[Congressional Record Volume 140, Number 33 (Tuesday, March 22, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
INTERSTATE BANKING EFFICIENCY ACT OF 1994
Mr. NEAL of North Carolina. Madam Speaker, I move to suspend the
rules and pass the bill (H.R. 384) to amend the Bank Holding Company
Act of 1956, the Revised Statutes of the United States, and the Federal
Deposit Insurance Act to provide for interstate banking and branching,
as amended.
The Clerk read as follows:
H.R. 3841
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Interstate
Banking Efficiency Act of 1994''.
(b) Table of Contents.--
Sec. 1. Short title and table of contents.
TITLE I--INTERSTATE BANKING AND BRANCHING
Sec. 101. Interstate banking.
Sec. 102. Interstate branching by national banks.
Sec. 103. Interstate branching by State banks.
Sec. 104. Branching by foreign banks.
Sec. 105. Interstate consolidations.
Sec. 106. Branch closures.
Sec. 107. Prohibition against deposit production offices.
Sec. 108. Federal Reserve Board study on bank fees.
Sec. 109. Restatement of existing law.
TITLE II--CRA EVALUATIONS
Sec. 201. State-by-State CRA evaluations of depository institutions
with interstate branches.
TITLE I--INTERSTATE BANKING AND BRANCHING
SEC. 101. INTERSTATE BANKING.
(a) Interstate Acquisitions.--Section 3(d) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1842(d)) is amended to
read as follows:
``(d) Interstate Acquisitions.--
``(1) Approvals authorized.--
``(A) In general.--Subject to paragraph (2), the Board may
approve an application under this section by a bank holding
company to acquire, directly or indirectly, any voting shares
of, interest in, or all or substantially all of the assets of
any additional bank or any bank holding company located in
any State other than the home State of the applicant bank
holding company.
``(B) Concentration limits.--
``(i) In general.--The Board may not approve an application
under subparagraph (A) if--
``(I) the applicant (including all insured depository
institutions which are affiliates of the applicant) controls,
or upon completion of the acquisition would control, more
than 10 percent of the total amount of insured depository
institution deposits in the United States; or
``(II) the applicant (including all insured depository
institutions which are affiliates of the applicant) controls,
or upon completion of the acquisition would control, 30
percent or more of the total amount of insured depository
institution deposits in the State in which the bank to be
acquired is located.
``(ii) Waiver by state.--A State may waive the application
of clause (i)(II) to an acquisition in such State.
``(2) Applicability of state law to acquisitions.--
``(A) Inapplicability of certain state laws to
acquisitions.--Subject to paragraph (3), any acquisition
described in paragraph (1)(A) which has been approved under
this section may be consummated notwithstanding any law of
any State that would prohibit or otherwise limit such
acquisition on the basis of--
``(i) the location or size of the acquiring company or any
subsidiary of such company;
``(ii) the number of bank subsidiaries of such company; or
``(iii) any other factor that--
``(I) directly or indirectly, has the effect of prohibiting
or limiting the acquisition of shares or control of a bank or
bank holding company located in such State by an out-of-State
bank holding company; and
``(II) is not applied with similar effect with respect to
acquisitions of banks or bank holding companies located in
such State by bank holding companies located in the State.
``(B) Applicability of state law on the form of
acquisition.--
``(i) In general.--Notwithstanding any other provision of
this subsection and subject to clause (ii), any law of a host
State which--
``(I) is in existence on the date of the enactment of the
Interstate Banking Efficiency Act of 1994 or is enacted after
such date; and
``(II) allows an out-of-State bank or bank holding company
to establish a bank in the host State only by acquiring an
existing bank in the host State,
shall apply with respect to the establishment or acquisition
of a bank in the host State under this subsection.
``(ii) Applicability of provisions relating to minimum
period of existence of acquired bank.--In the case of any
State law referred to in clause (i) which is enacted after
the date of the enactment of the Interstate Banking
Efficiency Act of 1994 and requires the bank to be acquired
to have been in existence (as of the date of the transaction)
for a period of time greater than 5 years, such law shall be
applied under clause (i) by substituting `5-year period' for
such greater period.
``(3) Applicability of state law to interstate banking
operations.--
``(A) State taxation authority not affected.--No provision
of this subsection shall be construed as affecting the
authority of any State or political subdivision of any State
to apply and administer any tax or method of taxation to any
bank, bank holding company, or foreign bank, or any affiliate
of any bank or bank holding company, to the extent such tax
or tax method is otherwise permissible by or under the
Constitution of the United States of America or other Federal
law.
``(B) Applicability of deposit caps and antitrust laws.--No
provision of this subsection shall be construed as
affecting--
``(i) the authority of any State to limit the percentage of
the total amount of insured depository institution deposits
in the State which may be held or controlled by any bank to
the extent the application of such limitation does not
discriminate against out-of-State banks or bank holding
companies; or
``(ii) the applicability of the antitrust laws or any State
law which is similar to the antitrust laws.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Antitrust laws.--The term `antitrust laws'--
``(i) has the same meaning as in subsection (a) of the 1st
section of the Clayton Act; and
``(ii) includes section 5 of the Federal Trade Commission
Act to the extent such section 5 relates to unfair methods of
competition.
``(B) Deposits.--The term `deposits' has the same meaning
as in section 3(l) of the Federal Deposit Insurance Act.
``(C) Home state.--The term `home State' means, with
respect to a bank holding company, the State in which the
total deposits of all banking subsidiaries of such company
were the largest on the later of July 1, 1966, or the date on
which the company becomes a bank holding company.
``(D) Host state.--The term `host State' means, with
respect to a bank holding company acquiring or establishing a
bank in a State other than such company's home State, the
State in which the bank being acquired or established is
located.
``(E) Insured depository institution.--The term `insured
depository institution' has the same meaning as in section 3
of the Federal Deposit Insurance Act.
``(F) Out-of-state bank holding company.--The term `out-of
State bank holding company' means, with respect to any State,
a bank holding company the home State of which is another
State.''.
(b) Subsidiary Depository Institutions as Agents.--Section
18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) by
adding at the end the following new subsection:
``(q) Subsidiary Depository Institutions as Agents for
Certain Affiliates.--
``(1) In general.--Any depository institution subsidiary of
a depository institution holding company may receive
deposits, renew time deposits, close loans, disburse proceeds
of loans, and receive payments on loans and other obligations
as agent for a depository institution affiliate located in
another State.
``(2) Depository institution acting as agent is not a
branch.--Notwithstanding any other provision of law, a
depository institution acting as agent in accordance with
paragraph (1) for a depository institution affiliate shall
not be considered to be a branch of the affiliate.
``(3) Activities as agent.--Paragraph (1) shall not be
construed as authorizing a State depository institution to
engage in activities as an agent in which such institution is
not authorized to engage as principal under the laws of the
State in which such institution acts as agent.
``(4) Plan on meeting local credit needs.--
``(A) In general.--If a depository institution holding
company controls any depository institution which acts as
agent for another depository institution subsidiary of such
company pursuant to paragraph (1), the depository institution
holding company shall file a local credit needs plan with the
appropriate Federal banking agency for the subsidiary which
acts as agent before the date on which the subsidiary begins
acting as agent.
``(B) Local credit needs plan defined.--The term `local
credit needs plan' means a plan for meeting local credit
needs in the communities served by any depository institution
subsidiary (of a bank holding company) which acts as agent
pursuant to paragraph (1), which includes an estimate of the
extent to which the amount of the anticipated savings
attributable to the use of depository institution
subsidiaries as agents under this subsection will be
available to meet such local credit needs.''.
(c) Effective Date.--The amendment made by this section
shall apply after the end of the 12-month period beginning on
the date of the enactment of this Act.
SEC. 102. INTERSTATE BRANCHING BY NATIONAL BANKS.
Section 5155 of the Revised Statutes (12 U.S.C. 36) is
amended--
(1) by redesignating subsections (d) through (h) as
subsections (g) through (k), respectively;
(2) by inserting after subsection (c) the following new
subsections:
``(d) Interstate Branching by National Banks.--
``(1) Approvals of acquisition of existing branches
authorized.--Subject to paragraphs (3) and (4) and
subsections (e) and (f), after the end of the 3-year period
beginning on the date of the enactment of the Interstate
Banking Efficiency Act of 1994, the Comptroller of the
Currency may approve an application to allow a national bank
to--
``(A) acquire a bank or branch located outside the home
State of such bank in a State in which the bank does not
maintain a branch; and
``(B) operate such bank or branch (including any branch of
such bank) as a branch,
if the conditions established in paragraph (6) are met.
``(2) State `opt-in' election to permit interstate
branching through de novo branches.--Subject to subsections
(e) and (f), the Comptroller of the Currency may approve an
application by a national bank to establish and operate a de
novo branch outside the home State of such bank in a State in
which the bank does not maintain a branch if--
``(A) there is in effect in the host State a law that--
``(i) expressly permits all out-of-State banks to establish
de novo branches in such State; and
``(ii) applies equally to national and State banks; and
``(B) the conditions established in paragraph (6) are met.
``(3) State `opt-out' election to prohibit interstate
branching by acquisition of existing banks.--
``(A) In general.--An application by a national bank to
establish a branch in a State other than the home State of
such bank through the acquisition of an existing bank or
branch in the host State may not be approved by the
Comptroller of the Currency if there is in effect in the host
State a law which--
``(i) expressly prohibits all out-of-State banks from
acquiring a branch located in such State through the
acquisition of an existing bank or branch in the host State;
``(ii) was enacted during the period beginning on January
1, 1990, and ending 3 years after the date of the enactment
of the Interstate Banking Efficiency Act of 1994; and
``(iii) applies equally to national and State banks.
``(B) Effect of prohibition.--A national bank whose home
State has in effect a prohibition described in subparagraph
(A) may not acquire or establish, under this subsection, a
branch located in any other State.
``(4) State laws requiring minimum period of existence for
acquisitions by out-of-state banks.--
``(A) Laws enacted before interstate banking act.--In the
case of a State in which a law is in effect which--
``(i) allows an out-of-State bank or bank holding company
to establish a bank in the host State only by acquiring a
bank or branch (in the host State) which has been in
existence for not less than the minimum time period specified
in such law; and
``(ii) took effect on or before the date of the enactment
of the Interstate Banking Efficiency Act of 1994,
an out-of-State national bank which has no branch in such
State may establish a branch in the State under this
subsection only by acquiring a bank or branch which has been
in existence for not less than the minimum time period
specified in such law.
``(B) Subsequent enactments.--In the case of a State in
which a law is in effect which--
``(i) allows an out-of-State bank or bank holding company
to establish a branch in the host State only by acquiring a
bank or branch (in the host State) which has been in
existence for not less than the minimum time period specified
in such law; and
``(ii) took effect after the date of the enactment of the
Interstate Banking Efficiency Act of 1994,
an out-of-State national bank which has no branch in such
State may establish a branch in the State under this
subsection only by acquiring a bank or branch which has been
in existence for not less than the lesser of the minimum time
period specified in such law or 5 years.
``(5) Early approval authorized if state law permits.--The
Comptroller of the Currency may approve an application under
paragraph (1) before the expiration of the 3-year period
described in such paragraph if the State in which the branch
is or will be located has in effect a law which expressly
permits interstate branching by all national and State banks.
``(6) Conditions applicable to the establishment or
acquisition of interstate branches.--The Comptroller of the
Currency may approve an application under paragraph (1) or
(2) by a national bank to acquire or establish a branch only
if--
``(A) the national bank is adequately capitalized (as
defined under section 38 of the Federal Deposit Insurance
Act) as of the date the application is filed; and
``(B) the Comptroller of the Currency determines that--
``(i) the national bank will continue to be adequately
capitalized upon the consummation of the acquisition or
establishment of the branch; and
``(ii) on the basis of an evaluation conducted by the
Comptroller, the management of the bank has the necessary
management skills to manage the operations of the bank upon
the consummation of the acquisition or establishment of the
branch.
``(e) Provisions Applicable to Application and Approval
Process.--
``(1) Consultation with state bank supervisor.--In
determining whether to grant approval of an application under
subsection (d), the Comptroller of the Currency shall
consider the views of any appropriate State bank supervisor
of the bank which submits the application regarding the
bank's compliance with applicable State community
reinvestment laws.
``(2) Compliance with state filing requirements.--
``(A) In general.--An out-of-State national bank that files
an application under subsection (d) to acquire or establish a
branch within a host State shall--
``(i) comply with any filing requirement of the host State
that--
``(I) is not discriminatory in nature; and
``(II) is similar in effect to any requirement imposed by
the host State on a nonbanking corporation from another State
that seeks to engage in business in the host State; and
``(ii) submit a copy of the application to the State bank
supervisor of the host State.
