[Congressional Record Volume 140, Number 46 (Monday, April 25, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              INTERSTATE BANKING AND BRANCHING ACT OF 1994

  The Senate continued with the consideration of the bill.
  Mr. RIEGLE. Madam President, let me now move to the discussion of the 
bill we are presenting today.
  Madam President, I rise to introduce S. 1963, the Interstate Banking 
and Branching Act of 1994, and to urge its swift passage. This bill was 
reported out of the Senate Banking Committee February 23 by a unanimous 
vote and is similar to legislation passed by the House March 22 on a 
voice vote.
  Over the last 14 years, each of the past four administrations has 
advocated removing barriers to interstate banking. The Carter 
administration told Congress in a 1980 report that restrictions on 
interstate banking caused inequities and inefficiencies and removing 
such restrictions would serve the public interest.
  In April 1983, Treasury Secretary Donald Regan testified on behalf of 
the Reagan administration before the Banking Committee. In that 
testimony, in which the administration endorsed congressional efforts 
to eliminate restrictions on interstate banking, Secretary Regan 
stated, ``Most such restrictions serve only anticompetitive purposes to 
the detriment of consumer service and convenience.''
  Treasury Secretary Brady, speaking for the Bush administration, also 
advocated removing restrictions on interstate banking and branching. On 
February 26, 1991, he told the Banking Committee:

       We have left antiquated laws on the books that prohibit 
     banks from * * * branching across State lines. Banks in 
     California, Michigan, and Utah can open branches in 
     Birmingham, England, but not in Birmingham, Alabama. These 
     laws--mainly enacted in the 1920's and 1930's--are wholly out 
     of touch with reality, and impose unnecessary costs on banks 
     and consumers.

  Most recently, Treasury Secretary Bentsen has stated:

       We currently have a de facto system of interstate banking. 
     But it's a patchwork system, and it's clumsy * * * permitting 
     a true interstate banking system can translate into increased 
     lending, a safer and stronger banking system, and more 
     competitive services for all consumers in all communities.

  In addition to support from the administration, this bill also enjoys 
the strong support of the Federal Reserve Board, the Federal Deposit 
Insurance Corporation, and the Comptroller of the Currency. It also 
enjoys the support of, among others, the American Bankers Association 
and the Bankers Roundtable. It is similar to the interstate banking and 
branching bill that passed the Senate in 1991.
  Virtually all Senators serving on the Banking Committee were actively 
involved in the drafting of this legislation. I want to particularly 
acknowledge the contributions of our ranking member, Senator D'Amato, 
and I also want to commend Senator Dodd for his leadership on this 
issue, and again thank Senator Roth for being here today in the ranking 
position. Let me now briefly describe this legislation and why I 
believe it is needed.


                            summary of bill

  The Interstate Banking and Branching Act of 1994 would remove current 
restrictions on both interstate banking and branching over a 2-year 
period.

  The bill would eliminate remaining restrictions on interstate banking 
after 1 year and would permit adequately capitalized and managed bank 
holding companies to acquire existing banks in any State. Such 
acquisitions would be subject to approval by the relevant Federal bank 
regulatory agency. States could require that any bank acquired by an 
out-of-state bank holding company have been in existence for up to 5 
years. Also, any bank holding company could not acquire an out-of-state 
bank if the acquisition would result in such company controlling over 
25 percent of that State's insured deposits or over 10 percent of the 
nation's insured deposits. Individual states could waive the 25 percent 
cap.
  With regard to interstate branching, the bill would permit, 2 years 
after enactment, bank holding companies to convert bank subsidiaries in 
various States into branches of the main bank of the holding company. A 
host State would have the right to apply its banking laws to the 
branches of out-of-state banks in the host state. Any State would also 
have the right to opt out of interstate branching. The bill does not 
permit banks to establish de novo branches in any State unless a State 
specifically passes legislation authorizing de novo branching. Under 
this bill, interstate branching will be permitted to take place in a 
manner that preserves the interests of individual states.
  This bill is not a radical innovation. Interstate banking is already 
a fact of life in most states. Thirty-four State have already adopted 
legislation permitting full interstate banking and fifteen of the 
remaining 16 States permit interstate banking within States in their 
regions. This bill will streamline the interstate banking process and 
remove laws that burden that process.
  Passage of this bill will increase the safety and soundness of our 
banking industry and reduce risks to our bank deposit insurance fund 
and the American taxpayers who back that fund. It will permit banks to 
operate more efficiently and to serve their customers better. Let me 
explain why.


