[Congressional Record Volume 140, Number 106 (Thursday, August 4, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  CONFERENCE REPORT ON H.R. 3841, RIEGLE-NEAL INTERSTATE BANKING AND 
                    BRANCHING EFFICIENCY ACT OF 1994

  Mr. NEAL of North Carolina. Mr. Speaker, pursuant to House Resolution 
505, I call up the conference report on the bill (H.R. 3841) to amend 
the Bank Holding Act of 1956, the Revised Statutes of the United 
States, and the Federal Deposit Insurance Act to provide for interstate 
banking and branching.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Bilbray). Pursuant to House Resolution 
505, the conference report is considered as read.
  (For conference report and statement, see proceedings of the House of 
August 2, 1994, at page H6625.)
  The SPEAKER pro tempore. The gentleman from North Carolina [Mr. Neal] 
will be recognized for 30 minutes, and the gentleman from Florida [Mr. 
McCollum] will be recognized for 30 minutes.

  The Chair recognizes the gentleman from North Carolina [Mr. Neal].


                             general leave

  Mr. NEAL of North Carolina. Mr. Speaker I ask unanimous consent that 
all Members may have 5 legislative days in which to revise and extend 
their remarks on the conference report to the bill, H.R. 3841.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  Mr. NEAL of North Carolina. Mr. Speaker, I yield myself such time as 
I may consume.
  Mr. Speaker, I rise in strong support of the conference report on 
H.R. 3841.
  As we take up this report, I am reminded of the saying that failure 
is an orphan, while success has many parents. Passage today of 
interstate branching legislation today will be a big victory for the 
American people, but there truly are many, many people who deserve a 
share of the credit.
  First, I thank Chairman Gonzalez for all his efforts to expedite 
consideration of this measure and steer it through the legislative 
process. I also thank the gentleman from Iowa [Mr. Leach], for all of 
his work. I thank the distinguished ranking member of the Financial 
Institutions Subcommittee, Mr. McCollum, for his support and 
cooperation in moving the legislation to this point.
  I also thank the gentleman from Minnesota [Mr. Vento] and the 
gentleman from Nebraska [Mr. Hoagland], for their many valuable 
contributions to this legislative effort over the past several years. 
We could not have gotten to this point without them.
  Mr. Speaker, the legislation before us today is the product of 
compromise, as all good legislation is. On June 1, 1997, it will remove 
Federal obstacles to interstate branching by banks, but it also 
recognizes and addresses issues many interested parties have raised in 
the course of action on this legislation.
  For example, the bill respects States' rights by allowing States to 
opt out of branching if they so choose--and by permitting de novo 
interstate branching only if a State opts in. It imposes national and 
State concentration limits, while preserving the States' rights to 
waive those State limits. It also ensures that certain State laws will 
continue to apply to interstate branches of national banks.

  The bill includes important consumer protections. it preserves the 
application of the Community Reinvestment Act to interstate branches 
established under this bill. It would require regulators to bring 
communities together to seek ways to replacing any branch that an 
interstate bank may close in the future in a low- or moderate-income 
area.
  Mr. Speaker, these elements of compromise make for a stronger bill 
and one even more worthy of enactment, particularly given the many 
benefits interstate branching will bring about.
  Interstate branching will make banking more convenient for millions 
of Americans. For the first time, consumers will be able to do their 
banking at whatever branch of their bank is convenient to them--be it 
across town, or across the country.
  Interstate branching will also increase the safety and soundness of 
the banking system, by allowing banks to gather deposits across wider 
geographic areas, and by allowing them to spread out their loan 
portfolios as well.
  Interstate branching will help ameliorate credit crunches, which all 
too many American businesses have experienced over the past several 
years.
  Interstate branching will give banks new latitude to manage their 
operations according to natural business considerations--rather than 
artificial geographic boundaries.
  Mr. Speaker, I could go on, but I will not. I think the benefits of 
this legislation are clear. This is a good bill, and it will help our 
banking system better meet the needs of Americans well into the 21st 
century. I urge my colleagues to join with me in supporting its 
enactment into law.
  Mr. GONZALEZ. Mr. Speaker, I rise in support of the conference report 
on H.R. 3841, the Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994. I commend Congressman Steve Neal, chairman of 
the Subcommittee on Financial Institutions, for his work on this 
legislation.
  The conference report will provide for interstate branching, but with 
important safeguards. States will have an opportunity to opt-out of 
interstate branching for approximately 3 years, and interstate branches 
will be subject to the consumer protection laws of the States in which 
they operate.
  In addition, the conferees agreed to add a provision which would 
prevent the Office of Thrift Supervision from preempting a provision in 
the Texas Constitution protecting the homestead of its citizens from 
foreclosure. Thus, the citizens of Texas remain free to decide for 
themselves the scope of their constitutional protections in this area.
  Mr. McCOLLUM. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to add my support to this conference 
report, whose time certainly has come and been long overdue in many 
respects for most of us. It is a journey this bill has taken that has 
been a hard-fought battle for a lot of us. It is something Congress 
should have done many many years ago, in my judgment.
  The liberalization of interstate banking laws has actually continued 
through the State actions unabated since 1985. By the end of 1993, 
every State but Hawaii had acted to permit some form of interstate 
banking on a regional or local, neighborhood basis. We have been just a 
little remiss in getting around to opening the door fully for the 
efficiencies that are involved and for the benefit of the general 
public.
  The bill would enable bank customers to walk into a bank in any 
State, as long as the bank had an office there, and deposit money and 
do other transactions they would not be able to do at a simple ATM 
machine.
  The bill allows bank holding companies to begin nationwide banking 1 
year after the date of enactment. Banks would be allowed to branch 
interstate after June 1, 1997. Individual States may decide under this 
proposal to pass a law during those 3 years to opt out of the 
interstate branching, and some may choose to do that, though I suspect 
most will not.
  Foreign banks will be able to branch in a similar way to domestic 
banks. Unfortunately, even though the foreign banks would not normally 
be doing the type of services that domestic banks do, one casualty of 
the conference was the imposition of community reinvestment 
requirements on foreign banks to do the simple business they do. That 
is any new activity of a foreign bank that wants to engage in any such 
activity would have CRA applied to it.
  Interstate banking is already a practical reality in almost all 
States. Through this bill, we are recognizing the changes that are 
occurring already in the marketplace. If we can pass this bill, the 
resulting efficiencies for the industry and the increase in convenience 
and pricing for consumers will make this a legislative achievement that 
will be very significant, and one that we can be proud of. So I 
certainly urge its adoption.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1140