``(B) Penalty for failure to comply.--The Comptroller of
the Currency may not approve an application under subsection
(d) by an out-of-State national bank which materially fails
to comply with subparagraph (A) with respect to such
application.
``(3) Concentration limits.--
``(A) In general.--The Comptroller of the Currency may not
approve an application by a bank under subsection (d) if--
``(i) the bank (including all insured depository
institutions which are affiliates of the bank) controls, or
upon completion of the acquisition would control, more than
10 percent of the total amount of insured depository
institution deposits in the United States; or
``(ii) the bank (including all insured depository
institutions which are affiliates of the bank) controls, or
upon completion of the acquisition would control, 30 percent
or more of the total amount of insured depository institution
deposits in the State in which the proposed branch would be
located.
``(B) Not applicable to de novo out-of-state branches.--
Subparagraph (A) shall not apply to the establishment of a de
novo branch outside the home State of a national bank.
``(C) Waiver by state.--A State may waive the application
of subparagraph (A)(ii) to the acquisition of banks or
branches in such State.
``(4) Consideration of bank affiliates.--In determining
whether to grant approval of an application under subsection
(d) with respect to a proposed branch by a national bank
which, as of the date of the application, does not have a
branch in the host State (of the proposed branch), the
Comptroller of the Currency shall take into account the most
recent written evaluation under section 807 of the Community
Reinvestment Act of 1977 of each bank affiliate of the bank
which submits the application.
``(5) Definitions.--For purposes of this subsection and
subsections (d) and (f) the following definitions shall
apply:
``(A) Affiliate.--The term `affiliate' has the same meaning
as in section 2(k) of the Bank Holding Company Act of 1956.
``(B) Antitrust laws.--The term `antitrust laws'--
``(i) has the same meaning as in subsection (a) of the 1st
section of the Clayton Act; and
``(ii) includes section 5 of the Federal Trade Commission
Act to the extent such section 5 relates to unfair methods of
competition.
``(C) De novo branch.--The term `de novo branch' means a
branch of a national bank which--
``(i) is originally established by the national bank as a
branch; and
``(ii) does not become a branch of such bank as a result
of--
``(I) the acquisition by the bank of an insured depository
institution or a branch of an insured depository institution;
or
``(II) the conversion, merger, or consolidation of any such
institution or branch.
``(D) Deposits.--The term `deposits' has the same meaning
as in section 3(l) of the Federal Deposit Insurance Act.
``(E) Home state.--The term `home State' means, with
respect to a national bank, the State in which the main
office of the bank is located.
``(F) Host state.--The term `host State' means any State in
which a national bank establishes or maintains a branch other
than the home State of such bank.
``(G) Insured depository institution.--The term `insured
depository institution' has the same meaning as in section
3(c)(2) of the Federal Deposit Insurance Act.
``(H) Out-of-state bank.--The term `out-of-State bank'
means, with respect to any State, a bank whose home State is
another State.
``(I) Out-of-state bank holding company.--The term `out-of-
State bank' means, with respect to any State, a bank holding
company whose home State (as defined in section 3(d)(4)(D) of
the Bank Holding Company Act of 1956) is another State.
``(J) State bank.--The term `State bank' has the same
meaning as in section 3(a)(2) of the Federal Deposit
Insurance Act.
``(K) State bank supervisor.--The term `State bank
supervisor' has the same meaning as in section 3(r) of the
Federal Deposit Insurance Act.
``(f) Applicability of State and Federal Law to Interstate
Branching Operations.--
``(1) Certain state laws applicable to national bank
branches.--
``(A) In general.--Any branch of an out-of-State national
bank shall be subject to the laws of the host State with
respect to intrastate branching, consumer protection, fair
lending, and community reinvestment as if the branch were a
branch of a bank chartered by that State, except to the
extent any such State law is preempted by Federal law
regarding the same subject.
``(B) Prohibition on discriminatory effect.--
Notwithstanding subparagraph (A), a branch of an out-of-State
national bank shall not be subject to a State law described
in such subparagraph to the extent the Comptroller of the
Currency determines that the application of the law has, or
would have, a discriminatory effect on the branch in
comparison with the effect the application of such law has
with respect to branches of a bank chartered by the State.
``(C) Enforcement of applicable state laws.--The provisions
of any State law to which a branch of a national bank is
subject under this paragraph shall be enforced, with respect
to such branch, by the Comptroller of the Currency.
``(2) Treatment of branch as bank.--All laws of a host
State, other than the laws described in paragraph (1) or laws
pertaining to the application or administration of any tax or
method of taxation, shall apply to a branch (in such State)
of an out-of-State national bank in the same manner and to
the same extent such laws would apply if the branch were a
national bank located in that State.
``(3) State taxation authority not affected.--No provision
of this subsection or subsection (d) or (e) shall be
construed as affecting the authority of any State or
political subdivision of any State to apply and administer
any tax or method of taxation to any national bank, including
any branch of a national bank, any bank holding company which
controls a national bank, or any affiliate of any such bank
or bank holding company to the extent such tax or tax method
is otherwise permissible by or under the Constitution of the
United States of America or other Federal law.
``(4) State-imposed notice requirements.--A host State may
impose any notification or reporting requirement on a branch
established or acquired under subsection (d) if the
requirement--
``(A) does not discriminate against out-of-State banks or
bank holding companies; and
``(B) is not preempted by any Federal law regarding the
same subject.
``(5) Applicability of deposit caps and antitrust laws.--No
provision of this subsection or subsection (d) or (e) shall
be construed as affecting--
``(A) the authority of any State to limit the percentage of
the total amount of insured depository institution deposits
in the State which may be held or controlled by any bank
(including all insured depository institutions which are
affiliates of the bank) to the extent the application of such
limitation does not discriminate against out-of-State banks
or bank holding companies; or
``(B) the applicability of the antitrust laws or any State
law which is similar to the antitrust laws.''; and
(3) in subsection (i) (as so redesignated by the amendment
made by paragraph (1) of this section), by striking ``The
term'' and inserting ``Branch.--Except as provided in section
18(q) of the Federal Deposit Insurance Act, the term''.
SEC. 103. INTERSTATE BRANCHING BY STATE BANKS.
(a) In General.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by adding at the end the
following new section:
``SEC. 44. STATE BANK BRANCHES.
``(a) Consent of Corporation.--
``(1) Establishment of branches.--No State nonmember
insured bank (except a District bank) may establish and
operate any new domestic branch without the prior written
consent of the Corporation.
``(2) Change of location of state bank offices and
branches.--No State nonmember insured bank (except a District
bank) may move the main office or any domestic branch of such
bank from 1 location to another without the prior written
consent of the Corporation.
``(3) Change of location of insured branch of foreign
bank.--No foreign bank may move any insured branch from 1
location to another without the prior written consent of the
Corporation.
``(4) Factors to be considered.--The Corporation shall
consider the factors enumerated in section 6 in making any
determination under this subsection.
``(b) Establishment of Foreign Branches.--
``(1) In general.--No State nonmember insured bank shall
establish or operate any foreign branch without the prior
written consent of the Corporation.
``(2) Conditions and regulations.--The Corporation may
establish such conditions and prescribe such regulations for
the establishment and operation of foreign branches of State
nonmember banks as the Corporation may determine to be
appropriate.
``(c) Interstate Branching by State Banks.--
``(1) Approvals of acquisition of existing branches
authorized.--Subject to paragraphs (3) and (4) and
subsections (d) and (e), after the end of the 3-year period
beginning on the date of the enactment of the Interstate
Banking Efficiency Act of 1994, the appropriate Federal
banking agency may approve an application under this section
to allow an insured State bank to--
``(A) acquire a bank or branch located outside the home
State of such bank in a State in which the bank does not
maintain a branch; and
``(B) operate such bank or branch (including any branch of
such bank) as a branch,
if the conditions established in paragraph (6) are met.
``(2) State `opt-in' election to permit interstate
branching through de novo branches.--Subject to subsections
(d) and (e), the appropriate Federal banking agency may
approve an application by a State bank to establish and
operate a de novo branch outside the home State of such bank
in a State in which the bank does not maintain a branch if--
``(A) there is in effect in the host State a law that--
``(i) expressly permits all out-of-State banks to establish
de novo branches in such State; and
``(ii) applies equally to national and State banks; and
``(B) the conditions established in paragraph (6) are met.
``(3) State `opt-out' election to prohibit interstate
branching by acquisition of existing banks.--
``(A) In general.--An application by an insured State bank
to establish a branch in a State other than the home State of
such bank through the acquisition of an existing bank or
branch in the host State may not be approved by the
appropriate Federal banking agency if there is in effect in
the host State a law which--
``(i) expressly prohibits all out-of-State banks from
acquiring a branch located in such State through the
acquisition of an existing bank or branch in the host State;
``(ii) was enacted during the period beginning on January
1, 1990, and ending 3 years after the date of the enactment
of the Interstate Banking Efficiency Act of 1994; and
``(iii) applies equally to national and State banks.
``(B) Effect of prohibition.--An insured State bank whose
home State has in effect a prohibition described in
subparagraph (A) may not acquire or establish, under
subsection (c), a branch located in any other State.
``(4) State laws requiring minimum period of existence for
acquisitions by out-of-state banks.--
``(A) Laws enacted before interstate banking act.--In the
case of a State in which a law is in effect which--
``(i) allows an out-of-State bank or bank holding company
to establish a bank in the host State only by acquiring a
bank or branch (in the host State) which has been in
existence for not less than the minimum time period specified
in such law; and
``(ii) took effect on or before the date of the enactment
of the Interstate Banking Efficiency Act of 1994,
an out-of-State insured State bank which has no branch in
such State may establish a branch in the State under this
subsection only by acquiring a bank or branch which has been
in existence for not less than the minimum time period
specified in such law.
``(B) Subsequent enactments.--In the case of a State in
which a law is in effect which--
``(i) allows an out-of-State bank or bank holding company
to establish a branch in the host State only by acquiring a
bank or branch (in the host State) which has been in
existence for not less than the minimum time period specified
in such law; and
``(ii) took effect after the date of the enactment of the
Interstate Banking Efficiency Act of 1994,
an out-of-State insured State bank which has no branch in
such State may establish a branch in the State under this
subsection only by acquiring a bank or branch which has been
in existence for not less than the lesser of the minimum time
period specified in such law or 5 years.
``(5) Early approval authorized if state law permits.--The
appropriate Federal banking agency may approve an application
under paragraph (1) before the expiration of the 3-year
period described in such paragraph if the State in which the
branch is or will be located has in effect a law which
expressly permits interstate branching by all national and
State banks.
``(6) Conditions applicable to the establishment or
acquisition of interstate branches.--The appropriate Federal
banking agency may approve an application under paragraph (1)
or (2) by an insured State bank to acquire or establish a
branch only if--
``(A) the bank is adequately capitalized (as defined under
section 38) as of the date the application is filed;
``(B) the bank is authorized to establish branches in other
States under the law of the home State of the bank; and
``(C) the appropriate Federal banking agency determines
that--
``(i) the bank will continue to be adequately capitalized
upon the consummation of the acquisition or establishment of
the branch; and
``(ii) on the basis of an evaluation conducted by the
agency, the management of the bank has the necessary
management skills to manage the operations of the bank upon
the consummation of the acquisition or establishment of the
branch.
``(d) Provisions Applicable to Application and Approval
Process.--
``(1) Consultation with state bank supervisor.--In
determining whether to grant approval of an application under
subsection (c), the appropriate Federal banking agency shall
consider the views of any appropriate State bank supervisor
of the bank which submits the application regarding the
bank's compliance with applicable State community
reinvestment laws.
``(2) Compliance with state filing requirements.--
``(A) In general.--An out-of-State insured State bank that
files an application under subsection (c) to acquire or
establish a branch within a host State shall--
``(i) comply with any filing requirement of the host State
that--
``(I) is not discriminatory in nature; and
``(II) is similar in effect to a requirement imposed by the
host State on a nonbanking corporation from another State
that seeks to engage in business in the host State; and
``(ii) submit a copy of the application to the State bank
supervisor of the host State.
``(B) Penalty for failure to comply.--The appropriate
Federal banking agency may not approve an application under
subsection (c) by an insured State bank which materially
fails to comply with subparagraph (A) with respect to such
application.
``(3) Concentration limits.--
``(A) In general.--The appropriate Federal banking agency
may not approve an application by a bank under subsection (c)
if--
``(i) the bank (including all insured depository
institutions which are affiliates of the bank) controls, or
upon completion of the acquisition would control, more than
10 percent of the total amount of insured depository
institution deposits in the United States; or
``(ii) the bank (including all insured depository
institutions which are affiliates of the bank) controls, or
upon completion of the acquisition would control, 30 percent
or more of the total amount of insured depository institution
deposits in the State in which the proposed branch would be
located.
``(B) Not applicable to de novo out-of-state branches.--
Subparagraph (A) shall not apply to the establishment of a de
novo branch outside the home State of an insured State bank.
