[Congressional Record Volume 140, Number 47 (Tuesday, April 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: April 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
RECESS
The PRESIDING OFFICER. Under the previous order, the hour of 12 noon
having arrived, the Senate will stand in recess until the hour of 3
p.m.
Thereupon, the Senate, at 12:07 p.m. recessed until the hour of 3
p.m.; whereupon, the Senate reassembled when called to order by the
Presiding Officer [Mrs. Murray].
The PRESIDING OFFICER. In my capacity as a Senator from the State of
Washington, I suggest the absence of a quorum.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. FEINGOLD. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 1659
(Purpose: To require a GAO report)
Mr. FEINGOLD. Madam President, I have an amendment relating to a GAO
report I would like to offer at this time. I send the amendment to the
desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Wisconsin [Mr. Feingold] proposes an
amendment numbered 1659.
Mr. FEINGOLD. Madam President, I ask unanimous consent that the
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the bill, add the following new
section:
SEC. . GAO REPORT ON DATA COLLECTION UNDER INTERSTATE
BRANCHING.
(a) In General.--The Comptroller General shall submit to
the Congress, not later than 9 months after the date of
enactment of this Act, a report that--
(1) examines statutory and regulatory requirements for
insured depository institutions to collect and report deposit
and lending data; and
(2) determines what modifications to such requirements are
needed, so that implementing the interstate branching
provisions contained in this Act results in no material loss
of information important to regulatory or congressional
oversight of insured depository institutions.
(b) Consultation.--The Comptroller General, in preparing
the report required by this section, shall consult with
individuals representing the appropriate Federal banking
agencies, insured depository institutions, consumers,
community groups, and other interested parties.
(c) Definitions.--For purposes of this section, the terms
``appropriate Federal banking agency'' and ``insured
depository institution'' have the same meanings as in section
3 of the Federal Deposit Insurance Act.
Mr. FEINGOLD. Madam President, I have an amendment relating to a GAO
report on the requirement for insured depository institutions to
collect data in light of this legislation, which I understand will be
accepted by the managers of the bill. As I indicated, this amendment
would simply direct GAO to submit a report on data collection under
interstate branching to determine if modifications to existing
requirements should be implemented in light of the enactment of this
legislation.
I appreciate the chairman's suggestion to perfect the amendment.
Madam President, I had intended to offer an amendment to S. 1963, the
Interstate Banking and Branching Act of 1994, that related to
continuing current law requirements for certain statements of
condition. The information in those condition statements is useful to
regulators and consumer groups in evaluating the performance of insured
depository institutions, but in the new banking structures allowed
under S. 1963, there may be significant gaps in the reporting that we
currently require.
These gaps arise because of the nature of the new banking structures
allowed in S. 1963. Because under current law, branches are allowed
only in the same State as their home bank, these statements of
condition, known as call reports, necessarily provided a State-by-State
assessment of key financial institution activities. The potential for
cross-State branching could undermine the ability of regulators and
consumer groups to make such assessments on a State-by-State basis.
A central concern that many of us have with the proposed national
interstate banking and branching legislation is the potential for a
loss of critical banking services in some communities, as banks are
purchased by large out-of-State institutions. Information provided in
call reports can be useful in evaluating that kind of trend, and is all
the more important as we move away from our traditional State-based
banking system to a nationwide system.
Although I considered offering an amendment specifically requiring
that, for institutions with assets over $1 billion, limited call
reports be made on a State-by-State basis, I am persuaded that this
matter should be examined in the larger context of the call reports
themselves.
To that end, I will not offer my original amendment, but instead have
offered language requiring that the General Accounting Office review
the statutory and regulatory requirements for the collection and report
of deposit and lending data, in consultation with regulators,
consumers, community groups, and representatives of insured
institutions.
I hope this GAO analysis of the broader issue of call report
information will help assess whether such requirements for State-by-
State reporting should be mandated either by statute or regulation.
I appreciate the support of the managers for this amendment.
I yield the floor.
Mr. RIEGLE. Madam President, let me say to the Senator from Wisconsin
that this is an amendment that I am prepared to accept. It has been
cleared on the Republican side. I now urge its adoption without
objection.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 1659) was agreed to.
Mr. RIEGLE. Madam President, I move to reconsider the vote.
Mr. FEINGOLD. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Alaska is recognized.
Mr. MURKOWSKI. Madam President, first, let me commend the members of
the Banking Committee, Senator Riegle particularly, who is on the
floor, Senator D'Amato, and Senator Dodd, for bringing up what I
consider long overdue, and that is the interstate banking bill. As
Treasury Secretary Lloyd Bentsen said last year: ``We currently have a
de facto system of interstate banking. But it's a patchwork system, and
it's clumsy.''
I would certainly agree, Madam President, and I believe this bill
will bring a degree of much needed rationality to the banking system
and make our Nation's banks more competitive with their international
counterparts. It is very important.
I was in the commercial banking business for 25 years, and I have
observed the participation of foreign institutions doing business in
the United States, their ability to compete with us, and, of course,
the difficulty of our banks being allowed access to foreign countries
on the basis of reciprocity. So we need to have a correction here that
will bring our banking system more into conformity to compete with our
international counterparts. Those counterparts in many cases do not
have the same antitrust oversight that ours have.
Madam President, there is another aspect of the banking system that I
personally think Congress should revisit. I know this is something that
occasionally is misinterpreted when we talk about the Community
Reinvestment Act of 1977, or the CRA, and the impact that the CRA has
on community-owned banks which are owned by minorities. In our effort
to try to ensure equity, we have an unworkable situation that really
needs to be addressed.
When we adopted the Community Reinvestment Act, we did so with the
intent of getting banks and other financial services institutions to
better serve citizens living in communities where they operate. In
particular, it was designed to encourage lending activity in poor
communities, the low-income communities, and especially communities
where there were large minority populations. Too often, we have heard
of situations where large State and nationally chartered banks
establish branches in and around low-income communities, collected
their deposits, and then refused to provide loans to businesses and
individuals living right around the corner from the branch. Obviously,
that is wrong, and corrections were needed.
However, unlike large multi-State banks, small community banks
generally receive their funds from the community where they operate and
most often invest those funds back within the community. Yet small
community banks are regulated by the same set of rules under the
Community Reinvestment Act as large banks which have branch offices in
many different communities that have greater opportunity to invest
selectively in any part of the country or, for that matter, abroad.
By their very nature, most small community banks try to conform to
the spirit of the Community Reinvestment Act, and yet they have to
abide by the onerous burdens imposed by the Community Reinvestment Act.
In a recent study of community banks, it was found that community banks
have to spend more than $1 billion annually to comply with the
Community Reinvestment Act. Imagine that, Madam President, $1 billion
it cost these small community banks to comply with these regulations.
The cost of establishing the sophisticated CRA compliance program is
especially burdensome to small community bankers and places them at a
competitive disadvantage with their larger competitors. If community
banks have to pass on their costs to their customers for this CRA
compliance, their customers are simply going to move. They are going to
go to the larger banks that have branches in the surrounding areas
because they can better absorb the cost of the compliance. Clearly, the
larger banks can absorb the cost of compliance. The smaller bank cannot
and, as a consequence, have to pass it on.
The real issue is whether the paperwork and outreach requirements
imposed by the CRA make any sense, especially in the case of community
banks owned by minorities. We have encouraged lending in poor and
minority communities by providing preferences to minority-owned banks.
Fine. That is as it should be. That reflects the real world reality
that many minority-owned lending institutions are more willing to
provide loans to minority members than are large multi-State banks.
And it is a reality that many members of minority groups feel more
comfortable doing business with a bank with the same ethnic heritage.
We can certainly understand that. It may not be the way we would like
to have the banking world operate--or businesses, for that matter--but
it is a known fact. I know of many cases where immigrants from Korea,
Taiwan, and China have come to this country looking to make a better
life and have found that the most comfortable way is using a bank owned
by Asian-Americans to transact business. Language and cultural barriers
are minimized when they do business with such banks, and they perceive
having a better chance of receiving a loan from such a bank that
understands them and is interested, obviously, in their establishing
themselves here in America.
I have heard the same story told about African-American citizens.
Many minority groups believe they have a better chance of getting a
loan to start a business or buy a house if they are dealing with a bank
that is owned by members with similar ethnic backgrounds. Many of these
minority-owned banks want to make loans to members of their ethnic
group.
Last year, two senior executive officers of African-American-owned
banks in Los Angeles wrote to the Los Angeles Times confirming this
view, and let me quote from their letter to the Times:
As minority bankers, we are well aware that minority banks
were formed specifically to lend to minority applicants who
were overlooked by more mainstream institutions. Asian-
American banks tend to lend to Asian-American applicants, and
African-American banks tend to lend to African-American
applicants--because those applicants often have nowhere else
to turn.
Madam President, that is the reality of minority banking. It will
continue to be.
That brings me back to the Community Reinvestment Act and the
accompanying regulations.
The minority-owned bank must make overt efforts to reach out to all
groups in the community where it is operating, and is judged by the
same standards for community reinvestment as nonminority-owned
institutions.
Imagine in Los Angeles, Madam President, under the Community
Reinvestment Act, a small community-owned bank, serving an ethnic
district has to show that it is trying to solicit business from outside
that area in the same manner that any other national bank with many
branches in Los Angeles is trying to do. It is an impossibility. It is
an inconsistency. It is not practical. It makes all community-owned
banks less competitive and really achieves no other purpose, other than
increasing their costs.
For example, Madam President, a Hispanic-owned bank operating in a
community that has a large population of Asian Americans, as an
example, must make significant efforts to provide services to the Asian
community. That may require placing ads in local Chinese-, Japanese-
language newspapers, contacting local Chinese and Japanese community
groups, and making other outreach efforts to serve the financial needs
of this community.
That would be the mandated effort under the act of a Hispanic-owned
bank, say in Los Angeles. It has to reach out beyond the minority it
serves and prove that it is attempting to serve Asian-Americans,
Japanese, Chinese and so forth. That is really an impracticality and
one I am inclined to generalize. But I feel the Banking Committee has
overlooked this, in its efforts in this regard to bring about
substantive changes in our banking regulations.
Of course the same is true for an Asian-American bank operating in a
community composed of groups of Asian-Americans, Mexican-Americans, and
African-Americans. From what I have learned from speaking to minority
bankers in some of these communities, the result of these outreach
programs have been very discouraging and very costly. Time and money
has been spent on bridging cultures, and produces very little, if any,
new opportunities for these minority-owned banks. Resources that could
be better be spent on servicing the ethnic group reflecting the
minority owners is diverted into a futile effort to bridge ethnic
groups.
One Asian-American bank in Los Angeles--I might add an Asian-
American-owned bank--has written to me to indicate its efforts to
penetrate the Hispanic and African-American communities. Since 1992 the
bank has advertised continually in local newspapers in different
languages. The bank has participated in community development programs
and has had regular contact with community groups, local governments,
nonprofit developers, to ascertain the credit needs of these
communities and minority groups. After a year of effort the bank
received one response from the Hispanic community; none from the
African-American community. This is a Chinese ethnic bank, serving
Chinese-Americans in Los Angeles. But it is forced to move out into the
Hispanic area and African-American community, to comply with this law.
These are the facts. Minority-owned banks are trying to meet the
standards imposed by the CRA, but for cultural reasons they simply find
they cannot get into business with other minority groups. Yet at the
same time these minority-owned banks are servicing the very minority
populations that they are closest to, and doing a good job. These are
often the same minority groups that would have difficulty gaining
credit from other lenders, and for that reason we encourage minority
ownership of banks. That is the basic reason. It is unfair and
inefficient to penalize minority-owned banks with the same standards
that we impose on other banks in this regard.
If they are serving ethnic minorities, whether the minority borrower
is around the corner from the bank or across the city should make no
difference under this regulation. In many cases, if the minority-owned
banks do not make a loan to the minority borrower, the borrower might
have nowhere else to turn for the credit.
Many minority-owned banks are very concerned about what else they can
do to meet this CRA standard. Their fear is exacerbated that pending
regulations would impose civil penalties against banks that receive a
composite CRA rating of substantial noncompliance. Frankly, there is no
basis for this regulatory proposal since the CRA provides only one
specific sanction for a poor CRA record--the agency may condition or
deny an application for a deposit facility by the bank, or a branch
bank for that matter.
I ask the floor managers if they have given any consideration to this
dilemma relative to the service that the minority banks are providing
in the community and the fact that there is no practical way they can
comply with the CRA mandate because they are limited to service within
the community and the minorities that they serve? To have to show
evidence that they are effectively soliciting and generating business
outside, that seems to be an inconsistency that the legislation that
has been proposed has overlooked.
I am hesitant to offer an amendment because I know the chairman of
the Banking Committee is attempting to move this legislation along, but
I really feel in this sense we have a void, and I would appreciate any
comments or consideration he might give this matter with the assurance
they try to consider the inequity and injustice that is before us.
I would appreciate any remarks of the chairman.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. RIEGLE. Madam President, let me respond to the Senator from
Alaska. I think he makes an important point, a valuable point. We have
asked the bank regulators to look at the CRA and to concentrate on
performance rather than forms and paperwork per se. They are in the
process of reviewing and revising the method by which those objectives
are pursued by banks.
I think in the situation that the Senator cites, there are special
factors and considerations that apply there. The Senator's point is
well taken. It will be part of this debate. We will see to it that the
regulators pay attention to the issues that my colleague has raised, to
see what might be done about it.
Mr. MURKOWSKI. I appreciate the comments of the chairman of the
Banking Committee. I think it is important for the regulators, the
examiners, to recognize the merits of the job a minority bank is doing
in meeting the credit needs of the minority community.
Mr. RIEGLE. Right.
Mr. MURKOWSKI. To expect them to be very effective outside that puts
them at a great disadvantage. I hope we can see within the interpretive
language of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation, some language that would address this
inconsistency, because I have heard from those regulators and they,
too, have a degree of frustration because they are mandated under the
act. Yet the realities are that many of these small community banks do
a good service. It puts them at an unfair disadvantage to be measured
by a ruler that simply is unrealistic.
If the chairman can give me that assurance the legislative language
or intent will recognize this, I will not proceed with my proposed
amendment.
Mr. RIEGLE. Let me continue by saying I will take the issue up with
the regulators. We will see what can be done. They are in the process
right now of attempting to reevaluate how the CRA process is applied
and made to work and is measured. I think there is, as the Senator
says, an anomaly here. There is an inherent contradiction, if you will,
when you get outside the minority interests that a specialized
institution of the kind the Senator cites is aimed at.
So let us pursue it that way. I think that is probably the best way
to try to respond to the concern the Senator has raised.
Mr. MURKOWSKI. I appreciate the spirit under which the chairman took
my remarks and look forward to some enlightenment from the regulators.
Mr. RIEGLE. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. METZENBAUM. Madam President, I ask unanimous consent that the
order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 1660
(Purpose: To clarify the statute of limitations for actions brought by
the Federal Deposit Insurance Corporation and the Resolution Trust
Corporation as conservator or receiver)
Mr. METZENBAUM. Madam President, I send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Ohio [Mr. Metzenbaum] proposes an
amendment numbered 1660.
Mr. METZENBAUM. Madam President, I ask unanimous consent that the
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 26, after line 18, insert the following new title:
TITLE II--BANK AND THRIFT STATUTE OF LIMITATIONS
SEC. 201. SHORT TITLE.
This title may be cited as the ``Bank and Thrift Statute of
Limitations Clarification Act of 1994''.
SEC. 202. AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.
Section 11(d)(14)(B)(i) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(d)(14)(B)(i)) is amended by inserting
after ``receiver'' the following: ``, regardless of whether
the claim may have been barred under any otherwise applicable
statute of limitation at the date of such appointment, unless
such claim was barred more than 5 years before the date of
such appointment''
SEC. 203. APPLICABILITY.
The amendment made by section 202 shall apply to all
actions pending or brought by the Federal Deposit Insurance
Corporation and the Resolution Trust Corporation as
conservator or receiver on or after August 9, 1989.
On page 1, between lines 2 and 3, insert the following:
``TITLE I--INTERSTATE BANKING AND BRANCHING''.
Redesignate sections 1 through 7 of the bill as sections
101 through 107, respectively.