  Mr. NEAL of North Carolina. Mr. Speaker, I yield 6 minutes to the 
distinguished gentleman from Massachusetts [Mr. Kennedy].
  Mr. KENNEDY. Mr. Speaker, I rise in cautious support of this 
legislation. In doing so, I have only the highest regard for the 
efforts of my friend and colleague, Mr. Neal, to bring this legislation 
to the floor. He has been a tireless advocate of interstate banking, 
and this legislation is a fitting tribute to his years of work on this 
issue. I also want to commend chairman Gonzalez, who has allowed the 
committee to work its will and bring this bipartisan legislation to the 
floor today.
  Mr. Speaker, the House today is considering probably the single most 
important piece of banking legislation enacted in the last four 
decades. In my view, full and unfettered interstate banking is an idea 
that is long overdue. Over the last 20 years, the American banking 
industry has slipped from its dominant position in the world. Then, 6 
of the largest 10 banks in the world were U.S. banks. Today, only 1 of 
the largest 25 banks in the world is based here in America. 
Consequently, the ability of U.S. banks to finance large transactions 
and leverage affordable capital for American businesses in 
international transactions has rapidly declined.
  However, on the whole, this bill gives a huge and unqualified win to 
the banking industry, and only gives consumers a question mark. Several 
members of our committee felt that the equation should have been more 
balanced. For example, we believed that no bank should be able to 
branch across State lines without demonstrating that it had a good 
record of serving the credit needs of low- and moderate-income 
neighborhoods. Unfortunately, that view did not prevail. Consequently, 
this legislation may actually be a boon to the big banks, but be a bust 
to consumers. They could end up paying more for loans and other banking 
services. And they could end up having credit decisions being made by a 
lender who sits in an office thousands and thousands of miles away.
  We have seen in other circumstances some of the bigger banks go in 
and gobble up a smaller bank in a local community, such out the 
deposits, and invest them elsewhere and, in fact, hurt the local 
community. While I view interstate banking in general as a very 
positive development, I do think that we should have put in stricter 
guidelines for how banks should treat our lowest-income and most 
vulnerable citizens.
  However, I do appreciate the leadership which the gentleman from 
North Carolina [Mr. Neal] has shown, and the efforts that he made to 
strengthen the bill with regard to the consumer protections.
  Unlike the interstate bill that we are considering, in a few minutes 
we will also consider the community development bank legislation, and I 
believe that this legislation more fairly balanced the concerns of the 
banking industry and those of ordinary citizens.
  For the industry, the legislation provides important relief from 
outdated and needlessly burdensome regulations. For instance, it 
lengthens the period within which a bank must be examined from 12 
months to 18 months. In addition, it requires State and Federal 
examiners to combine their efforts where possible, in order to minimize 
the time during which banks are encumbered by examinations. These and 
other provisions will significantly reduce banks' burden, without 
sacrificing the taxpayer's interest in maintaining the safety and 
soundness of those institutions.
  For the consumers, other speakers have already discussed the 
important Community Development Bank Program established by this 
legislation. This is a landmark program, and one that fulfills a 
campaign promise made by President Clinton. It will, for the first 
time, provide capital and seed money to lenders committed to community 
development lending. As we have seen from examples like Shorebank and 
Community Capital Bank, lenders can have a tremendously beneficial 
impact in low- and moderate-income communities. By meeting the need for 
housing and small business credit, these lenders can be the catalysts 
to community revitalization. So this is critical legislation to 
consumers.
  Let me mention two other titles of this bill that are important to 
consumers. First, the home equity protection title takes a big step 
toward ending lending rip-offs that have caused thousands of homeowners 
throughout the Nation to lose their homes. Most home equity lenders are 
reputable and honest. But over the last few years, a growing number of 
them have been exposed as nothing more than scam artists and have been 
ripped off. They have tricked homeowners--who are usually poor and 
unsophisticated in financial matters--into borrowing against the equity 
in their homes. The loans then turn out to have outrageous terms--such 
as interest rates of 20, 30, even 40 percent; closing costs that eat up 
20 or 25 percent of the total value of the loan; and hidden conditions 
like balloon payments. These terms virtually guarantee that the 
consumer will default. At that point, the scam loan broker dives in 
like a vulture--by either forcing the consumer to refinance on even 
more unconscionable terms, or else taking away the consumer's home.
  The second title of this legislation that deserves the attention of 
the Members is the title that reforms the Flood Insurance Program. As 
we have seen in the wake of the Midwest floods, only about 17 percent 
of the people who live in flood-prone areas have flood insurance. The 
result has been tremendous hardship to homeowners and taxpayers alike. 
Homeowners who are flooded and do not have flood insurance receive at 
best only a few thousand dollars in Federal disaster relief--hardly 
enough to rebuild a seriously damaged home. And the Federal taxpayer 
usually ends up paying millions and millions of dollars in disaster 
aid.
  It is because of these provisions that are contained in the Flood 
Insurance Program which will expand the use of flood insurance, will 
make the program solvent, and will, therefore, decrease our dependence 
on taxpayer payouts when a bailout is needed.
  I think that this is far-reaching legislation.
  Again, I want to thank the chairman, the gentleman from North 
Carolina [Mr. Neal], the chairman, the gentleman from Texas [Mr. 
Gonzalez], the chairman, the gentleman from Massachusetts [Mr. Frank], 
for all the leadership they have shown on this issue.
  I also want to congratulate the gentleman from Nebraska [Mr. 
Bereuter], in particular, for his efforts on the Flood Insurance 
Program, and my friends from the other side of the aisle for their 
efforts in making this a very strong bill.
  Mr. McCOLLUM. Mr. Speaker, I yield 4 minutes to the gentleman from 
New York [Mr. Fish], who represents the best of the Committee on the 
Judiciary. They were important conferees on a major portion of this 
particular bill, and the gentleman from New York [Mr. Fish], who is our 
ranking Republican on the committee, is going to be giving a few words 
about that.
  Mr. FISH. Mr. Speaker, House Judiciary Committee members were 
assigned as conferees to the Interstate Banking and Branching Act of 
1994 primarily due to a provision in the conference extending statute 
of limitations authority for the Federal Deposit Insurance Corporation 
[FDIC].
  The provision, as passed by the Senate would have allowed the FDIC to 
revive State civil causes of action including negligence for suits 
against officers and board members of savings and loans institutions. 
The Senate language would have allowed the FDIC, to ignore the running 
of States' statutes of limitation and revive claims for misconduct 
including simple negligence. However, it was the judgment of Judiciary 
conferees that allowing the revival of claims for negligence where the 
State statute of limitations had expired would be inequitable and run 
counter of the fundamental purpose of statutes of limitation.
  The House Judiciary Committee has a long-standing policy in 
opposition to reviving expired statutes of limitation and to applying 
such statutes in a retroactive fashion. There are serious due process 
fairness questions raised by such action. Last year, regarding a 
similar issue, House Judiciary Conferees refused to allow a blanket 
extension of the Federal statute of limitations authority for the 
Resolution Trust Corporation [RTC]. The committee did agree last year 
to the conference committee compromise on H.R. 1340, the Resolution 
Trust Corporation Completion Act, which allowed a limited revival of 
claims for fraud or intentional misconduct. However, Judiciary 
conferees explicitly rejected language last year, to allow the revival 
of claims based on negligence or gross negligence.
  Similarly, in this conference, in recognizing the exceptional 
circumstances surrounding the S&L industry, Judiciary conferees 
proffered language accepted by the conferences which would in fact 
allow the revival of claims where there has been fraud or intentional 
misconduct. This extraordinary remedy would allow the FDIC to go after 
those most culpable of defrauding S&L institutions; but would not 
reexpose every sitting or former board member to a suit in negligence. 
To allow the revival of claims for mere negligence would be inequitable 
to those who are not actually responsible for the wrongdoing.
  The language in this conference report is a fair and reasonable 
compromise. This language provides the FDIC with additional authority 
to revive claims for intentional misconduct or fraud of which the State 
statute of limitations has expired thereby allowing them to pursue S&L 
officers or board members who have caused a loss to the U.S. taxpayers. 
The conference report language is a reasonable response to this 
extraordinary circumstance and I believe it strikes a fair balance.