``(C) Waiver by state.--A State may waive the application
of subparagraph (A)(ii) to the acquisition of banks or
branches in such State.
``(4) Consideration of bank affiliates.--In determining
whether to grant approval of an application under subsection
(c) with respect to a proposed branch by an insured State
bank which, as of the date of the application, does not have
a branch in the host State (of the proposed branch), the
appropriate Federal banking agency shall take into account
the most recent written evaluation under section 807 of the
Community Reinvestment Act of 1977 of each bank affiliate of
the bank which submits the application.
``(e) Applicability of State and Federal Law to Interstate
Branching Operations.--
``(1) State laws applicable to branches of out-of-state
banks.--
``(A) In general.--Subject to subsection (d), any branch of
an out-of-State insured State bank shall be subject to the
laws of the host State as if such branch were a branch of a
bank chartered by that State.
``(B) Activities of branches.--An insured State bank that
establishes a branch in a host State may not conduct any
activity at such branch that is not permissible for a bank
chartered by the host State.
``(C) Reservation of certain rights to states.--No
provision of this subsection or subsection (c) or (d) shall
be construed as limiting in any way the right of a State to--
``(i) determine the authority of State banks chartered in
that State to establish and maintain branches; or
``(ii) supervise, regulate, and examine State banks
chartered by that State.
``(2) State taxation authority not affected.--No provision
of this subsection or subsection (c) or (d) shall be
construed as affecting the authority of any State or
political subdivision of any State to apply and administer
any tax or method of taxation to any State bank, including
any branch of a State bank, any bank holding company which
controls any State bank, or any affiliate of any such bank or
bank holding company to the extent such tax or tax method is
otherwise permissible by or under the Constitution of the
United States of America or other Federal law.
``(3) State-imposed notice requirements.--A host State may
impose any notification or reporting requirement on a branch
established or acquired under subsection (c) if the
requirement--
``(A) does not discriminate against out-of-State banks or
bank holding companies; and
``(B) is not preempted by any Federal law regarding the
same subject.
``(4) Applicability of deposit caps and antitrust laws.--No
provision of this subsection or subsection (c) or (d) shall
be construed as affecting--
``(A) the authority of any State to limit the percentage of
the total amount of insured depository institution deposits
in the State which may be held or controlled by any bank
(including all insured depository institutions which are
affiliates of the bank) to the extent the application of such
limitation does not discriminate against out-of-State banks
or bank holding companies; or
``(B) the applicability of the antitrust laws or any State
law which is similar to the antitrust laws.
``(f) Coordination of Examination Authority.--
``(1) In general.--A host State bank supervisor may examine
a branch operated in the host State by an out-of-State
insured State bank to--
``(A) determine compliance with host State laws regarding
banking, community reinvestment, fair lending, consumer
protection, and permissible activities; and
``(B) ensure that the activities of the branch do not
constitute a significant risk to the safe and sound operation
of the branch.
``(2) Enforcement.--If the State bank supervisor of a host
State described in paragraph (1) determines that there is a
violation of host State law concerning the activities being
conducted by a branch operated in such State by an out-of-
State insured State bank or that the branch is being operated
in an unsafe and unsound manner, such host State bank
supervisor or, to the extent authorized by the law of the
host State, a State law enforcement officer may undertake
such enforcement actions or proceedings as would be permitted
under host State law if the branch were a bank chartered by
the host State.
``(3) Cooperative agreement.--The State bank supervisors of
1 or more States may enter into cooperative agreements to
facilitate State regulatory supervision of State banks and
branches, including cooperative agreements relating to the
coordination of examinations and joint participation in
examinations.
``(4) Federal regulatory authority.--No provision of this
section shall be construed as limiting the authority of any
Federal banking agency to examine any bank or branch of a
bank for which the agency is the appropriate Federal banking
agency.
``(g) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Antitrust laws.--The term `antitrust laws'--
``(A) has the same meaning as in subsection (a) of the 1st
section of the Clayton Act; and
``(B) includes section 5 of the Federal Trade Commission
Act to the extent such section 5 relates to unfair methods of
competition.
``(2) De novo branch.--The term `de novo branch' means a
branch of a bank which--
``(A) is originally established by the bank as a branch;
and
``(B) does not become a branch of such bank as a result
of--
``(i) the acquisition by the bank of an insured depository
institution or a branch of an insured depository institution;
or
``(ii) the conversion, merger, or consolidation of any such
institution or branch.
``(3) Home state.--The term `home State' means, with
respect to a State bank, the State by whom the bank is
chartered.
``(4) Host state.--The term `host State' means the State in
which a bank establishes or maintains a branch other than the
home State of the bank.
``(5) Out-of-state bank.--The term `out-of-State bank'
means, with respect to any State, a bank whose home State is
another State.
``(6) Out-of-state bank holding company.--The term `out-of-
State bank' means, with respect to any State, a bank holding
company whose home State (as defined in section 3(d)(4)(D) of
the Bank Holding Company Act of 1956) is another State.''.
(b) Technical and Conforming Amendment.--Section 3(o) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(o)) is
amended to read as follows:
``(o) Definitions Relating to Domestic and Foreign
Branches.--
``(1) Branch.--The term `branch' means a domestic branch or
a foreign branch, except when such term is used in connection
with the term `Federal branch' or `insured branch'.
``(2) Domestic branch.--The term `domestic branch' includes
any branch bank, branch office, branch agency, additional
office, or any branch located in any State at which deposits
are received, checks are paid, or money is lent.
``(3) Foreign branch.--The term `foreign branch' means any
office or place at which banking operations are conducted and
which is not located in any State.''.
SEC. 104. BRANCHING BY FOREIGN BANKS.
(a) In General.--Section 5(a) of the International Banking
Act of 1978 (12 U.S.C. 3103(a)) is amended to read as
follows:
``(a) Interstate Branching and Agency Operations.--
``(1) Federal branch or agency.--Subject to the provisions
of this Act and with the prior written approval by the Board
and the Comptroller of the Currency of an application, a
foreign bank may establish and operate a Federal branch or
agency in any State outside the home State of such foreign
bank to the extent that the establishment and operation of
such branch would be permitted under section 5155 of the
Revised Statutes if the foreign bank were a national bank
whose home State (as defined in subsection (e)(5) of such
section) is the same State as the home State of the foreign
bank.
``(2) State branch or agency.--Subject to the provisions of
this Act and with the prior written approval by the Board and
the appropriate State bank supervisor of an application, a
foreign bank may establish and operate a State branch or
agency in any State outside the home State of such foreign
bank to the extent that such establishment and operation
would be permitted under section 44 of the Federal Deposit
Insurance Act if the foreign bank were a State bank whose
home State (as defined in subsection (g) of such section) is
the same State as the home State of the foreign bank.
``(3) Criteria for determination.--In approving an
application under paragraph (1) or (2), the Board and (in the
case of an application under paragraph (1)) the Comptroller
of the Currency--
``(A) shall apply the standards applicable to the
establishment of a foreign bank office in the United States
under section 7(d); and
``(B) may not approve an application unless the Board and
(in the case of an application under paragraph (1)) the
Comptroller of the Currency--
``(i) determine that the foreign bank's financial
resources, including the capital level of the bank, are
equivalent to those required for a domestic bank to be
approved for branching under section 5155 of the Revised
Statutes and section 44 of the Federal Deposit Insurance Act;
and
``(ii) consult with the Secretary of the Treasury regarding
capital equivalency.
``(4) Requirement for a separate subsidiary.--If the Board
or the Comptroller of the Currency, taking into account
differing regulatory or accounting standards, finds that
adherence by a foreign bank to capital requirements
equivalent to those imposed under section 5155 of the Revised
Statutes and section 44 of the Federal Deposit Insurance Act
could be verified only if the banking activities of such bank
in the United States are carried out in a domestic banking
subsidiary within the United States, the Board and the
Comptroller of the Currency may approve an application under
paragraph (1) subject to a requirement that the foreign bank
or company controlling the foreign bank establish a domestic
banking subsidiary in the United States.
``(5) Additional authority for interstate branches and
agencies of foreign banks.--Notwithstanding paragraphs (1)
and (2), a foreign bank may, with the approval of the
Comptroller of the Currency, establish and operate a Federal
branch or Federal agency or, with the approval of the Board
and the appropriate State bank supervisor, a State branch or
State agency in any State outside the foreign bank's home
State if--
``(A) the establishment and operation of a branch or agency
is expressly permitted by the State in which the branch or
agency is to be established; and
``(B) in the case of a Federal or State branch, the branch
receives only such deposits as would be permissible for a
corporation organized under section 25A of the Federal
Reserve Act.''.
(b) Continued Authority for Limited Branches, Agencies, or
Commercial Lending Companies.--Section 5(b) of the
International Banking Act of 1978 (12 U.S.C. 3103(b)) is
amended by adding at the end the following new sentence:
``Notwithstanding subsection (a), a foreign bank may continue
to operate, after the enactment of the Interstate Banking
Efficiency Act of 1994, any Federal branch, State branch,
Federal agency, State agency, or commercial lending company
subsidiary which such bank was operating on the day before
the date of the enactment of such Act to the extent the
branch, agency, or subsidiary continues, after the enactment
of such Act, to engage in operations which were lawful under
the laws in effect on the day before such date.''.
(c) Clarification of Branching Rules in the Case of a
Foreign Bank With a Domestic Bank Subsidiary.--Section 5 of
the International Banking Act of 1978 (12 U.S.C. 3103) is
amended by adding at the end the following new subsection:
``(d) Clarification of Branching Rules in the Case of a
Foreign Bank With a Domestic Bank Subsidiary.--In the case of
a foreign bank that has a domestic bank subsidiary within the
United States--
``(1) the fact that such bank controls a domestic bank
shall not affect the authority of the foreign bank to
establish Federal and State branches or agencies to the
extent permitted under subsection (a); and
``(2) the fact that the domestic bank is controlled by a
foreign bank which has Federal or State branches or agencies
in States other than the home State of such domestic bank
shall not affect the authority of the domestic bank to
establish branches outside the home State of the domestic
bank to the extent permitted under section 5155(d) of the
Revised Statutes or section 44 of the Federal Deposit
Insurance Act, as the case may be.''.
(d) Home State Determinations.--Section 5(c) of the
International Banking Act of 1978 (12 U.S.C. 3103(c)) is
amended to read as follows:
``(c) Determination of Home State of Foreign Bank.--For the
purposes of this section--
``(1) in the case of a foreign bank that has any branch,
agency, subsidiary commercial lending company, or subsidiary
bank in more than 1 State, the home State of the foreign bank
is the 1 State of such States which is selected by the
foreign bank or, in default of any such selection, by the
Board; and
``(2) in the case of a foreign bank that does not have a
branch, agency, subsidiary commercial lending company, or
subsidiary bank in more than 1 State, the home State of the
foreign bank is the State in which the foreign bank has a
branch, agency, subsidiary commercial lending company, or
subsidiary bank.''.
SEC. 105. INTERSTATE CONSOLIDATIONS.
Section 18(d) of the Federal Deposit Insurance Act (12
U.S.C. 1828(d)) is amended to read as follows:
``(d) Interstate Consolidations.--
``(1) Consolidations authorized.--
``(A) In general.--Except as provided in section 3(d)(1)(B)
of the Bank Holding Company Act of 1956 and notwithstanding
any other provision of Federal law or any provision of State
law (other than a law referred to in subparagraph (B)), a
bank holding company which has bank subsidiaries in more than
1 State may, with the prior written approval by the
responsible agency (as determined in accordance with section
18(c)(2) of the Federal Deposit Insurance Act) of an
application and subject to the requirements of subsection
(c), combine 2 or more of such banks into a single bank by
means of merger, consolidation, or other similar transaction
in accordance with such subsection after the end of the 18-
month period beginning on the date of the enactment of the
Interstate Banking Efficiency Act of 1994.
``(B) Exception for states which prohibit the acquisition
of a branch by any out-of-state bank.--No bank which is
located in a State in which a law described in section
5155(d)(3)(A) of the Revised Statutes of the United States or
section 44(c)(3)(A) is in effect may be a party to a merger,
consolidation, or other similar transaction under
subparagraph (A) with any other bank affiliate of such bank.
``(C) Exception for certain banks acquired during
transition period.--No bank subsidiary of a bank holding
company, or any branch of any such bank--
``(i) control of which was acquired, directly or
indirectly, by such company after the end of the 18-month
period beginning on the date of the enactment of the
Interstate Banking Efficiency Act of 1994; and
``(ii) which is located in a State in which the company did
not control any bank or branch as of the end of such 18-month
period,
may be a party to a merger, consolidation, or other similar
transaction under subparagraph (A) with any other bank
affiliate of such bank before the end of the 3-year period
beginning on such date of enactment, unless the State in
which the bank or branch is located is a State referred to in
section 5155(d)(5) of the Revised Statutes of the United
States or section 44(c)(5).
