[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]

 
      INTERSTATE BANKING EFFICIENCY ACT OF 1994--CONFERENCE REPORT

  The Senate continued with the consideration of the conference report.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. MITCHELL. Madam President, what is the pending business before 
the Senate?
  The PRESIDING OFFICER. The Senate is considering the conference 
report on H.R. 3841, the interstate banking bill.
  Mr. MITCHELL. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. RIEGLE. Madam President, I am especially pleased that this 
legislation contains the 1995 Special Olympics World Games 
Commemorative Coin Act. The Special Olympics are an international 
success story. Among other things, they provide a world-class sporting 
event for athletes with mental retardation and demonstration to a 
global audience the extraordinary talents, dedication, and courage of 
persons with mental retardation.
  I have been a long-standing supporter of the Special Olympics. Today, 
nearly 1 million athletes compete in Special Olympics programs 
throughout the world. There are accredited Special Olympics programs in 
more than 130 countries.
  The 1995 Special Olympics Coin Act directs the Secretary of the 
Treasury to issue $1 silver coins, emblematic of the 1995 Special 
Olympics World Games. It mandates that surcharges, collected from the 
sale of such coins, be paid to the 1995 Special Olympics World Games 
Organizing Committee to help fund these games.
  The Special Olympics are an extraordinarily worthwhile and special 
international sporting event and I want to express my gratitude and 
congratulations to Sargent and Eunice Shriver for their tremendous 
leadership and success in making the games a reality.


                host state authority over national banks

  Mr. D'AMATO. I would like to bring to the attention of the chairman a 
concern that has been expressed with regard to section 105 of this 
bill. The purpose of that section is to authorize host State bank 
supervisors to examine and bring enforcement actions with respect to 
interstate branches of State-chartered banks. The section makes a 
reference to section 5155(g) of the revised statutes, which, considered 
alone, speaks to branching by national banks. I understand there is a 
concern that the section could be construed as conferring on States 
supervisory authority over interstate branches of national banks.
  Mr. RIEGLE. This simply is not the case. Section 105 speaks to the 
supervisory authority of State banking supervisors over interstate 
State-chartered banks only. The reference is intended to be to State 
banks that are members of the Federal Reserve System. They have the 
same authority to establish branches as national banks under section 
5155(g).
  The reference to section 5155(g) was added by the conferees as a 
technical and conforming correction. We intended section 105 of the 
bill to apply to all State banks, but the language actually only 
referred to State nonmember banks that are subject to section 18(d) of 
the Federal Deposit Insurance Act. A correction was needed to fill an 
unintended regulatory gap that may have prevented host State bank 
supervisors from examining and bringing enforcement actions against 
State member banks.
  The conferees' intent is clearly stated in the official version of 
the conference report, where we described section 105 as permitting 
``the appropriate State bank supervisor of a host State to examine 
branches of out-of-State State banks * * *.''
  A different section of the bill addresses supervision of interstate 
branches of national banks. Section 102 of the bill clarifies that 
under interstate banking, State-chartered banks will continue to be 
subject to supervision by State authorities, while national banks will 
remain subject to supervision by the OCC. Where a national bank is 
subject to State law, section 102(f) of our bill clearly spells out 
that those State laws ``shall be enforced, with respect to such branch, 
by the Comptroller of the Currency.''
  Mr. D'AMATO. I appreciate the chairman's clarification of this 
matter. I am in total agreement with Senator Riegle on this point.
  I would like to point out that the printed version of the conference 
report seems to have prompted this concern. As the Senator said, the 
official version of the conference report clearly states our intention 
that section 105 apply only to State-chartered banks. Unfortunately, 
the word ``State'' in the reference to ``State banks'' was omitted in 
the printed version. This error inadvertently suggested that section 
105 could speak to supervision of all banks, not just State banks.
  Mr. RIEGLE. The official version of the conference report contained 
the word ``State'' in reference to the types of banks covered and so 
that document correctly describes the conferees' agreement concerning 
the scope of section 105. The omission of the word ``State'' from the 
printed version was a printer's error. The official version of the 
report clearly shows the section is limited to examination and 
enforcement by host State officials with respect to out-of-State State 
banks--not national banks. I ask unanimous consent to print the correct 
version of the conference report description of section 105 in the 
Congressional Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   Excerpt From House Report 103-651