                              {time}  1150

  Mr. NEAL of North Carolina. Mr. Speaker, I yield 2 minutes to the 
gentleman from Ohio [Mr. Fingerhut].
  Mr. FINGERHUT. I thank the gentleman for yielding this time to me.
  Mr. Speaker, let me begin by commending the gentleman from North 
Carolina [Mr. Neal] chairman of the subcommittee, and also the ranking 
member, the gentleman from Florida [Mr. McCollum] for pursuing this 
very important bill to its conclusion.
  Mr. Speaker, I joined this committee as a new Member of the House of 
Representatives because I believe firmly in the importance of a 
vibrant, expanding, and profitable financial banking system to our 
country's economic prosperity.
  I also believe very strongly that the more vibrant a financial system 
we have, the greater the benefits to the consumers of this country that 
that financial system can provide.
  But you can only do that, you can only maintain a vibrant and 
successful financial system if you continue to modernize the laws under 
which they operate. As has been mentioned by a number of my colleagues 
on this committee speaking in support of this bill, it has been all too 
many years since this particular section of the laws governing our 
banking system have been modernized. It is without question that the 
passage of this bill today, the adoption of this conference report, 
will result in a significant modernizing, upgrading, and thus a 
contribution to their financial success of our banking community and, 
therefore, our economy.
  Indeed when you couple this measure with the paperwork reduction 
sections of the next bill that will be considered by this body under 
the community banking sections, we will have provided a significant 
incentive, regulatory and financial, to our banking system seeking to 
retain the dominance it once held in international markets.
  Let me also say a word of parochial privilege here. That is that my 
State, the State of Ohio, is the home to some of the strongest, best 
capitalized, most prominent banks in these United States. It is without 
question in my mind that the benefits of this bill will strongly accrue 
to the citizens of the State of Ohio as those banks are well positioned 
to take advantage of these provisions.
  I strongly urge adoption of the conference report.
  Mr. McCOLLUM. Mr. Speaker, I yield 1 minute to the gentlewoman from 
New Jersey [Mrs. Roukema], the distinguished senior member of our 
committee.
  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. I thank the gentleman for yielding this time to me.
  Mr. Speaker, I rise today in support of H.R. 3841, the Interstate 
Banking Efficiency Act.
  This legislation is perhaps the most significant piece of banking 
reform that the Banking Committee has passed in the last 4 or 5 years.
  I supported this legislation because I have long felt that interstate 
banking and branching provided the best opportunity for banks to become 
more competitive.
  Interstate banking and branching would also allow banks to become 
more geographically diverse thus permitting them to engage in 
profitable business in different communities in different sections of 
the country. In addition, it lessens the negative effects of regional 
economic downturns on the banks.
  H.R. 3841 would permit interstate banking after 1 year, and complete 
consolidation of existing subsidiaries and full interstate branching by 
June 1, 1997.
  States are given the ability to opt in earlier if they choose to do 
so and, more importantly, they may opt out of interstate branching 
within 3 years.
  Anticoncentration limits, based on percentage of deposits held, was 
also included. This provision is extremely important in maintaining 
local competitiveness.
  The dual banking system and States rights are preserved in that the 
bill clarifies State authority to tax affiliates of banks and bank 
holding companies; it requires the Federal regulators to review CRA 
performance of applicant banks before a bank can branch interstate; and 
it preserves the States ability to apply State laws regarding 
intrastate branching, fair lending, and consumer protection.
  Finally, this legislation permits foreign banks to establish and 
operate branches in any State to the same extent as other banks in a 
State in which the foreign bank is located. However, in order to level 
the playing field, foreign banks are to be regulated so that they do 
not have an unfair cost advantage over U.S. banks and that they observe 
community reinvestment and consumer protection requirements similar to 
domestic banks.
  Mr. Speaker, this is very important and much needed legislation and I 
urge my colleagues to vote for the conference report.
  Mr. NEAL of North Carolina. Mr. Speaker, I yield 3 minutes to the 
distinguished gentleman from Nebraska [Mr. Hoagland], who has worked on 
this legislation for many years.
  Mr. HOAGLAND. I thank the gentleman for yielding this time to me.
  Mr. Speaker, I just want to take a moment to join the celebration 
here today because we are doing something so right. You know, it is not 
very often that so many years of efforts can culminate in a product 
that is truly so outstanding and something that needs so desperately to 
be done. For so many years now, the American banking system has been 
suffering under the antiquated restrictions of the McFadden Act, first 
passed in 1927, and then the Douglas amendment, passed in 1956, which 
has imposed clearly unnecessary restrictions on our banking industry 
throughout the country.
  As those restrictions have weakened the industry, more of their 
customers have fled elsewhere, to other means of financing corporate 
activities and the market share of the banking industry has steadily 
declined.
  So, by liberalizing these laws, bringing them up to date, ratifying, 
in many cases, things that are being done anyway, it will inevitably 
have the effect of strengthening all of corporate America, and that is 
only good for all of us.
  Under the current restrictions, bank holding companies have to set up 
separate boards of directors in every State, separate regulatory 
reports in every State, undergo separate examinations, install separate 
computer systems, and so forth.
  Now, that means, in my region of the country, a regional bank, like 
Norwest, when it comes into South Dakota, Nebraska, Iowa, or Minnesota, 
sets up an entirely separate corporate structure in every State. What 
that means to the consumer is that if we have a Norwest account in 
Omaha, it is no good for cashing a check in Sioux Falls or in South 
Dakota somewhere or in Minneapolis because each State has a separate 
deposit account and separate computer system.
  So, in that respect, it is going to make things a lot more efficient 
for the consumers in America because they will be able to shop at the 
same bank wherever it has branches nationwide.
  It will also enable banks, as they diversify across regions, to be 
more stable because if the economy turns down in one region, it can be 
rescued in another.
  So, Mr. Speaker, I want to commend the gentleman from North Carolina 
[Mr. Neal] for his work, and Mr. Frank of Massachusetts for his work, 
the gentleman from Nebraska [Mr. Bereuter], and the gentleman from 
Florida [Mr. McCollum], who have worked so hard on this legislation.
  Again I want to join in the celebration because we really should be 
proud of this. So many people in Congress, so many people outside of 
Congress who worked so hard to bring about these changes, and we are 
about to get them done.
  Mr. McCOLLUM. Mr. Speaker, I yield 4 minutes to my good colleague, 
the gentleman from Nebraska [Mr. Bereuter], who is a member of the 
Committee on Banking, Finance and Urban Affairs.
  (Mr. BEREUTER asked and was given permission to revise and extend his 
remarks.)
  Mr. BEREUTER. I thank the gentleman for yielding this time to me.
  Mr. Speaker, this Member rises in support of the interstate banking 
conference report. This Member would like to thank the chairman of the 
House Banking Committee, the distinguished Member from Texas, Mr. 
Gonzalez, and the ranking minority member of the House Banking 
Committee, the distinguished Member from Iowa, Mr. Leach, for their 
leadership in advancing this bipartisan landmark legislation. Special 
recognition is due to the subcommittee chairman and ranking minority 
member, the distinguished gentleman from North Carolina [Mr. Neal] and 
the distinguished gentleman from Florida [Mr. McCollum], along with 
many other Members whose initiative and effort are embodied in this 
legislation.
  Mr. Neal is conscientious, persistent, and knowledgeable, a man of 
admirable ability and motives who has served his district, State, and 
Nation very well. We will miss him after his retirement from the 
Congress at the end of 1994.
  Mr. Speaker, this Member is particularly pleased that the opt-out 
provisions for interstate banking have remained in this measure. This 
is legislation that this Member proposed and drafted in the previous 
Congress, and successfully advanced on the House floor in the 102d 
Congress with the cosponsorship and great assistance from the 
distinguished gentleman from Minnesota [Mr. Vento]. The opt-out 
provisions gives State legislatures an opportunity to opt-out, in 
effect to take themselves out of the interstate branching arrangement 
until June 1, 1997, if they chose to do so. Now, this Member does not 
expect many if any States to exercise that option, but that option is 
maintained, and that is an important States' rights issue, which will 
reassure some bankers, consumer groups, and State officials.
  Furthermore, this Member also supports the provisions in this measure 
that provide for the avoidance of undue concentration of power in 
individual banks. The measure establishes 10 percent nationwide and 30 
percent statewide concentration limits. In fact I had wanted the latter 
figure to be somewhat lower, but this is the will of the committee and 
consistent with the advice of many interests. States are also 
authorized to waive the statewide concentration limitation. Under the 
conference report, States also retain existing authority to impose 
lower deposit caps on a nondiscriminatory basis. This Member had 
previously expressed his concerns that there existed an opportunity for 
too many decisions and too much of a community's resources to be 
drained from some rural areas and from some low-income urban areas. In 
part those concerns are addressed.