On page 1, line 4, strike ``Act'' and insert ``title''.
Mr. METZENBAUM. Madam President, this amendment will protect over
$1.6 billion in RTC and FDIC claims in the courts.
Two weeks ago, the Acting Chairman of the FDIC, Mr. Andrew Hove, Jr.,
sent a letter to Senator Riegle, with a copy to myself, asking for this
legislation. Two days later, the RTC's Acting Chief Executive Officer,
Mr. John Ryan, also sent a letter asking for legislation.
The FDIC letter said that $500 million in existing FDIC lawsuits was
threatened unless we pass legislation.
The RTC letter said that over $1.1 billion in RTC claims against
officers and directors who are culpable in the failure of savings and
loans is at risk without this legislation.
The RTC letter also said that without legislation, the statute of
limitations legislation that we recently passed is in jeopardy. I think
this is important to many of my colleagues.
The RTC said that our two recent extensions of the Federal statute of
limitations are imperiled. These extensions were in December's RTC
Completion Act and in February legislation--authored by Senator D'Amato
and myself--in response to the Whitewater-Madison Savings and Loan
floor debate.
I know that Senator D'Amato feels strongly about this problem,
because on April 14, he introduced a bill, S. 2021, containing the
language of this amendment. I am an original cosponsor with Senator
D'Amato, along with Senators John Kerry and Donald Riegle.
When he introduced the bill, Senator D'Amato said that he was
concerned about its retroactivity. I want to tell my colleague from New
York that there is no legal impediment to the retroactive application
of nonsubstantive civil law, such as this amendment.
Let me also assure my colleague that, under this amendment,
defendants cannot be sued for acts that were not illegal at the time
they committed them. No one will wake up and find themselves sued for
something that was not illegal when they committed it. All this
amendment does is give the Government extra time to discover previous
wrongdoing and file suit.
This amendment is necessary because recent Federal court decisions
have created a deplorable situation. Federal courts have dismissed FDIC
and RTC lawsuits against officers and directors of failed S&L's and
banks who were clearly involved in misconduct.
I want to repeat that. Federal courts have dismissed FDIC and RTC
lawsuits against officers and directors of failed savings and loans and
banks who were clearly involved in misconduct.
Unfortunately, because of these recent court decisions, the
wrongdoers will never have to pay for their wrongdoing. Who do you
think will pay? The same crowd that always has to pay: The taxpayers
will pay.
The reason has nothing to do with the merits of the cases. The reason
is that a State statute of limitations expired before the FDIC took
over the thrift or bank. That gets pretty technical; if the State
statute expires, the Federal statute does not attach.
We have a Federal statute of limitations, which we enacted in FIRREA.
Unfortunately, many Federal courts have interpreted FIRREA to require
that the State statute of limitations must be unexpired before the
Federal statute of limitations can take effect. I believe those courts
misjudged in those cases. In effect, the Federal statute must attach to
an unexpired, State statute. That is something we did not intend when
we adopted FIRREA, and it should not be the law.
The language of FIRREA says that the Federal statute of limitations
``begins to run * * * on the later of,'' one, the date that the thrift
is taken over by the Federal Government, or, two, the date the cause of
action accrues.
Clearly, Congress meant by this that the statute of limitations
cannot run before the RTC or FDIC takes over. Nonetheless, more and
more courts have interpreted FIRREA to require that the State statute
of limitations not have expired when the RTC or FDIC takes over.
We did not contemplate this when we passed FIRREA. In fact, the
FIRREA conference committee rejected a provision that would have said
that FIRREA would not revive claims under expired State statutes of
limitation.
To let the present situation continue is manifestly unfair to the
taxpayer who must pay the bill when wrongdoers cannot be sued.
This is not something we can put off. My colleagues on the Banking
Committee and others are suggesting this is not quite the time, but
this is an urgent matter. The FDIC and the RTC are losing cases almost
every week because of these court decisions. They are asking us to help
them. They are trying to do their job as Government officials, trying
to hold people responsible who should be held responsible, and we have
an obligation to vote favorably and adopt this amendment in order to
protect the taxpayers' interests.
We can talk all we want over here about balancing the budget. We can
talk about all the things we are doing to save taxpayers money, but if
we do not adopt this amendment, we are letting billions of dollars,
about $1.5 billion, fly out the door, and the taxpayers will be Mr. and
Mrs. Sucker. He or she will be stuck holding the bill.
Thus far, 50 cases have been affected.
This amendment is very simple. It does two things. First, it
clarifies that Congress, when it passed FIRREA, intended the Federal
statute of limitations to run without having to attach to an unexpired
State statute of limitations. Second, it limits the revival of any
claim whose statute of limitations has expired under State law. This
amendment says that claims which expired under State statute of
limitations law more than 5 years before the FDIC or RTC took over a
thrift or bank may not be brought. Claims cannot be revived more than 5
years before the RTC or FDIC take over. That protects taxpayers. It
starts with the $1.6 billion in existing lawsuits against failed banks
and savings and loan office directors that the RTC and FDIC say is at
risk if we do not pass corrective legislation.
Clearly, we cannot wait for separate legislation. With a simple two-
sentence clarification, $1.6 billion in claims can be protected.
Now, my friend, the chairman of the committee, and others have
suggested to me that the Banking Committee wants a clean bill. Well, I
wish to have a clean sweep of all the dollars that are owed to the
taxpayers of this country by officers and directors who were guilty of
wrongdoing and ripped off the RTC or the FDIC.
The RTC has already spoken on the need for this legislation, as part
of the Banking Committee's annual RTC oversight hearing. The FDIC
acting chairman has asked this committee, the Banking Committee--in
fact, he urged the committee--to ``propose'' and ``promote'' this
legislation. His words, not mine--``propose and promote.'' His letter
says that ``without such legislation, more and more RTC and FDIC
professional liability cases will continue to be dismissed on the
technicality of the statute of limitations having run before the
institution failed.'' That is his quote--``on the technicality of the
statute of limitations having run before the institution failed,''
before the RTC or FDIC could even get in there.
The present situation is simply inequitable, unfair to the taxpayers.
Let my give you an example that illustrates the unfairness of the
current situation. Last month, in Tyler, TX, in the case of FDIC versus
Henderson, the case went to trial before a Federal jury. The jury found
that the defendant was grossly negligent and in breach of his fiduciary
duties in connection with the failure of two thrifts. The defendant, a
Mr. John Henderson, was the president, the chairman, and the largest
stockholder of the thrifts. Mr. Henderson was clearly in control of the
failed thrifts. He was the only board member to attend board meetings
for almost 2 years. In fact, he was the only board member despite a
Texas State law that requires five board members. In order to cover up
this failure, Mr. Henderson had the minutes of the board of directors
create the impression there were several board members present. Things
were so bad that the jury found Henderson liable to the Federal
taxpayers for $7 million in damages resulting from his grossly
negligent behavior.
But at the same time the jury concluded that, because of the recent
Federal cases which require that State statutes of limitation not be
expired before the Federal statute of limitations takes hold, Mr.
Henderson could not be held accountable for his demonstrable
wrongdoing. The Texas 2-year State statute of limitations had run
before the FDIC took over the thrift.
Let me give you the picture. Before the FDIC took over, Mr. Henderson
was in control. He was the sole board member attending board meetings.
He was the largest single shareholder. He was the chairman of the
board. He was in total control. And he milked from this savings and
loan an amount that the jury found to be $7 million.
Now, the FDIC comes in at a later point when the thrift goes belly
up, or prior to its actually going belly up, and takes over, and the
thrift says, well, the reason for much of this loss relates directly to
Mr. Henderson's conduct.
So they sue Mr. Henderson, and Mr. Henderson, largest share holder,
chairman of the board, only member of the board attending the meetings
for 2 years, comes in and says, ``I have a defense. The State statute
expired long before the FDIC took over.''
That is unfair. It is unfair to the taxpayers. Mr. Henderson acted in
a grossly negligent manner when he controlled the thrifts. His gross
negligence cost innocent taxpayers millions in losses, yet he cannot be
brought to justice. Instead, innocent taxpayers will have to pay. Mr.
Henderson squandered the thrift's money, which has to be made up by the
taxpayers, on risky loans. He squandered the thrift's money on
outrageous personal benefits and accouterments, and he will not have to
pay back a single penny.
Why should Mr. Henderson get off on a technicality? While the thrift
was losing almost a quarter of a million dollars a month, he spent the
thrift's money on luxury cars and four $2 million airplanes for his own
personal use. He had the thrift buy him a specially equipped $75,000
BMW. Other cars, including a Mercedes, were kept at Henderson's ranch
some 300 miles from the thrift where there was no way they could be
used for thrift-related work. Henderson even had the thrifts buy him a
$2 million jet, which he used to fly back and forth to the ranch for
lunch--for lunch--all at the taxpayers' expense. A $2 million taxpayer-
financed plane to fly home for lunch. There is another way to describe
it. Mr. Henderson was, indeed, taking the taxpayers for a ride.
Unfortunately, because of these recent court decisions, Mr. Henderson
is going to get away with it without repaying a dime. Why should the
$35,000-a-year worker who works hard, struggles to pay his or her
Federal income taxes, and barely makes it have to pay for Mr.
Henderson's jet? I say to my colleagues, this case illustrates why we
need this amendment.
I could give you a number of other examples. Who is more culpable,
the innocent taxpayer or Mr. Henderson with his $2 million lunches?
I ask my colleagues to support fairness, to support this amendment,
and I wish to point out that this amendment has been offered as a
separate bill cosponsored by Senator Riegle, Senator D'Amato, Senator
Kerry, and myself. The RTC and the FDIC say we need it. Without it, our
recent extensions of the Federal statute of limitations are in peril.
With two simple sentences, merely clarifying what we already passed,
and one rollcall vote, we can correct this problem and protect over
$1.5 billion in taxpayer money. I ask my colleagues to join me and vote
for this amendment.
I yield the floor.
Mr. RIEGLE. Madam President, the Senator from Ohio, as he has on a
number of other occasions, has importantly highlighted this issue and
this problem.
I ask unanimous consent that at the end of my remarks the letter from
the FDIC dated April 11, 1994, be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. RIEGLE. Madam President, that letter requests that we introduce
this legislation at their initiation. We have done so. We introduced it
``by request,'' which is the phrase we use in situations like that.
Senator D'Amato, the ranking minority member, joined me in responding
to that request from the FDIC. But I hasten to add that we have not had
any legislative hearings, as you might expect, because this letter is
as recent as just a few days ago.
So let me tell you that I introduced it not only because of the
request from the FDIC, but I support the substance of the request. I
support the extension myself. So I agree with the Senator from Ohio on
the substance of the issue.
Let me tell you one problem we have with it, however. As I am sure
the Senator knows, this issue legislatively is not within our
jurisdiction with respect to what will have to happen on the House
side. The Judiciary Committee in the House will have to be involved in
this issue. So it is outside the scope of our counterpart Banking
Committee on the other body.
One of the concerns that I have is that anything that we attach to
this bill--which is a banking bill and a vote in the Banking
Committee--in turn has to be set off by a second and different
committee in the House, which always poses problems for us, as the
Senator from Ohio knows. He is smiling because he can recall any number
of cases where that has happened. I fully expect that it may happen in
this case, as it has before, assuming that this were to be attached
here.
So that is a matter of some concern to me just as the manager of the
bill, because I want to get the bill through, and I do not want to run
into complications that are of a jurisdictional sort on the House side
for that reason.
We have in the past voted on extensions on a number of occasions, not
precisely as drafted in this instance. But just for the record, on
March 26, 1992, on September 8, 1992, on September 25, 1992, then in
1993 on May 13, and then again this year on February 9, on those five
occasions we have all had to deal with and vote on amendments or
provisions regarding the statute of limitations and the extension. I
have supported that all five times because I feel strongly about it for
many of the reasons that the Senator from Ohio has stated. But I do see
this complication in terms of the jurisdiction. I make that point.
As I said, or meant to say, we have not had time yet to have
legislative hearings on this issue in the committee because, as I say,
we have just introduced this by request just in the last few days.
Let me yield the floor at this point.
Exhibit 1
Federal Deposit
Insurance Corporation,
Washington, DC, April 11, 1994.
Hon. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: I would like to bring to your attention
concerns that the Federal Deposit Insurance Corporation has
with respect to recent court decisions interpreting the
statute of limitations governing actions brought by the FDIC
and the Resolution Trust Corporation as receiver or
conservator of failed institutions.
The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) provides that the statute of
limitations for tort claims brought by the FDIC and the RTC
as conservator or receiver is the longer of three years or
the period applicable under state law. FIRREA also clearly
states that the date on which the statute of limitations
begins to run is the later of the date of the appointment of
the Corporation as conservator or receiver or the date on
which the cause of action accrues. Nevertheless, the courts
have added the further requirement that the claim must not be
barred under state law at the time the FDIC takes over.
As described in the enclosed analysis of the issue, we
believe the courts have incorrectly applied the statute of
limitations that was established under FIRREA. Also enclosed
is legislation intended to clarify FIRREA with respect to
this issue. How the statute of limitations is computed is
critical to the FDIC's mission to hold bank and thrift
officials and professionals accountable and to maximize
recoveries from failed institutions. We estimate that over
$500 million in claims in pending lawsuits involving FDIC and
old FSLIC receiverships, and millions more for claims still
under investigation, are at risk for dismissal on statute of
limitations grounds if the proposed legislation is not
enacted. We understand that claims of the same general order
of magnitude involving RTC receiverships are similarly at
risk.
I urge you to introduce the proposed legislation and to
promote its passage. Legislation to clarify the statute of
limitations is critical to allowing the FDIC and the RTC to
fulfill their missions to hold wrongdoers accountable and to
recover losses for the insurance funds and the taxpayers.
Without such legislation, more and more RTC and FDIC
professional liability cases will continue to be dismissed on
the ``technicality'' of the statute of limitations having run
before the institution failed. Such legislation is important
not only to maximize recoveries involving institutions that
failed in the past but also to ensure the orderly resolution
of institutions that may fail in the future.
Please let me know if you have any questions or need
assistance with respect to our proposal.
Andrew C. Hove, Jr.,
Acting Chairman.
Mr. D'AMATO. Madam President, I think the chairman has articulated
the situation well. I would be hard pressed to maintain opposition.
I want to be very candid to the Senator from Ohio regarding his
amendment. Given the fact that we have extended the statute of
limitations unanimously--or just nearly unanimously--in this body as it
related to the RTC, and notwithstanding that the FDIC has sent a letter
indicating that they are not supportive, I think that the overwhelming
sentiment of the body would be to go forward.
Therefore, I will not oppose. As I think the chairman has quite
accurately portrayed the situation that the House, as it relates to
jurisdiction, may not, and indeed the chairman of the Judiciary
Committee in all likelihood will raise opposition.
Again, I would say to both the chairman and to the distinguished
Senator from Ohio that I will raise no opposition to this amendment
here at this time, nor will I raise opposition to the amendment in
conference. I will call for its adoption in conference. But again, to
be very candid, because I do not want to say one thing to my
colleague--and I think he knows we may agree or disagree on a number of
issues--I do not say one thing to him today and do another thing
tomorrow.
I am a cosponsor of the original bill, the original legislation. But
I am fearful that in the final analysis we may not be successful in
getting the House to accept this. But I will go forward in a good-faith
effort provided that it does not --as long as he understands that it
does not--ultimately jeopardize final passage of the bill.
I think he understands if I say that, I will make a good-faith effort
to see that it is retained. I will do that. But up to the point that if
indeed the House is in opposition and will not act on it because of the
various committee jurisdictions and the disputes as it relates to that,
then at that point I will feel constrained to yield to the House.
I do not know. Maybe the House will accept this. It is not without
precedent. The Senator knows the various players and Members. He has
dealt with them through the years over there. I think he will probably
reach out and contact the chairman of the Judiciary Committee and see
if he cannot get them to acquiesce.
So I say to him in all good faith that I will do nothing to attempt
to impede this when it gets over to conference. I join with my
colleague, if the Senator wants to urge adoption.
Mr. RIEGLE. Madam President, I urge adoption of the amendment.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 1660) was agreed to.
Mr. RIEGLE. Madam President, I move to reconsider the vote by which
the amendment was agreed to.