                           interstate banking

  Interstate banking presently takes place in this country only where 
the States permit it. Congress, in the Bank Holding Company Act of 
1956, specifically prohibited the Federal Reserve Board from approving 
an application of a bank holding company located in one State from 
acquiring a bank located in another state, unless the acquisition was 
specifically authorized by the laws of the State in which the acquired 
bank was located. During the 1980's, many states adopted banking laws 
permitting bank holding companies within regions to purchase banks 
across state lines--but these laws are not uniform and we do not yet 
have nationwide interstate banking.
  Eliminating the remaining restrictions on interstate banking will 
permit banks to better diversify both their deposits and loans and 
consequently provide greater protection to the deposit insurance fund. 
Geographic restrictions now in place make such diversification 
difficult. This tends to leave banks more vulnerable to downturns in 
local economies where they do their business. According to acting FDIC 
Chairman Hove:

       The insurance funds have absorbed major losses in recent 
     years in rescuing large banking organizations with assets 
     concentrated in a few industries or a limited geographical 
     area. During the 1980s, for example, slightly more than 80 
     percent of failed-bank assets were in just four states: 
     Texas, Illinois, New York, and Oklahoma. Perhaps if they had 
     been more geographically diversified, banks in these states 
     might have been better able to weather the financial storms 
     that beset local and regional energy, agricultural, and real 
     estate markets.

  Federal Reserve Governor La Ware testified:

       . . . elimination of geographic restraints would provide an 
     important tool in diversifying individual bank risk, 
     providing for stability of the banking system, and improving 
     the flow of credit to local economies under duress.

  Thus, reducing these restrictions will likely bolster the safety and 
soundness of the banking industry and thereby lessen the vulnerability 
of the bank insurance fund and risks to the American taxpayer. Phasing 
out remaining restrictions to interstate banking is not, as I noted 
above, a radical step.


                          interstate branching

  Removing current restrictions on interstate branching will also help 
promote efficiency in the banking system and permit banks to serve 
consumers better. It will reduce administrative expenses for banks that 
presently operate interstate through separately chartered subsidiary 
banks of a bank holding company. The principle difference between 
interstate banking and interstate branching is that interstate banking 
requires banks acquired across state lines to remain as subsidiary 
banks of the main bank holding company. A subsidiary bank must have 
separate capital, a separate board of directors, and meet separate 
regulatory requirements. Converting subisidary banks to branches will 
eliminate such duplication, strengthen bank capital, and better protect 
the deposit insurance fund.
  Permitting expanded bank branching will also increase customer 
convenience and reduce banking charges to consumers by increasing 
competition. Bank customers will also be better served if they can deal 
with branches of their home bank in different States. Many customers 
have complained about interstate restrictions that prevent them from 
depositing funds or cashing checks outside the state in which their 
account is established. Literally, millions of Americans cross State 
lines commuting to and from work, as well as in their business and 
personal travel. Secretary Bentsen gave the following example:

       The Washington area is a perfect case, and it isn't unique. 
     Down the street from my office is the branch of a banking 
     organization that hangs out its shingle in Maryland, 
     Washington, Virginia and a few other states. People who use 
     this branch but have their account at a branch in Maryland or 
     Virginia, can walk up and cash a check. They can draw 
     hundreds of dollars out of the ATM machine, or transfer 
     thousands of dollars between accounts. But they can't make a 
     deposit in that branch . . . not being able to make a deposit 
     at my own bank just because that branch is in another state 
     is like requiring that the space shuttle stay within the 
     school zone speed limit. We are the only country in the 
     industrialized world with this kind of artificial 
     restriction.

  Indeed, the restrictions on interstate branching are an American 
anomaly. The United States is the only industrial country that 
restricts bank branching. The globalization of the bankiing industry 
means that U.S. banks cannot afford to continue to base their success 
on a limited geographical area. They cannot match their competitors 
while burdened with costly subisidary structures and cannot be strong 
global competitors without larger deposit bases in this country. 
Removing the restrictions on bank branching will permit American banks 
to become stronger global competitors with an enhanced capacity to help 
U.S. companies sell their goods in markets abroad.

  In short, removing existing restrictions on branching will increase 
consumer convenience, industry efficiency and competitiveness. Greater 
efficiency in the banking industry will reduce strains on the deposit 
insurance fund and protect the taxpayers who back that fund.
  Community bankers need not fear that new competition from regional or 
money center banks will put them out of business. The experience of 
States that allow statewide branching suggests that small banks do very 
well in meeting new competition. Former Deputy Treasury Secretary 
Robert Carswell recounted the State of New York's experience as 
follows:

       Before New York removed its geographic branching 
     restrictions and allowed any bank to branch anywhere in the 
     State, there were predictions that independent banks would be 
     driven to the wall and banking would be concentrated in the 
     hands of a few large banks that would then squeeze and drain 
     the local economies. It simply has not happened. Independent 
     banks have done fine--providing services to old and new 
     customers. The general level of services to consumers has 
     improved, and prices are more uniform across the State. Some 
     larger banks have been successful in establishing branches 
     upstate; others have not.