  Mr. Speaker, having made these comments this Member would emphasize 
that is well past time to modernize our banking legislation. It not 
only will serve bank consumers better, in many cases, the current 
structure places the American financial service institutions in a 
disadvantageous position with respect to foreign banks and commerce in 
many other parts of the world. It is time for us to update our banking 
system, and this legislation is a sound, well-crafted and long-
considered effort to bring the American banking structure into the 20th 
century before we leave it.
  Mr. Speaker, this Member urges his colleagues to support the passage 
of the interstate banking conference report.

                              {time}  1200

  Mr. NEAL of North Carolina. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from California [Ms. Waters].
  Ms. WATERS. Mr. Speaker, I commend Chairman Neal and Chairman 
Gonzalez for their leadership on this conference report for H.R. 3841, 
the Riegle-Neal Interstate Branching Act.
  This is an important bill for banks. Today's action will clear the 
way for a distinct new power which many banks have been seeking 
desperately for years.
  I have always maintained that in order to proceed with an expansion 
of bank powers, there must be protections for consumers. Industry 
advantages like consolidation bring fear and uncertainty to many 
consumers and communities. Before the subcommittee considered this 
legislation, Chairman Neal and I agreed to work on my proposal to 
minimize the community loss which often results from branch closures.
  I am pleased that these discussions have led to a concrete result 
which has been retained in this conference report. This bill includes 
my legislation giving communities an opportunity to replace banking 
services which may be lost due to branch closures. I believe this 
amendment vastly improves the underlying bill.
  In conclusion, I would again like to thank Chairman Neal for his work 
on this legislation. I know how important this legislation is to him, 
and I think it is a fine tribute to our colleague, Mr. Neal, who will 
retire at the end of this term. While the legislation before us does 
not address all the concerns I have about interstate branching, we 
have, in good faith, worked to make the bill better. I urge its 
adoption.
  Mr. McCOLLUM. Mr. Speaker, for the purposes of a colloquy, I yield 
such time as he may consume to the gentleman from Massachusetts [Mr. 
Franks].
  Mr. FRANK of Massachusetts. Mr. Speaker, I thank the gentleman from 
Florida [Mr. McCollum].
  I would just like to note that the gentlewoman from California did 
accurately describe the title of this bill as we voted it as the 
Riegle-Neal bill, and I think it is appropriate that the Riegle-Neal 
phrase will take its place when people talk about this important 
legislation.
  Mr. Speaker, I would like to have a colloquy with the gentleman from 
Florida [Mr. McCollum] on the question of the statute of limitations. 
Section 201 allows the revival of some tort claims that expired under 
State statutes of limitation which previously dealt with the Federal 
issue and other legislation. The only claims that can be revived are 
those that rise from, and I quote here, fraud, intentional misconduct 
resulting in unjust enrichment, and intentional misconduct resulting in 
substantial loss to the institutions.
  Would the gentleman from Florida describe what intentional misconduct 
means in this context?
  Mr. McCOLLUM. I say to the gentleman, Glad to, Mr. Frank.
  Mr. Speaker, as the gentleman is aware, this very same standard was 
adopted by Congress in last year's RTC Completion Act. It was part of 
an identical legal standard that must be satisfied to revive certain 
other RTC-related tort claims. Last year's Judiciary Committee report 
explained the meaning of the term, and the explanation is just as 
accurate for the language in H.R. 3841. In essence, the terms 
``intentional misconduct resulting in unjust enrichment'' and 
``intentional misconduct resulting in substantial loss to the 
institution'' are phrases that must be read as a whole. They describe 
situations where misconduct and its harmful effect are intended or 
anticipated, not situations where an intended act merely happens to 
result in harm through negligence or chance.
  For instance, these terms would not describe circumstances in which 
an outside director intentionally missed a board meeting for personal 
reasons, and in the director's absence a loan was approved that 
resulted in substantial loss to the institution. It is true that the 
outside director would have intentionally missed the meeting, which 
could be viewed as a form of misconduct. But the ultimate result of the 
conduct--the substantial loss to the institution--would have been 
unforeseen and unintended. The terms also would not apply to a loan 
officer or outside lawyer who intentionally omitted a provision from a 
loan document in the mistaken or negligent belief that it was 
unnecessary, even if the absence of the provision ultimately caused 
loss to the institution. While the decision to omit the provision might 
technically have been intentional, the loss to the institution would 
have been an unintended consequence of that decision. In short, 
intentional misconduct is specifically meant to capture only categories 
of misconduct that are intended or anticipated to, and do result in, 
either unjust enrichment or substantial loss to an institution.
  Mr. FRANK of Massachusetts. I think it is useful to have that 
clarification, and let me further ask the gentleman if he believes it 
was the intent of the conferees to create a new Federal cause of action 
by the use of this particular language.
  Mr. McCOLLUM. Absolutely not. The conferees intended that the 
provision apply only to claims arising from recognized common law 
causes of action and only to such claims that arise from the fraud 
intentional misconduct standard.
  Mr. FRANK of Massachusetts. Let me just say in closing, if we do 
proceed to substantially repeal, as I hope we will, the Glass-Steagall 
Act, we will have Riegle-Neal as an eponymous phrase to replace Glass-
Steagall in our statute books.
  Mr. HUGHES. Mr. Speaker, title II of the bill as adopted by the 
conference would permit the FDIC or RTC, as a Federal conservator or 
receiver of a failed depository institution, to revive under certain 
circumstances, certain tort claims that had expired under a State 
statute of limitations within 5 years of the appointment of the 
conservator or receiver. This provision does not affect other 
applicable State laws concerning the running or the tolling of statutes 
of limitations nor does it alter section 11(k) of the Financial 
Institution Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. 
1821(k).
  The revival of expired claims is an extraordinary remedy because it 
is an extreme form of the retroactive application of law which the 
courts and Congress have generally disfavored. Accordingly, title II 
appropriately would limit this extraordinary remedy to claims arising 
from an egregious class of conduct, that is, fraud, intentional 
misconduct resulting in unjust enrichment, and intentional misconduct 
resulting in substantial loss to the institution. This three-pronged, 
fraud/intentional misconduct standard is precisely the same as the one 
that Congress adopted last year, after considerable debate, with 
respect to a similar retroactive statute of limitations extension in 
the Resolution Trust Corporation Completion Act of 1993.
  As with last year's reauthorization of the RTC, the intentional 
misconduct standard for revival in this provision is not intended to 
apply to claims arising from negligence, whether pleaded as simple, 
ordinary, or gross negligence. Claims arising from such negligent 
conduct by directors, officers, and outside professionals--such as 
merely failing to adequately review loan reports or the negligent 
approval of loan applications when closer scrutiny would reveal reasons 
for rejection--do not warrant the extraordinary remedy of revival if it 
is in contravention of State law.
  Title II would recognize that there is a level of misconduct which 
justifies congressional actions to retroactively set aside a State 
statute of limitations, particularly where, for example, the misconduct 
involves individuals who improperly manipulated institutional affairs 
to prevent themselves from being brought to justice before the State 
period of limitations expired. This level of misconduct is reflected in 
particular forms of intentional behavior. The intentional misconduct 
standard is written to specifically include conduct such as self-
dealing that results in unjust enrichment or a substantial loss to the 
institution, manipulation by institution insiders--including by a 
scheme to maintain adverse domination--that results in the running of a 
statute of limitations, falsifying financial records that disguises 
increased financial loss, and conspiracy to violate banking rules or 
regulations.
  Mr. McCOLLUM. Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of North Carolina. Mr. Speaker, I yield 3 minutes to the 
distinguished gentleman from Maryland [Mr. Hoyer], the Democrat caucus 
chairman who, I point out, is a former member of the Committee on 
Banking, Finance and Urban Affairs.
  Mr. HOYER. Mr. Speaker, I rise in strong support of the Interstate 
Banking and Branching Efficiency Act. This is a bill whose time had 
come long ago and I commend the Banking Committee for bringing us a 
conference report that is sure to be enhanced within weeks. As we all 
know, our political system has a bias against action and even widely 
popular measures can sometimes be very difficult to pass. Such has been 
the case with this legislation. Unfortunately, the broad consensus that 
exists for this bill may make it somewhat uninteresting to the media, 
where conflict is much preferred. In any event, passage of this 
conference report, in combination with the Community Development and 
Regulatory Improvement Act, will be among the major achievements of 
this Congress.
  What this bill is, is less a change in policy than an acknowledgment 
of reality. Interstate banking exists today, as we all know. The 
problem is that laws that were written in the 1930's, largely in 
reaction to the great depression, are imposing impediments that have 
become gratuitous. Today, by passage of this legislation, we are simply 
saying that the Federal Government should get out of the way and let 
the market work.