Mr. METZENBAUM. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. METZENBAUM. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the role.
Mr. D'AMATO. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Wellstone). Without objection, it is so
ordered.
Mr. D'AMATO. Mr. President, while the Senator from Ohio is
contemplating if he is ready to go forward--and if he is, I will resist
going forward--I will make a statement relating to the Fair Housing
Act, and advertising under the Fair Housing Act.
Mr. President, I rise today to call attention to a troubling
situation concerning the Fair Housing Act. It was originally designed
to ensure decent, safe, and affordable housing for all Americans. The
act is now being cited as an impediment to the ordinary and everyday
process of advertising a home or property for sale, rent, or lease.
The Federal Fair Housing Act bars discrimination against families
with children and the disabled on the basis of a potential tenant's
race, religion, national origin, or gender.
Unfortunately, the interpretation of this fundamental principle has
led us into the world of uncertainty over what is indeed fair when it
comes to advertising property.
The realtor associations and newspaper organizations around the
country are sending out warnings to their members that they need to be
very, very sensitive to words, phrases, and statements that relate to
people and that might be construed to be discriminatory. Fair housing
advocates are poring over real estate sections in local newspapers
looking for anything that might be perceived as steering minority
communities away from the advertised property or community.
From New York to Ohio, Oregon to Kentucky, Iowa and Virginia,
newspapers are facing lawsuits or complaints alleging they have printed
discriminatory ads.
In Oregon, a fair housing advocacy group filed complaints last year
against more than a dozen of the State's newspapers. Without admitting
guilt, the newspapers nonetheless agreed to pay the council $25,000 and
provide $42,000 worth of free advertising to publicize the Fair Housing
Act. As a result, the Oregon Newspaper Publishers Association now has a
special guidebook for members, and one Oregon landlord organization has
developed a list of troublesome words that could lead to problems.
Among other things, the publisher's guidebook warns that a home
advertised as ``perfect for running, biking professional'' may run
afoul of the Fair Housing Act because it discriminates against the
handicapped.
In Dubuque, IA, a newspaper agreed to pay $1,000 and run a series on
fair housing issues after local activists complained about four ads. In
one of the ads, the advertiser used the phrase ``two-person occupancy''
in a description of a two-bedroom apartment.
Mr. President, these cases raise an interesting dilemma for anyone
who tries to market a property: You could be liable under the Fair
Housing Act for something that might not be discriminatory nor
intentional.
Hundreds of cases have been filed by individuals and organizations
using the Fair Housing Act as the cornerstone of their legal battle.
Many of these cases are legitimate, but some have been frivolous. Are
we in for a flood of litigation because of the way in which the Fair
Housing Act is being interpreted?
If you say your home is ``close to the best schools,'' is that
discriminatory? If you advertise a property in an ``exclusive
neighborhood,'' is that indicative of a racial bias? If the home or
apartment is ``perfect for singles,'' does that discriminate against
families with children? Even the word ``executive'' has been cited in
complaints.
Unfortunately, the only way to be safe is to simply describe a
property in the basic sense. But I ask you, Mr. President, is that
fair? Should realtors and property owners be forced to overcomply with
the law simply to avoid litigation? Should newspapers be in the
business of policing classified ads to see that the Fair Housing Act is
being followed?
Even a newspaper's first amendment protection is no match for the
Federal Fair Housing Act. So far, this problem is limited to
residential real estate advertising.
I support the goal of the Fair Housing Act to reduce discrimination
in the buying, selling, and rental of real estate. Nevertheless, this
effort is fraught with danger. Since the risk of being sued has never
been greater, all sellers and landlords who are planning to publish an
ad should first get the help of a veteran real estate agent,
advertising specialist, or lawyer. One wrong word, and they may be
headed for court.
All publishers of advertisements, advertising agents, and firms
engaged in the sale, rental, or financing of real estate are required
to provide a printed copy of their nondiscrimination policy to
employees and clients.
It is hard to believe that we have, in America, a list of words that
cannot be used to protect newspapers, realtors, landlords, anyone who
has something to publish from ending up in court. But we do. Some of
those awful words and phrases are ``physically fit,'' ``mature,''
``families,'' ``adults,'' ``bachelor,'' ``retired,'' and the list goes
on and on. The word ``privacy'' is even prohibited, according to the
Oregon guidebook.
Should we also be concerned about terms like ``active,'' ``desirable
neighborhood,'' ``handyman's dream,'' ``quiet neighborhood,''
``sophisticated,'' and ``within walking distance of''? What about
``fisherman's retreat''? Could that be construed to be discriminatory
against nonfishermen? Against women who fish? It is absurd, but it is
all possible under the Fair Housing Act.
This trend is to promote lists of acceptable and unacceptable words
for advertisers. But I am very concerned about the way we are
interpreting the Fair Housing Act and worry that it may not end with
real estate ads. It may not affect you now, but where do we go from
here?
Mr. President, a real estate developer of single-family housing
expressed to me that he was concerned that newspapers have turned his
ads down because he wanted to advertise a ``master bedroom,'' ``walk-in
closet,'' or ``in close proximity to churches and temples.''
If indeed we are reaching this point of absurdity, and it is absurd,
we are at total variance with what the Fair Housing Act is and should
be about. It should be about seeing that there is no discrimination.
I suggest that if we get into the business of saying that ``walk-in
closet'' may somehow connote that it does not take into consideration
the handicapped and that this should be on the list of proscribed no-
nos, this becomes a rather dangerous precedent and one that I think is
well beyond the intent of Congress, and I would hope that HUD will be
sensitive to the realities of the world and not attempt to stifle free
speech in such a way.
Free speech is at the core of this. Long Island and probably many
other communities came about many years ago initially as a result of
communities being in close proximity to mass transportation--at that
time it was the Long Island Railroad, and it was very desirable to have
a home within walking distance of this railroad, as it still is in many
communities. Have we become so paranoid with political correctness that
we cannot say ``walking distance'' because somehow that would be
interpreted as not being inclusive or aware of the handicapped and
their needs? If so, I would say to you that it is a great perversion of
what the law should be about.
My staff has contacted the Department of Housing and Urban
Development and made them aware of these concerns which have been
brought to my attention by many people in the real estate and housing
industry. HUD must look carefully at this and not make a mockery of a
very important law, a law against discrimination that should be
enforced with vigor but not reach so far as to make it a sham.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. RIEGLE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 1661
(Purpose: To amend provisions of the bill relating to State decisions
to allow or prohibit interstate branching, and for other purposes)
Mr. RIEGLE. Mr. President, a number of Senators have been working
with me and Senator D'Amato to try to perfect an amendment, and we
resolved that issue. It is the major issue that we have been dealing
with over the last few hours.
I want to give a brief explanation and send it to the desk on behalf
of Senator D'Amato and myself.
In developing this amendment, I have worked not only with Senator
D'Amato, but with Senator Graham of Florida; Senator Roth; Senator
Feingold, who is here and expressed a keen interest in this; Senator
Simpson; Senator Kerrey; and Senator Campbell, a member of the
committee. All of those Senators are listed as cosponsors of this
amendment.
We have discussed the amendment that I will be sending to the desk
with the administration, and they do not object to it.
This amendment would extend until June 1, 1997, the time period for
which States can decide whether to opt out of the interstate
combination provisions of the bill. This would essentially extend the
time period for an additional year as compared to what was provided in
the reported bill. This amendment responds to concerns of some States
and their Senators that the State legislatures need a sufficient period
of time to consider legislative changes that might be needed at the
State level in preparation for interstate branching.
I now send the amendment to the desk and ask that it be reported.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Michigan, [Mr. Riegle], for himself, Mr.
D'Amato, Mr Graham, Mr. Roth, Mr. Feingold, Mr. Simpson, Mr.
Kerrey, and Mr. Campbell proposes an amendment numbered 1661.
Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection it is so ordered.
The amendment is as follows:
On page 6, strike lines 10 through 12, and insert the
following:
``(A) Combinations authorized.--Beginning on June 1, 1997,
a bank holding company having''.
On page 11, line 6, insert ``and prior to June 1, 1997,''
before ``that applies''.
On page 11, lines 17 and 18, strike ``Laws enacted
subsequent to authorization date.--'' and insert ``Effect of
state election.--''.
Beginning with page 11, line 25, strike ``during the 2-year
period beginning on the date of enactment of this
subsection'' and insert ``prior to June 1, 1997''.
On page 12, strike lines 19 through 23 and insert the
following:
``performance beyond June 1, 1997.
``(8) Combinations after june 1, 1997.--A State described
in para--''.
Mr. RIEGLE. Mr. President, I do not know if the ranking minority
member wants to make a comment--perhaps the Senator from Wisconsin
does--but we would be prepared to move on this quite rapidly.
Mr. D'AMATO. Mr. President, I am very pleased to be able to support
this amendment. I think it makes ample sense.
Mr. FEINGOLD addressed the Chair.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. FEINGOLD. Mr. President, I would like to thank the manager very
much for bringing this amendment forward. It is something I have been
working on with people from Wisconsin, including the Governor, who
thought this would be very helpful.
As the manager suggested, this would simply extend from 2 years,
which is the current period suggested, to a date certain, June 1, 1997,
the period of time during which States could opt out of interstate
branching. The additional time is necessary to allow State legislatures
the opportunity to enact State legislation which will provide the
framework for the new system.
Because a number of State legislatures will not be in session after
July 31, it is important that these kinds of complex issues have some
legislative time at the State level.
This change is supported by the National Governors Association.
Mr. President, I ask unanimous consent that a letter from the
Governor of Wisconsin, Tommy Thompson, regarding this issue be printed
in the Record at the conclusion of my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. FEINGOLD. I also want to add, Mr. President, that even with this
change, any State can enact interstate branching before this time
period, before June 1, 1997. They are free to move forward as rapidly
as they wish.
All this amendment does is simply give those States, especially rural
States where legislatures are not in continuous session, a little more
time to respond in a comprehensive and responsible fashion.
So I, again, am very grateful to the manager for his cooperation and
help in making this possible.
I yield the floor.
Exhibit 1
State of Wisconsin,
April 19, 1994.
Hon. Russell Feingold,
Hart Senate Building, Washington, DC.
Dear Senator Feingold: I would like to bring to your
attention my concerns about the interstate branching
legislation and urge you to support amendments that would
protect state revenues and regulatory interests.
The current Senate bill (S. 1963) does neither. The
legislation authorizes interstate branching unless a state
opts out within a two year time period. States, at a minimum,
need a three year time frame before implementation of this
bill in order to amend state tax and banking laws affected by
federal legislation. After May 31st of this year, 37 state
legislatures will not be in session and will not be able to
initiate the necessary changes. Unless our state tax laws are
amended, Wisconsin stands to lose significant revenue when
interstate branching occurs.
In addition, the bill does not specifically preserve the
rights of states to apply state laws to the branches of
national banks. This legislation could override state
regulatory and consumer laws. State sovereignty requires that
states have the ability to affect banking operations within
their borders.
Most importantly, all banks within the state should be
subject to the same rules. Banks moving into Wisconsin to do
business should follow the same laws as local banks.
The state of Wisconsin will benefit from your support of
any amendments that provide states three years to consider
interstate branching and that ensure interstate branches of
out-of-state banks are subject to the laws of our state just
like state-chartered banks.
Please call me or Robert Cook (202-624-5870) if you have
any questions regarding the effect of this legislation on
Wisconsin.
Sincerely,
Tommy G. Thompson,
Governor.
Mr. ROTH. Mr. President, I am pleased to join Senators Riegle and
D'Amato in offering this amendment because I am concerned that States
will not have adequate time to respond to the very fundamental
questions posed for them by this bill.
As Secretary Bentsen emphasized, we should ``continue to leave it
entirely to the States to decide if they don't want out-of-state banks
doing business within their borders.'' That makes sense to me.
Unfortunately, as the bill is currently drafted, States would have just
2 years to enact legislation prohibiting interstate branching if they
so chose. If a State does not act in that time, banks within the State
can begin to consolidate their operations across State lines. This
presents particular difficulties in States where legislatures do not
meet each year. Of course, a State may address the issue in later
years, but the horse is already out of the barn. Under the legislation
it is not possible to reverse any consolidation that has lawfully taken
place.
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 to make their initial
choices. I would think they are the experts on how much time they need
and that as representatives of the States in the Congress, we should be
deferential on such a matter. They seem to grasp the reality that the
choices given by the bill are not simple. The ramifications are many;
the politics, intense; the revenue consequences, serious.
During deliberations in the Banking 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. At that time I reserved my right
to support a 3-year amendment on the floor, and I am pleased to do so
now as a cosponsor of the amendment to extend the opt-out period until
June 1, 1997.
I had argued in committee--and I repeat here--that the 2-year
provision in the bill may very well be self-defeating for the
proponents of the legislation. Constrained by a short period of time,
and 2 years for a dozen States actually translates into a few months,
many States may protect themselves by opting out so that they then have
forever to decide. I respectfully suggest that forever is longer than 3
years or until June 1, 1997, and that the proponents should find it in
their interests to accept this amendment.
The amendment we introduce today will ensure adequate time is granted
for States to fully consider the merits of interstate branching, its
impact on State tax revenue, and its effect on the consumer. I strongly
support the change and urge swift adoption of this amendment.
Mr. RIEGLE. Mr. President, I ask that the amendment be agreed to.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 1661) was agreed to.
Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. D'AMATO. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Amendment No. 1662
(Purpose: To establish the National Commission on Financial Services)
Mr. RIEGLE. Mr. President, I will, in a moment, send to the desk an
amendment on behalf of Senator Carol Moseley-Braun that has been
cleared on both sides, the purpose of which is to establish a National
Commission on Financial Services.
I ask the clerk to report the amendment.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Michigan [Mr. Riegle] for Ms. Moseley-
Braun, proposes an amendment numbered 1662.
Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection it is so ordered.
The amendment is as follows:
On page 1, between lines 1 and 2, insert the following:
``TITLE I--INTERSTATE BANKING AND BRANCHING''.
Redesignate sections 1 through 7 of the bill as sections
101 through 107, respectively.
On page 26, after line 18, add the following new title:
TITLE II--FINANCIAL SERVICES
SEC. 201. SHORT TITLE.
This title may be cited at the ``National Commission on
Financial Services Act''.
SEC. 202. ESTABLISHMENT OF NATIONAL COMMISSION ON FINANCIAL
SERVICES.
(a) Establishment.--There is established a commission to be
known as the ``National Commission on Financial Services''
(hereafter in this title referred to as the ``Commission'').
(b) Membership of the Commission.--
(1) Composition.--The Commission shall be composed of 7
voting members and 3 nonvoting members appointed as follows:
(A) Three voting members and 1 nonvoting member to be
appointed by the President.
(B) Two voting members and 1 nonvoting member to be
appointed jointly by the Majority Leader of the Senate and
the Speaker of the House of Representatives.
(C) Two voting members and 1 nonvoting member appointed
jointly by the Minority Leader of the Senate and the Minority
Leader of the House of Representatives.
(2) Qualifications.--
(A) Voting members.--
(i) In general.--Voting members appointed pursuant to
paragraph (1) shall be appointed from among individuals who
are users of the financial services system, and shall include
representatives of business, agriculture, and consumers.
(ii) Prohibition.--No voting member of the Commission shall
be an employee of the Federal Government or any State
government.
(B) Nonvoting members.--Nonvoting members appointed
pursuant to paragraph (1) shall be appointed from among
individuals who are experts in finance or in the financial
services system.
(3) Appointment.--The appointment of the members of the
Commission shall be made not later than June 30, 1994.
(4) Terms.--Members shall be appointed for the life of the
Commission.
(5) Vacancies.--A vacancy in the Commission shall not
affect the powers of the Commission and shall be filled in
the same manner in which the original appointment was made.
(6) Chairperson.--The President shall designate 1 of the
voting members of the Commission to serve as the chairperson
of the Commission (hereafter in this title referred to as the
``Chairperson'').
(7) Initial meeting.--Not later than 30 days after the date
on which all members of the Commission have been appointed,
the Commission shall hold its first meeting.
(8) Meetings.--The Commission shall meet at the call of the
Chairperson.
