to code. In addition, we 
have urged there be a special loan fund for communities that want to 
take measures to protect against flooding because we think this can 
further reduce the loss to the fund and put it on an actuarially sound 
basis.
  According to what I understand FEMA has said, those structures built 
after 1975, and on coastal areas after 1981, when tougher standards 
were enacted for coastal areas, have not been part of the problem. They 
are paying actuarially sound insurance premiums.
  There is a question of cross-subsidization, because a home or a 
business or a structure right on the ocean front is much more apt to be 
damaged by waves and by erosion than, maybe, a store or home two or 
three or four blocks away. Thus, ocean-front structures are greater 
risks than those structures several blocks away. However, when you take 
the entire community, the rates paid by all of those structures in that 
community to the flood insurance fund are actuarially sufficient to 
cover the likely damage resulting to any or all of those structures in 
the floodplain.
  So to the extent that there is cross-subsidization, it is cross-
subsidization within the particular zone where different homes, maybe a 
block or two apart, or different structures, may have different levels 
of risk. There is not, as I understand the answers from FEMA, cross-
subsidization from one section of the country to another.
  What we need to do is come to agreement on a bill that will encourage 
more structure owners in the flood-prone areas to get insurance for 
their buildings, to provide assistance for mitigation in bringing up to 
flood-code standards those pre-FIRM structures now in place, and also 
to encourage communities to take flood protection or other protective 
measures to prevent against the dangers of erosion or flooding.
  One of the proposals in the measure originally proposed by my friend 
from Massachusetts would set aside $25 million for mapping of erosion 
dangers. Some 13 or 15 States which are in danger of erosion have 
already undertaken erosion-mapping efforts. The flood insurance fund, 
because of the pre-FIRM structures, is now in significant difficulty, 
and they have had to take out a $100 million credit line to cover the 
damages because the pre-FIRM structures are not paying actuarially 
sound damages.
  The problem comes with the fund in a deficit. I want to know and 
several of my colleagues want to know if there is going to be a benefit 
to the fund that would warrant the fund--and through the fund the 
people who are paying the flood insurance premiums--spending $25 
million out of that fund for erosion mapping. I happen to think there 
are enough flood-prone structures that if we were going to dip into the 
fund, we ought to be using that money for mitigation efforts directly.
  As you can see, I believe we are close to agreement on this. There 
are others, however, who say we ought to add a separate environmental 
purpose to the floodplain law so people who are paying flood insurance 
would be providing for non-insurance-related benefits. I do not 
believe, with the insurance fund in the precarious position which it 
is, that you can put further burdens on the premium payers, 
particularly those premium payers who have met the State and local 
codes and guidelines and who have structures that conform to the 
guidelines.
  There are a number of ways we can work on this problem and I believe 
we can do that work in compromise, in good faith, off the floor. But I 
urge my colleagues, if this amendment is not withdrawn, and I do not 
know whether it will be withdrawn, to support a tabling motion to 
enable us to complete the work on the compromise and carry on the 
discussions that were to have begun 26 minutes ago.
  I assure the Chair and my colleagues I look forward to continuing the 
work with the Senator from Massachusetts as we seek to solve the very 
real problems of making the flood insurance fund sound, getting more 
structures involved in the Flood Insurance Program, and ensuring that 
appropriate mitigation efforts are taken to reduce the damage of 
floods.
  I thank the Chair and I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition? The Senator from 
Florida.
  Mr. MACK. Madam President, I think, rather than to address myself to 
the specifics and the issues within the bill, and I am really 
addressing my comments to the Senator from Massachusetts, there is the 
potential for an impasse to develop here. It was my hope we were going 
to work our way towards a compromise. There is disagreement on both 
sides as to whether people are acting in good faith or whether they are 
not.
  I was under the impression we were going to meet at noon, the three 
principals--the Senator from Massachusetts, Senator Bond, and myself--
to see if we could find a way to come together. I was under the 
impression the amendment would not be offered until after the three 
principals got together, in essence to try to find out whether there 
really was room to compromise or whether there was not.