  By the same token, communities need not fear that increasing 
geographic opportunities for banks will deprive them of needed capital. 
The bill amends the Community Reinvestment Act to require separate 
evaluations of an interstate bank's record of performance in each State 
or metropolitan area in which it has branches. In considering 
acquisitions of banks, the Federal Reserve must review a bank holding 
company's compliance with both Federal and State community reinvestment 
laws. These provisions are designed to ensure that banks will not just 
vacuum up deposits in some States and reinvest them in other States.
  This bill also makes absolutely clear that host States can apply 
their banking laws, including those that govern interstate branching, 
consumer protection, fair lending, and community reinvestment to the 
out-of-state bank branches that come into the State. It also provides 
that Federal and State antitrust laws will continue to apply to 
interstate banking and branching transactions. As an additional 
safeguard against an overconcentrated banking system it contains both 
statewide and national deposit caps.
  So I can come today and urge my colleagues to support this 
legislation, which is very similar to the interstate banking and 
branching bill we passed in 1991 but could not get the other body, the 
House, to accept in conference. This legislation is long overdue and 
will serve our national interests well.
  I reserve the remainder of my time.
  Mr. D'AMATO. Madam President, I rise today in support of S. 1963, the 
Interstate Banking and Branching Act of 1994.
  This legislation is long overdue. Interstate banking and branching 
will increase the safety and soundness of our financial system. It will 
provide more convenience and services to consumers. It will save the 
banking industry millions of dollars that are wasted in unnecessary 
administrative expenses and overhead costs. Instead of administrative 
costs, these funds could be used to supply credit to our businesses and 
other consumers. This legislation has been supported by both Republican 
and Democratic administrations, by the Federal banking agencies, by 
academic experts, and industry representatives. It was reported out of 
the Banking Committee unanimously. The Senate passed a similar bill in 
1991, that was not accepted by the House. Now, however, the House has 
acted first, and passed its version of interstate banking on March 22, 
1994. Now it is time for the Senate to act.
  Interstate branching promotes safety and soundness. According to 
Federal Reserve Board Governor LaWare:

       The elimination of geographic restraints will provide an 
     important tool in diversifying individual bank risk, 
     providing for stability of the banking system, and improving 
     the flow of credit to local economics under duress.

  Acting FDIC Chairman Hove testified before the banking Committee that 
full interstate banking will strengthen the Federal deposit insurance 
funds. Citing the FDIC's experience with bank failures in the 1980's, 
he noted that the failure of banks to diversify geographically creates 
institutions that are particularly vulnerable to regional economic 
downturns.
  Likewise, the General Accounting Office found that 90 percent of the 
banks that failed in 1987 were in States that allowed only unit banks 
or limited branching. The GAO noted that ``when a bank's assets are not 
geographically diversified, the quality of its balance sheet can be 
severally affected by fluctuations in the local economy.'' Interstate 
branching will permit banks to diversify their loan portfolio, thus 
making our banking system less vulnerable to downturns in any 
particular community or region.

  The Congressional Budget Office also found that nationwide interstate 
banking will enable banks to increase geographic and industry 
diversification, thereby reducing the probability of bank failure and 
lead to a healthier and more stable banking system.
  Interstate branching will also eliminate unnecessary overhead costs, 
and make banking more efficient. Under the current system of holding 
companies, depository institutions must maintain a separate board of 
directors, submit separate regulatory reports, undergo separate 
examinations, submit separate financial reports, and maintain separate 
support facilities for each of it's subsidiaries. This legislation will 
allow banks to consolidate these separate subsidiaries into one bank 
with several branches, thereby eliminating the unnecessary duplication 
and overhead expenses of multiple banks. Some of the larger banking 
companies have estimated that they could each save between $30 million 
and $50 million per year if they were allowed to consolidate their 
separate bank subsidiaries into branches. These savings could be used 
to replenish bank capital, thus increasing the ability of the banking 
industry to provide the credit essential for the continued growth of 
our economy.
  This legislation will also benefit consumers, the users of financial 
services. In today's world, individuals often commute between States on 
a daily basis. It is not unusual to live in New Jersey or Connecticut, 
work in New York, and own a vacation home in West Virginia or Florida. 
Yet, under our current banking system, an individual in these 
circumstances would have to have three different bank accounts, in 
three different banks, in order to have ready access to financial 
services. This does not make sense for the consumer, and it does not 
make sense for the banks.
  This bill also takes into consideration the rights of the States with 
respect to interstate banking and branching. Section 2 of the 
legislation repeals a current provision, known as the Douglas 
amendment, that restricts the ability of a bank holding company to 
acquire a bank outside of its home State. Instead, the bill provides 
that the Federal Reserve Board may approve an application by an 
adequately capitalized and managed holding company to acquire a bank 
outside of its home State. However, a State may insist that the out-of-
State bank holding company only acquire an existing bank in that State. 
Further, the State may limit the banks that may be acquired to those 
institutions that have been in existence for a given period of time, up 
to 5 years. A State may also limit the size of the institution--based 
on deposit share--that may be acquired, so long as this limitation does 
not have a discriminatory effect against out-of-State bank holding 
companies or banks.
  The bill also respects States rights with respect to interstate 
branching. Under section 3 of this legislation, 2 years after the date 
of enactment, a bank holding company with banks located in two 
different States may consolidate these institutions into one bank with 
interstate branches. The resulting bank may establish additional 
branches at any location where the former separate banks could have 
branched under applicable Federal or State law. However, a State may 
opt-out of this provision by passing a law, at any time after the date 
of enactment, that specifically prohibits interstate combinations as 
described above for all out-of-State institutions. Thus, the right of a 
State to prohibit interstate branching, as authorized under this bill, 
is fully protected, so long as the prohibition applies equally to all 
out-of-State banking organizations.
  The States' interests are also considered with respect to choice or 
applicable law. Section 3 provides that State laws are made applicable 
to interstate branches to the same extent that such laws are applicable 
to branches of banks, of the same charter type, that has a main office 
in that State. Thus, the States retain the same regulatory authority 
over the interstate branch of a national bank that they have over a 
branch of a national bank whose main office is located in that State. 
Likewise, a State has the same regulatory authority over the interstate 
branch of a State bank that it would have over the branch of a bank 
chartered by that State.