(9) Quorum.--A majority of the members of the Commission
shall constitute a quorum, but a lesser number of members may
hold hearings.
SEC. 203. DUTIES OF THE COMMISSION.
(a) Study.--
(1) In general.--The Commission shall, after consultation
in accordance with paragraph (3), conduct a study of all
matters relating to the strengths and weaknesses of the
United States financial services system in meeting the needs
of users of the system, including all laws, regulations, and
policies that govern part or all of the financial services
industry or that affect the ability of the financial services
industry to effectively and efficiently meet the needs of--
(A) the United States economy;
(B) individual consumers and households;
(C) communities;
(D) agriculture;
(E) small-, medium-, and large-sized businesses (including
the need for debt, equity, and other financial needs);
(F) governmental and nonprofit entities; and
(G) exporters and other users of international financial
services.
(2) Matters studied.--The study required under paragraph
(1) shall include consideration of--
(A) the changes underway in the national and international
economies and the financial services industry, and the impact
of such changes on the ability of the financial services
system to efficiently meet the needs of the United States
economy and the users of the system during the next 10 years
and beyond;
(B) the adequacy of the existing framework of Federal and
State laws and regulations, and the extent to which Federal
laws and regulations, in an efficient and cost-effective
manner--
(i) achieve consumer protection objectives;
(ii) promote competition and prevent anticompetitive acts
and practices or undue concentration;
(iii) ensure that the financial services are delivered in a
nondiscriminatory and cost-efficient manner; and
(iv) ensure access to the financial services system for all
potential users of the system, regardless of where such users
are located; and
(C) the extent to which the Federal regulatory structure
impacts the achievement of the objectives in subparagraph
(B).
(3) Consultation.--Consultation in accordance with this
paragraph means consultation with--
(A) the Board of Governors of the Federal Reserve System;
(B) the Director of the Office of Thrift Supervision;
(C) the Chairperson of the Federal Deposit Insurance
Corporation;
(D) the Comptroller of the Currency;
(E) the Secretary of the Treasury;
(F) the Secretary of the Department of Housing and Urban
Development;
(G) the Securities Exchange Commission;
(H) the Commodities Futures Trading Commission;
(I) the Director of the Congressional Budget Office; and
(J) the Comptroller General of the United States.
(b) Recommendations.--Based on the results of the study
conducted under subsection (a), the Commission shall develop
specific recommendations for changes in laws and regulations
to improve the operation of the United States financial
services system, including needed changes in the Federal
legislative and regulatory policies and in the Federal
regulatory structure that would enhance--
(1) the ability of the financial services system, or any
part thereof, to respond to the needs of all potential users
of the system;
(2) the systemic safety of the financial services system;
(3) the cost of financial services to users of the system;
(4) the competitiveness of the various providers of
financial services;
(5) how funds are allocated to the financial services
system; and
(6) how funds are allocated by the financial services
system to users of the system or to specific categories of
users.
(c) Report.--Not later than March 31, 1995, the Commission
shall submit to the President, the Speaker of the House of
Representatives, and the President pro tempore of the Senate
a report describing the activities of the Commission,
including the study conducted under subsection (a) and any
recommendations developed under subsection (b).
SEC. 204. POWERS OF THE COMMISSION.
(a) Hearings.--The Commission may hold such hearings, sit
and act at such times and places, take such testimony, and
receive such evidence as the Commission considers advisable
to carry out this section.
(b) Obtaining Official Data.--The Commission may secure
directly from any Federal department or agency such
information (other than information required by any statute
of the United States to be kept confidential by such
department or agency) as the Commission considers necessary
to carry out its duties under this section. Upon the request
of the Chairperson, the head of that department or agency
shall furnish such nonconfidential information to the
Commission.
(c) Postal Services.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
SEC. 205. COMMISSION PERSONNEL MATTERS.
(a) Compensation of Members.--Each member of the Commission
who is not an officer or employee of the Federal Government
shall be compensated at a rate equal to the daily equivalent
of the annual rate of basic pay prescribed for level IV of
the Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties
of the Commission. All members of the Commission who are
officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
(b) Travel Expenses.--The members of the Commission shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Commission.
(c) Staff.--
(1) In general.--The Chairperson may, without regard to the
civil service laws and regulations, appoint and terminate an
executive director and not more than 2 additional
professional staff members to enable the Commission to
perform its duties. The employment of an executive director
shall be subject to confirmation by the Commission.
(2) Compensation.--The Chairperson may fix the compensation
of the executive director and other personnel without regard
to the provisions of chapter 51 and subchapter III of chapter
53 of title 5, United States Code, relating to the
classification of positions and General Schedule pay rates,
except that the rate of pay for the executive director and
other personnel may not exceed the rate payable for level V
of the Executive Schedule under section 5316 of title 5,
United States Code.
(d) Detail of Federal Employees.--Upon the request of the
Chairperson, any Federal Government employee may be detailed
to the Commission without reimbursement, and such detail
shall be without interruption or loss of civil service status
or privilege.
(e) Procurement of Temporary and Intermittent Services.--
The Chairperson may procure temporary and intermittent
services under section 3109(b) of title 5, United States
Code, at rates for individuals which do not exceed the daily
equivalent of the annual rate of basic pay prescribed for
level V of the Executive Schedule under section 5316 of title
5, United States Code.
(f) Administrative Support Services.--Upon the request of
the Chairperson, the Administrator of General Services shall
provide to the Commission, on a reimbursable basis, the
administrative support services necessary for the Commission
to carry out its responsibilities under this section.
SEC. 206. TERMINATION OF COMMISSION.
The Commission shall terminate 30 days after the date of
submission of the report required under section 203(c). All
records and papers of the Commission shall thereupon be
delivered by the Administrator of General Services for
deposit in the National Archives.
SEC. 207. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There are authorized to be appropriated
such sums as may be necessary to carry out this Act.
(b) Availability.--Any sums appropriated under the
authorization contained in this section shall remain
available, without fiscal year limitation, until expended.
Ms. MOSELEY-BRAUN. Mr. President, our financial services system plays
a critical role in the American economy. Families use it to purchase a
car, to buy a home, to fund their children's education, and for myriad
other everyday, but vitally important, purposes. Businesses use it to
fund their operations, to finance expansion, to create jobs, and for an
equally large variety of other reasons. In fact, our economy absolutely
depends on the ability of our financial services system to meet the
needs of consumers and households, communities, agriculture, business,
governments of all types, and nonprofit entities.
It is equally clear that our financial services system, and our
economy as a whole, are undergoing major changes. The revolution in
communications, computerization and other technological changes,
changes in the kinds of services demanded by various users of our
system, the creation of new financial products and services and whole
new financial sectors, and structural changes in our economy itself are
all combining to reshape our financial system.
Our banking system has been shrinking as a percentage of the overall
financial system. Mutual funds now have over $2 trillion in assets. And
the derivatives area, perhaps most visibly embodied in the two Chicago
Futures Exchanges, has resulted in changes in our financial system that
weren't even imagined a few decades ago.
The Federal Government's involvement in our financial services system
is almost as complex as the system itself. The Treasury Department, the
Department of Housing and Urban Development, the Federal Reserve, the
Securities and Exchange Commission, the Comptroller of the Currency,
the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, the Commodity Futures Trading Commission, and the Federal
Trade Commission are just some of the Federal departments and agencies
with major responsibilities and authorities that directly impact on our
financial system.
Federal laws and regulations ensure the stability of our payments
system, and protect the savings of ordinary Americans. Federal laws and
regulations govern the conduct of monetary policy, and ensure that
consumers have the information they need to shop for credit. Federal
laws and regulations protect the integrity and fairness of our capital
markets, and the privacy of consumer credit history information.
Federal laws and regulations credited a huge secondary market in
mortgages, and regulate important parts of each and every home buying
transaction. Federal laws and regulations in the financial services
area affect every single American--and the rest of the world.
Given the scope and extent of Federal involvement in our financial
system, and given the scope and extent of the changes now underway in
that system and our economy at large, I believe it is time for a
comprehensive examination of our financial system. That is why I am
offering this amendment establishing a national commission on financial
services.
There have been a lot of studies of various financial issues in the
past, including:
The Hunt Commission, established in 1970;
The Financial Institutions in the Nation's Economy--``FINE''--study,
conducted in 1975;
President Carter's report on geographic restrictions, conducted in
1978; and, most recently,
The 1991 study, entitled ``Modernizing the Financial System.''
All of these studies examined parts of our financial system. However,
the subtitle of the 1991 study, ``Recommendations for a Safer, More
Competitive Banking System,'' highlights the differences between what
has gone before and the amendment I am proposing today.
The Commission approach embodied in my amendment will study the
entire financial system, not just the banking system. And, since the
banking system is shrinking as a percentage of our total financial
system, I think it is appropriate that we look at the entire system in
a comprehensive way.
Moreover, this amendment mandates study of our financial system from
the viewpoint of our economy and from the viewpoints of users of the
financial system, including consumers and households, communities,
agricultural interests, and businesses of all sizes, instead of from
the viewpoint of providers or from the viewpoint of Government. To
ensure that objective is met, the voting members of this Commission
will be drawn from the users of the system.
I am new to these issues at the Federal level. However, I have worked
with them at the State level, and I strongly believe it could be very
helpful to have the framework of a broad set of recommendations to help
us deal with the huge changes underway in our economy and our financial
system.
I do not think such a commission should prevent us from acting on
those issues that are ready for action during this Congress. However,
whether we attempt to act comprehensively in the future, or whether we
go step-by-step, I think we will clearly benefit having some better
understanding of:
The needs of the users of our financial system;
How well the system meets those needs; and
The impact Federal laws and regulations have on the system and its
ability to meet the needs of consumers, communities, businesses, and
the rest of the users of our financial system.
A comprehensive study of our financial system can give Congress and
the President a framework that will help us ensure that Federal laws
and regulations are adequate and up to date, that they do not
unreasonably or inappropriately get in the way of or distort the
fundamental changes now underway in our financial system and in our
economy, and that they are able to achieve their public policy
objectives.
At the same time, such a study can help us frame new responses, to
extend and reform Federal laws and rules to cover new areas where
necessary and appropriate, and to meet ongoing public needs in new,
creative ways.
Mr. President, the Commission created by this amendment will report
back to Congress by March 31, 1995. This time period is, I am
convinced, one of the best investments in our future we can make.
If we care about big issues, like the future of our economy and our
international competitiveness, and if we care about people and
communities, and how the financial system works for them, then we
should begin this study now. I strongly urge my colleagues to join me
in working to see that this amendment proposing a National Commission
on Financial Services Act is quickly enacted into law.
Mr. RIEGLE. As I say, this has been cleared on both sides, and I ask
that it be agreed to.
The PRESIDING OFFICER. Is there further discussion of the amendment?
Mr. METZENBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. METZENBAUM. Mr. President, I am sure I have no objection. I was
off the floor for a minute. Are these managers' amendments?
Mr. RIEGLE. This is an amendment on behalf of Senator Carol Moseley-
Braun to set up a National Commission on Financial Services.
Mr. METZENBAUM. I thank the Senator. I apologize for interrupting.
Mr. RIEGLE. I would rather have the Senator ask and be sure.
The PRESIDING OFFICER. If there is no further debate on the
amendment, the question is on agreeing to the amendment.
The PRESIDING OFFICER. The amendment (No. 1662) was agreed to.
Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. D'AMATO. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. RIEGLE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. D'AMATO. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. NICKLES. In section 2 of this bill, the language provides a 25-
percent deposit cap or concentration limit for banks in any one State.
Oklahoma law currently sets an 11 percent deposit cap in the State
banking code. Under the House version of this bill, it is clear that
States have the right to set their own limits. My question is does the
language in the Senate's version of the bill preempt Oklahoma's 11-
percent concentration or deposit cap limitation?
Mr. RIEGLE. It does not. Oklahoma law and any other State law which
sets a lower deposit concentration limit would be protected under this
language. This section is intended only to set a ceiling above which a
State may not go without a specific waiver by the State bank supervisor
on a case-by-case basis.
Mr. RIEGLE. Mr. President, I have two other items here. I hope we can
resolve the issue with Senator Metzenbaum because we are ready to go to
final passage here very shortly, I think, and would like to do so.
Amendment No. 1663
(Purpose: To remove certain limitations on the maximum interest rate
that may be charged on certain FmHA loans)
Mr. RIEGLE. Mr. President, I offer an amendment on behalf of Senator
Pryor. It raises concerns and deals with concerns about the
applicability of State usury laws to out-of-State branches.
During discussions of the interstate banking bill, Senator Pryor
raised concerns about the applicability of State usury laws to out-of-
State branches. He wanted to ensure that branches of out-of-State banks
coming into Arkansas were subject to that State's usury ceiling. My
staff consulted with his staff and we addressed his concern in the
committee report on S. 1963 in which we made clear State usury laws
would apply to interstate branches coming into the host State. During
those discussions, Senator Pryor raised an additional concern of his
State's usury law and its impact on Farmers Home Administration loan
programs. That issue is addressed by this amendment.
This amendment would override Arkansas' usury law with respect to
three different Farmers Home Administration [FHA], loan programs. These
programs are the water and waste disposal direct and guaranteed loan
programs, the community facilities direct and guaranteed loan programs,
and the business and industry guaranteed loan program. Currently, these
programs perform below par in Arkansas because that State's usury
ceiling restricts their use, thereby inhibiting community and economic
development. For the past 4 years, Federal money allocated by the
Farmers Home Administration for direct loans and loan guarantees in
Arkansas has been reallocated to other States because FHA was unable to
expend it in Arkansas due to the usury ceiling. This amendment would
override any State usury ceiling with respect to these programs, but
would give States 3 years to opt out of this provision and reimpose
their State usury limit if they so choose.
Mr. President, the amendment has been cleared on both sides. I send
the amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Michigan [Mr. Riegle], for Mr. Pryor,
proposes an amendment numbered 1663.
Mr. RIEGLE. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following new section:
SEC. . MAXIMUM INTEREST RATE ON CERTAIN FmHA LOANS.
(a) In General.--Section 307(a) of the Consolidated Farm
and Rural Development Act (7 U.S.C. 1927(a)) is amended--
(1) in paragraph (3)(A), by striking ``Except'' and
inserting ``Notwithstanding the provisions of the
constitution or laws of any State limiting the rate or amount
of interest that may be charged, taken, received, or
reserved, except''; and
(2) in paragraph (5)--
(A) by striking ``(5) The'' and inserting ``(5)(A) Except
as provided in subparagraph (B), the''; and
(B) by adding at the end the following new subparagraph:
``(B) In the case of a loan made under section 310B as a
guaranteed loan, subparagraph (A) shall apply notwithstanding
the provisions of the constitution or laws of any State
limiting the rate or amount of interest that may be charged,
taken, received, or reserved.''.
(b) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by subsection (a) shall apply to a
loan made, insured, or guaranteed under the Consolidated Farm
and Rural Development Act (7 U.S.C. 1921 et seq.) in a State
on or after the date of enactment of this Act.
(2) State option.--Except as provided in paragraph (3), the
amendments made by subsection (a) shall not apply to a loan
made, insured, or guaranteed under the Consolidated Farm and
Rural Development Act in a State after the date (that occurs
during the 3-year period beginning on the date of enactment
of this Act) on which the State adopts a law or certifies
that the voters of the State have voted in favor of a
provision of the constitution or law of the State that states
that the State does not want the amendments made by
subsection (a) to apply with respect to loans made, insured,
or guaranteed under such Act in the State.
(3) Transitional period.--In any case in which a State
takes an action described in paragraph (2), the amendments
made by subsection (a) shall continue to apply to a loan
made, insured, or guaranteed under the Consolidated Farm and
Rural Development Act in the State after the date the action
was taken pursuant to a commitment for the loan that was
entered into during the period beginning on the date of
enactment of this Act, and ending on the date on which the
State takes the action.
Mr. RIEGLE. Mr. President, this has been cleared on both sides. If
there is no further debate on it, I urge the adoption of the amendment.
The PRESIDING OFFICER. Is there further debate? If not, the question
is on agreeing to the amendment.
The amendment (No. 1663) was agreed to.
Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. D'AMATO. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. METZENBAUM. I suggest the absence of a quorum.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. METZENBAUM. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. METZENBAUM. Mr. President, the Senator from Ohio had intentions
of offering two amendments, one having to do with low-cost banking, and
the other having to do with check cashing.