``(2) Effect of state prohibition on branching.--If a
branch which results from a transaction under paragraph (1)
is located in a State in which a law--
``(A) takes effect after the consummation of the
transaction;
``(B) is enacted during the period beginning on January 1,
1990, and ending 3 years after the date of the enactment of
the Interstate Banking Efficiency Act of 1994;
``(C) expressly prohibits all out-of-State banks from
acquiring a branch located in such State through the
acquisition of an existing bank in the host State; and
``(D) applies equally to national and State banks,
the branch shall be promptly converted back into a bank as
the bank existed before such transaction, in accordance with
regulations of the Federal banking agency or State bank
supervisor which had jurisdiction over the bank which was
converted into a branch.
``(3) Applicability of state and federal law to interstate
branching operations.--If a branch which results from a
transaction under paragraph (1) is the branch of a national
bank, section 5155(f) of the Revised Statutes of the United
States shall apply with respect to such branch.
``(4) State taxation authority not affected.--No provision
of this subsection shall be construed as affecting the
authority of any State or political subdivision of any State
to apply and administer any tax or method of taxation to any
bank subsidiary or additional branch resulting from a
consolidation or other transaction under paragraph (1) or
(2), any bank holding company which controls any bank or
branch resulting from any such consolidation or other
transaction, or any affiliate of any such bank or company to
the extent such tax or tax method is otherwise permissible by
or under the Constitution of the United States of America or
other Federal law.
``(5) Plan on meeting local credit needs.--The responsible
agency (as determined under subsection (c)(2)) may not
approve any application for any consolidation or other
transaction under this subsection unless the responsible
agency has considered a plan submitted by the applicant bank
holding company for meeting local credit needs in the
communities served by any bank subsidiary of the company
which is involved in the proposed consolidation or
transaction, including the extent to which the amount of the
anticipated savings attributable to the proposed
consolidation or other transaction will be available to meet
such local credit needs.''.
SEC. 106. BRANCH CLOSURES.
Section 42 of the Federal Deposit Insurance Act (12 U.S.C.
1831r-1) is amended by adding at the end the following new
subsection:
``(d) Branch Closures in Interstate Banking or Branching
Operations.--
``(1) Notice requirements.--In the case of an interstate
bank which proposes to close any branch in a low- or moderate
income area, the notice required under subsection (b)(2)
shall contain the mailing address of the appropriate Federal
banking agency and a statement that comments on the proposed
closing of such branch may be mailed to such agency.
``(2) Action required by appropriate federal banking
agency.--If, in the case of a branch referred to in paragraph
(1)--
``(A) a person from the area in which such branch is
located--
``(i) submits a written request relating to the closing of
such branch to the appropriate Federal banking agency; and
``(ii) includes a statement of specific reasons for the
request, including a discussion of the adverse effect of such
closing on the availability of banking services in the area
affected by the closing of the branch; and
``(B) the agency concludes that the request is not
frivolous,
the agency shall consult with community leaders in the
affected area and convene a meeting of representatives of the
agency with community leaders in the affected area and such
other individuals, organizations, and depository institutions
(as defined in section 19(b)(1)(A) of the Federal Reserve
Act) as the agency may determine to be appropriate, to
explore the feasibility of obtaining adequate alternative
facilities and services for the affected area, including the
establishment of a new branch by another depository
institution, the chartering of a new depository institution,
or the establishment of a community development credit union,
following the closing of the branch.
``(3) No affect on closing.--No action by the appropriate
Federal banking agency under paragraph (2) shall affect the
authority of an interstate bank to close a branch (including
the timing of such closing) if the requirements of
subsections (a) and (b) have been met by such bank with
respect to the branch being closed.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Interstate bank defined.--The term `interstate bank'
means a bank which maintains branches in more than 1 State.
``(B) Low- or moderate-income area.--The term `low- or
moderate-income area' means a census tract for which the
median family income is--
``(i) less than 80 percent of the median family income for
the metropolitan statistical area (as designated by the
Director of the Office of Management and Budget) in which the
census tract is located; or
``(ii) in the case of a census tract which is not located
in a metropolitan statistical area, less than 80 percent of
the median family income for the State in which the census
tract is located, as determined without taking into account
family income in metropolitan statistical areas in such
State.''.
SEC. 107. PROHIBITION AGAINST DEPOSIT PRODUCTION OFFICES.
(a) Regulations.--Before the end of the 120-day period
beginning on the date of the enactment of the Interstate
Banking Efficiency Act of 1994, each appropriate Federal
banking agency shall prescribe regulations which prohibit any
person from using any authority to engage in interstate
branching pursuant to this title, or any amendment made by
this title to any other provision of law, primarily for the
purpose of deposit production.
(b) Guidelines for Meeting Credit Needs.--Regulations
issued under subsection (a) shall include guidelines to
ensure that each interstate branch meets the credit needs of
the community and market area in which the branch operates.
(c) Limitation on Out-of-State Loans.--
(1) Limitation.--Regulations issued under subsection (a)
shall require that if the percentage of outstanding loans
made by an interstate branch to borrowers located in the host
State of, or market area served by, the branch is less than
half the average of such percentage for all Federal
depository institutions and State depository institutions
having their principal place of operations in the host State
or that market area--
(A) the appropriate Federal banking agency for the branch
shall review the loan portfolio of the branch and determine
whether the branch is reasonably meeting the credit needs of
the community and market area in which the branch operates;
and
(B) if the agency determines that the branch is not
reasonably meeting those needs--
(i) the branch shall be closed, and
(ii) the person which established the branch may not open a
new branch in that State unless the person provides
reasonable assurances to the satisfaction of the appropriate
Federal banking agency that the new branch will reasonably
meet the credit needs of the community and market area in
which the new branch will operate.
(2) Considerations.--In making a determination under
paragraph (1)(A) regarding an interstate branch, the
appropriate Federal banking agency shall consider--
(A) whether the branch was acquired as part of the purchase
of a failed or failing depository institution;
(B) whether the branch has a higher concentration of
commercial and credit card lending; and
(C) the ratings received by the branch in evaluations under
the Community Reinvestment Act of 1977.
(d) Application.--This section shall not apply to any
interstate branch acquired before January 1, 1992, as part of
any consolidation or merger of depository institutions.
(e) Definitions.--For the purposes of this section, the
following definitions shall apply:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act.
(2) Branch.--The term ``branch'' means any office, agency,
or other place of business located in any State at which
deposits are received, checks paid, or money lent.
(3) Federal depository institution and state depository
institution.--The terms ``Federal depository institution''
and ``State depository institution'' have the same meanings
as in section 3 of the Federal Deposit Insurance Act.
(4) Host state defined.--The term ``host State'' means the
State in which a bank establishes or maintains a branch,
other than--
(A) in the case of a insured State bank, the State in which
the bank is chartered;
(B) in the case of a national bank, the State in which the
main office of the bank is located; and
(C) in the case of a bank holding company, the State in
which the total deposits of all bank subsidiaries of such
company is the greatest.
(5) Interstate branch.--The term ``interstate branch''
means a branch established pursuant to the authority referred
to in subsection (a).
(6) Principal place of operations.--The term ``principal
place of operations'' means the State in which the total
deposits of all bank subsidiaries of a person are greatest.
(7) State defined.--The term ``State'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act.
SEC. 108. FEDERAL RESERVE BOARD STUDY ON BANK FEES.
(a) In General.--Section 1002 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note) is amended to read as follows:
``SEC. 1002. SURVEY OF BANK FEES AND SERVICES.
``(a) Annual Survey Required.--The Board of Governors of
the Federal Reserve System shall obtain a sample, which is
representative by geographic location and size of the
institution, of--
``(1) certain retail banking services provided by insured
depository institutions; and
``(2) the fees, if any, which are imposed by such
institutions for providing such service, including fees
imposed for not sufficient funds, deposit items returned, and
automated teller machines.
``(b) Annual Report to Congress Required.--
``(1) Preparation.--The Board of Governors of the Federal
Reserve System shall prepare a report of the results of each
survey conducted pursuant to subsection (a).
``(2) Contents of the report.--Each report prepared
pursuant to paragraph (1) shall include--
``(A) a description of any discernible trend, in the Nation
as a whole and in each State, in the cost and availability of
retail banking services which delineates differences on the
basis of size of the institution and engagement in multistate
activity; and
``(B) a description of the correlation, if any, among the
following factors:
``(i) An increase or decrease in the amount of any deposit
insurance premium assessed by the Federal Deposit Insurance
Corporation against insured depository institutions.
``(ii) An increase or decrease in the amount of the fees
imposed by such institutions for providing retail banking
services.
``(iii) A decrease in the availability of such services.
``(3) Submission to congress.--The Board of Governors of
the Federal Reserve System shall submit each annual report to
the Congress not later than June 1 of each calendar year.''.
(b) Sunset.--The requirements of subsection (a) shall not
apply after the end of the 7-year period beginning on the
date of enactment of this Act.
SEC. 109. RESTATEMENT OF EXISTING LAW.
No provision of this title and no amendment made by this
title to any other provision of law shall be construed as
affecting in any way the right of any State, or any political
subdivision of any State, to impose or maintain a
nondiscriminatory franchise tax or other nonproperty tax
instead of a franchise tax in accordance with section 3124 of
title 31, United States Code.
TITLE II--CRA EVALUATIONS
SEC. 201. STATE-BY-STATE CRA EVALUATIONS OF DEPOSITORY
INSTITUTIONS WITH INTERSTATE BRANCHES.
Section 807 of the Community Reinvestment Act of 1977 (12
U.S.C. 2906) is amended by adding at the end the following
new subsection:
``(d) Institutions With Interstate Branches.--
``(1) State-by-state evaluation.--In the case of a
regulated financial institution which maintains 1 or more
domestic branches located outside the State in which the
institution's principal place of business is located
(hereafter in this subsection referred to as the `home
State'), the appropriate Federal financial supervisory agency
shall prepare--
``(A) a written evaluation of the entire institution's
record of performance under this Act, as required by
subsections (a), (b), and (c) of this section; and
``(B) for each State in which the institution maintains 1
or more domestic branches (including the institution's home
State), a separate written evaluation of the institution's
record of performance within such State under this Act, as
required by subparagraphs (A) and (B) of subsection (b)(1) of
this section.
``(2) Content of state level evaluation.--A written
evaluation prepared pursuant to paragraph (1)(B) of this
subsection shall report the information required by such
paragraph separately for each metropolitan area (as defined
by the appropriate Federal financial supervisory agency) in
which the regulated financial institution maintains 1 or more
domestic branch offices and separately for the
nonmetropolitan portion of the State if the institution
maintains 1 or more domestic branch offices in such
nonmetropolitan area.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
North Carolina [Mr. Neal] will be recognized for 20 minutes, and the
gentlewoman from New Jersey [Mrs. Roukema] will be recognized for 20
minutes.
parliamentary inquiry
Mr. MFUME. Madam Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore. The gentleman will state it.
Mr. MFUME. Madam Speaker, I would inquire of the gentlewoman from New
Jersey [Mrs. Roukema] whether she is standing in opposition to the bill
before the House.
Mrs. ROUKEMA. Madam Speaker, the minority is in agreement.
Mr. MFUME. Madam Speaker, I rise in opposition to the bill and would
like to be recognized also.
The SPEAKER pro tempore. The gentleman from Maryland [Mr. Mfume] is
entitled to control the time, and will be recognized for 20 minutes.
The Chair recognizes the gentleman from North Carolina [Mr. Neal].
general leave
Mr. NEAL of North Carolina. Madam Speaker, I ask unanimous consent
that all Members may have 5 legislative days within which to revise and
extend their remarks, and include therein extraneous material, on H.R.
3841, as amended.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Carolina?
There was no objection.
Mr. NEAL of North Carolina. Madam Speaker, I yield such time as he
may consume to the gentleman from Texas [Mr. Gonzalez], the very
distinguished chairman of the Committee on Banking, Finance and Urban
Affairs.
(Mr. GONZALEZ asked and was given permission to revise and extend his
remarks.)
Mr. GONZALEZ. Madam Speaker, I thank the gentleman for yielding time
to me.
Madam Speaker, the gentleman from North Carolina, the chairman of the
subcommittee, did a magnificent job steering and chairing this
subcommittee and this very difficult legislation through successfully.
I rise in support of the legislation.
Madam Speaker, the House Banking Committee has considered and passed
interstate banking and branching legislation many times in the past
only to meet obstacles down the road. Competition among financial
service providers, a divided banking industry, and other unrelated
issues have previously spelled doom for such legislation. This year, at
long last, all obstacles have been surmounted. H.R. 3841 takes an
important step toward modernizing banking laws, allowing institutions
to better diversify risks and serve customers nationwide. The
legislation also contains safety and soundness safeguards and customer
protections. I urge the House to pass this valuable piece of
legislation and commend Chairman Steve Neal for his diligence in moving
this legislation forward.