  I must say, from our perspective, this seemed like a preemptive 
strike, that the message was: I am going to move forward. The amendment 
offered is not the amendment on which we have been talking about 
compromise. It goes back to the position of denial of insurance and 
increasing premiums. And I must say to the Senator from Massachusetts, 
if that is the amendment he wants to go forward with, we are prepared 
to debate it, and debate it to the full extent necessary. I feel 
confident it will be defeated.
  In our discussions, I think both of us have agreed the two areas we 
know must be dealt with are the issues of mitigation and increasing 
participation. So, I guess my question is, to the Senator from 
Massachusetts: Where does he want to go?
  The PRESIDING OFFICER. Does the Senator yield?
  Mr. MACK. Yes; I do.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. First, I thank both Senators for their efforts on this. I 
said in my opening comments I was anticipating a meeting. I said to the 
manager of the bill overall, the Senator from New York, I would 
possibly lay the amendment down with an understanding that I was not 
going to try to close it out, I was not going to fill any trees, I was 
not going to do anything--not even ask for the yeas and nays. I was 
simply going to put it at the desk so we reserved our rights, depending 
on where we proceeded.
  Then I discussed some of the parameters of this bill in order to try 
to hopefully stimulate a good dialog here. The problem is that we have 
been dialoging this bill for 3 years.
  I have held back from putting it on to one or two other bills on 
three or four occasions in markups in the Banking Committee. This is 
the last train this year. This is it for this opportunity problem. So I 
want to make sure where we are.
  We met yesterday. Sure, we did. I do not want to go into great 
details now. I really think we ought to have the benefit of sitting 
down and trying to proceed forward, which is what we anticipated.
  What we were presented with yesterday, as a consequence of the 
discussions, in my mind, did not represent where I thought we were 
moving in terms of the proximity the Senator from Florida just 
described. In fact, it stripped out whole portions of the bill that we 
have never talked about stripping out. So to me it was a step backwards 
from where we had been. As a consequence, I began to question really 
whether or not we are on the same track. I hope we are. I take the good 
faith of my friend from Florida who has worked closely on this and has 
consistently been available and tried to do it. I would like to see if 
we can get an agreement now and let us sit and talk.
  Mr. MACK addressed the Chair.
  The PRESIDING OFFICER. The Senator from Florida is recognized.
  Mr. MACK. Madam President, just a couple of responses and then I 
think we should.
  As far as this being, in essence, the last legislative vehicle to 
attach this legislation to, I disagree with that. I think there is, in 
fact, interest on our part to see that a flood insurance bill can be 
passed and clearly addressing the areas I have mentioned.
  Second, again I want to say every opportunity you hinted at that you 
wanted to get together, I have made myself available.
  Mr. KERRY. Madam President, I think the----
  The PRESIDING OFFICER. The Senator from Florida has the floor.
  Mr. MACK. Let me make a last point, then I will yield.
  The PRESIDING OFFICER. Is the Senator yielding for a question or 
yielding the floor?
  Mr. MACK. I have one last comment to make and then I will yield the 
floor.
  The last comment is with respect to stripping out. We mentioned 
yesterday some of our concerns about the purposes clause in the 
legislation. So I do not think that should be a surprise that we came 
back with a suggestion that that was what we were intending to do. That 
was mentioned yesterday afternoon in the meeting in my office.
  But, again, we could end up talking all day about whether people 
really are serious about compromising. Let us meet and see if we can 
move forward.
  I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Madam President, there is a difference, I think, with all 
due respect, from pointing out a concern about the way something is 
phrased versus stripping it out completely in a way that, in effect, 
takes out of the bill the very essence of the 1968 creation of this 
bill in the first place.
  I would like to sit down with you. I think it would be good.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOLE. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOLE. Madam President, is leader time reserved?
  The PRESIDING OFFICER. Yes.

                          ____________________