I think, after discussion, that the chairman of the committee and the
ranking member may be able to handle this matter in another way, and
therefore I will not offer that amendment.
There is another amendment that the Senator from Ohio is prepared to
offer. There is no question that it is a controversial amendment. But
it has to do with the fact that the Supreme Court in one fell swoop the
other day totally eliminated the obligation and liabilities of
accountants, lawyers, and all those who are involved in connection with
underwriting, and securities transactions, a horrendous decision by the
Supreme Court--horrendous because had that decision been in effect
previously, the $275 million recovered from the accountants and the
lawyers and others in connection with the investment bankers in the
Keating matter would not have occurred. Right now, under the law, it is
precluded from recovering any additional dollars along that line.
It is my understanding that some Members of this body would strongly
react to attempting to correct that matter, and this is the second bill
to which the Senator from Ohio had intentions of offering it as an
amendment. I hope that we can figure out some other way to do it. But I
make no bones about it. Before this session is over, I will give every
Member of this body the chance to correct this terrible inequity that
has been created by the Supreme Court of the United States. It was not
one of their great days. It certainly was unfair to the taxpayers of
this country who have been stuck with the liabilities that otherwise
accountants, attorneys, investment bankers, and others should be
paying.
Mr. President, I yield the floor.
Mr. RIEGLE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. RIEGLE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Wofford). Without objection, it is so
ordered.
Amendment No. 1664
(Purpose: Relating to the Mount Rushmore Commemorative Coin Act)
Mr. RIEGLE. Mr. President, I have an amendment that has been cleared
on both sides in behalf of Senator Daschle and Senator Pressler, and I
send it to the desk and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:
The Senator from Michigan [Mr. Riegle], for Mr. Daschle,
for himself and Mr. Pressler, proposes an amendment numbered
1664.
Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the bill, insert the following
new section:
SEC. . MOUNT RUSHMORE COMMEMORATIVE COIN ACT.
(a) Distribution of Surcharges.--Section 8 of the Mount
Rushmore Commemorative Coin Act (104 Stat. 314; 31 U.S.C.
5112 note) is amended by striking paragraphs (1) and (2) and
inserting the following:
``(1) the first $18,750,000 shall be paid during fiscal
year 1994 by the Secretary to the Society to assist the
Society's efforts to improve, enlarge, and renovate the Mount
Rushmore National Memorial; and
``(2) the remainder shall be returned to the Federal
Treasury for purposes of reducing the national debt.''.
(b) Retroactive Effect.--If, prior to the enactment of this
Act, any amount of surcharges have been received by the
Secretary of the Treasury and paid into the United States
Treasury pursuant to section 8(1) of the Mount Rushmore
Commemorative Coin Act, as in effect prior to the enactment
of this Act, that amount shall be paid out of the Treasury to
the extent necessary to comply with section 8(1) of the Mount
Rushmore Commemorative Coin Act, as in effect after the
enactment of this Act. Amounts paid pursuant to the preceding
sentence shall be out of funds not otherwise appropriated.
(c) Numismatic Operating Profits.--Nothing in this section
shall be construed to affect the Secretary of the Treasury's
right to derive operating profits from numismatic programs
for use in supporting the United States Mint's numismatic
operations and programs or to allow the distribution of
operating profits from the Numismatic Public Enterprise Fund
to a recipient organization under any numismatic program.
Mr. RIEGLE. Mr. President, this amendment has been cleared on both
sides. It relates to a slight change in an existing law regarding the
Mount Rushmore Commemorative Coin Act. I urge its adoption.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 1664) was agreed to.
Mr. RIEGLE. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. D'AMATO. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. FORD. Mr. President, I wish to congratulate the chairman of the
Banking Committee for the outstanding work he has done in crafting an
interstate banking and branching bill which I believe is in the best
economic interests of this country. I believe the committee bill will
significantly improve the efficiency of financial institutions across
this country to the long-term benefit of individuals and businesses. It
will strengthen our economy.
On the one hand, we need to eliminate unnecessary Federal barriers
and allow interstate banking and branching to proceed as market forces
dictate. On the other hand, we need to do this in a manner which does
not threaten the safety and soundness of our banking system, and which
respects both States' rights and the legitimate franchise interests of
community banking institutions. In my view, the committee bill
accomplishes these objectives.
I became strongly interested in the issue of interstate banking and
branching in 1991 at the urging of bankers in my State. At that time,
they came to me with serious concerns that the pending Bush
administration proposal went too far toward favoring the interests of
large banks, and that other proposals had little chance of passage.
Working together with our bankers and many other State banking
organizations--as well as the distinguished chairman of the committee--
we were able to develop a compromise proposal which I was privileged to
offer as an amendment to the Senate floor and which passed the Senate.
The committee bill before us today is similar to that amendment in
many ways, but contains some important improvements. I strongly support
this measure.
There is, however, one aspect of this debate which concerns me and
the bankers in my State a great deal. That is the issue of interstate
branching by foreign banks. I believe the House bill, H.R. 3841, gives
competitive advantages to foreign banks. This bill has already passed
the full House of Representatives, and I presume the treatment of
foreign banks will be an issue in the conference committee. I strongly
favor the Senate approach.
Mr. President, foreign banks have expanded their presence in this
country dramatically in recent years, to the point where they now enjoy
a significant market share. They are not merely operating at the
fringes of our banking system, as some would suggest.
In 1993, foreign banks operating in the United States controlled $872
billion in banking assets, $872 billion. Foreign banks controlled an
additional $329 billion in off-shore assets. Ninety percent of these
assets were booked in the Cayman Islands, and most of the remainder
were booked in the Bahamas. The Federal Reserve has just begun
calculating these off-shore assets, presenting a more accurate picture
of the reach and influence of foreign banking operations in this
country. Together, these totals show that foreign banks in 1993 held a
staggering $1.5 trillion in U.S. loans and securities out of a total
U.S. market of $3.9 trillion. This means foreign banks controlled 30.5
percent of U.S. bank assets in 1993.
Forty-two percent of all business loans in the United States last
year were made by foreign bank-owned entities. Foreign banks held more
than $200 billion in commercial and industrial loans for each of the
last 3 years, compared to $85 billion 10 years ago. Foreign banks held
an additional $70 billion in commercial real estate loans last year as
well.
Mr. President, I have been surprised to learn how many individuals in
this town have been retained by foreign banking interests and are
willing to defend foreign banking interests affected by this
legislation.
I have also come to learn that many foreign banks compete directly
for the same business U.S. banks dominated only a few years ago, and
they have a pretty sweet deal. Do not get me wrong, I am not opposed to
competition. I am not opposed to interstate banking and branching
activities being conducted by foreign banks. However, in my view, I
believe they should compete equally with our own banks. They should be
subject to the same regulatory restrictions as our own banks if they
are competing directly.
Instead, their cost of capital appears to be much lower than that of
U.S. banks, which means that they can accept a much lower rate of
return. Why? Most foreign banks do not have to worry about complying
with community reinvestment laws, or consumer banking laws, or fair
lending laws. Most do not have to worry about the Home Mortgage
Disclosure Act, or the Real Estate Settlement Procedures Act, to name a
few.
Foreign banks also continue to enjoy the ability to enter into other
fields which are off limits to U.S. banks. Current Federal law exempts
foreign banks in certain cases from restrictions on U.S. bank holding
companies relating to interests in nonbanking organizations. I am told
this has enabled foreign banks to engage in a wide range of business
activities from raising poultry to manufacturing metal products.
Let me say again, I have no problem with competition. But fair
competition means playing by the same rules. I think we must have
balance in this bill, providing the same benefits and burdens for
foreign banks as are available for U.S. banks.
Mr. President, I would like to ask the chairman of the Banking
Committee, the distinguished Senator from Michigan, if he would answer
a few questions regarding the concerns I have with foreign banks under
an interstate banking and branching bill.
First, I would ask the distinguished chairman of the Banking
Committee, has the committee heard testimony expressing concern over
preferential treatment for foreign banks under any interstate banking
legislation?
Mr. RIEGLE. Yes. At the committee hearings on this bill, testimony
was given on this issue. We were told that foreign banks presently
receive preferential treatment in our market inasmuch as their
wholesale branches are not subject to the Community Reinvestment Act
and other consumer laws. We were also told they can attract corporate
customers since they do not pay deposit insurance premiums on corporate
accounts taken in their wholesale branches.
Mr. FORD. Do foreign banks have the right to branch interstate under
the House bill without meeting the same requirements we put on domestic
banks?
Mr. RIEGLE. I understand the House bill permits foreign banks to
branch interstate without the need for a subsidiary bank chartered in
this country.
Mr. FORD. I would say to the chairman that my concern with the
approach is that the Community Reinvestment Act and other consumer laws
would not apply to the foreign bank branches under the House bill. Let
me ask the chairman further, do foreign banks have the ability to
branch interstate under the Senate bill?
Mr. RIEGLE. Yes. They have all of the same rights as U.S. banks.
Under the Senate bill, foreign banks can acquire and combine banks on
an interstate basis just like U.S. banks if they use the structure
required of domestic U.S. banking organizations. This ensures they do
not receive preferential treatment.
Mr. FORD. In areas where foreign banks compete directly with U.S.
banks, would it be the chairman's view that the inapplicability of the
Community Reinvestment Act or consumer banking laws or fair lending
laws could give foreign banks a competitive advantage over U.S. banks?
Mr. RIEGLE. Yes. In fact, the committee recently received a letter
from the Independent Bankers Association of America contending that
because the wholesale branches of foreign banks are not subject to such
requirements, they have a competitive advantage over U.S. banks and can
thus ``undercut the price charged by U.S. banks for comparable
services.'' I ask unanimous consent to have printed in the Record that
letter from the IBAA.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Independent Bankers
Association of America,
Washington, DC, December 21, 1993.
Hon. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: As you know, the IBAA has long favored
the ``Fair Trade In International Banking Act'', and has
testified in favor of the bill several times. We believe that
``national treatment'' is becoming an increasingly important
concept as international banking expands, both in the United
States and worldwide. However, the Fair Trade In
International Banking Act only speaks to the treatment
afforded to U.S. banks doing business in foreign countries.
We have concerns that the playing field is not even here in
the United States and that U.S. banks are currently at a
serious competitive disadvantage.
Foreign banks can operate in the U.S. in many forms. These
include agencies, Edge Act corporations, full service
branches and ``wholesale'' branches. Only the FDIC insured
full service branches are subject to the panoply of bank
regulatory laws and regulations. Generally, federal and state
branches of foreign banks must be FDIC insured if they
receive deposits under $100,000.00, unless the appropriate
federal regulator determines that the branch is not engaged
in ``domestic retail deposit activity''. 12 U.S.C. Section
3104
Pursuant to this section, regulations have been promulgated
which allow uninsured foreign branches to accept initial
deposits of at least $100,000.00 even if the deposit falls to
less than $100,000.00. 12 C.F.R. Section 364.4. In addition,
an uninsured foreign branch can accept initial deposits of
less than $100,000.00 if the deposit is from any business
entity and certain other depositors. 12 C.F.R. Section 346.6
We believe that these provisions effectively allow branches
of foreign banks to compete with U.S. banks on a retail
deposit level. However, the branch does not have to pay FDIC
deposit premiums and is not subject to a great many banking
and consumer protection laws. This gives the branch of the
foreign bank a distinct cost savings that allows it to
undercut the prices charged by U.S. banks for comparable
services. We believe that this disparity has helped foreign
banks to control almost 36% of all commercial and industrial
loans in the U.S., as well as to control 21% of all U.S.
banking assets.
On October 5, 1993 Federal Reserve Governor LaWare
testified before the Senate Banking Committee that he
believed foreign banks should receive the same treatment with
regard to interstate banking and branching as U.S. banks.
This is an especially troubling idea given the apparent
preferential treatment that these banks now have.
We believe it is appropriate for the Senate Banking
Committee to investigate whether and to what extent foreign
banks receive preferential treatment, both in the areas
discussed above and other areas. For the banking industry to
effectively compete, it must have a level playing field both
here and abroad. The Fair Trade In International Banking Act
will help insure that national is afforded U.S. banks abroad.
We also need to insure that the same treatment is afforded
here.
Sincerely,
Kenneth A. Guenther,
Executive Vice President.
Mr. FORD. Is the chairman aware of any other concerns being expressed
by U.S. bankers about possible competitive advantages being given to
foreign banks under any interstate banking proposals?
Mr. RIEGLE. Yes. I have received 16 letters from State banking
organizations from across the country expressing concerns that the
language in the House bill gives foreign banks competitive advantages.
These State banking organizations have all expressed support for
retaining the State approach on this issue. I ask unanimous consent
that these letters be printed in the Record at this point.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
Alabama Bankers Association,
Montgomery, AL, April 20, 1994.
Senator Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle. I am writing in reference to the
foreign branching language in the House interstate banking
bill (H.R. 3841). I am very concerned about this portion of
the bill as this letter will explain.
The Senate version of the interstate banking legislation
(S. 1963) provides that foreign banks could, like domestic
banks, branch interstate by first establishing an insured
bank in this country and then branching from such bank. The
House version, however, would allow foreign banks to put
their direct wholesale branches and agencies throughout the
United States.
According to recent Federal Reserve Board data, there are
over 300 foreign banking organizations from 62 different
countries operating banking facilities in the United States.
Of the almost 700 different types of facilities, only 93 are
subsidiaries, while 378 are branches and 211 are agencies.
Foreign banks make 75% of their United States loans from
wholesale branches and agencies. These branches and agencies
are not subject to FDIC insurance premiums, CRA, HMDA
requirements, and other consumer bank requirements.
Therefore, this provision would only widen the unfair
advantage they have over domestically chartered banks.
The recently completed GATT agreement states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
Foreign banks now account for a 42% share of all business
loans made in the United States. The foreign share of the
United States banking market is larger than the foreign
banking share of most other major financial markets in the
world. The reason for this is the distinct competitive
advantage these foreign banks have over domestic banks in our
own market.
Allowing foreign banks new competitive advantages in the
United States market, as proposed in the House interstate
banking bill (H.R. 3841), would be detrimental to the
domestic banking industry. The Senate interstate banking bill
passed by your Committee allows foreign banks chartered in
the United States to take advantage of the interstate
language. Those not chartered in the United States could keep
their present offices, but would continue to be required to
obtain state approval to operate a branch or representative
in the different states.
Foreign banks operating domestically should not receive
preferential treatment over domestic banks by our own
government. I respectfully ask that you make every effort to
keep the Senate interstate banking bill free from language
that establishes preferential treatment for unincorporated
foreign banks in the United States. United States banking
regulations should apply to all financial institutions doing
business in the United States, whether domestic or foreign.
Thank you for your consideration of this matter.
Sincerely,
Jerry W. Spencer,
Executive Vice President.
____
The Arkansas Bankers Association,
Little Rock, AR, April 21, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writing this letter to bring
your attention to the foreign branching language in the House
interstate banking bill (H.R. 3841).
The interstate banking bill currently before the Senate (S.
1963) provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and the branching from such bank. The House
interstate banking bill, in contrast, would allow foreign
banks to put their direct wholesale branches and agencies
throughout the United States. Since the wholesale branches
and agencies of foreign banks, from which they make over 75%
of their U.S. loans, are not subject to FDIC Insurance
premiums nor CRA and other consumer bank requirements, this
would add to the already grossly unfair advantage they have
over U.S. domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
According to recent Federal Reserve Board data there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities, only 93 are subsidiaries, while 378 are branches
and 211 agencies. These latter two types of facilities from
which foreign banks do most of their business in this country
are exempt from FDIC insurance, HMDA requirements, CRA
provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world. Is this
happening because U.S. banks are inept competitors? The
answer is clearly and emphatically NO. Is it because foreign
banks have competitive advantages over U.S. banks in our own
market. The answer is just as emphatically YES.
There is no need to give foreign banks new competitive
advantages in our market as proposed in the House interstate
banking bill (H.R. 3841). Under the Senate interstate banking
bill passed by your Committee, foreign banks which are
chartered in the U.S., whether national or state will be able
to take advantage of the interstate language. Those which are
not chartered in the U.S. could keep their present offices
but would continue to need state approval to operate a branch
or representative in the different states.