Mr. NEAL of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
(Mr. NEAL of North Carolina asked and was given permission to revise
and extend his remarks.)
Mr. NEAL of North Carolina. Madam Speaker, I rise in strong support
of H.R. 3841, the Interstate Banking Efficiency Act of 1994.
There are many people to thank for their hard work in bringing this
legislation to the House floor. I begin by commending Chairman Gonzalez
for scheduling an early Banking Committee markup of H.R. 3841, and
seeking rapid floor action after the Banking Committee approved the
bill by a 50 to 1 vote.
I also commend Mr. McCollum, the ranking Republican on the Financial
Institutions Subcommittee, for all of his leadership on this issue.
I thank Mr. Vento, whose hard work on this legislation in 1991 laid
the foundation for interstate branching legislation this year.
Lastly, I thank all those on both sides of the aisle who have agreed
to forego offering floor amendments to H.R. 3841. I am very sympathetic
to many of the issues my colleagues have raised, but I am afraid the
past history of interstate branching legislation proves this is an
engine that can carry very little freight.
I do look forward to working with my colleagues, however, to address
many of the issues they have raised that could not be addressed in this
bill. As I have stated before, I am particularly interested in making
sure that low- and moderate-income Americans have access to financial
facilities and services.
Madam Speaker, the present Federal geographic constraints on banking
were enacted in the 1930's and 1950's. The world has changed
dramatically since then, and so has the way we do our banking in
America. Americans are more mobile today than ever before. Technology
now permits consumers to withdraw money from their accounts at ATM's
across the country and around the world. Capital now flows from
community to community and State to State irrespective of political
boundaries.
The legislation before us today helps Federal laws keep pace with
these changes. Just as important, it fosters creation of a stronger
banking system that is more responsive to the needs of American
consumers and businesses alike.
Madam Speaker, 60 million Americans presently live in metropolitan
areas that straddle State lines. Four million Americans commute to and
from work every day across State lines. Americans take more than 440
million trips between different regions of the country every year.
This bill gives these millions of Americans the freedom to walk into
any branch of their bank anywhere in the country and access their
bank's complete line of products and services. That is exactly the type
of convenience consumers have a right to expect as we move toward the
21st century--and exactly the type of convenience current interstate
branching restrictions prevent.
Businesses will also be winners. As a result of this bill, many
businesses will be able to reduce the fees and monitoring costs they
incur operating their treasury management programs.
Taxpayers will be winners, because banks with branch networks are
more resistant to failure than are their less geographically diverse
counterparts. By branching, a bank can diversify both its sources of
deposits and its assets, and better insulate itself from economic
downturns beyond its control.
This bill will also help prevent and ameliorate credit crunches.
Geographically diverse banks are better able to weather local and
regional downturns without calling loans and turning down creditworthy
borrowers.
Lastly, banks will benefit. No other American industry is forced to
establish a separate subsidiary in each State in which it does
business, and no other industry is restricted by law from expanding its
core business across State lines. This bill gives banks the freedom to
structure themselves, and to pursue business opportunities, according
to business judgment rather than Government dictates.
Madam Speaker, I have looked forward to today for many years, because
I believe we are handing the American people a victory by passing this
bill. This bill will promote convenience for bank customers. It will
enhance the safety and soundness of the banking system and heighten
resistance to credit crunches. It will give banks greater operational
and organizational flexibility.
I believe these benefits are long overdue. For that reason, I urge my
colleagues to join with me in suspending the rules and passing H.R.
3841.
Madam Speaker, I reserve the balance of my time.
{time} 1830
Mr. VENTO. Madam Speaker, will the gentleman yield?
Mr. NEAL of North Carolina. I yield to the gentleman from Minnesota.
(Mr. VENTO asked and was given permission to revise and extend his
remarks.)
Mr. VENTO. Madam Speaker, I rise in support of this legislation on
interstate banking and branching. I want to commend the subcommittee
chairman. I think it is time we rationalize this. The issue is
noncontroversial. It passed in the committee 50 to 1.
There are a lot of other issues that need to be addressed by the
committee. I trust that the chairman will address those consumer
issues. He has been very fair. We have a long list, and we hopefully
can work out most of that in the near future and satisfy some of the
concerns and objections that Members might have, not to the basic
legislation, which they have actually voted for, but to the fact that
we need to address other concerns.
I want to commend the chairmen, both the gentleman from Texas [Mr.
Gonzalez] and the gentleman from North Carolina [Mr. Neal] and the
ranking members that have worked on this.
It is a compromise that has been around for awhile that we have
worked out. It is time to enact it and rationalize the system of
interstate banking and branching.
Madam Speaker, I rise in strong support of H.R. 3841, the Interstate
Banking Efficiency Act of 1994. This legislation is needed and worthy
of our positive action. I would like to recognize the hard work of
Chairmen Neal and Gonzalez, as well as Congressmen McCollum and Leach
in bringing this consensus bill to the full House.
Nationwide banking and branching is an issue whose time has come.
There is a general consensus that interstate banking and branching
translates into savings and efficiencies for the banks; increased
competition and opportunities for consumers and increased
diversification for insured financial institutions--a crucial safety
and soundness factor.
The issue of interstate banking and branching is not new. This is a
matter which has been fully debated and voted upon at the subcommittee
and full committee levels and here on the floor of the House. In fact,
in 1991, the full House of Representatives considered and approved an
amendment very similar to the pending bill. That bipartisan compromise
amendment, which I crafted with Congressmen Bereuter, Neal, Wylie and
Gonzalez, was adopted by the full House by a vote of 366-4.
Unfortunately, interstate banking and branching was not realized
because the underlying bill was later defeated.
The bill now pending before us is a balanced approach, which reflects
significant compromises and protections for consumers and local
communities. The need and correctness of the decision is if any thing
more apparent today with the State-by-State regional compacts, the
regulatory decisions which extend branching and interstate banking to
savings and loans and the creative First Fidelity decision of 30-mile
radius.
An important feature of the bill is that it maintains a positive role
for the States. Under this bill, States have 3 years to opt-out of the
interstate branching network. As an additional protection for States'
rights, the legislation specifically protects State deposit caps and
applies State consumer protection, fair lending, intrastate branching
and community reinvestment laws to branches of out-of-State banks.
Madam Speaker, many of our colleagues were rightly concerned that
interstate banking and branching would be a conduit to draw funds out
of a State. In this legislation, we are proactive in addressing such
possible problems, by providing for State-by-State CRA evaluations and
by prohibiting deposit production offices. In fact, the bill provides
that if a branch does not provide loans above a certain threshold, the
Federal regulator may close that branch and not permit the responsible
bank to open a new branch in the State until there are adequate
assurances that local credit needs will be met.
As Members, we must also be concerned about the safety and soundness
of the Federal Deposit Bank Insurance Fund. Through regional
diversification, banks should be stronger and better able to withstand
local economic or natural disasters. In addition, H.R. 3841 includes a
key safety factor by limiting interstate branching to adequately
capitalized and well managed institutions.
I would urge my colleagues to support H.R. 3841. While some counsel
delay, I do not believe that delay is warranted or prudent. Today, the
profitability of banks and the marketplace are stable. Action on this
legislation will send a message to reinforce and enhance the soundness,
certainty, and predictability of our national financial institutions'
policy path and law.
Madam Speaker, we need the banks to remain an integral part of our
financial community. We need these financial institutions to make loans
to small businesses, to provide a full range of financial services to
our constituents, and to be a leading force in our community. We cannot
expect banks to make those positive contributions if we tie their hands
to an out-dated banking system. It is appropriate today and necessary
to permit banks to effectively compete in our national financial
marketplace. H.R. 3841 is an important step in achieving that goal. I
urge its adoption.
Mr. NEAL of North Carolina. Madam Speaker, the gentleman has reminded
me, I want to point out that this bill passed our subcommittee by a
vote of 29 to 0. It passed the full Senate Committee on Banking,
Housing and Urban Affairs by a vote of 19 to 0. It passed the full
House Committee on Banking, Finance and Urban Affairs by a vote of 50
to 1.
There are extraneous issues, lots of them, that we could add to this
bill. But we should not. We ought to deal with this bill as it is and
then deal with other issues, which we can certainly do.
Mr. LaFALCE. Madam Speaker, will the gentleman yield?
Mr. NEAL of North Carolina. I yield to the gentleman from New York.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Madam Speaker, I rise in support of the legislation. I
commend the chairman of the subcommittee and the chairman of the full
committee and the ranking minority members for the fine work they have
done.
Madam Speaker, Congress has been dealing with the issue of interstate
branching for the past decade. At long last, we finally have the chance
to enact legislation on this issue. As Congress has been engaged in
endless deliberations, the market has made enormous progress toward
forming a nationwide interstate system. Congress now needs to recognize
that new reality and pass this legislation.
This legislation is a balanced approach to interstate branching. It
reflects the various concerns and perspectives of many of those who
have in the past not supported interstate branching legislation. While
the banking industry supports this legislation, it should be emphasized
this bill would not allow the banking industry total freedom in its
branching activities. This bill contains provisions that maintain
substantial power with the States, as well as provisions that address
the concerns of consumers.
The overwhelming benefits of this interstate branching legislation
should be recognized by everyone concerned. First, it will provide a
safer and sounder banking system through the benefits of geographic
diversification. The benefits of diversification--both geographic and
across product lines--have unfortunately not been fully appreciated by
the Congress to date. Increased geographic diversification will reduce
a bank's exposure to a single regional economy--a problem which has
been the source of so many bank failures in recent years. Regional
economic downturns need not result in bank failures, which only
exacerbate the problems in a local economy.
Second, this interstate legislation will result in increased
availability of credit to our communities. When banks are allowed to
operate through a more efficient branching structure, they are relieved
of the burden of expending valuable capital on establishing separate
banks in individual States. The resources once wasted on duplicative
corporate structures can now be used to make more loans.
With respect to some of the concerns often expressed by consumers,
the bill is very strong. Concerns have often been expressed that States
currently exercising authority over banks operating within their
borders would lose that authority if these banks were converted into
branches. This issue is addressed very specifically in the bill. Under
the bill, interstate branches are subject to the laws of the host State
with respect to intrastate branching, consumer protection, fair lending
and community reinvestment as if the branch were a branch of a bank
chartered by that State. States also retain their current taxing
authority.
The bill also contains provisions to ensure that CRA evaluations done
on large banking organizations with interstate branching networks
provide sufficiently detailed information about the adequacy of lending
done in specific States and regions within those States. The bill
requires that in addition to a CRA evaluation of the entire
institution's CRA performance, bank regulators would also be required
to do evaluations of a bank's CRA performance in each State, each
metropolitan area, and the nonmetropolitan portions of the State.
The bill also addresses another concern of many consumer groups--that
interstate branching would enable large banking organizations to use
their branching structure to siphon deposits out of local communities
to be lent out elsewhere. The bill would severely restrict the ability
of banks to engage in this type of activity.
I want to emphasize the larger issue of benefits to consumers. We are
all consumers of financial services. A more efficient, more competitive
banking system provides the best assurance of providing all consumers
with a broad array of financial services at reasonable prices. We also
need to realize that corporations and smaller firms are also consumers
of financial services and that they would benefit from a more efficient
financial system, resulting in higher levels of economic growth and
more jobs.
As important as it is to eliminate interstate branching restrictions,
we must recognize that doing so will not be sufficient to make our
banking industry fully competitive--on either a national or an
international level. In addition to the geographic diversification that
this bill will allow, we also need diversification across product
lines. This was the conclusion of my Task Force Report on the
``International Competitiveness of U.S. Financial Institutions''
completed in 1990. It remains valid today. Nevertheless, passage of
interstate branching legislation is an essential first step.
Our banking industry is experiencing what has been referred to as a
``secular decline.'' In addition to the role played by the
inefficiencies of current interstate branching restrictions, this
decline can be attributed to the fact that the banking franchise in the
United States is too narrow. The banking charter is overly restrictive
in comparison to both the array of financing options available in the
market from non-bank financial institutions, and the changing shape of
consumer needs. The result is that banking has become a much riskier
business as banks have concentrated their portfolios in certain types
of lending and in certain regions of the country.
Banks are prevented by law from offering the full array of financial
products their customers demand. After losing many of their best
corporate customers to the commercial paper market in the early 1980's
because of these legal restrictions, too many banks were inclined to
replace that business with what were often much riskier loans, leading
eventually to large loan losses and bank failures.
The recent protracted credit crunch is simply one installment of the
price we will pay if we allow the decline of our banking industry to
continue. Unless the banking charter is expanded, credit availability
problems will continue to plague us in the future.