  I am sure that the vast majority of our constituents have no idea 
that there is a Federal prohibition against interstate banking. 
Certainly, right here in the Washington metropolitan area, where most 
of my constituents live, there is interstate banking. ATM networks 
exist that allow customers access to their accounts in three 
jurisdictions; Maryland, Virginia and the District of Columbia. 
Nonetheless, there are major inefficiencies in the system that may be 
invisible to customers, but very apparent to the banks themselves. And, 
while the customers don't see the inefficiencies, they are certainly 
paying for them. By making the banking system more competitive, this 
bill will reduce costs both to the banks and their customers.
  This bill is good for banks, good for business and good for 
consumers, and I urge my colleagues to support it.
  Mr. Speaker, I also want to join my colleagues in congratulating the 
gentleman from North Carolina [Mr. Neal]. I am very pleased that this 
legislation is going to pass. I am pleased with the bipartisan efforts 
the gentleman from Florida [Mr. McCollum] and others have extended on 
behalf of this legislation.
  I am not pleased that the gentleman from North Carolina [Mr. Neal] is 
leaving the House of Representatives. The House will be a lesser place, 
North Carolina will not be as well represented, and the Committee on 
Banking, Finance and Urban Affairs will have a void that will be 
difficult to fill. I congratulate him, not only for this bill and the 
leadership he has shown, but for all of his service to the House, and 
to the people of North Carolina and this country.
  Mr. McCOLLUM. Mr. Speaker, I yield 2 minutes to the gentleman from 
Wyoming [Mr. Thomas], another good friend and member of the Committee 
on Banking, Finance and Urban Affairs.
  Mr. THOMAS of Wyoming. Mr. Speaker, I rise in support of the 
interstate bank and branching bill before us, as well as the community 
development financial institutions bill to be considered later today.
  I want to thank the gentleman from North Carolina [Mr. Neal], the 
gentleman from Florida [Mr. McCollum], and everyone who has worked so 
hard on these issues for years. We are taking what I see to be a 
significant first step today toward a more efficient, competitive 
banking industry.
  First, let me address the interstate banking and branching bill 
before us.
  I have been a supporter of allowing interstate branching to go 
forward. There is good evidence that significant savings is to be had 
by allowing banks to consolidate their operations. A more efficient 
banking system is good for consumers and good for the industry.
  But my support has always been conditioned on protecting state's 
rights. While I would have preferred allowing States to opt in to 
interstate branching, it was absolutely vital that States at the least 
have the right to opt out.
  Just as important as the ability to opt out is that States be given 
enough time to fully consider the complex issues surrounding branching. 
In Wyoming, our state legislature meets every other year for a general 
session. The original House bill, allowing consolidation after only 18 
months, did not give Wyoming, and other States with Biennial meetings, 
enough time.
  I offered an amendment with Congressman Castle during committee 
consideration that would have given States the time they need to make 
informed changes in their own laws and decisions on branching. I am 
pleased that this final bill includes that equity Congressman Castle 
and I pushed for.
  I also want to briefly mention my strong support for the regulatory 
relief provisions of the community development financial institutions 
bill.
  I have worked on this issue for several years, I am a cosponsor for 
Mr. Bereuter's bill, and I'm pleased a substantial portion of his 
legislation is included in this regulatory relief package.
  Unfortunately, some members of the House Banking Committee forget 
that banks are businesses. And just like other business owners, I can 
tell you that whenever I meet with bankers in Wyoming, the first 
subject they bring up is the growing regulatory burden they face. The 
time, money, and manpower that go into complying with the litany of 
regulations is excessive. This bill give some relief.
  More needs to be done. We should seriously examine the current 
Community Reinvestment Act, for instance, and find ways to reduce that 
burden. We need to address director and officer liability. But this 
bill goes a long way to accomplishing one of my top priorities as a 
member of the House Banking Committee--providing regulatory relief to 
financial institutions--and I congratulate Mr. Bereuter for his work.
  Mr. Speaker, just one final note. It seems to me we need to have a 
discussion in this body about the future of our financial institutions 
and what we want the banking industry to become in the next 10 to 20 
years. There are some folks who want to see banks become a delivery 
mechanism for social programs. I hope we do not take that route. At a 
time when banks face increasing competition from nonbanks, when the 
future of the industry is in question, we need to closely examine where 
we want to industry to go, and how we get there.
  Mr. Speaker, I urge my colleagues to vote for these important bills.