  Further, State and Federal antitrust laws that do not have a 
discriminatory effect on out-of-State banks and bank holding companies 
are specifically safeguarded. This is in addition to new concentration 
limits adopted by the bill. Under these limits, the Federal Reserve 
Board may not approve an acquisition if the applicant controls, or 
after the acquisition would control, 10 percent or more of the total 
deposits of insured depository institutions in the United States. The 
Federal Reserve Board is also prohibited from approving an acquisition 
if the applicant controls, or after the acquisition would control, 25 
percent or more of total deposits held by insured depository 
institutions in that State. However, the State may waive the 
applicability of this latter restriction.
  The legislation also protects the authority of the States to tax 
interstate branches in the manner that they determine appropriate, 
provided of course that the tax does not contravene other Federal 
statutes or the U.S. Constitution.
  Section 4 of this legislation provides that State bank supervisors 
from two or more States may enter into cooperative agreements to 
facilitate State regulatory supervision of interstate State chartered 
banks.
  Finally, section 6 of this bill amends the Community Reinvestment Act 
with respect to financial institutions with interstate branches. The 
regulatory agencies would be required, under this amendment, to prepare 
a written evaluation of such institution's CRA performance in each 
State in which it has a branch. If an institution maintains a branch in 
a multistate metrolitan area, the agency must prepare a separate 
written evaluation for that multistate metropolitan area, and for the 
nonmetropolitan areas of the State, if the institution has a branch in 
the nonmetropolitan area of the State.

  This legislation represents a balanced approach to interstate banking 
and branching. It takes into consideration the historic role of the 
States in regulating financial institutions, and the concerns of the 
Federal Government to protect the safety and soundness of our banking 
system and to avoid losses to the deposit insurance funds and the 
taxpayer. This legislation will increase the safety of our financial 
system, improve the efficiency and delivery of financial products. It 
will ultimately result in a healthy and more competitive banking system 
that will be able to serve the needs of our economy into the next 
century. We should act, and act now to pass this legislation. I urge my 
colleagues to vote for this bill.


                    privilege of the floor--S. 1963

  Mr. RIEGLE. Madam President, I ask unanimous consent that during the 
consideration of S. 1963, Kay Bondehagen be granted the privilege of 
the floor.
  The ACTING PRESIDING pro tempore. Without objection, it is so 
ordered.
  The Senator from Delaware.
  Mr. ROTH. Madam President, S. 1963, the Interstate Banking and 
Branching Act of 1994, is important legislation. The reason, however, 
that the legislation has such widespread support in this body owes much 
to the fact that it does much less than many less-informed believe. Let 
me explain.
  Interstate banking means that an out-of-State bank may acquire an in-
State bank. This is already happening today. This is already happening 
today. It has been the practice for some States to narrow the 
acquirer's eligibility to a particular region. The legislation, in 
contrast, ensures that the acquirer can come from any State across the 
Nation. This is no major change, in my opinion.

  Interstate branching is more significant. However, the legislation 
does not establish interstate branching. Interstate branching means 
that an out-of-State bank that owns an in-State subsidiary may convert 
it into a branch. This is, unlike interstate banking, something new. 
But all that this legislation does is to create a choice for the 
policymakers in each State--the Governor and the legislature--to make 
for that State.
  The efforts that I have expended on this legislation have been for 
one and only one purpose: To craft an absolutely neutral proposition 
for the States and the industry involved. Since that is the purpose of 
the legislation, as I understand it, it makes little sense to burden 
the legislation with extraneous provisions, whether they involve a 
rollback of insurance powers or whether they involve increasing the 
regulatory burden on banks. We have worked for far to avoid imposing 
such conditions and I hope that we can continue that effort 
successfully.
  In striving for neutrality, we have made clear that certain current 
practices of the banking industry, such as extending credit across 
State lines, are not adversely affected by the legislation. Moreover, 
we have sought to assure the States that the choice that each makes 
under the legislation is without bias: The right of each State to opt 
in or opt out of interstate branching at any time is specifically 
preserved in this legislation. Unlike other versions, our bill sets no 
lobster traps for the States. They may enter or exit freely, as the 
policymakers in each State decide. And, I repeat, they may do so at any 
time.
  Suppose a State's policymakers fail to act either way? Is a State in 
or out? S. 1963 is clear that if a State does not act within 2 years of 
the bill's enactment, the State is in and interstate branching may take 
place within the State. Because there are so many factors that each 
State's policymakers must take into account in formulating a decision, 
not the least of which is the revenue consequences, the Governors and 
the State legislatures have requested that they be given 3 years 
instead of 2 years to make their initial choices. I would think that 
they are the experts on how much time they need and that as 
Representatives of the States in the Congress we particularly should 
be deferential on such a matter. However, I do not believe that the 
chairman agrees with me. In committee, I had pressed for 3 years and 
was pleased that the bill which at the time provided only 1 year to 
decide was amended to 2 years. So from my perspective, I still see room 
for improvement on this question.

