[Congressional Record Volume 140, Number 127 (Tuesday, September 13, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 13, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF 1994

  Mr. FORD. Mr. President, let me follow the Senator from Florida, my 
good friend, Senator Graham, to say that foreign banks now have $1.2 
trillion of the $3.9 trillion business. I think they are doing very 
well.
  Mr. President, I rise in strong support of the Riegle-Neal Interstate 
Banking and Branching Efficiency Act of 1994. I believe this 
legislation will mean real progress in a number of ways. It will make 
our banking system more efficient and competitive. It will offer 
greater choice to consumers. It will be good for businesses. And it has 
been carefully structured in a manner which protects important States' 
rights under our dual banking system and respects the legitimate 
franchise interests of small community banks.
  I compliment the chairman of the Banking Committee, Senator Riegle, 
for his years of hard work and dedication to this particular issue. It 
is appropriate that the final product bears his name.
  Mr. President, I was pleased to play a part in the development of 
this legislation. In 1991, when there seemed to be a stalemate on this 
issue, the bankers of my State and many other States came together 
around a compromise proposal which I offered as a floor amendment at 
that time. I wish to compliment Ballard Cassady with the Kentucky 
Bankers Association for the leadership role he played in assembling a 
national coalition within the banking community. That 1991 compromise 
amendment which passed the Senate is similar in many ways to the final 
product we are considering today. I believe it strikes an appropriate 
balance between competing interests on a very complex issue.
  The pending legislation is full of important compromises. There is 
one in particular which I wish to highlight, because I believe it is an 
area which we should continue to monitor very carefully. And that 
involves the language affecting foreign banks.
  I would have preferred the original Senate approach on foreign banks, 
which was simple and straightforward. It said to foreign banks: if you 
wish to branch interstate, you must play by the same rules as U.S. 
banks. We will give you the exact same opportunities if you accept the 
same burdens. You should bear the same costs as U.S. banks if you are 
going to compete for the same business.
  Mr. President, I believe there is growing evidence that foreign banks 
are increasingly competing for the same loans as U.S. banks. Their 
market share has grown for commercial and industrial loans as well as 
commercial real estate loans. Yet our tradition is to treat them as 
separate creatures. They are a different kind of animal under our 
traditional view. So foreign banks generally have not had to bear the 
costs of paying deposit insurance premiums or complying with laws like 
the Community Reinvestment Act.
  All of this has evolved under our interpretation of the concept of 
``national treatment'' under our international agreements. I would 
suggest to our regulators that they may now be interpreting ``national 
treatment'' to mean something that the average U.S. banker neither 
understands nor supports. It is a very complex area, and it may be time 
for a reevaluation.
  However, given the time constraints involved in putting this 
legislation together, I believe we reached a fair compromise on foreign 
banks for the time being.
  We are basically saying to foreign banks three important things. 
First, it should be clear that you are subject to most of the same 
consumer laws as U.S. banks. This bill specifically mentions 11 
different Federal laws which will be extended to foreign banks. Second, 
if you take retail deposits of less than $100,000 you will have to pay 
deposit insurance premiums just like U.S. banks, and the definition of 
``retail'' deposits has been tightened. Third, if you branch interstate 
by acquisition or merger, and you merge with an institution which is 
subject to the Community Reinvestment Act, you will continue to be 
subject to CRA just like U.S. banks.
  In particular, I would like to compliment Assistant Treasury 
Secretary Rick Carnell and Pat Mulloy of the Senate Banking Committee 
staff for their hard work in developing this compromise language. It is 
a good start, and helps to level the playing field for U.S. banks.
  However, I believe we must continue to watch the market trends with 
respect to foreign banks to make sure they do not have major 
competitive advantages under this law. This may very well be an area 
which we will need to revisit in the future.
  With those comments in mind, I wish to say again to the floor manager 
that he has crafted a very positive piece of legislation, and I believe 
it will contribute toward a more efficient banking sector and a 
healthier economy. Our State banking commissioner just yesterday 
suggested that this may be the most significant Federal banking 
legislation in more than a decade, and I believe he may be right. I 
compliment the Senator from Michigan for making it a reality.

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