                              {time}  1210

  Mr. NEAL of North Carolina. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from New York [Mrs. Maloney].
  Mrs. MALONEY. Mr. Speaker, I thank the chairman of the subcommittee 
for his leadership on this issue.
  Mr. Speaker, I rise in strong support of the conference report on the 
Riegle-Neal Interstate Bank Efficiency Act.
  Passage of this legislation will bring Federal banking laws into the 
modern age.
  Mr. Speaker, interstate banking and branching already exists in the 
United States.
  But the lack of comprehensive Federal legislation, like this bill, 
has led to wasteful administrative impediments to efficient bank 
operation that would benefit both the consumers and the banks.
  I believe that passage of this legislation is wholly consistent with 
the efforts of this Congress to reinvent government by eliminating 
outdated and unnecessary regulatory obstacles to economic growth.
  I believe so strongly in the merits of this issue that I introduced 
legislation, H.R. 3129, that would allow consolidation of existing 
interstate banks.
  The provisions of my bill would allow banks to run all of their State 
branches under a single administrative structure instead of being 
required to establish costly duplicative structures in every State in 
which they operate.
  Many economists believe that consolidation alone will provide banks 
with enough savings to create hundreds of millions of dollars of 
available credit for lending to the public and to business.
  I am particularly pleased that virtually all the provisions of my 
legislation are included in this conference report.
  Passage of this conference report will foster competition and expand 
banking resources for people and businesses around the country.
  I believe that competition leads to healthier banks and lower costs 
for businesses and consumers.
  I fully expect that even in New York City, that many mistakenly 
believe will only be an exporter of new branches, we will see new banks 
coming to town.
  I also share the sentiments of Federal Reserve Board Governor Eugene 
LaWare, who testified before our committee saying, ``Greater geographic 
diversification would have provided more stability over the last decade 
to banks operating in the agricultural areas of the Midwest, the oil 
patch of the Southwest and the high-tech and defense regions of New 
England and California.''
  Mr. Speaker, for all of these beneficial economic reasons, I urge my 
colleagues to pass this bill.
  Mr. NEAL of North Carolina. Mr. Speaker, if the gentlewoman will 
yield, may I just say briefly that I want to thank the gentlewoman for 
her leadership on this issue. She has been an early and longtime 
supporter of this legislation, and we appreciate her very creative 
efforts.
  Mr. McCollum. Mr. Speaker, I yield 2 minutes to our distinguished 
colleague on the Committee on Banking, Finance and Urban Affairs, the 
gentleman from Delaware [Mr. Castle], who is the former Governor of 
that State.
  Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I thank the distinguished gentleman from Florida [Mr. 
McCollum], and to him and to the gentleman from North Carolina [Mr. 
Neal] I would really like to offer my thanks for this legislation. We 
do this routinely when we get up to speak, but I think in this instance 
it is richly deserved. These two Members, along with the gentleman from 
Massachusetts [Mr. Frank], the gentleman from Nebraska [Mr. Bereuter], 
and others who have an interest in this, have, I think, worked 
extraordinarily hard to take one of the most complicated subject 
matters we deal with in this Congress and put it into legislation that 
hopefully virtually every Member in this particular Chamber will 
support.
  I come from a State, the State of Delaware, that has some very unique 
banking laws. We have had no bank failures. We have unusual capital 
requirements and unusual regulations, and, frankly, I came here with 
one concern, and that is to make sure that interstate banking did not 
in some way gut what we have in the State of Delaware. That was not an 
easy thing to do, but working with these gentlemen and their staffs and 
other people on this committee, we have indeed crafted a piece of 
legislation which not only protects the States by delaying the starting 
date for branching, for example, until 1997 and protecting the State 
taxing authority, but, in my judgment enhances what we have at the 
State level. We have indeed protected the duel banking system which is 
so important to the United States of America, and yet we have spread 
the opportunity for banks to go across State lines so people can have 
that convenience.
  So it is with all those things in mind that I join what appears to be 
a flood of support for this particular legislation. I hope we can pass 
it today, and I hope this will improve the entire banking situation and 
improve the economic circumstances for Americans across this country.
  Mr. NEAL of North Carolina. Mr. Speaker, I yield such time as he may 
consume to the distinguished gentleman from Virginia [Mr. Moran].
  Mr. MORAN. Mr. Speaker, I just want to say for the record that having 
served on the Committee on Banking, Finance and Urban Affairs and on 
the Subcommittee on Financial Institutions when we worked for many, 
many months in trying to get an interstate banking bill to the floor 
that would pass, although I am sure others have said this before me, I 
want to give a great deal of credit to the chairman of the Subcommittee 
on Financial Institution Supervision, Regulation and Deposit Insurance, 
the gentleman from North Carolina [Mr. Neal] and his excellent staff 
for getting this bill out.
  This is a very important bill. It is important to the economy of the 
United States. It recognizes the trends that have taken place 
throughout our economy. Customers are going to be better served, our 
economy is going to be more stable, and we are going to be more 
globally competitive with this bill. It is a very good bill. I strongly 
support it, and again my hat is off to the Members on both sides of the 
aisle and their staffs for their support on this, because it is a 
product that we should have been able to pass before and one that I am 
glad we can pass today.
  Mr. McCOLLUM. Mr. Speaker, I have no other speakers on this side, but 
I do yield myself such time as I may consume in order to make a couple 
of comments.
  First of all, I would like to say that the significance of this bill 
cannot be overstated in the banking world. The interstate banking bill 
is one of the most important pieces of legislation that will pass with 
regard to this entire Congress, and it is certainly one of the most 
important pieces of legislation in the community of banking interests 
to pass in a long time. While it is going along with quite harmony 
today, as it did on the floor a few months ago when we came up and 
brought out the bill originally, this conference report is still very, 
very significant and important.
  I would also like to close by making my adieus to my good friend and 
colleague, Mr. Steve Neal. He and I have served together for some time. 
The gentleman is going to be missed. I think it is only appropriate 
that this bill go down with your name on it. I like the idea of calling 
it the Neal-Riegle bill better, like some of the gentleman's colleagues 
said earlier. I have been your ranking Republican not only on 
the drafting of this bill this year, but I was also in previous 
Congresses your ranking Republican serving side by side with you while 
you were chairman of a couple of other subcommittees, including the one 
overseeing the Federal Reserve, and I have had no Member I have enjoyed 
working with on that side of the aisle more than Steve Neal.