  As I noted, there is probably no issue that makes the States more 
nervous than the impact of interstate branching on their collection of 
tax revenues. Now there is no way that we can guarantee a State that if 
it collected a certain amount of revenue from banks last year that it 
will collect the same amount with or without this legislation. For if 
the States do not opt-out of interstate branching, branching will 
occur, and the facts will have changed. So when the facts change, there 
may be different results. Maybe better, maybe worse. All we can do is 
to guarantee that the States will remain able to collect the same 
amount of revenues. One of my contributions to the managers' amendment 
makes clear that the authority of the States to tax as they are taxing 
remains undiminished by this legislation. We cannot do any more or any 
less for the States. The Congress has no proper role in this context in 
structuring the States on State tax policy. We cannot and do not solve 
their tax problems in this legislation. It is true, no question, that 
every State will have to assess the State tax consequences of this 
legislation and adjust its particular tax laws to the changing 
circumstances while deciding whether to allow interstate branching 
within its State.
  Many believe that this is a fair question to put to the States in 
view of the purported benefits to the banking industry and to the 
consumer that flow from the efficiencies produced by interstate 
branching. However, I repeat, it is a little much to ask each State to 
resolve its internal policy question in 2 years, which for a dozen or 
so States is really only a few months as a practical matter.
  In summary, Madam President, we have worked diligently on this 
legislation to be fair to all concerned. We have striven to produce a 
neutral vehicle for posing a very important question to the States. We 
are making excellent progress. It is my hope that when we conclude our 
efforts in this body, we will have reached the goal.
  Thank you, Madam President. I yield the floor, and I suggest the 
absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. RIEGLE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                           Amendment No. 1658

  (Purpose: To provide for national banks that are not part of a bank 
holding company to merge and consolidate on an interstate basis and to 
                    make other technical amendments)

  Mr. RIEGLE. Madam President, let me now present the managers' 
amendment to S. 1963. This amendment has been developed with Senator 
D'Amato and with Senator Roth. I appreciate the support of both. It 
enjoys the support of the Clinton administration.
  In general, the amendment further refines the provisions contained in 
the reported bill with technical, conforming and clarifying amendments, 
including properly cross-referencing the definition of adequately 
capitalized throughout the bill, facilitating the consolidation of 
banks that are not owned by bank holding companies and clarifying that 
institutions that undertake interstate combinations do not need to be 
unwound if at any subsequent time the relevant State law prohibits any 
such future interstate combinations.
  Also, the amendment clarifies that the bill is not intended to affect 
State tax authority over banking institutions.
  Additionally, the amendment, at the request of the FDIC, makes a 
technical change to allow the FDIC to override State and Federal law 
restrictions on concentration and age of institution requirements in 
all failing bank situations, as was the committee's intention.
  Finally, the amendment allows making a portion of the bank's assets 
available for call by a State-sponsored housing entity to remain in 
force after passage of this bill.
  Let me now send it to the desk. After Senator Roth has been heard, I 
am going to urge the adoption of the managers' amendment.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Michigan [Mr. Riegle], for himself, Mr. 
     D'Amato and Mr. Roth, proposes an amendment numbered 1658.

  Mr. RIEGLE. Madam President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is as follows:

       On page 3, line 4, strike ``(2) and (3)'' and insert ``(2), 
     (4), and (6)''.
       On page 4, between lines 17 and 18, insert the following:
       ``(3) Exception.--The Board may approve an application 
     under paragraph (1)(A), notwithstanding any provision of 
     paragraph (2), if such application involves the acquisition 
     of one or more banks in default or in danger of default or 
     with respect to which the Federal Deposit Insurance 
     Corporation provides assistance under section 13(c) of the 
     Federal Deposit Insurance Act.
       On page 4, line 18, strike ``(3)'' and insert ``(4)''.
       Beginning with page 4, line 23, strike all through page 5, 
     line 2, and insert the following:
       ``(5) No effect on state tax authority.--No provision of 
     this Act shall be construed as affecting the authority of any 
     State or political subdivision of any State to adopt, apply, 
     and administer any tax or method of taxation to any bank, 
     bank holding company, or foreign bank or to any affiliate of 
     any bank, bank holding company, or foreign bank to the extent 
     that such tax or tax method is otherwise permissible by or 
     under the Constitution of the United States or other Federal 
     law.
       ``(6) Affect on state contingency laws.--Nothing in this 
     subsection affects the applicability of a State law that 
     makes an acquisition of a bank contingent upon a requirement 
     to hold a portion of such bank's assets available for call by 
     a State-sponsored housing entity established pursuant to 
     State law, if--
       ``(A) the State law does not have the effect of 
     discriminating against out-of-State banks, out-of-State bank 
     holding companies, or subsidiaries thereof;
       ``(B) that State law was in effect as of the date of 
     enactment of the Interstate Banking and Branching Act of 
     1994;
       ``(C) the Federal Deposit Insurance Corporation has not 
     determined that compliance with such State law would result 
     in an unacceptable risk to the appropriate deposit insurance 
     fund; and
       ``(D) the appropriate Federal banking agency for such 
     institution has not found that compliance with such State law 
     would place the institution in an unsafe or unsound 
     condition.''.
       On page 5, line 9, insert `` `in default', `in danger of 
     default','' before ``and''.
       On page 5, line 18, strike ``and''.
       On page 5, line 23, strike all of the punctuation at the 
     end and insert ``; and''.
       On page 5, after line 23, insert the following:
       ``(3) a bank holding company is `adequately capitalized' if 
     it meets or exceeds all applicable Federal regulatory capital 
     standards.''.
       On page 8, strike lines 14 through 16 and insert ``host 
     states.--If any branch of an out-of-''.
       On page 8, line 23, strike ``based upon'' and all that 
     follows through page 9, line 6, and insert the following: 
     ``that imposes such tax based upon a method adopted by the 
     host State, which could include allocation and 
     apportionment.''.
       On page 11, line 19, insert ``or paragraph (8)'' before 
     ``shall have''.
       On page 13, between lines 23 and 24, insert the following:
       ``(11) No effect on state tax authority.--No provision of 
     this Act shall be construed as affecting the authority of any 
     State or political subdivision of any State to adopt, apply, 
     and administer any tax or method of taxation to any bank, 
     bank holding company, or foreign bank or to any affiliate of 
     any bank, bank holding company, or foreign bank to the extent 
     that such tax or tax method is otherwise permissible by or 
     under the Constitution of the United States or other Federal 
     law.
       On page 13, line 24, strike ``(11)'' and insert ``(12)''.
       On page 15, line 14, strike ``paragraph'' and insert 
     ``paragraphs''.
       On page 15, beginning on line 17, strike ``A State bank 
     supervisor'' and insert ``The appropriate State official''.
       On page 17, line 2, insert ``or to take any enforcement 
     actions or proceedings against'' after ``examine''.
       On page 17, strike lines 7 through 10, and insert ``agency 
     determines that the States have reached an agreement under 
     subparagraph (C) that adequately protects the deposit 
     insurance funds, the appro-''.
       On page 17, line 11, strike ``shall not'' and insert 
     ``may''.
       On page 17, line 13, strike the quotation marks and the 
     final period.
       On page 17, between lines 13 and 14, insert the following:
       ``(4) No effect on state tax authority.--No provision of 
     this Act shall be construed as affecting the authority of any 
     State or political subdivision of any State to adopt, apply, 
     and administer any tax or method of taxation to any bank, 