In order to make credit available to a full range of customers
including small businesses, our banks must be sufficiently
diversified--geographically and across product lines--to be profitable
and avoid losses.
During the 1980's, our banks were prevented by law from attaining
such diversification, and the results were disastrous--both for the
banks that failed as a result of overexposure to certain regions of the
country and certain industries, and for the economies whose economic
hardship was further exacerbated by lack of credit. If we fail to learn
the lessons of our mistakes, we are bound to repeat them.
Finally, I want to emphasize the fundamental connection between the
strength and competitiveness of our banking industry and the strength
and competitiveness of our economy. Put very simply, the cost of
maintaining restrictive legislation which prevents banks from operating
most efficiently is slower economic growth and fewer jobs. While many
large companies can access the capital markets to meet their financing
needs, small businesses often rely exclusively on bank financing.
Consequently, the major impact of our outdated banking laws falls on
small firms--those very firms which provide the engine of growth for
our economy.
This legislation is long overdue and I urge its passage. It is the
first step in the reforms that are necessary if our banking system is
to serve the interests of economic growth and job creation.
Mr. NEAL of North Carolina. Madam Speaker, I reserve the balance of
my time.
Mr. MFUME. Madam Speaker, I yield myself such time as I may consume.
I would just like to take a moment to say a couple of things that I
think are very, very important.
First of all, I need to join with the gentleman from North Carolina
[Mr. Neal] in congratulating the gentlewoman from New Jersey [Mrs.
Roukema] for her work on this bill. Of course, the gentleman from North
Carolina [Mr. Neal] for his work and both the gentleman from Texas [Mr.
Gonzalez] and the ranking minority member, the gentleman from Iowa [Mr.
Leach], who have worked very, very hard on this and other issues that
have come before our committee.
I do not say that lightly. Their work has been instructive for many
of us and certainly beneficial for our entire Nation.
Interstate banking, for the record, is long overdue and much-needed
legislation, because it essentially frees in many respects our Nation's
financial institutions to be competitive and to have some sense of
purpose. It gives banks the kind of organizational and operational
flexibility that is so very, very desperately needed.
Madam Speaker, I voted for this bill in subcommittee. I voted for it
in the full committee. I thought it was important that we have it here
on the floor. And important also, quite frankly, that it passed.
As members of the Committee on Banking, Finance and Urban Affairs
know, I offered during markup, in conjunction with the gentleman from
Massachusetts [Mr. Kennedy] and the gentleman from Maryland [Mr. Wynn],
an amendment that would have substantially brought consumer rights into
this legislation in a way that I think clearly would benefit those
persons in our community who needs banks, who banks service and who
have put their deposit there and their faith, quite frankly, in banks,
in whose communities banks sit and who have a right to believe that the
consumer has some importance in this.
That particular amendment was voted down. The last time we visited
this legislation beforehand, it passed. And so I guess, depending on
what day it is and what the dynamic or dynamism is within the
committee, it is pretty had to determine what will happen.
But what did happen was a commitment from me to bring this
legislation or this amendment to the floor so that the full House might
have an opportunity to be on the record with respect to this very
important consumer issue.
Unfortunately, this bill is being brought up under Suspension of the
Rules, which does not allow, then, for that amendment to be offered.
I regret that. I think in some respects, while we all want interstate
banking and branching to pass, have done a disservice to the full
membership of this body, many of whom want the right to be able to vote
on such a consumer amendment, all of whom certainly ought to have the
right to do that.
So we find ourselves, as we do in this kind of dichotomy, where we
believe, as members of the Committee on Banking, Finance and Urban
Affairs, in this legislation and the importance of it. And we have been
prepared over and over again to stand up for it, while at the same time
coming to grips with the very basic reality.
The reality is that we have not done all for consumers in this bill
that we could do and that once we pass this particular bill, it is
gone. There is no chance to come back and, in my opinion at least, and
do what we have the opportunity to do now or certainly what we would
have had the opportunity to do had this bill not been brought up under
Suspension.
I regret that. Inasmuch as I want it to be enacted, I would not be
able to sleep at night knowing that I had walked away from my
commitment to consumers, to people all across this Nation who have
every right to believe that their rights and their particular interests
are reflected in this very important bill.
For that reason, I will oppose this legislation, not because I do not
believe in it, but because I believe more in the need for us to reflect
in the legislation that we pass at least some sense of the needs of
consumers in this country who do not have a voice in this body and
certainly, because we are voting tonight under Suspensions, will not
have a voice in this process.
Mr. HOYER. Madam Speaker, will the gentleman yield?
Mr. MFUME. I yield to the gentleman from Maryland.
(Mr. HOYER asked and was given permission to revise and extend his
remarks.)
Mr. HOYER. Madam Speaker, I thank the gentleman for yielding to me,
and I appreciate his position.
I rise in very strong support of this legislation, congratulate the
chairman and the ranking members for their work on this.
Madam Speaker, I rise in support of H.R. 3841, the Interstate Banking
Efficiency Act. The bill before us today is the product of considerable
work by the banking community and Congress.
For too many years the issue of interstate branching when unresolved
as a number of smaller issues sidetracked it. However, today, under the
suspension of the rules, we are able to vote on what has always been
the central issue for interstate banking: whether interstate branching
would be permitted. And whether, by extension, our country would move
forward to reduce the often duplicative regulatory requirements placed
on interstate banks.
If we pass this bill, we will permit interstate branching and allow
some of our country's largest banks to consolidate their operations and
improve their efficiency. Why is this important?
Every dollar the bank ties up in regulatory capital requirements, or
pays in administrative costs, is a dollar that cannot be loaned to a
small business which wants to expand its operations; or to a family
which is paying for a child's college education. The interstate banking
legislation will make interstate banks more competitive and will allow
them to make more money available to communities and families.
I recognize the concerns which many smaller independent banks raised
over this legislation. For that reason, I am also pleased the bill
before us today includes important provisions allowing States to ``opt
out'' of interstate banking and branching. The bill also restricts
larger interstate banks to a percentage of the deposits they can
control nationwide and within a particular State.
I urge my colleagues to support this legislation. Vote for H.R. 3841,
and free banks to invest more of their money in the businesses and
individuals who drive economic growth.
Mr. NEAL of North Carolina. Madam Speaker, I yield 2 minutes to the
gentlewoman from New Jersey [Mrs. Roukema], who has been a real leader
on this issue.
Mrs. ROUKEMA. Madam Speaker, I rise in strong support of H.R. 3841,
the Interstate Banking Efficiency Act of 1994.
As a long and energetic supporter of interstate banking and
branching, I believe this legislation represents the best compromise on
the important issues of interstate banking and branching that we have
achieved in several years.
H.R. 3841 was adopted by the Banking Committee several weeks ago by
an overwhelming vote of 50 to 1.
Under this legislation: Interstate banking can take place after 1
year; full nationwide branching will go into effect within 3 years, and
States rights are protected by giving them an option to opt out if they
do not support branching as well as clarifying State authority to tax
bank affiliates.
This interstate banking and branching bill, more than any other
provisions we have adopted over the past few years, will help enhance
competitiveness among our banks.
Interstate banking and branching will help make banks safer through
geographic diversification by allowing banks to diversify their loan
portfolios and lessen their exposure to swings in regional economies.
Interstate branching will make banks more efficient through
substantially reduced operating costs because it will be less costly to
operate branches than to maintain separate banks.
This provision will also increase competition which will benefit
consumers by providing more competitors in the marketplace and thereby
making more bank products available and raising the probability that
banking services will become less expensive.
During the full Banking Committee markup, a managers amendment was
offered which addressed several concerns relating to CRA performance,
State law-enforcement rights, and branch closing procedures.
Madam Speaker, my colleagues should realize that too much work went
into this bill and too much is at stake with the future of the Nation's
banking industry.
Interstate banking and branching is a must do and I urge passage of
H.R. 3841.
{time} 1840
Mr. MFUME. Madam Speaker, I reserve the balance of my time.
Mr. NEAL of North Carolina. Madam Speaker, I yield 1 minute to the
distinguished gentleman from Nebraska [Mr. Hoagland], who has always
been a longtime worker in the vineyards.
Mr. HOAGLAND. Madam Speaker, I thank the gentleman for yielding time
to me.
Madam Speaker, I want to join with my thanks to the chairman of the
full committee, the gentleman from Texas [Mr. Gonzalez] and the
chairman of the subcommittee, the gentleman from North Carolina [Mr.
Neal] and my colleagues on the Committee on Banking, Finance and Urban
Affairs for finally having brought to rest this very difficult issue
and controversy.
For decades now our banking system has been laboring under
excessively restrictive banking and branching statutes. Through the
years many thousands of individuals through the country have worked to
reform these restrictions and rationalize our banking structure, but as
has been said previously, this issue has often been caught up in
extraneous issues that have prevented us from getting to the heart of
the interstate branching and banking issue and bringing it to closure.
We are able to do this this month and this session.
Often it is said that Congress largely ratifies the changes that have
already taken place, but that is only partially the case here. It is
true that an awful lot of changes have taken place in the decade since
these restrictions were first enacted, that have had the tendency to
break down these restrictions, but also all sorts of new services and
new activities will be allowed once this legislation passes.
Those new services and new activities are going to make the banking
system we have in America more competitive, and ultimately affect our
economy very much, to the benefit of all of us, and I am delighted we
are finally getting this done this session. Once again, I would like to
congratulate those responsible.
Mr. MFUME. Madam Speaker, I yield 4 minutes to the gentleman from
Massachusetts [Mr. Kennedy].
(Mr. KENNEDY asked and was given permission to revise and extend his
remarks.)
Mr. KENNEDY. Madam Speaker, I have always been a supporter of the
interstate banking bill, and hope that we can find a way to make this
bill work on behalf of all the consumers of our country.
This bill, I believe, however, contains a major weakness. There is
nothing in it to ensure that the benefits of interstate banking are
felt by all consumers, including those who live in our rural
communities and our inner cities.
In the last several years, as banks have increasingly crossed State
lines, we have witnessed a disturbing trend. Banks have gone into new
communities, taken in hundreds of millions of dollars worth of
deposits, but little, if anything, is then provided to the local
community in the form of credit.
Madam Speaker, the fact is that if we are serious about providing
credit to the American people, then I think we ought to commit
ourselves to three basic, modest provisions that would allow this bill
to be not only a good bill for those in wealthier communities, but a
good bill for those in rural communities and in our inner cities.
Madam Speaker, I want to commend the chairman of our committee, the
gentleman from Texas [Mr. Gonzalez], who has always supported the
concept of asking for some consumer protections when we are providing
banks with new powers. I think it would be a sad day for the Congress
to begin a process of allowing the banks to get new powers without
having to provide some basic consumer protection.
Madam Speaker, I know the gentleman from North Carolina [Mr. Neal]
has always been a strong supporter, not only of new powers, but also of
the notion of looking out for the American consumer. However, the
provisions that the gentleman from Maryland [Mr. Mfume] and myself, and
the other gentleman from Maryland [Mr. Wynn] and the gentlewoman from
California [Ms. Waters] supported in the committee were provisions that
have passed the full Committee on Banking, Finance and Urban Affairs in
the past. In the past, the bills that provided for interstate powers,
the bills always contained the three provisions that were in this
amendment.
That is, first and foremost, that lenders demonstrate how they will
meet the credit needs of lower- and moderate-income consumers in the
areas where they wish to open a branch; second, that lenders not be
allowed to branch across State lines if they have a demonstrated
pattern of closing branches in low- and moderate-income areas; and,
third, that the biggest banks report information on loans to small
businesses, including minority-owned businesses, so that those small
businesses will not be discriminated against.
Madam Speaker, I ask the Congress to consider supporting these
provisions in this legislation. The fact is that if we have a bill that
provides these new powers, and we provide at the same time these
consumer protections, I think we will have passed good, forward-looking
legislation that will have the best interests of not just the wealthier
communities, but the best interests of all the communities in our
country in mind.
Madam Speaker, this is not, as I say, legislation that deals with
just minority communities. This is legislation, as the gentleman from
Nebraska [Mr. Bereuter]. a member of our committee, indicated the other
day, that is critically important to the rural communities of our
country.
Madam Speaker, I would hope that we could ask Congress to consider
including these three provisions as we look forward to supporting
interstate banking. Again, Madam Speaker, I want to congratulate the
gentleman from Texas [Mr. Gonzalez] and the gentleman from North
Carolina [Mr. Neal] on a job well done, and I hope that we can find a
way to look out after the interests of all the consumers in our country
at the same time.
Mr. NEAL of North Carolina. Madam Speaker, would the gentleman from
Maryland [Mr. Mfume] yield time to me to discuss some of these matters?
I have a number of Members who want to speak, and if the gentleman has
enough time, I would request that he yield me 4 minutes.