It is our feeling foreign banks operating domestically
should not receive preferential treatment from our government
over U.S. domestic banks. An example of the preferential
treatment foreign banks are currently receiving is exhibited
in Subsection 236.6 of the FDIC Rules and Regulations which
allow unincorporated, uninsured foreign branches and agencies
to accept deposits of any amount from any business entity
which engages in commercial activities from profit.
I would respectfully ask that you make every effort to keep
the Senate interstate banking bill free from established
preferential treatment to unincorporated foreign banks in the
U.S. Our U.S. banking regulations are there for a reason and
they should apply to all financial institutions, domestic or
foreign, doing business in the United States.
Sincerely,
H.C. Carvill,
Executive Director.
____
Colorado National Bank,
Denver, CO, April 22, 1994.
Hon. Ben Nighthorse Campbell,
Russell Senate Office Building,
Washington, DC.
Dear Senator Campbell: I urge you to support the interstate
banking and branching bill (S. 1963) which is scheduled for
consideration on Monday and Tuesday (April 25 and 26) by the
full United States Senate.
Passage of interstate banking and branching is the number
one legislative priority for First Bank System. I urge you to
keep the interstate bill ``clean'' and vote against any
amendments which address non-related issues, such as
insurance, basic banking services or CRA. Any such unrelated
amendments will undermine the passage of the bill, which in
its present form will increase the competitiveness and safety
of the banking industry and benefit our customers.
Again, I urge you to support passage of a ``clean''
interstate banking and branching bill when it comes up for a
vote on the Senate floor.
Sincerely,
Daniel W. Yohannes
President.
____
Indiana Bankers Association,
Indianapolis, IN., April 19, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing & Urban Affairs, U.S.
Senate, Washington, DC.
Dear Chairman Riegle: My purpose in writing to you is in
regard to the House interstate banking bill (H.R. 3841),
particularly the foreign branching language it contains.
The House interstate banking bill would allow foreign banks
to locate their direct wholesale branches and agencies
throughout the U.S. This would add to the unfair advantage
they have over U.S. chartered banks, since the wholesale
branches and agencies of foreign banks, from which they make
more than 75 percent of their U.S. loans, are not subject to
FDIC insurance premiums, the Community Reinvestment Act, or
other consumer bank requirements.
Foreign banks have a great presence in the U.S.
marketplace. Federal Reserve data point out that there are
more than 300 foreign banking entities from 62 countries
operating banking facilities here. Only 93 are subsidiaries,
378 are branches, and 211 are agencies. Foreign banks account
for a 42 percent share of all business loans being made in
the U.S. You may know that the branches and agencies of the
foreign players are exempt from FDIC insurance, HMDA
requirements, and CRA provisions, among others. These foreign
competitiors clearly have competitive advantages over U.S.
banks in our own market.
I respectfully ask that you not give foreign banks
preferential treatment over our own banks in our market as
proposed in the H.R. 3841. Under the Senate interstate
banking bill passed by your Committee, foreign banks which
are chartered in the U.S. whether national or state, will be
able to take advantage of the interstate language. Those
which are not chartered in the U.S. could keep their present
offices but would continue to need state approval to operate
a branch or representative office in the different states. An
example of current preferential treatment foreign banks have
is exhibited in Subsection 346.6 of the FDIC rules and
regulations which allow unincorporated, uninsured foreign
branch and agencies to accept deposits of any amount from any
business entity which engages in commercial activities for
profit.
The foreign branching language in H.R. 3841 would give
foreign banks competitive advantages over U.S. banks. There
is no obligation to give foreign institutions more favorable
treatment. Thank you for your consideration of my views.
Sincerely,
William H. King,
President.
____
Iowa Bankers Association,
Des Moines, IA, April 19, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writing this letter to bring
your attention to the foreign branching language in the House
interstate banking bill (H.R. 3841).
The interstate banking bill currently before the Senate (S.
1963) provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and then branching from such bank. The House
interstate banking bill, in contrast, would allow foreign
banks to put their direct wholesale branches and agencies
throughout the United States. Since the wholesale branches
and agencies of foreign banks, from which they make over 75
percent of their U.S. loans, are not subject to FDIC
insurance premiums nor CRA and other consumer bank
requirements, this would add to the already grossly unfair
advantage they have over U.S. domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
According to recent Federal Reserve Board data there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities, only 93 are subsidiaries, while 378 are branches
and 211 agencies. These latter two types of facilities from
which foreign banks do most of their business in this country
are exempt from FDIC insurance, HMDA requirements, CRA
provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world. Is this
happening because U.S. banks are inept competitors? The
answer is clearly and emphatically NO. Is it because foreign
banks have competitive advantages over U.S. banks in our own
market? The answer is just as emphatically YES.
There is no need to give foreign banks new competitive
advantages in our market as proposed in the House interstate
banking bill (H.R. 3841). Under the Senate interstate banking
bill passed by your Committee, foreign banks which are
chartered in the U.S., whether national or state will be able
to take advantage of the interstate language. Those which are
not chartered in the U.S. could keep their present offices
but would continue to need state approval to operate a branch
or representative in the different states.
It is our feeling that foreign banks operating domestically
should not receive preferential treatment from our government
over U.S. domestic banks. An example of the preferential
treatment foreign banks are currently receiving is exhibited
in Subsection 346.6 of the FDIC Rules and Regulations which
allow unincorporated, uninsured foreign branches and agencies
to accept deposits of any amount from any business entity
which engages in commercial activities for profit.
I would respectfully ask that you make every effort to keep
the Senate interstate banking bill free from established
preferential treatment to unincorporated foreign banks in the
U.S. Our U.S. banking regulations are there for a reason and
they should apply to all financial institutions, domestic or
foreign, doing business in the United States.
Sincerely,
Neil Milner,
CAE, Executive Vice President and CEO.
____
Kansas Bankers Association,
Topeka, KS, April 18, 1994.
Re interstate banking and branching legislation.
Hon. Donald W. Riegle, Jr.,
Chair, Senate Committee on Banking Housing, and Urban
Affairs, Dirksen Senate Office Building, Washington, DC.
Dear Chairman Riegle. The purpose of this letter is to
encourage that the language on foreign bank competition in S.
1963 prevail in Conference Committee over the language
contained in H.R. 3841.
We commend the Senate in crafting legislation which does
not grant foreign financial institutions treatment more
favorable than domestic institutions. Foreign banks are big
players in the players in the U.S. market, and there is
nothing inherently wrong with this, so long as the playing
field is maintained on the level.
We understand the Senate version would allow foreign banks
which are not chartered in the U.S. to keep their present
offices, but they would continue to need state approval to
operate a branch or other operation within a state. Those
that are chartered in the U.S., will be treated as any other
domestic bank. This seems infinitely fair.
Thank you for your consideration and your efforts to
prevent preferential treatment to foreign banks that choose
not to become incorporated in the U.S. and hence, operate
free from financial and other impediments of their
competitors.
Cordially,
Harold A. Stones,
Executive Vice President.
____
Kentucky Bankers Association,
Louisville, KY, April 19, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writing this letter to bring
your attention to the foreign branching language in the House
interstate banking bill (H.R. 3841).
The interstate banking bill currently before the Senate (S.
1963) provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and then branching from such bank. The House
interstate banking bill, in contrast, would allow foreign
banks to put their direct wholesale branches and agencies
throughout the United States. Since the wholesale branches
and agencies of foreign banks, for which they make over 75%
of their U.S. loans, are not subject to FDIC insurance
premiums nor CRA and other consumer bank requirements, this
would add to the already grossly unfair advantage they have
over U.S. domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
According to recent Federal Reserve Board data there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities. only 93 are subsidiaries, while 378 are branches
and 211 agencies. These latter two types of facilities from
which foreign banks do most of their business in this country
are exempt from FDIC insurance, HMDA requirements, CRA
provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world. Is this
happening because U.S. banks are inept competitors? The
answer is clearly and emphatically NO. Is it because foreign
banks have competitive advantages over U.S. banks in our own
market. The answer is just as emphatically YES.
There is no need to give foreign banks new competitive
advantages in our market as proposed in the House interstate
banking bill (H.R. 3841). Under the Senate interstate banking
bill passed by your Committee, foreign banks which are
chartered in the U.S. whether national or state will be able
to take advantage of the interstate language. Those which are
not chartered in the U.S. could keep their present offices
but would continue to need state approval to operate a branch
or representative in the different states.
It is our feeling that foreign banks operating domestically
should not receive preferential treatment from our government
over U.S. domestic banks. An example of the preferential
treatment foreign banks are currently receiving is exhibited
in Subsection 346.6 of the FDIC Rules and Regulations which
allow unincorporated, uninsured foreign branches and agencies
to accept deposits of any amount from any business entity
which engages in commercial activities for profit.
I would respectfully ask that you make every effort to keep
the Senate interstate banking bill free from established
preferential treatment to unincorporated foreign banks in the
U.S. Our U.S. banking regulations are there for a reason and
they should apply to all financial institutions, domestic or
foreign, doing business in the United States.
Sincerely,
Ballard W. Cassady, Jr.,
Executive Vice President.
____
Michigan Bankers Association,
Lansing, MI, April 22, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing & Urban Affairs, U.S.
Senate, Washington, DC.
Dear Don: This letter confirms our concerns expressed last
week when we met with you regarding the foreign branching
language in the House interstate banking bill (H.R. 3841),
which differs significantly from your S. 1963.
The interstate banking bill currently before the Senate (S.
1963) provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and then branching from such bank. The House
interstate banking bill, in contrast, would allow foreign
banks to put their direct wholesale branches and agencies
throughout the United States. Since the wholesale branches
and agencies of foreign banks, from which they make over 75%
of their U.S. loans, are not subject to FDIC insurance
premiums nor CRA or other consumer bank requirements, this
would add to the already grossly unfair advantage they have
over U.S. domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
The 378 branches and 211 agencies of foreign banking
organizations from which they do most of their business in
this country are exempt from FDIC insurance, HMDA
requirements, CRA provisions, etc.--thus giving such foreign
bank offices a distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42% share of all business loans being
made in the United States. This foreign share of our banking
market is larger than the foreign banking share of most other
major financial markets in the world. This isn't happening
because U.S. banks are inept competitors; it is because
foreign banks have competitive advantages over U.S. banks in
our own market.
There is no need to give foreign banks new competitive
advantages in our market as proposed in the House interstate
banking bill (H.R. 3841). Under the Senate interstate banking
bill passed by your Committee, foreign banks which are
chartered in the U.S., whether national or state will be able
to take advantage of the interstate language. Those which are
not chartered in the U.S. could keep their present offices
but would continue to need state approval to operate a branch
or representative in the different states.
We believe that foreign banks operating domestically should
not receive preferential treatment from our government over
U.S. domestic banks.
We respectfully ask that you make every effort to keep the
Senate interstate banking bill both on the Senate floor and
in conference free from established preferential treatment to
unincorporated foreign banks in the U.S. Our banking
regulations are there for a reason and they should apply to
all financial institutions, domestic or foreign, doing
business in United States.
Sincerely,
Donald A. Booth,
Executive Vice President.
____
Mississippi Bankers Association,
Jackson, MS, April 19, 1994.
Hon. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Senator Riegle: On behalf of our Association's
membership, the commercial banks of Mississippi, I am writing
in regard to the foreign branching provisions included in
H.R. 3841, the House interstate banking legislation.
The Senate interstate banking bill, S. 1963, provides that
foreign banks may branch interstate only by first
establishing an insured bank in this country and then
branching from that bank. This is the same rule that applies
to domestic banks. However, H.R. 3841 would allow foreign
banks to place direct branches and agencies throughout the
United States. Such branches and agencies of foreign banks
are not subject to FDIC insurance premiums or many of the
other banking regulations which apply to domestically
chartered banks. Such a change as proposed by H.R. 3841 would
give a grossly unfair competitive advantage to these foreign
branches and agencies.
The vast majority of foreign banking facilities in the
United States are either branches or agencies. According to
numbers from the Federal Reserve Board, of 682 foreign
banking facilities in the United States, 589 of these are
branches and agencies. While foreign banks do most of their
business in this country through branches and agecnies, these
facilities are exempt from FDIC insurance, CRA provisions and
many other regulations to which domestic banks are subject.
We object to the unfair advantage given to such foreign
banking facilities.
It is our position that foreign banks with operations
within the United States should not receive any preferred
treatment under the interstate banking law. There is no need
to give these foreign banks any new competitive advantages as
would be provided by H.R. 3841. The Senate interstate banking
bill (S. 1963) gives foreign banks chartered in the U.S. the
ability to utilize the interstate banking law. Foreign banks
without a U.S. charter could still keep their present offices
and continue to apply for state approval to operate branches
in different states.
We would urge you to work to maintain the Senate position
on these foreign bank branching provisions in the interstate
bill. We believe that foreign banks which do not have a
charter in the United States should not be given preferential
treatment and that our banking regulations, both state and
federal, should be allowed to apply equally to domestic and
foreign banks.
Sincerely,
McKinley W. Deaver,
Executive Director.
____
Ohio Bankers Association,
Columbus, OH, April 18, 1994.
Hon. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: Ohio bankers, as we believe is generally
the case around the country, support S. 1963. Action by
states have long since made interstate banking a reality.
Standardized federal rules will help rationalize and simplify
the business of banking. We write this letter not just to
support passage by the Senate of S. 1963 but to express a
strong preference for the treatment of branches of foreign
banks in your bill as opposed to that in House's counterpart
(H.R. 3841).
We believe that foreign banks should be treated as
competitive equals in this country. Your bill, as we
understand it, provides that once a foreign bank establishes
an insured bank in this country it could branch interstate.
The House version requires no U.S. insured bank. Thus, it
would allow foreign banks to compete directly with U.S. banks
without being subject to a number of costly regulatory
requirements faced by U.S. banks including deposit insurance
premiums and community reinvestment.
Today U.S. banks already operate at a disadvantage compared
with foreign bank operations in the United States. The
results are dramatic. Foreign banks have captured 42 percent
of all business loans being made in the United States. One
example of a significant, current competitive inequity comes
through F.D.I.C. rules which allow unincorporated, uninsured
foreign branches and agencies to accept deposits of any
amount from any business entity which engages in commercial
activities for profit. Given the current significant premium
levied by the F.D.I.C. many businesses are finding the
resulting rate differential to be compelling. H.R. 3841 would
increase that sort of inequity for U.S. banks.
We would ask you to oppose any efforts to incorporate
preferential treatment for foreign banks in this legislation.
Ohio banks do not fear competition as long as the same rules
apply to all.
Sincerely,
Michael Van Buskirk,
Executive Vice President.
____
Oklahoma Bankers Association,
Oklahoma City, OK, April 18, 1994.
Donald W. Reigle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S., Senate Washington, DC.
Re interstate branching by foreign banks.
Dear Chairman Riegle: The interstate banking bill currently
before the Senate (S. 1963) is much different than its
counterpart in the House (H.R. 3841) regarding the ability of
foreign banks to establish branches on an interstate basis.
H.R. 3841 would allow foreign banks to put their direct
wholesale branches and agencies throughout the United States
without maintaining an actual charter. S. 1963 would require
that the foreign banks first establish an insured bank in
this country and then it would be treated the same as a
domestic bank in terms of its ability to branch on an
interstate basis. The wholesale branches and agencies of
foreign banks, from which they make over 75% of the U.S.
loans, are not subject to FDIC insurance premiums nor CRA and
other consumer bank requirements. H.R. 3841 would add to the
already grossly unfair advantage they have over U.S.
domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment, which is precisely
what H.R. 3841 does.
According to recent Federal Reserve Board data there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities, only 93 are subsidiaries, while 378 are branches
and 211 agencies. These latter two types of facilities from
which foreign banks do most of their business in this country
are exempt from FDIC insurance, HMDA requirements, CRA
provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world. This has
resulted in large measure because foreign banks have distinct
competitive advantages over U.S. banks in our own market.