     bank holding company, or foreign bank or to any affiliate of 
     any bank, bank holding company, or foreign bank to the extent 
     that such tax or tax method is otherwise permissible by or 
     under the Constitution of the United States or other Federal 
     law.''.
       Beginning with page 17, line 14, strike all through page 
     19, line 22, and insert the following:
       (b) National Banking Associations.--The Act entitled ``An 
     Act to provide for the consolidation of national banking 
     associations'', approved November 7, 1918 (12 U.S.C. 215 et 
     seq.) is amended--
       (1) in the first sentence of subsection (a) of the first 
     section, by inserting ``, or in any State in which a bank is 
     authorized to engage in an interstate consolidation pursuant 
     to section 3(h) of the Bank Holding Company Act of 1956,'' 
     after ``located in the same State'';
       (2) by inserting before the period at the end of subsection 
     (d) of the first section ``, except that the applicability of 
     State law to an interstate consolidation undertaken in 
     accordance with section 3(h) of the Bank Holding Company Act 
     of 1956 is determined in accordance with the provisions of 
     that section'';
       (3) by adding at the end of the first section the following 
     new subsection:
       ``(h) An interstate consolidation--
       ``(1) shall be undertaken under this section pursuant to 
     the procedures, restrictions, and requirements--
       ``(A) set forth in section 3(h) of the Bank Holding Company 
     Act of 1956 as if such interstate consolidation were a 
     combination under that section; and
       ``(B) set forth in this section, to the extent that such 
     procedures, restrictions, and requirements are not 
     inconsistent with those of section 3(h) of the Bank Holding 
     Company Act of 1956; and
       ``(2) involving banks that are not affiliated (as such term 
     is defined in section 2 of the Bank Holding Company Act of 
     1956) shall meet the requirements of section 3(d) of the Bank 
     Holding Company Act of 1956, as determined by the Comptroller 
     of the Currency, as if such consolidation were an acquisition 
     under that section 3(d).'';
       (4) in the first sentence of section 2(a)--
       (A) by striking ``under an agreement not inconsistent with 
     this Act,''; and
       (B) by inserting ``or within any State in which a bank is 
     authorized to engage in an interstate merger pursuant to 
     section 3(h) of the Bank Holding Company Act of 1956,'' after 
     ``located within the same State,'';
       (5) in the sixth sentence of section 2(d) by inserting 
     before the period ``, except that the applicability of State 
     law to a merger undertaken in accordance with section 3(h) of 
     the Bank Holding Company Act of 1956 is determined in 
     accordance with the provisions of that section'';
       (6) in section 2, by adding at the end the following new 
     subsection:
       ``(h)(1) An interstate merger--
       ``(A) shall be undertaken under this section pursuant to 
     the procedures, restrictions, and requirements--
       ``(i) set forth in section 3(h) of the Bank Holding Company 
     Act of 1956 as if such merger were a combination under that 
     section; and
       ``(ii) set forth in this section, to the extent that such 
     procedures, restrictions, and requirements are not 
     inconsistent with those of section 3(h) of the Bank Holding 
     Company Act of 1956; and
       ``(B) involving banks that are not affiliated (as such term 
     is defined in section 2 of the Bank Holding Company Act of 
     1956) shall meet the requirements of section 3(d) of the Bank 
     Holding Company Act of 1956, as determined by the Comptroller 
     of the Currency, as if such merger were an acquisition under 
     that section 3(d).
       ``(2) Paragraph (1) shall apply to a State member bank 
     involved in an interstate merger on the same terms and 
     conditions and subject to the same procedures, restrictions, 
     and requirements as are applicable to the consolidation of 
     branches by a national banking association involved in an 
     interstate merger.''; and
       (7) in paragraph (4) of section 3, by inserting ``or within 
     any State in which a bank is authorized to engage in an 
     interstate consolidation, merger, or other transaction 
     pursuant to section 3(h) of the Bank Holding Company Act of 
     1956,'' after ``within the same State,''.
       On page 21, line 5, strike ``approval'' and insert 
     ``consent''.
       On page 21, line 13, strike ``and''.
       On page 21, line 20, strike all of the punctuation at the 
     end and insert ``; and''.
       On page 21, between lines 20 and 21, insert the following:
       ``(C) the term `adequately capitalized' has the same 
     meaning as in section 38.''.