  So you are going to be missed, and I join my colleagues in 
complimenting you on your great service and tenure here and on this 
bill.
  With that in mind, Mr. Speaker, and urging my colleagues to agree to 
this conference report, I yield back the balance of my time.
  Mr. MFUME. Mr. Speaker, in March when the House of Representatives 
brought H.R. 3841 to the floor under suspension of rules, I made my 
concern clear regarding the lack of certain consumer provisions in the 
legislation. I must, again, make my concern clear today.
  First, let me indicate, that I am glad to see movement on interstate 
banking. Interstate banking is much needed legislation in that it gives 
banks the kind of organizational and operational flexibility that is so 
very desperately needed. In my opinion, this legislation is long 
overdue.
  But another reality surrounding movement on interstate banking 
legislation is the fact that we are, for the first time, bestowing new 
powers upon the banks, and we are not asking the banks to meet the 
credit needs of the local communities. Strengthening the requirements 
for banks to meet the credit needs of local communities is action that 
is also desperately needed.
  As many know, Mr. Speaker, several members of the Banking Committee 
worked to include language in this interstate bill that would have 
substantially brought consumer rights into this legislation in a 
meaningful way. Ironically, the Banking Subcommittee on Financial 
Institutions is holding a hearing next week regarding ways to increase 
access of low- and moderate-income Americans to financial services. The 
subcommittee may do well to review the issues surrounding the debate 
over interstate as well.
  The language that was previously sought provided that lenders would 
demonstrate how they will meet the credit needs of lower and moderate-
income consumers in the areas where they wish to open a branch; that 
lenders not be allowed to branch across State lines if they have a 
demonstrated pattern of closing branches in low- and moderate-income 
areas; and that the biggest banks report information on loans to small 
businesses, including minority-owned businesses, so as to reduce 
commercial lending discrimination.
  Mr. Speaker, I was told by Mr. Neal that these issues will be 
carefully looked at and reviewed. Maybe next week's hearing is, in 
fact, the start of such a review. I still contend that an opportunity 
to really do something about these consumer issues passed us by during 
consideration of this legislation. However, because of the assurances I 
have received and because of my sincere interests in making banks more 
efficient, I will support the passage of the conference report before 
us today. But let the record show, Mr. Speaker, these consumer issues 
will not go away, and I will work to see that these issues receive the 
action and attention that they deserve also.
  Mr. NEAL of North Carolina. Mr. Speaker, I yield myself such time as 
I may consume.
  First, let me thank the distinguished gentleman from Florida [Mr. 
McCollum] for his kind comments. I have also enjoyed working with him 
over these many years.
  Mr. Speaker, I also want to take a moment to thank our outstanding 
staff. Bill and I have worked hard together on this matter and on many 
other issues for many years on the committee. We are often mentioned, 
but our staffs do not get the recognition they so richly deserve. I 
would just briefly like to mention the names of the members of our 
staff. They are such fine people, and they are so dedicated, and in 
this small way I would like to recognize their absolutely fabulous 
efforts.

                              {time}  1220

  Peter Kinzler is our staff director, and he is ably assisted by Ken 
Swab and Heidi Thomas and Barbara Shycoff and Paul Hannah, and all of 
us by our support staff, Pam Littlejohn and Carol Lambka.
  You know, an awful lot of work goes into producing these bills, a lot 
of technical work, a lot we do not see.
  Mr. McCOLLUM. Mr. Speaker, will the gentleman yield?
  Mr. NEAL of North Carolina. I yield to the gentleman from Florida.
  Mr. McCOLLUM. Mr. Speaker, I wanted to join in thanking them in 
particular. I might add two minority staffers I should have 
acknowledged over here and have done yeoman work with the committee on 
the Republican side. John Heasley and Stacy Kincaid have done the same 
type of job your staff has. It has been a pleasure for us to work with 
all of the staff this time, yours and mine.
  Mr. NEAL of North Carolina. That is absolutely correct, and our 
staffs work together in a very fine bipartisan way.
  Mr. Speaker, this legislation will enormously benefit consumers all 
across this country. It will help strengthen the banking system, make 
business run more efficiently, reduce the likelihood of regional 
downturns, of the negative impact of regional downturns in the economy. 
It is really very fine legislation, and I feel certain we will approve 
it overwhelmingly.
  Mr. VENTO. Mr. Speaker, I rise in strong support of H.R. 3841, the 
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. 
This legislation is needed and worthy of our positive consideration. I 
would like to recognize the hard work of Banking Subcommittee Chairman 
Neal who has long sought this policy, as well as my other colleagues on 
the House Banking Committee for their efforts and leadership on this 
important legislation.
  This legislation is an overdue policy that sets forth a rational 
process in national interstate banking and branching. For too long, 
banks have operated under out-dated constraints. These constraints 
hampered efficiencies in operations and established artificial barriers 
to competition that hurt the consumer.
  Nation-wide banking branching is a policy change that needs to be 
implemented today. There is a positive consensus that interstate 
banking and branching translates into savings and efficiencies for the 
banks, increased competition and opportunities for consumers, and 
increased diversification for insured financial institutions--and this 
leads to modernization and improved health and viability of financial 
institutions enhancing crucial safety and bank soundness factors.
  In 1991, the House recognized the positive benefits of interstate 
banking and branching by approving, with a vote of 366 to 4, the 
bipartisan compromise, which is the foundation of this measure we are 
acting upon today. I initiated and crafted this with the help and 
support of key provisions from members Bereuter, Neal, Wylie and 
Chairman Gonzalez. This consensus approach was maintained in the 
Interstate bill, H.R. 3841, which the House approved this March 1994.
  The conference report now pending before us establishes a different 
mechanism for interstate branching. While the structure is modified, 
the pending bill again maintains the essence of the consensus bill, 
which I drafted. The conference report maintains a balanced approach 
reflecting the significant compromises and important protections for 
consumers and local communities.
  An important feature of the bill is that it maintains a positive role 
for the States. Under this bill, States have 3 years to opt-out of the 
interstate branching network. As an additional protection for States 
rights, the legislation specifically protects State deposit caps and 
applies State consumer protection, fair lending, intrastate branching, 
and community reinvestment laws to branches of out-of-State banks, 
unless pre-empted or upon a determination of discriminatory effect by 
the U.S. Comptroller of the Currency. In fact, the statement of 
managers' language includes an important clarification on the authority 
of the Comptroller and the proper policy that should be followed in 
considering preemption requests. Finally the conference report provides 
for State-by-State Community Reinvestment Act evaluations.