There is no need to give foreign banks new competitive
advantages in our market as proposed by H.R. 3841. Under the
Senate interstate banking bill passed by your Committee,
foreign banks which are chartered in the U.S., whether
national or state will be able to take advantage of the
interstate language. Those which are not chartered in the
U.S. could keep their present office but would continue to
need state approval to operate a branch or representative in
the different states.
Oklahoma bankers believe that foreign banks operating
domestically should not receive preferential treatment from
our government over U.S. domestic banks. An example of the
preferential treatment foreign banks are currently receiving
is exhibited in Subsection 346.6 of the FDIC Rules and
Regulations which allow unincorporated, uninsured foreign
branches and agencies to accept deposits of any amount from
any business entity which engages in commercial activities
for profit.
I would respectfully ask that you make every effort to keep
the Senate interstate banking bill free from established
preferential treatment to unincorporated foreign banks in the
U.S. Our U.S. banking regulations are there for a reason and
they should apply to all financial institutions, domestic or
foreign, doing business in the United States.
Sincerely,
Roger M. Beverage,
President.
____
South Dakota Bankers Association,
Pierre, SD, April 21, 1994.
Mr. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writting to communicate the
growing concern of South Dakota bankers with the provisions
for foreign bank branching found in the House interstate
banking bill (H.R. 3841),
It is my understanding that you have received a letter from
Ballard Cassady, Jr., executive vice president of the
Kentucky Bankers Association which describes in some detail
the differences between the interstate banking bill passed by
the House, and the bill currently before the Senate (S.
1963). Mr. Cassady's letter illustrates the significant
competitive advantages given to foreign banks in the House
bill. We believe that the Senate interstate banking bill is
much more balanced in its treatment of foreign and
domestically-chartered banks. We do not believe that foreign
banks operating domestically should receive preferential
treatment over banks domiciled in the United States.
We hope you will makes every effort to keep the Senate
interstate banking bill free of established preferential
treatment to unincorporated foreign banks in the U.S. We also
hope you can be successful in maintaining this position in
the conference report.
Thank you for your attention to our concerns.
Sincerely,
Jeffrey J. Rodman,
Executive Vice President.
____
Tennessee Bankers Association,
Nashville, TN, April 18, 1994.
Mr. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: The purpose of this letter is to call
your attention to the foreign branching language in the House
interstate banking bill (H.R. 3841). Unlike the Senate
interstate bill (S. 1963) which provides that foreign banks
could, like domestic banks, branch interstate by first
establishing an insured bank in this country and then
branching from such a bank, the House interstate bill would
allow foreign banks to put their direct wholesale branches
and agencies throughout the United States. Since the
wholesale branches and agencies of foreign banks are not
subject to FDIC insurance premiums, nor CRA, this would add
to the already unfair advantage they have over U.S.
domestically chartered banks.
According to the recently completed GATT agreement, the
host country should provide foreign financial institutions
treatment no less favorable than it accords its own like
service providers. There is no obligation to give foreign
institutions more favorable treatment.
Foreign banks are not small players in the U.S. market.
They account for a 42% share of all business loans made in
the United States. This fact is not because U.S. banks are
not interested in quality loans, but more due to the fact
that foreign banks have competitive advantage over U.S. banks
in our own market.
I would request that every effort be made to keep the
Senate interestate banking bill free from established
preferential treatment to unincorporated foreign banks in the
United States. U.S. banking regulations are in place for a
reason, and the regulations should apply to all financial
institutions, domestic or foreign, who choose to do business
in the United States.
Sincerely,
Bradley L. Barrett,
Executive Vice President.
____
Virginia Bankers Association,
Richmond, VA, April 18, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writing to you to express
concern with any provisions that might be advocated for
inclusion in the Senate's interstate banking bill that would
conflict with our state law that prohibits foreign bank entry
into Virginia.
During the 1994 session of the Virginia General Assembly, a
bill was adopted, with the support of the Virginia Bankers
Association, to move Virginia from regional to national
interstate banking. Retained in the statute that was passed
was a provision prohibiting foreign banks from coming into
the Commonwealth.
It is my understanding that the House passed bill, H.R.
3841, would likely nullify our foreign bank prohibition. It
is further my understanding that the Senate interstate bill,
S. 1963, would more nearly protect our existing Virginia law
by requiring a foreign bank, like a domestic bank to first
establish an insured bank in this country before being able
to branch. While the Senate language is much preferable to
the House language, the Senate provision could be further
improved by also providing that state laws that are more
restrictive than federal laws will prevail.
I would respectfully request that you make very effort to
retain the Senate version of how foreign banks that operate
in this country will be governed and, if possible, further
strengthen that provision with language that protects more
restrictive state laws. There is simply no reason to give our
markets to foreign banks, or give them preferential treatment
over our own domestic banks.
Thank you for your consideration.
Sincerely,
Walter C. Ayers,
Executive Vice President.
____
West Virginia Bankers
Association, Inc.,
Charleston, WV, April 18, 1994.
Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I am writing this letter to bring
your attention to the foreign branching language in the House
interstate banking bill (H.R. 3841).
The interstate banking bill currently before the Senate (S.
1953) provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and then branching from such bank. The House
interstate banking bill, in contrast, would allow foreign
banks to put their direct wholesale branches and agencies
throughout the United States. Since the wholesale branches
and agencies of foreign banks, from which they make over 75%
of their U.S. loans, are not subject to FDIC insurance
premiums nor CRA and other consumer bank requirements, this
would add to the already grossly unfair advantage they have
over U.S. domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
According to recent Federal Reserve Board data there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities, only 93 are subsidiaries, while 378 are branches
and 211 agencies. These latter two types of facilities from
which foreign banks do most of their business in this country
are exempt from FDIC insurance, HMDA requirements, CRA
provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the U.S. market.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world. Is this
happening because U.S. banks are inept competitors? The
answer is clearly and emphatically NO. Is it because foreign
banks have competitive advantages over U.S. banks in our own
market? The answer is just as emphatically YES.
There is no need to give foreign banks new competitive
advantages in our market as proposed in the House interstate
banking bill (H.R. 3841). Under the Senate interstate banking
bill passed by your Committee, foreign banks which are
chartered in the U.S., whether national or state will be able
to take advantage of the interstate language. Those which are
not chartered in the U.S. could keep their present offices
but would continue to need state approval to operate a branch
or representative in the different states.
It is our feeling that foreign banks operating domestically
should not receive preferential treatment from our government
over U.S. domestic banks. An example of the preferential
treatment foreign banks are currently receiving is exhibited
in Subsection 346.6 of the FDIC Rules and Regulations which
allow unincorporated, uninsured foreign branches and agencies
to accept deposits of any amount from any business entity
which engages in commercial activities for profit.
I would respectfully ask that you make every effort to keep
the Senate interstate banking bill free from established
preferential treatment to unincorporated foreign banks in the
U.S. Our U.S. banking regulations are there for a reason and
they should apply to all financial institutions, domestic or
foreign, doing business in the United States.
Sincerely,
Thomas A. Winner,
President and CEO.
____
Wisconsin Bankers
Association,
Madison, WI April 21, 1994.
Hon. Donald W. Riegle, Jr.,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Riegle: I would like to bring to your
attention the foreign branching language in the House-passed
interstate banking bill (H.R. 3841).
The companion bill currently before the Senate (S. 1963)
provides that foreign banks could, like domestic banks,
branch interstate by first establishing an insured bank in
this country and then branching from such bank. The House
bill, by contrast, would allow foreign banks to put their
direct wholesale branches and agencies throughout the United
States. Since the wholesale branches and agencies of foreign
banks, from which they make over 75% of their U.S. loans, are
not subject to FDIC insurance premiums, CRA or other consumer
bank requirements, this would add to the already grossly
unfair advantage they have over domestically chartered banks.
National treatment for financial institutions, as defined
in the recently completed GATT agreement, states that a host
country should provide foreign financial institutions
``treatment no less favorable than it accords its own like
service providers.'' There is no obligation to give foreign
institutions more favorable treatment.
According to recent Federal Reserve Board data, there are
presently over 300 foreign banking organizations from 62
different countries operating banking facilities in the
United States. Of the almost 700 different types of
facilities, only 93 are subsidiaries, while 378 are branches
and 211 are agencies. These latter two types of facilities
from which foreign banks do most of their business in this
country are exempt from FDIC insurance, HMDA requirements,
CRA provisions, etc.--thus giving such foreign bank offices a
distinct advantage in loan pricing.
Foreign banks are not small players in the United States.
They now account for a 42 percent share of all business loans
being made in the United States. This foreign share of our
banking market is larger than the foreign banking share of
most other major financial markets in the world.
Is this happening because U.S. banks are inept competitors?
The answer is clearly and emphatically NO. It is because
foreign banks have competitive advantages over U.S. banks in
our own market.
There is no need to give foreign banks new competitive
advantages in our market as proposed in H.R. 3841. Under the
Senate's interstate banking bill passed by your Committee,
foreign banks which are chartered in the United States,
whether national or state, will be able to take advantage of
the interstate language. Those which are not chartered here
could keep their present office but would continue needing
state approval to operate a branch or representative office
in different states.
It is our belief that foreign banks operating domestically
should not receive preferential treatment from our government
over domestic banks. An example of the preferential treatment
foreign banks currently receive is exhibited in Subsection
346.6 of the FDIC Rules and Regulations. This allows
unincorporated, uninsured foreign branches and agencies to
accept deposits of any amount from any business entity which
engages in commercial activities for profit.
I respectfully ask that you make every effort to keep the
Senate interstate banking bill free from establishing
preferential treatment to unincorporated foreign banks in the
United States. Our banking regulations are there for a
reason, and they should apply to all financial institutions,
domestic or foreign, doing business in the United States.
Sincerely,
Harry J. Argue,
Executive Director.
Mr. FORD. I thank the chairman. Mr. President, I find the House
language on foreign banks to be very troubling. My bankers are
certainly strongly opposed to it, and I believe most of my colleagues
will find the same reaction from their own bankers. As the chairman has
stated, nothing in the Senate bill prohibits a foreign bank from
establishing a subsidiary as a U.S.-chartered bank, which then has
available all of the same rights and privileges of interstate banking
and branching this legislation provides to U.S. banks. But to obtain
these privileges, they must pay the same price as U.S. banks--
compliance with all relevant laws which apply to chartered
institutions. This includes community reinvestment laws, consumer
banking laws, and fair lending laws.
Under the House bill, however, the special section on foreign
branching assures an uneven playing field. Under section 104 of the
House bill, foreign banks can establish a Federal branch in another
State to the extent it would be permitted if that foreign bank were a
national bank. Foreign banks can establish a State branch in another
State to the extent it would be permitted if the foreign bank were a
State bank.
If we are going to treat foreign banks as if they are national or
State banks for purposes of interstate branching, we had better treat
them as if they were national or State banks for purposes of community
reinvestment laws, consumer banking laws, and fair lending laws. The
House bill does the former, giving foreign banks all the same benefits.
But the House bill fails to do the latter, by imposing none of the
burdens which apply to U.S. banks.
This provides a substantial competitive advantage for foreign banks
under the House language. It is a serious concern for my bankers, and
it is a problem for me.
I thank the chairman for answering my questions. I support interstate
banking and branching reform as strongly as any Member of this body,
and I strongly support this Senate bill. However, I would urge the
chairman to seek to retain the Senate approach on foreign banks in a
conference committee, or to significantly modify the House approach to
include fair treatment of U.S. and foreign banks with respect to both
the burdens and benefits of interstate banking and branching. I regret
to say to the chairman that if the conference report contains the House
language giving a competitive advantage to foreign banks, I will feel
compelled to actively oppose the passage of the conference report.
I know the chairman understands my concerns, and he has a great
ability to articulate concerns on such complex topics as this one. I
considered offering a sense of the Senate amendment expressing the
policy that this legislation not provide any competitive advantage to
foreign banks. I believe such an amendment would have passed
unanimously. However, I know of the chairman's interest in moving this
legislation, and I am hopeful this statement and colloquy will prove
sufficient to make the same point. I would hope the chairman would take
these concerns with him into a conference committee, and I would be
happy to provide any assistance which he sees fit to assure that this
issue is satisfactorily resolved.
Mr. RIEGLE. I thank the Senator from Kentucky for his help and for
his statement.
I know the Senator from New York has a sense-of-the-Senate amendment
he is prepared to offer and which I am prepared to accept.
I yield for that purpose.
Amendment No. 1665
(Purpose: To express the sense of the Senate that the President should
work to achieve a clearly defined and enforceable agreement with allies
of the United States which establishes a multilateral export control
regime to stem the proliferation of products and technologies to rogue
regimes that would jeopardize the national security of the United
States)
Mr. D'AMATO. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:
The Senator from New York [Mr. D'Amato], for himself, Mr.
Riegle, and Mr. Sasser, proposes an amendment numbered 1665.
Mr. D'AMATO. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 26, after line 18, add the following new section:
SEC. 8. SENSE OF THE SENATE CONCERNING MULTILATERAL EXPORT
CONTROLS.
(a) findings.--The Senate finds that--
(1) the United States and its allies have agreed that as of
March 31, 1994, the Coordinating Committee (hereafter
referred to as ``COCOM''), the multilateral body that
controlled strategic exports to the former Soviet Union and
other Communist States, ceased to exist;
(2) no successor has yet been established to replace the
COCOM;
(3) threats to United States security are posed by rogue
regimes that support terrorism as a matter of national
policy;
(4) a critical element of the United States proposal for a
successor to COCOM is that supplier nations agree on a list
of militarily critical products and technologies that would
be denied to a handful of rogue regimes;
(5) some allies of the United States oppose this principle
and instead propose that such controls be left to ``national
discretion'', effectively replacing multilateral export
controls with a loose collection of unilateral export control
policies which would be adverse for United States security
and economic interests;
(6) multilateral controls are needed to thwart efforts of
Iran, Iraq, North Korea, Libya, and other rogue regimes, to
acquire arms and sensitive dual-use goods and technologies
that could contribute to their efforts to build weapons of
mass destruction; and
(7) the United States would be forced to make the difficult
choice of choosing between unilateral export controls under
the Export Administration Act of 1979, which would put
American companies at a competitive disadvantage worldwide,
or allowing exports that could seriously harm the national
security interests of the United States.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) the President should work to achieve a clearly defined
and enforceable agreement with allies of the United States
which establishes a multilateral export control system for
the proliferation of products and technologies to rogue
regimes that would jeopardize the national security of the
United States; and
(2) the President should persuade allies of the United
States to promote mutual security interests by preventing
rogue regimes from obtaining militarily critical products and
technologies.
Mr. D'AMATO. Mr. President, first of all, I thank the chairman,
Senator Riegle, who is a cosponsor, and Senator Sasser, who is a
cosponsor, as well as 18 other colleagues.
This is a resolution which expresses how extremely important it is
that the President work with our allies in order to achieve a clearly
defined and enforceable agreement which establishes a multilateral
export control system for the antiproliferation of products and
technologies to rogue regimes that would jeopardize the national
security of the United States and, indeed, world peace.
Mr. President, the United States faces three choices in the
implementation of an export control policy. First, the United States
can use its diplomatic leverage as a world leader to foster an
effective and enforceable multilateral export control organization to
stem the proliferation of products and technologies that contribute to
the development and production of weapons of mass destruction. Then,
the United States can continue to use the Export Administration Act
[EAA] as the legal authority for implementing both multilateral and
unilateral export controls.
Second, the United States can move forward without multilateral
coordination and use the Export Administration Act as a tool to act
only unilaterally to stem the flow of militarily strategic technology
from terrorist and other countries. Or, third, the United States can
eliminate all export controls except the most egregiously dangerous.
Mr. President, there is only one clear choice among these options.
The President must work with our allies to create an effective and
enforceable multilateral export control organization. There is no
question that without effective multilateral coordination, any
implementation of the Export Administration Act will result in
selective unilateral controls by the United States. While the nature of
the threat has changed, from a anti-Communist to an antiproliferation
focus, the fact is that multilaterally agreed upon export controls
remain essential to our international security.
They also remain an essential component of our exporters' ability to
compete on a level playing field in the international marketplace.
According to a representative of the National Association of
Manufacturers [NAM],
The most important premise of the NAM proposal is that
export controls on commercial goods and technology, including
non-proliferation controls must be applied multilaterally.