  Mr. ROTH. Madam President, I am pleased to join with the chairman of 
the Banking Committee in offering the managers' amendment.
  I am particularly pleased that the amendment contains the House 
provision on tax neutrality. This House provision makes clear that the 
current authority of the States, except as limited by the Constitution 
or other Federal law, to tax any bank, bank holding company or foreign 
bank, or any affiliate of any bank, bank holding company or foreign 
bank is not affected by this legislation.
  The inclusion of such an assurance is very important to my State as 
well as to other States. It assures them that their current ability to 
tax, and their current tax methods, remain legally unaffected by the 
legislation.
  The House provision, which the managers' amendment tracks, is 
salutary because of its precision in identifying the various banking 
entities whose tax treatment is not affected by the legislation.
  I am also pleased that we have been able to rewrite the bankshares 
tax provision so that Congress is not instructing any State on what 
particular tax or tax method it should adopt, apply, or administer. 
Before the committee markup on the legislation, I submitted written 
questions to Comptroller of the Currency Ludwig and Treasury Under 
Secretary Newman on State tax issues. They said they do not believe 
that the Federal Government should solve the tax problems of the 
States, and they advised that we not ``resolve on the Federal level a 
problem that can best be resolved at the State level.'' And concluding 
that ``it would be better to be silent about State tax rules.''
  Thus, the Treasury Department does not oppose a declaration of tax 
neutrality but does oppose Federal solutions for State tax problems.
  The bankshares tax provision in the reported bill grossly violates 
Treasury's advice, and I am encouraged that the managers' amendment 
makes this provision less offensive to principles of federalism which 
the Department and I share. The new language does not direct any State 
to follow any particular tax method, nor does it obviate the need for 
the policymakers of the State to take responsibility for adopting a tax 
and a tax method of their choice. While the result is not quite the 
silence recommended by the department, it is now a tolerable whisper.
  Finally, I wish to make clear that this provision is appropriately 
deferential to the rights and responsibilities of the affected States. 
In this provision the Congress neither instructs nor commands any 
State. Under the provision, any covered State must adjust to the new 
circumstances of interstate branching by adopting a new tax method 
between now and the time interstate branching begins in that State. 
This further illustrates the need for 3 years' time for the States to 
make their multifaceted decision on interstate banking.
  I thank the distinguished chairman for incorporating my suggestions 
in the tax area and am pleased to support the adoption of the managers' 
amendment.
  The ACTING PRESIDENT pro tempore. Is there further debate?
  Mr. RIEGLE. Madam President, I urge adoption of the managers' 
amendment.
  Mr. ROTH. Madam President, I would agree with the adoption of the 
amendment.
  The ACTING PRESIDENT pro tempore. The question now is on agreeing to 
the adoption of amendment No. 1658.
  The amendment (No. 1658) was agreed to.
  Mr. RIEGLE. Madam President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. I thank the Chair.
  Madam President, we are now at a point, I would like to just say to 
colleagues and staff members who are following this on television and 
would not necessarily be present in the Chamber at this time, this 
would be an excellent opportunity for anyone who has remarks to deliver 
on the subject to see this as a time to come and do that, or if anybody 
has an amendment--I am not inviting amendments, but if anybody has an 
amendment this would be a good time to come and present it because we 
will have now a period in which we can handle those without any other 
indication of others coming forward at this time. So let me make that 
general suggestion to those who would have an interest in doing so.
  If other speakers do not arrive, and if we do not have other Members 
who come over to speak or offer amendments, then at some point later in 
the afternoon I am going to suggest we not just remain in a quorum call 
if we are not getting work done. I would hope that we could be getting 
some work done.
  In any event, having said that, I want to make just two other 
personal comments. One is that I think to those following this debate, 
whether in the Chamber here as visitors, or out across the country 
watching television, it all sounds very technical because it is quite 
technical.
  Banking law, as the occupant of the Presiding Officer's Chair, the 
Senator from Washington, knows--she serves on the Banking Committee--
the banking laws are by their very nature technical and complicated. So 
when we present them, it is very hard to follow necessarily what we are 
saying because each phrase and each explanation has a technical 
implication in terms of laying down the foundation of the law that we 
will be passing here.
  And all of this debate that takes place on the Senate floor, of 
course, takes the form of what is called legislative history. So if 
there is ever a question later on down the line as to how a bill is 
actually supposed to work, if the written law from the legislation 
itself is not completely clear, oftentimes the reference will then come 
back to the debate here on the Senate floor to see precisely what it is 
the Senator from Delaware may have said or the Senator from Michigan 
may have said or someone else, to really clarify exactly what the 
legislative intent is.
  So with respect to banking law changes and because of the importance 
that they be presented in the correct form, these discussions tend to 
sound more technical and harder to follow than perhaps some of the 
other things we take up in the Senate.
  The other point I wanted to make is this. I am very pleased to share 
this duty today with my colleague from Delaware. Senator Roth and I 
came to the Congress 28 years ago as newly-elected House Members in the 
election of 1966. At that time, I sat on that side of the aisle as a 
Republican. In 1973, I changed my party affiliation and crossed over 
the center aisle to become a Democrat and have been a Democrat now for 
21 years since.
  But we have retained our good friendship during that intervening 
period, and I was struck by a news item that I saw the other day, I say 
to the Senator from Delaware, that is, of the rather large group of 
nearly 50 or so freshmen Republicans that were elected, as we were, 
back in 1966, a group that included George Bush among others, who made 
his debut on the national scene in that election. To my knowledge, of 
our large group, only three remain now serving in the Congress--the 
Senator from Delaware, myself, and I saw the other day where one of our 
colleagues on the House side, John Myers, was in a complicated primary 
election out in the State of Indiana; he won the primary, and now he 
has a general election to face, as I know the Senator does as well.
  So our class of some 49 or 50 members has now been reduced year by 
year and circumstance by circumstance to some 3 of us who are 
remaining. Of course, I will be leaving at the end of this year myself. 
So whatever happens to John Myers, the Senator from Delaware may be the 
last of the Mohicans here at the time the dust settles at the end of 
this year.
  But it has been a particular pleasure for me to serve with the 
Senator from Delaware over that period of time. I must say, despite the 
fact we now serve in different parties, that really has no bearing 
whatsoever on our relationship and our friendship and our opportunity 
to work constructively together as we have many times over the years, 
and I am privileged again to do so today.
  Mr. ROTH. Will the distinguished chairman yield?
  Mr. RIEGLE. Yes, I would be happy to yield.
  Mr. ROTH. Just let me say that it is with genuine regret that I read 
the Senator's decision some time ago not to run again.
  I remember, Madam President, many years ago when we were both elected 
for the first time, I might say in a surprise upsweep for Republicans, 
the Senator may recall that I organized a weekly group. We met once a 
week to discuss the legislation that would come up in the House of 
Representatives for the following week.
  I always felt that was the beginning of our friendship and 
understanding. Sometimes it is difficult for our friends back home to 
understand how a Republican and Democrat can work together, but it is 
important if we are not going to have gridlock.
  The one particular situation I remember where we worked over a period 
of months in close collaboration was in the bailout of Chrysler 
Corporation.
  That was a matter of great, great concern to the State of Michigan. 
It was a matter of great concern to my State of Delaware. As I have 
said many times, not many people realize that percentagewise, we had 
more auto workers than even the State of Michigan. But I think recent 
events that show Chrysler roaring back with success, beginning to 
compete very successfully internationally, show how important that 
cooperation across the aisle was.
  I must say, I regret seeing the Senator leave. I also want to add, in 
public as I did privately, how sorry I was to read about the Senator's 
mother, the loss of his mother. We all know that no matter how well 
prepared we are for it, it still is a blow. It is still the end of a 
phase of life that is difficult to overcome.
  I give my deepest sympathy to the Senator and to his family.
  But again, may I congratulate the chairman and Senator D'Amato, the 
ranking member, for bringing this really very important but somewhat 
controversial piece of legislation. There are many different interests 
at play that are concerned, and yet through the leadership of the 
chairman and that of Senator D'Amato, the legislation has come here 
with the unanimous support of the Banking Committee. That certainly is 
in many ways the crowning victory of the many years of service of the 
distinguished chairman.
  I wish him well, and every success.
  Mr. RIEGLE. Madam President, I thank the distinguished Senator from 
Delaware very much.
  Madam President, we will now await other speakers or amendments that 
may come to the floor for a period of time. We invite those Members to 
come for that purpose now, if they can.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Reid). Without objection, it is so 
ordered.

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