  As Representatives, we must be concerned about the safety and 
soundness of the Federal Deposit Bank Insurance Fund. Through regional 
diversification, banks should be stronger and better able to withstand 
local economic or natural disasters. In addition, H.R. 3841 includes a 
key safety factor by limiting interstate branching to adequately 
capitalized and well-managed institutions and by requiring the 
regulator to determine that the new institution will be adequately 
capitalized and adequately managed.
  I urge my colleagues to support H.R. 3841. While some may counsel 
delay, I do not believe that delay is warranted nor prudent. Today, the 
profitability of banks and the marketplace are stable. Action on this 
legislation will send a message to reinforce and enhance the soundness, 
certainty, and predictability of our national financial institutions' 
policy path.
  Mr. Speaker, we need the banks and the banking role to remain an 
integral part of our financial community. We need these financial 
institutions to make loans to small businesses, to provide a full range 
of financial services to our constituents and to be a leading force in 
our communities.
  As we talk of competing on the information superhighway, we cannot do 
it with financial institutions built like Ford's Model T. We cannot 
expect banks to make positive contributions if we tie their hands to an 
out-dated State by State law and rule. We should in 1994, finally, 
permit banks to compete in our national financial marketplace and to 
remain a viable force, the role the U.S. economy has relied upon for 
over 200 years. H.R. 3841 is an important step in achieving that goal. 
I urge the adoption of the conference report.
  Mr. CASTLE. Mr. Speaker, I rise in support of the conference report 
on H.R. 3841. I believe the time for interstate banking and branching 
has come and I am pleased that the House and Senate have been able to 
produce a balanced bill which will make banking more efficient for 
business and more convenient for consumers, while protecting the 
ability of States to adjust their laws and prepare for the 
implementation interstate banking and branching.
  I am particularly pleased that the conferees have agreed to set June 
1, 1997, as the date interstate branching can begin. The House bill 
would have permitted branching through consolidation of subsidiaries as 
soon as 18 months after enactment of the bill. The later date of June 
1997, will give all State governments adequate time to decide if they 
want to participate in interstate branching. This is especially 
important to States like Delaware which have an active and vibrant 
State banking business.
  When the House Banking Committee was considering the interstate bill, 
Congressman Craig Thomas and I offered an amendment in committee to 
provide a 3-year time period before all forms of branching could begin. 
While the amendment was not adopted in committee, I am very pleased 
that the House and Senate conferees ultimately adopted the 1997 date.
  In addition, I want to thank Chairman Neal, Chairman Gonzalez, and 
Mr. Leach and Mr. McCollum, for working with me to clarify the bill's 
language relating to a State's tax authority. The House bill and report 
protect a State's authority to tax the affiliates of banks and bank 
holding companies. With the support of Senator Bill Roth, the Senate 
agreed to this language and the conference report reflects this 
agreement. I appreciate my colleagues' cooperation on this important 
issue.
  I want to thank Chairman Neal in particular for his efforts in 
crafting legislation which is fair and balanced. This legislation will 
provide a variety of benefits to businesses and consumers and I support 
enactment of H.R. 3841.
  Mr. LaFALCE. Mr. Speaker, I rise in support of the legislation. It is 
long past time for Congress to enact interstate branching legislation. 
Indeed, the market has, over the past decade, formed its own interstate 
banking system. However, today's legislation is needed to allow 
nationwide banking to be done more efficiently and rationally--through 
branches in various States, rather than through separately capitalized 
banks in various States. The benefits to American consumers, business 
borrowers, the banking industry, and the overall economy are clear.
  The success of the U.S. economy is based on the free flow of goods 
and capital across State lines. Interstate commercial activities have 
long been the accepted mode of operation in this country. It has always 
seemed anomalous to me that products of every description could move so 
readily across State borders as a natural part of interstate commerce, 
but banking services could not. These arbitrary restrictions on 
interstate operations and the costs they have imposed have had several 
adverse consequences: they have inhibited the development of truly 
national banking institutions in this country; diverted funds to 
duplicative corporate structures that might better have been spent on 
customer services or community reinvestment; and forestalled the 
geographic diversification that could help alleviate the adverse impact 
of regional economic downturns on this Nation's banks.
  Perhaps the most unfortunate result of this inefficiency in the 
banking system has been reduced credit availability and increased 
consumer frustration. The time is long overdue for us to make the U.S. 
banking system as efficient as the rest of our economy. This 
legislation will make that possible.
  This legislation recognizes the fundamental connection between the 
strength and competitiveness of our banking industry and the strength 
and competitiveness of our economy. Ultimately, the cost of 
restrictions and inefficiencies in our banking system is slower 
economic growth.
  The benefits of interstate branching legislation are significant. 
First, by increasing geographic diversification, interstate branching 
will result in a safer and sounder banking system. A safer and sounder 
banking system will, in turn, result in a more stable and prosperous 
economy.
  The benefits of geographic diversification in the banking industry 
have unfortunately not been fully appreciated in the past. An 
interstate branching structure will reduce any individual bank's 
exposure to downturns in a single regional economy. Regional economic 
downturns have in the past decade been the source of many bank and 
thrift failures. Such failures have drastically reduced the credit 
available to affected communities, thereby exacerbating existing 
weaknesses in a local economy. Had there been a nationwide branching 
structure in place permitting geographic diversification, fewer banks 
and thrifts might have failed in the 1980s. As a result, the regional 
economic downturns that occurred in various parts of the country in the 
1980's might well have been far less devastating. The structure of our 
banking system has had a profound effect on the health of the 
underlying economy in the past. This legislation will ensure that 
effect is a positive one in the future.
  The second major benefit of interstate branching will be the 
increased credit availability it brings to our communities. Under the 
current banking system banks must dedicate valuable capital to 
establishing separate banks in each State. With interstate branching, 
banks will be able to use their capital as the basis for more loans 
rather than using it on duplicative corporate structures.
  We are all consumers of financial services. A more efficient, more 
competitive banking system provides the best assurance of providing all 
consumers--individuals, corporations, small- and medium-sized 
businesses, and governments--with access to a broad array of financial 
services at reasonable prices. The result of increased credit 
availability will be higher levels of economic growth and higher levels 
of employment.
  In the past, there have been concerns that under interstate 
branching, States currently exercising authority over banks operating 
within their borders would lose that authority. As the conference 
report states, States have a legitimate interest in protecting their 
consumers, businesses, and communities. This legislation fully 
recognizes the crucial role States play in regulating financial 
institutions within their borders and particularly in protecting their 
consumers.
  Specifically, the bill applies the laws of the host State regarding 
community reinvestment, consumer protection, fair lending, and 
establishment of intrastate branches to the interstate branches of 
national banks established in the host State to the same extent as 
those laws apply to a branch of a State bank. The exception to this is 
when Federal law preempts the application of the State laws to a 
national bank, or when the Comptroller of the Currency determines that 
the State laws have a discriminatory effect on the branch compared to 
their effect on a branch of a State bank. In this way, the Comptroller 
of the Currency plays a key role in maintaining the balance that 
currently exists between Federal and State law under the dual banking 
system. This legislation intends to maintain that balance.
  Futhermore, the taxation authority of States and their political 
subdivisions with regards to banks is unaffected by this legislation.
  This bill also addresses the legitimate concerns often expressed by 
consumer groups in the past about the impact that interstate branching 
might have on local communities. First, CRA evaluations by regulators 
on large banking organizations with interstate branching networks are 
required under this legislation, not just on the institution's overall 
performance, but also in each State in which the bank maintains 
branches. Moreover, each State-by-State evaluation must present 
information separately for each metropolitan area within that State in 
which the institution maintains a branch, and for the nonmetropolitan 
area of the State if the institution has a branch in such area.
  Second, this bill addresses the historical concerns of consumer 
groups that interstate branching would enable large banking 
organizations to take deposits out of local communities, ignoring the 
credit needs of that community. The bill will severely restrict the 
ability of banks to engage in this type of activity, requiring bank 
regulators to develop regulations to prevent interstate branches from 
being used as mere deposit production offices.
  This bill also attempts to maintain the policy of national treatment 
for foreign banks operating in the United States. Doing so is important 
if the United States hopes to gain greater market access for U.S. 
financial institutions in foreign markets.
  Once again, this legislation is much needed and long overdue. I urge 
its passage.
  Mr. NEAL of North Carolina. Mr. Speaker, with that, I yield back the 
balance of my time, and I move the previous question on the conference 
report.
  The previous question was ordered.
  The conference report was agreed to.
  A motion to reconsider was laid on the table.

                          ____________________