Absent multilateral agreement, export controls are
ineffective and hurt only U.S. exporters.
This position undoubtedly applies to any proposal to reform the
export control system under the EAA.
The old multilateral export control system, CoCom, ceased to exist on
March 31, 1994. CoCom's role was to keep leading-edge military
technology away from Communist countries, mostly the Soviet Union and
China. With no new multilateral regime in place to deal effectively
with proliferation threats, the world became a free market for exports
that contribute to the development and production of weapons of mass
destruction by terrorist and other countries.
The Clinton administration has so far been unable to foster
cooperation among our allies to bring about agreement on a new regime.
Today, exports are flowing world-wide based on the premise of national
discretion. That is, each individual country will determine whether or
not they will export a product. Products that contribute to weapons of
mass destruction such as missile technology, nuclear and chemical and
biological weapons are free to flow, to anyone, anywhere. We would hope
that our allies will be prudent in their decisionmaking process but
there is no way to know, until, possibly it is too late.
The Clinton administration must develop consensus for a new regime,
that is stronger than the current regimes, which operate on the basis
of national discretion. The new regime is not to be viewed as merely a
gap filler for the current nonproliferation regimes because they
themselves do not have any real enforcement mechanisms. It must utilize
some of the characteristics that made CoCom work such as veto power and
prenotification of exports with viable enforcement mechanisms.
The new regime must be designed with the goal of preventing any
country, rich or poor, from building weapons of mass destruction. It
must be especially sensitive to nations like Iran, Iraq, North Korea,
Libya, Syria, and Cuba that support terrorism or other behavior that is
inconsistent with international peace and security.
The United States must convince our allies to work with us to slow
the spread of dangerous weapons. We need to show our allies the
importance of discretion in this still unstable world. Carelessness on
the part of our allies will make it easier for the nuclear states to
buy or build weapons of mass destruction.
In order to achieve that goal, the Clinton administration must act
with diplomacy and assertiveness in making this happen. They need to
stop acting like a second-rate power and assume the role that has been
achieved over many decades, that of a world leader. If they fail to
accomplish this goal then we will once again prove to be a world leader
with no leadership and have to deal with export controls that really
have no control.
Mr. President, this resolution expresses how extremely important it
is that the President work with our allies in order to achieve a
clearly defined and enforceable agreement which establishes a
multilateral export control system for the anti-proliferation of
products and technologies to rogue regimes that would jeopardize the
national security of the United States.
I ask my colleagues to support this measure and to let the
administration know how extremely important this is to U.S. national
security and to world security.
Mr. RIEGLE. Mr. President, I urge adoption of the sense-of-the-Senate
amendment.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 1665) was agreed to.
Mr. D'AMATO. Mr. President, I move to reconsider the vote.
Mr. RIEGLE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
community reinvestment act implications
Mr. WELLSTONE. Mr. President, I would like to engage Senator Riegle
in a short colloquy. I believe that there may be some confusion
regarding the Community Reinvestment Act [CRA] implications of this
legislation. For institutions that operate in more than one State, will
S. 1963 require a separate CRA rating for each State in which the
institution operates?
Mr. RIEGLE. Yes, it will. In this fashion, S. 1963 seeks to ensure
that financial institutions taking advantage of interstate banking
continue to meet the needs of all communities that they serve.
For multistate institutions, the bill requires a written evaluation
for the entire institution and a separate written evaluation for each
State in which the institution maintains one or more domestic branches.
Under the Community Reinvestment Act, such evaluations each include the
following: First the banking agency's conclusions for each assessment
factor identified in the regulations; second the facts and data
supporting such conclusions; and third the institution's rating and a
statement describing the basis for the rating.
Furthermore, these State level evaluations must also present both the
agency's conclusion for each assessment factor and the facts and data
supporting such conclusions separately for each metropolitan area in
which the institution maintains one or more branches, as well as the
remainder of the State if the institution maintains branches in
nonmetropolitan areas. The institution will not, however, receive a
separate CRA rating for each of the metropolitan and nonmetropolitan
areas covered in the State level evaluation.
state applicability
Mr. GRAHAM. I would like to bring to the attention of the Chairman
the concern of a number of my colleagues with the section of the bill
dealing with applicable State law. My concern is that the section will
result in a significant loss of authority for the States. Currently
through their banking laws and their bank holding company statutes,
States are able to require all banks to conform with a wide variety of
State laws. States have applied laws in the areas of consumer
protection, community reinvestment, and fair lending as well as a
number of reporting and notification requirements to these
institutions.
We need to look at the financial system from the eyes of the users of
the services, the consumers. We need to have uniformity and
predictability. At the same time we need to have standards that best
achieve the needs of the community. We must recognize the diversity of
the community needs across the Nation and provide laws that allow
communities to reflect those different needs.
I am concerned as are a number of my colleagues that the current
language of the bill does not give communities this needed flexibility.
I am also concerned the section of the bill dealing with applicable
law may result in many consumers not receiving the full protection of
State law in the areas of consumer protection and fair lending
practices. The language also reduces the authority of States to
guarantee adequate community reinvestment.
Mr. RIEGLE. Let me state for the record that some Senators have
expressed concern about the implications of the applicable State law
that would govern the operations of branches of out-of-state national
banks in their States once this bill is enacted, as you have just
mentioned. Under the reported bill, the States do not lose any
authority that they already have over national banks. The bill also
avoids having two classes of national banks resulting, interstate and
intrastate, with each type of bank subject to different laws.
I would just add that we worked hard in the committee to preserve the
contours of the dual banking system in crafting this legislation and
have not tried to alter the existing balance of power between the
Federal and the State levels. The reported bill endeavors to maintain
the status quo regarding a State's ability to regulate the activities
of national banks operating in that State. However, I remain open to
hearing from Senators regarding their suggestions to further fine tune
the language that has been drafted in committee on this point. I would
of course endeavor to consider their concerns in conference.
Mr. GRAHAM. I appreciate the willingness of the chairman to revisit
this issue with an open mind. I would encourage the administration, the
OCC, the National Governors' Association, and the Conference of State
Bank Supervisors to discuss this issue before the conference committee
meets and see if they can make progress toward bridging their
differences.
Mr. RIEGLE. I think that having such discussions would be an
excellent idea. I would join the Senator in encouraging them to do so.
The PRESIDING OFFICER. Are there further amendments?
Mr. RIEGLE. Mr. President, I ask the Chair to suspend for a moment.
There may be one other item.
Mr. President, we forgot one other refinement that needs to be added
to the bill. This is an amendment to be offered by myself and Senator
D'Amato having to do with State laws that would have an affect on the
date of enactment.
Amendment No. 1666
Mr. RIEGLE. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:
The Senator from Michigan [Mr. Riegle], for himself and Mr.
D'Amato, proposes an amendment numbered 1666.
Mr. RIEGLE. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 4, line 17, add the following after the period: ``a
State law in effect on the date of enactment of the
Interstate Banking and Branching Act of 1994 that permits
bank holding companies from only a limited number of States
to acquire banks in existence for a specified length of time,
in that State, shall be interpreted, under State and Federal
law, as permitting bank holding companies from any State, to
acquire a bank in that State, under the terms and conditions
of such State law.''
Mr. RIEGLE. Mr. President, I urge adoption of the amendment.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 1666) was agreed to.
Mr. D'AMATO. Mr. President, I move to reconsider the vote.
Mr. RIEGLE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GRAHAM. Mr. President, I rise today to express my concern about
the fact that the bill we are considering today does not include any
provisions to allow for interstate expansion by foreign banks.
International banks play a very important role in our economy today.
The presence of international banks in our economy has helped not only
to supply the credit needs of our Nation but has played an important
role in assisting U.S. firms in exporting their goods and services and
developing their expertise in successfully competing in the global
market. In my home State of Florida, these foreign banks have worked in
tandem with local businesses, and in many cases, small business to help
them put together successful endeavors. Many U.S. companies have,
through the knowledge and expertise of these institutions been able to
find new markets in which to export their U.S. produced products. This
bill recognizes the important efficiencies of allowing banks to operate
across the United States. I believe we should therefore allow foreign
banks to expand.
We have recognized in this bill the desirability of allowing U.S.
banks to expand their operations throughout the United States. I am
extremely concerned that the current bill is discriminatory because
U.S. banks are allowed to expand, but foreign banks operating in the
United States are not allowed to expand. National treatment requires
that international banks be allowed to expand interstate through direct
branches.
The United States has had a long history of providing national
treatment to foreign institutions operating in the United States. In
fact, when the International Banking Act of 1978 was adopted, the
policy of national treatment was embodied in statute.
The U.S. Treasury Department, along with the Federal Reserve has
advocated a policy of national treatment. This policy has been the
basis of U.S. negotiations on financial services and the concept of
national treatment has been employed in many of the Friendship,
Commerce and Navigation treaties as well as in a number of agreements
relating to financial services that are currently in force with the
OECD.
Under Secretary of the Treasury, Frank N. Newman wrote to Senator
Riegle about this issue on February 22, 1994. Under Secretary Newman
points out that the current bill would not permit foreign banks to
branch across State lines except through a subsidiary U.S. bank. He
points out that:
[t]he United States has repeatedly objected to similar
requirements imposed by foreign countries on U.S. banks that
operate abroad. Such requirements disproportionately burden
U.S. Banks and thereby deny them equality of competitive
opportunity in foreign financial markets. As we work to end
discrimination against U.S. financial institutions abroad,
and to enact the Fair Trade in Financial Services Act, we
will strengthen our hand by providing national treatment to
foreign banks operating in the United States.
In addition, the Commission of the European Communities has expressed
its concern that the bill does not provide for national treatment in
that interstate banking provisions are not extended to foreign banks.
They go on to state that they believe that this should be achieved
without imposition of a branch roll-up requirement. The letter makes
clear that the Second Banking Directive:
Has been cited incorrectly to justify a subsidiary
requirement as a condition for permitting foreign banks to
conduct interstate banking in the U.S. * * * Neither the
Second Banking Directive nor national legislation of Member
States prevent foreign banks from maintaining existing
branches or from establishing new ones as a condition for
operating in the European Union. Direct branching from
outside the European Union by non EU banks is permitted in
Member States of the Union.
Furthermore, the House of Representatives, in passing H.R. 3814, the
Interstate Banking Efficiency Act of 1994, recognized the importance of
granting interstate expansion to foreign banks.
I hope that when the Conference is convened, the Senate will review
the House provisions and adopt them.
Mr. D'AMATO. I would like to ask the chairman of the Banking
Committee a question concerning a provision that I believe is in the
House passed version of this legislation. As I understand it, the House
bill authorizes depository institutions that are affiliated to act as
agents for each other, and that such agents are not considered to be
branches under Federal or State law. Was there any consideration to
putting a similar provision in the Senate bill?
Mr. RIEGLE. I am glad the Senator raised that point. In fact, Senator
Shelby had discussed with me an amendment that would have authorized
banks to conduct certain banking activities through an agent. Under
Senator Shelby's amendment, such an agent would not be considered to be
a branch. However, after discussing his proposal with the Comptroller
of the Currency, I believe that national banks already possess
significant authority to act through agents.
Mr. D'AMATO. I see, so the fact that the amendment was not added to
the bill simply reflects that national banks already possess similar
authority under current law. Did the Comptroller provide the chairman
with any examples?
Mr. REIGLE. Yes, the Comptroller provided me with a representative
list of examples of situations in which national banks have used third
parties to provide banking services to their customers. I would ask for
unanimous consent to include this list in the Record at this point. I
would also point out that it is my understanding that under current law
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 and the
Comptroller's office has recently so opined.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Use of Third Parties by National Banks To Facilitate Traditional
Deposit and Lending Activities
The following lists situations in which affiliated and
nonaffiliated parties assist banks in engaging in traditional
banking activities without being considered to be bank
branches.
A. Use of telephones and the post office to facilitate
deposit transactions does not render such facilities to be
branches of national banks. Independent Bankers Association
of America v. Smith, 534 F.2d 921 (D.C. Cir.), cert. denied,
429 U.S. 862 (1976) (excerpt).
B. ATMs owned by a third party (e.g., a supermarket) do not
constitute national bank branches even though bank customers
may access their accounts through such facilities.
Independent Bankers Association of New York State v. Marine
Midland Bank, N.A., 757 F.2d 453 (2d Cir. 1985), cert.
denied, 476 U.S. 1186 (1986).
C. Loan origination activities by national bank through
third parties do not constitute branching. 12 C.F.R.
Sec. 7.7380(a).
D. Disbursal of loan proceeds by national banks through
third parties (e.g., at a real estate closing) does not
constitute branching. OCC Interpretive Letter of June 23,
1993; OCC Interpretive Letter of April 24, 1992 (general
discussion of issue).
E. Use of third party messenger services (e.g., Brinks) to
facilitate receipt of deposits and paying of withdrawals does
not constitute branching. 12 C.F.R. Sec. 7.7490 and as
revised January 13, 1993.
F. Use of affiliated banks and thrifts to facilitate
banking transactions is not branching. OCC interpretive
Letter of October 8, 1992 (intrastate affiliated banks); FDIC
Interpretative Letter of August 12, 1993 (intrastate
affiliated banks); OCC interpretive Letter of October 18,
1993 (intrastate affiliated banks and thrifts); OCC
Interpretive Letter of April 6, 1994 (interstate affiliated
banks).
G. Use of third party nonaffiliated nonbank to facilitate
deposit taking by national banks is not branching. OCC
Interpretive Letter (October 5, 1993).
Mr. RIEGLE. Mr. President, I ask for third reading of the bill.
The PRESIDING OFFICER. The clerk will read the bill for the third
time.
The bill clerk read the bill for the third time.
Mr. D'AMATO. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. D'AMATO. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. RIEGLE. Mr. President, I ask unanimous consent that the Banking
Committee be discharged from further consideration of H.R. 3841 and
then without objection the Senate then immediately proceed to its
consideration, and all after the enacting clause be stricken and the
text of our bill S. 1963, as amended, be inserted in lieu thereof.
The PRESIDING OFFICER. Is there objection to the request?
Without objection, it is so ordered.
Mr. RIEGLE. And the bill be advanced to third reading.
The PRESIDING OFFICER. The clerk will read the bill for a third time.
The bill (H.R. 3841) was ordered to a third reading and was read the
third time.
The PRESIDING OFFICER. The question is on the passage of the bill.
So the bill (H.R. 3841) as amended, was passed, 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
holding company' 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.''.
Mr. RIEGLE. Mr. President, I move to reconsider the vote.
Mr. D'AMATO. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. RIEGLE. Mr. President, I move that the Senate insist on its
amendment and request a conference with the House of Representatives on
the disagreeing votes of the two Houses, and that the Chair be
authorized to appoint conferees.
The PRESIDING OFFICER. The question is on agreeing to the motion.
The motion was agreed to.
Mr. RIEGLE. Mr. President, I thank my colleague, Senator D'Amato, and
all other colleagues who worked with us on this legislation. It is an
important piece of legislation and it has now been passed. We go to
conference. I am eager to do so. I thank all involved for their
cooperation.
I now suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from New York.
Mr. D'AMATO. Mr. President, let me commend the staff of the Banking
Committee, both the majority staff and minority staff.
I certainly commend Chairman Riegle for his job in moving this
important legislation that will permit us to compete in the
marketplaces of our country without regard to boundaries that have
little sense today in light of the banking system that has evolved
worldwide.
Again, while the logic of this legislation, I believe, is
irrefutable, the fact is that political considerations and policy
considerations are important to many of the independent bankers. Over a
period of time, they kept this legislation from moving forward.
Hopefully, we will see a reduction in cost and increase in earnings
and more opportunities for consumers. There is a whole host of reasons
why this legislation is necessary.
Again, I commend the chairman for his leadership in undertaking this
important matter. He did it in a way which protected people's rights
and yet kept a relatively clean bill so that it would not be loaded
down with contentious matters that would ultimately lead to its defeat.
There is no sense in passing a bill in one House without recognizing
the considerations that the other body would be looking to.
So I commend the chairman for his artful and yet forceful leadership.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. FORD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FORD. Mr. President, I ask unanimous consent that S. 1963 be
indefinitely postponed.
The PRESIDING OFFICER. Without objection, it is so ordered.
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