Mr. MFUME. Madam Speaker, I am happy to yield 4 minutes to the
gentleman from North Carolina.
Mr. NEAL of North Carolina. Madam Speaker, I just want to point out
that the bill, H.R. 3841, already contains many important consumer
provisions.
It preserves State branching, consumer protection, fair lending, and
community reinvestment laws as they apply to interstate branches.
In a February 22 letter to Senate Banking Committee Chairman Donald
Riegle, consumer groups praised H.R. 3841's applicable State law
provision, noting that the ``legislation in the House, now pending
before the Banking Committee, contains the safeguards consumers need
and have come to expect in the marketplace.''
It requires a State-by-State application of the Community
Reinvestment Act. H.R. 3841 would require that each State-by-State CRA
evaluation of an interstate bank be further subdivided to report on the
bank's CRA performance in each metropolitan area in which it maintains
branches, and in the nonmetropolitan portions of a State if the bank
maintains branches in nonmetropolitan areas.
The bill requires forward commitments for interstate consolidations
which would recapture some of the banks' savings from consolidations
for local communities. The bill requires a bank that plans to
consolidate multistate groups of banks into a single network of
branches to submit a plan to meet local credit needs.
The bill prohibits deposit production offices by taking steps to
ensure that interstate branching will not lead to the siphoning of
deposits out of communities.
The bill would ensure that State law enforcement officers as well as
State banking supervisors may enforce applicable State laws on in-State
branches of out-of-State State banks.
In addition, the Banking Committee adopted an amendment that requires
Federal bank regulators, in acting on bank applications to branch
interstate, to review the CRA performance of all bank affiliates of the
applicant bank, and not just the CRA rating of the applicant bank.
Another amendment, authored by the gentlewoman from California [Ms.
Waters] and adopted by the Banking Committee, requires Federal
regulators to convene meetings of community leaders, depository
institutions, and other interested parties to explore ways of replacing
a branch that is closing with adequate alternative facilities and
services.
In sum, I would say to my friends, the bill already contains many
worthwhile consumer provisions. I believe this is a fair and balanced
bill.
{time} 1850
That is not to say ever that we have done enough. My friends from
Massachusetts and Maryland have been leaders in looking out for the
interests of the consumers of this country, low- and moderate-income
people. I hope to be able to continue to work with them. I have
supported many of their ideas. I am happy to hold hearings when we can
on ideas that will improve our system.
Mr. MFUME. Madam Speaker, will the gentleman yield on that point?
Mr. NEAL of North Carolina. I am happy to yield to the gentleman from
Maryland.
Mr. MFUME. Madam Speaker, I appreciate the gentleman's sincerity.
There are, however, three issues that were never resolved by this bill
and that have brought us to this point of opposition. The first was
that lenders demonstrate how they will meet the credit needs of low-
income and moderate consumers in rural areas as well as in inner-city
areas. And I would like to get the gentleman to respond to that. I mean
is the gentleman prepared to hold hearings in that regard for the
purposes of passing legislation?
Mr. NEAL of North Carolina. Honestly, I will say to the gentleman,
and maybe this will answer all of the questions, if there is any
evidence that our banking system is flawed and not serving the American
public the way it should, I want us to look into it. So I would love to
look into this issue, and perhaps the gentleman will bring up some
others.
Mr. MFUME. If I might just continue, the second issue was that
lenders not be allowed to branch across State lines if they have a
demonstrated pattern of closing branches in rural areas and in low- and
moderate-income areas.
Mr. NEAL of North Carolina. That is an issue that goes to the bill.
Personally, I do not think that it is fair to apply a consumer
provision to one small group of banks. If something is a good idea in
terms of consumer provisions, it ought to be applied to all banks.
Personally, I see this legislation as in the interest of consumers.
This is a branch opening bill.
This will provide more services to the American people. So when we
are talking about doing something that will limit interstate branching,
I personally do not think that it is in the public interest.
Mr. MFUME. This is where the gentleman and I have a disagreement,
because I think if something is bad, and if we agree that it is bad,
and closing banks clearly is bad in rural communities and in low-income
communities who do not have access, then I cannot bring myself to say
OK, for the purposes of just moving forward with this legislation I am
going to go ahead with it. It is still bad.
Mr. NEAL of North Carolina. I had forgotten about the Waters
amendment. I mentioned it earlier, but let me mention again the Waters
amendment which we adopted in the committee, which requires Federal
regulators to convene meetings of community leaders, depository
institutions and other interested parties to explore ways of replacing
a branch that is closing with adequate facilities to replace it. I
think that speaks somewhat to what the gentleman had in mind. I am not
sure it answers everything.
Mr. MFUME. Would the gentleman be willing to revisit this whole
matter after we have had an opportunity to see what has taken place
over 6 months or 12 months, to ascertain whether or not in fact there
is a pattern of closing branches in rural areas and in low-income
areas?
Mr. NEAL of North Carolina. Yes; I would be happy to.
Mr. KENNEDY. Madam Speaker, will the gentleman yield on that point?
Mr. NEAL of North Carolina. I yield to the gentleman from
Massachusetts.
Mr. KENNEDY. Madam Speaker, I would just like to make the point that
we do note this is not an issue which needs further study. The fact is
we can look at a HMDA here and an HMDA there, but all you have to do is
drive to the rural areas of the country, or drive to any rural areas of
America where they are particularly brown or black communities and
determine that there have been an enormous amount of branch closings.
And the fact is that the last thing it seems to me that is required is
further study. There are provisions in the legislation that talk about
regulators ought to consider these issues. Considering these issues by
legislators gets us absolutely nothing. These are regulators that in
the past telegraphed these studies and told the banks to prepare their
PR machines in order to deal with the damaging reports that indicate
that you are three times more likely to be turned down for a home
mortgage loan because the color of your skin is black or brown versus
if it is white, coming from the same neighborhoods with the same income
levels.
So I do not think we ought to be talking about further studies on
this issue. The fact is that for the first time we are going to be
bestowing upon the banks new powers, and we are not going to be asking
the banks to meet the credit needs of the local communities. And that
is exactly what the trigger mechanism that is built into the Community
Reinvestment Act calls for, that when banks seek new powers, they must
in fact have demonstrated creditworthiness to all of the people that
they serve in their community or they are denied those powers. And that
is what we are talking about trying to include in this legislation. And
I think it would be a real mistake to get into a posture where we talk
about further study if in fact we are going to be bestowing these new
powers.
Mr. MFUME. If the gentleman will yield further, I assume then the
gentleman from Massachusetts is in opposition to the bill?
Mr. KENNEDY. The gentleman knows how I feel about that. I have
struggled with this issue, and the more we talk the more I am going to
vote against this bill.
But we will see how we do at the end of the discussion.
Mr. MFUME. Madam Speaker, I reserve the balance of my time.
Mr. NEAL of North Carolina. Madam Speaker, I yield 2 minutes to the
gentleman from Iowa [Mr. Leach].
(Mr. LEACH asked and was given permission to revise and extend his
remarks.)
Mr. LEACH. Madam Speaker, first let me just congratulate particularly
the chairman of the subcommittee of jurisdiction, the gentleman from
North Carolina [Mr. Neal]. This is a crowning achievement in his
glorious career here. Also I want to congratulate my ranking member of
the subcommittee, the gentleman from Florida [Mr. McCollum]. As people
may not know, on the Committee on Banking, Finance and Urban Affairs, I
am somewhat reluctant about this approach, but I am kind of a 19th
century mentality when it comes to some aspects of banking, and this is
a 21st century bill. In any case, there are a lot of changes that have
occurred in the banking system both in terms of law as well as in
picture, and it is probably about the appropriate time for Congress to
recognize that these changes are taking place.
Let me just say from a consumer point of view, I am pleased that the
leaders on this particular issue have included a provision that I have
long been identified with, and that is a prohibition against what I
call deposit production offices to ensure that larger interstate banks
simply do not go into States and try to sweep deposits without a
concomitant loan obligation in the areas in which those offices might
be.
This section requires a branch, owned by an out-of-State bank, to
make at least 50 percent of the loans that its in-State peers are
making, in the host State. If the number of loans falls below this
level, the branch has to be closed. In order to reopen the branch, or
establish a new branch, the institution must give reasonable assurances
that it will comply with the provision.
Despite this, I am troubled that the bill in its present form,
without the inclusion of more prudential capital standards, will propel
further consolidation of the banking industry without due regard to
safety and soundness concerns and at the expense of competitive equity
within the banking industry.
During full committee consideration, I unsuccessfully offered an
amendment that would have statutorily required all banks to be well
capitalized before engaging in interstate banking, branching, and
consolidation.
The bill as reported by the committee only requires banks that engage
in interstate branching to be adequately capitalized. With respect to
full nationwide banking, and consolidation of existing interstate
banks, the bill imposes no statutory capital requirements.
A number of recent Government reports and studies support the goal of
my amendment. The GAO, in its November, 1993 report to the committee,
suggested that ``permitting interstate banking and branching for well-
capitalized, well-managed banks could potentially benefit regulation
and the Bank Insurance Fund.''
In addition, last year I asked the Federal Reserve Board to conduct a
study of capital levels in State versus national banks. The report
demonstrated that, on average, State banks with assets from $300
million to $10 billion have higher leverage ratios than national banks.
The Board's report indicates that currently 4,663 State banks are now
subject to higher capital standards than the Federal level. This
represents approximately 60 percent of all State-chartered banks.
One of the extraordinary things happening in banking today is not
only the consolidation of the industry, but the fact that this
consolidation is occurring with banks with less capital taking over
better capitalized banks, using techniques which reduce rather than
increase the amount of capital in the system.
The amendment offered in committee would have required banks that
wish to acquire banks across State lines to meet a well-capitalized
standard, which today is modestly set at a 5-percent leverage ratio. Of
the top 25 banks in the United States by asset size, at most only 2 of
these banks would not meet this standard based on statistics from the
third quarter of 1993.
The public has an interest in having a well-capitalized banking
industry, both to ensure the safety and soundness of the financial
system and the adequacy of resources to make entrepreneurial loans.
Banks simply will not make entrepreneurial loans unless they have
sufficient capital to take risks. The more the capital base of a
financial institution is reduced, the less likely it is to support a
growth-oriented economy.
In conclusion, the U.S. banking system is on the brink of becoming
the strongest in the world, but the Congress should take care not to
jeopardize the stability and strength of the financial system by
refraining to adopt standards which would prevent capital flowing out
of the system.
I think regulators have to be put on guard that they have a very
large responsibility to make sure that this change neither jeopardizes
the safety and soundness of the system nor leads to a circumstance
where industrial and commercial lending is given a back seat. So let me
congratulate the progressives and suggest with some reluctance I am
being brought along.
Mr. MFUME. Madam Speaker, I yield myself such time as I might consume
to just make a couple of other points. Again, I am going to go back to
what was spoken last in the remarks of one who has spoken tonight. We
all understand how important this legislation is. We all have worked
very, very hard in the Committee on Banking, Finance and Urban Affairs
to get it to this point. The work of Chairman Neal, and the gentlewoman
from New Jersey [Mrs. Roukema], the gentleman from Iowa [Mr. Leach],
and the gentleman from Texas [Mr. Gonzalez] has been reflected in my
own remarks, and I think the appreciation is broad based.
{time} 1900
I am here in opposition this evening because, on a matter of
principle, I think it is important to speak for the consumer.
I recognize that the votes are not there to defeat the legislation,
but I recognize also that if I did not stand in opposition, this
argument would never be made. We would have gone beyond this and passed
the bill on suspension, and while many of the Members who are cosigners
and supporters of this amendment will probably also vote for it, and I
understand that, it is important that these arguments be made, and in
the absence of them being made, I again say that we do a disservice to
consumers across this Nation.
There are a lot of good things in this bill. I have worked to put a
lot of them in. Other Members have done that, and we have done it as a
committee, in a bipartisan way, I might add, but the argument today
about needing to do more is an argument that must be made, and that is
why I am standing to make it.
Madam Speaker, I yield 1 minute to the gentleman from Florida (Mr.
McCollum).
Mr. McCOLLUM. Madam Speaker, I thank the gentleman for yielding me
this time.
Madam Speaker, I appreciate his giving me the time simply to
compliment everyone on this bill.
I have been the ranking member on this subcommittee and worked with
the gentleman from North Carolina [Mr. Neal] throughout the process. I
got delayed from coming down here because of a Rules hearing a few
minutes ago.
But I think that this is one of the most significant pieces of
legislation this Congress will pass, and certainly it is one of the
most significant pieces of legislation in the years that I have been
here for Banking. We are now finally opening the door to interstate
banking. We are going to give the opportunity for branching and for the
combination of efficiency that is going to occur across State lines for
banks that own branches in other States, and I think it is being done
in a very orderly, methodical fashion.
We have not attached a lot of other things. It does not have products
and services on it, and while I respect some of the debate here today
of the concerns that several have over matters of community
reinvestment and importance to the minority community, the key thing I
wanted to talk about, and I appreciate the gentleman yielding to me to
do, is simply to emphasize the overall importance of this bill to the
economy of this country, to the banking community, to the citizenry of
this country, and I think that it is a critical, critical bill that is
being debated for a very short time.
I urge its passage.
Mr. NEAL of North Carolina. Madam Speaker, I yield 1 minute to the
gentleman from Nebraska [Mr. Bereuter] the senior member of the
committee.
Mr. MFUME. Madam Speaker, I yield 1 minute to the gentleman from
Nebraska [Mr. Bereuter].
The SPEAKER pro tempore. The gentleman from Nebraska [Mr. Bereuter]
is recognized for 2 minutes.
Mr. BEREUTER. Madam Speaker, I thank the gentleman for yielding me
this time.
Madam Speaker, I do rise in support of the legislation. I compliment
the gentleman from North Carolina [Mr. Neal] and the gentleman from
Florida [Mr. McCollum] and the other members of the committee for their
excellent work on this legislation.
I am particularly appreciative of the fact that they have picked up
the opt-out provisions for interstate branching.
This is legislation that I proposed in the previous Congress. The
gentleman from Minnesota [Mr. Vento] joined me in that, and we had a
particular provision subject to a vote on the House floor. It passed by
a very large margin.
It makes it possible for many States to be supportive and legislators
from those States to be supportive of this legislation. It gives those
legislatures an opportunity to opt out, to take themselves out of this
interstate branching arrangement if they choose to.
Now, I do not expect them to do that in large numbers, if any in fact
do, but that option is maintained, and that is an important States
rights issue.
I must express my concern yet that we may have an opportunity for too
many decisions and too much of a community's resources to be drained
from some rural areas and from some low-income urban areas.
There were some provisions added that were authorized by the
gentlewoman from California [Mrs. Waters], for example, that were
accepted with the blessing of the chairman and the minority members.
That is an important step in the right direction.
But it is time to modernize our banking legislation. We are in a
disadvantageous position in this country with respect to banking in
many other parts of the world. It is time to modernize. It is time to
update.
I compliment the chairman and all Members who have participated in
this arrangement.
Like the gentleman from Iowa [Mr. Leach] I would have preferred
higher capitalization levels. We fought the good fight, and we did not
win on those issues. And this legislation, nevertheless, merits
approval.
Mr. MFUME. Madam Speaker, I yield 1 minute to the gentleman from New
York [Mr. Schumer].
Mr. SCHUMER. Madam Speaker, I thank the gentleman for yielding.
The gentleman from Maryland knows that while I am very sympathetic to
where he is coming from, I am in support of the legislation.
Let me say two things, Madam Speaker, No. 1, it is about time we did
this. It is just long overdue. If America is going to have a banking
system that can compete internationally, we should have interstate
banking now. We should have had it 10 years ago, and there is no
economic argument to stand in the way. It is pro-consumer to have
interstate banking, because you have more banks competing. It is pro-
America to have interstate banking, because our banks will be stronger
and compete internationally, and it will also bring about the kind of
strengthening of the banking system, which I believe is rather weak,
that we so desperately need.
I would say to my colleague, the gentleman from Maryland, and my
colleague, the gentleman from Massachusetts, I appreciate the valiant
fight they are making, and I am very sympathetic and have always
supported the type of legislation they are offering.
But we have been through this time and time again. Every time we try
to add one thing onto the bill, then other and other and other things
happen, and nothing gets passed. We have to pass this bill plain.
I urge a ``yes'' vote.
Mr. NEAL of North Carolina. Madam Speaker, I yield 1 minute to the
gentleman from Alabama [Mr. Bachus].
(Mr. BACHUS of Alabama asked and was given permission to revise and
extend his remarks.)
Mr. BACHUS of Alabama. Madam Speaker, I rise in strong support of the
Interstate Banking Efficiency Act.
Madam Speaker, I would like to commend the distinguished chairman of
the subcommittee, Mr. Neal, and the distinguished ranking member, Mr.
McCollum, for all their hard work on this legislation. I am pleased to
join my colleagues on the House Banking Committee in support of H.R.
3841, the Interstate Banking Efficiency Act.
This landmark legislation will lead to greater efficiency within the
banking system while enabling customers to benefit from a wide variety
of banking services at financial institutions across the country. When
this legislation is fully enacted, residents of Alabama will be able to
make a deposit at their bank in Florida or cash a check at their bank,
hassle-free, in California.
In our mobile society with citizens routinely travelling across our
Nation, this type of service has become a necessity.
As reported by the committee on March 9, H.R. 3841 will permit
interstate banking after 1 year, consolidation of existing subsidiaries
after 18 months, and full interstate branching by national and state-
chartered institutions after 3 years.
Additionally, I am pleased my legislative language relating to
accommodation services arrangements was incorporated in the bill. Under
this arrangement, banks owned by the same holding company could act as
agents for one another in offering banking services. This arrangement
will provide holding companies such as SouthTrust Bank of Birmingham,
AL, the alternative of retaining separately banks in each State or in
each community within a State, with directors drawn from the local
community, and yet still avail themselves of some of the advantages of
interstate banking.
In particular, this provision would permit each local bank to have
local directors, require that each local bank be subject to separate
examination of safety and soundness, consumer compliance, and CRA
compliance, and require that each local bank be subject to separate
capitalization.
In my opinion, it makes good sense to permit these affiliated banks
the alternative of maintaining a separate corporate existence and
handling certain interstate transactions as agents for each other, such
as receipt of deposits, renewal of time deposits, closing of loans,
disbursement of loan proceeds, and receipt of loan and other payments.
I look forward to working with my colleagues in the Senate in sending
an interstate banking bill to the President at the earliest
opportunity.
Mr. MFUME. Madam Speaker, I yield 1 minute to the gentleman from
Massachusetts [Mr. Kennedy].
Mr. KENNEDY. Madam Speaker, in closing, I just have heard all the
arguments. I understand all of the wonderful benefits that interstate
banking is going to provide, and to those of you that say we ought to
go ahead and do interstate because it is time for interstate to happen,
I say yes, it is time for interstate to happen. But it is time for
interstate to happen for all the people of this country.
What we will do today is set a precedent of providing banks with
powers. We are not asking the consumers to be protected. The poor
people of this country, people of color in America have not been well
served by the banks of our Nation, and we ought to be providing those
individuals that have been denied credit, been denied their access to
the American dream simply because of the color of their skin, because
they cannot walk into a bank in this country and get a home mortgage or
get a small-business loan to say, ``Enough is enough,'' and we expect
banks that have acute records of disregard for people of color to not
get new powers.
We expect credit to be provided in the communities that they are
going to purchase new banks in, and we expect we can learn these
statistics on race for the loans that they make to small businesses.
I urge a ``no'' vote on this bill.
Mr. MFUME. Madam Speaker, I yield myself the balance of my time.
Madam Speaker, let me just say a couple of things in closing. First
of all, I think this debate was necessary and important, because it
highlights for many of us the need to be able to speak out on behalf of
the American consumer in such a way that we elevate in this debate
those concerns.
Second, it is also important that we understand, I think, that being
in opposition to the process is not necessarily being in opposition to
the bill. We believe, and have worked on this bill, for a long time,
but the process, we believe, is flawed.
We believe also that the consumer of this Nation has been left out of
this debate, and so whether we are talking about inner-city America or
rural America or small businesses or minority businesses, I have
offered in committee and have made this debate today to try to drive
home the point that as we do what we do, we must also be mindful in the
process of the people who are affected most.
I appreciate the gentleman from North Carolina and his arguments and
certainly those who have been supportive, but I appreciate more the
benefit of making this argument so that the American people will have
an opportunity to understand there is a desperate need to keep
consumers in legislation.
{time} 1910
Mr. NEAL of North Carolina. Madam Speaker, I would point out there
are a number of important consumer protections for less-advantaged
people in the bill. There is a number of consumer benefits for all
Americans in the bill; there is a number of benefits for business in
the bill. Taxpayers come out way ahead because it reduces the
likelihood that banks will get in trouble. Credit crunches will not
occur as often because geographically strong banks will not be
dependent on one part of the country. Banks will benefit, everyone
benefits from this legislation.
We have known it for about 10 years; this should have passed years
ago. It has always failed because of someone's idea of just something
else we could add to it, some little thing would make it different or
make it better. This is the best we could do. I am happy to look at
other issues at any time, but this is very much in the American
interest, and I urge my colleagues to pass this very good bill.
The SPEAKER pro tempore (Ms. Eshoo). The time of the gentleman from
North Carolina [Mr. Neal] expired.
Mr. MFUME. Madam Speaker, I ask unanimous consent that the gentleman
have an additional 30 seconds.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Maryland?
There was no objection.
Mr. NEAL of North Carolina. Madam Speaker, I yield to the gentleman
from Maryland.
Mr. MFUME. Madam Speaker, do I still understand, as we close the
date, the willingness of the gentleman to revisit in the form of
hearings may of the concerns that I and Mr. Wynn and Mr. Kennedy have
tried to articulate in the amendments we offered previously?
Mr. NEAL of North Carolina. I said before, I do not want to say that
I am going to go back and try to change the interstate banking
legislation because that is not what we are about, but in terms of
trying to improve the American banking system insomuch as I can help
with that, I will try at any time. If that is not adequate, I can
expand upon it. But I want the system to work for all Americans.
Mr. MFUME. We do too, and I thank the gentleman for his comments.
Mr. NEAL of North Carolina. We will try to help you.
Mr. FAZIO. Madam Speaker, I rise in strong support of H.R. 3841, the
Interstate Banking Efficiency Act. This legislation is a critical
component of our efforts to keep the national economic recovery moving
forward.
Our Nation's bank regulatory system is riddled with cumbersome
organizational requirements for interstate banking activities which add
significant costs to banks that operate in more than one State. Today,
174 multistate bank holding companies are required to set up separate
and distinct organizational structures for each State in which they
operate. They must have their own executives and boards of directors,
undergo separate examinations and audits, receive separate ratings and
maintain separate capital reserves. These organizational arrangements
are required even if the bank affiliates are operating essentially as
branches. Clearly, these requirements are an administrative burden
which carries a heavy price in overhead.
H.R. 3841 seeks to rationalize interstate banking and branching
regulations to eliminate unnecessary administrative requirements
without compromising the safety and soundness of our Nation's financial
institutions. H.R. 3841 will streamline these regulatory burdens by
enabling banks to own branches and provide banking services across
State boundaries without having to establish separately capitalized and
organized banks in each State as is required under current law.
The major benefit of this legislation is that it will free up
approximately $1 billion annually in capital that the banking industry
now spends on administrative overhead costs. This is $1 billion that
can be used to make loans. Projections suggest that this new loan
making capability could pump $10 billion into the economy on an annual
basis in the form of loans to small businesses, real estate ventures,
or capital improvements--all of which are key to keeping our economy
moving forward.
Interstate banking and branching are long overdue. This bill is
important to improving the efficiency and competitiveness of our
financial institutions. Further, the bill will provide an economic
stimulus to our country's capital markets. The time has come to make
interstate banking and branching a reality. I encourage my colleagues
to support H.R. 3841.
Mr. CASTLE. Madam Speaker, I rise in support of H.R. 3841. While I
have reservations over considering legislation of this importance under
suspension of the rules, I believe the time for interstate banking and
branching has come and the House should act on the bill.
I am concerned that our States should have adequate time to decide if
they want to participate in interstate branching. As Chairman Neal
knows, I believe that States should have a 3-year period before
interstate branching through consolidation of subsidiaries is
permitted. While the bill has a 3-year waiting period for regular
branching, it would allow subsidiaries of bank holding companies to be
converted into branches after 18 months. Congressman Craig Thomas and I
offered an amendment in committee to equalize the time period for
branching and consolidation.
I would have liked to have the full House consider this issue, but to
enable the interstate bill to move forward, I am not contesting the
consideration of the bill under suspension of the rules. Chairman
Gonzalez and Mr. Leach agree with my view of the consolidation issue
and I hope Chairman Neal will remain open to discussion on this issue
when the bill goes to conference.
I want to thank Chairman Gonzalez, Chairman Neal of the subcommittee
and Mr. Leach and Mr. McCollum for working with me to clarify the
bill's language relating to a State's tax authority. The bill and
report protect a State's authority to tax the affiliates of banks and
bank holding companies. I appreciate my colleagues' cooperation on this
important issue. I support approval of H.R. 3841.
The SPEAKER pro tempore (Ms. Eshoo). The question is on the motion
offered by the gentleman from North Carolina [Mr. Neal] that the House
suspend the rules and pass the bill, H.R. 3841, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________