  coordination of examination authority regarding interstate branches

       Section 105 permits the appropriate State bank supervisor 
     of a host State to examine branches of out-of-State State 
     banks to assure compliance with host State laws, including 
     those governing banking, community reinvestment, fair 
     lending, consumer protection and permissible activities, and 
     to assure that the activities of the branch are conducted in 
     a safe and sound manner.
       The host State bank supervisor, or other host State law 
     enforcement officer (if authorized under host State law) may 
     take appropriate enforcement actions and proceedings 
     regarding the branch.
       State bank supervisors are permitted to enter into 
     cooperative agreements to facilitate supervision of State 
     banks operating interstate. Under the Senate-passed bill, 
     such agreements would have been subject to approval of the 
     appropriate Federal regulator. The House-passed bill had no 
     requirement for approval. The Senate receded to the House on 
     this issue. Both bills contained a provision that nothing in 
     the section affected the authority of Federal banking 
     agencies to examine branches of insured depository 
     institutions, and the Conferees included such a provision in 
     the title.

  Mrs. MURRAY. Madam President, I rise to discuss an issue that has 
come to my attention upon closer scrutiny of the Interstate Banking 
Efficiency Act.
  Following conclusion of deliberations of the conference committee, 
the director of the department of financial institutions in my home 
State of Washington identified a potential unintended consequence of 
the wording of section 102 of this bill. This section allows a State to 
opt out of the interstate branching system by adopting a State law 
``that--(i) applies equally to all out-of-state banks.''
  It was the understanding of the director of the department of 
financial institutions that the intention of this provision was one, to 
prohibit interstate compacts limited to specific regions of the United 
States; and 2, to prohibit state legislation that discriminates against 
national banks doing business in such States.
  This bill was not drafted with the intention of creating a disparity 
between the treatment of State-chartered savings banks and Federal 
savings banks. I am hopeful that such a situation will not occur.
  I ask unanimous consent that the director's letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

         State of Washington, Department of Financial 
           Institutions,
                                     Olympia, WA, August 16, 1994.
     Re Interstate Banking Efficiency Act.

     Mr. Kerry Killinger, President, Washington Mutual Savings 
       Bank, Seattle, WA.

       Dear Mr. Killinger: As you are aware, on August 2, 1994 the 
     Conference Committee concluded its deliberations on the 
     Interstate Banking Efficiency Act. I would like to draw your 
     attention to Section 102 Interstate Bank Mergers which 
     creates new Section 44 in the Federal Deposit Insurance Act. 
     There appears to be some unintended results that may impact 
     the competitive viability of state-chartered savings banks to 
     their federal savings association counterparts.
       Paragraph (a)(2) of new Section 44 is the state election to 
     ``opt out'' of the interstate branching provisions. 
     Subparagraph (A) states that, among other things, that the 
     opt out provisions must apply to ``all out-of-State banks.'' 
     Upon inquiry to committee staff, it appears that the intent 
     of this provision was to (1) prohibit the formation of 
     interstate regional compacts and (2) prohibit the possibility 
     that some states may opt out only national banks in order to 
     provide competitive edges for state-chartered financial 
     institution. Thus, the intended purpose of the provision was 
     to assure a ``level playing field'' among competing financial 
     institutions. However, if it is determined that state opt out 
     legislation must also include savings banks in order for the 
     provision to be operative, state-chartered savings banks are 
     put at a competitive disadvantage compared to their federal 
     savings association counterparts. Since the apparent intent 
     of the provision was to level the playing field, it would not 
     appear that the result against state-chartered savings banks 
     was ever intended.
       I would be glad to discuss this issue with you further at 
     any time.
           Sincerely,
                                                     John L. Bley,
                                                         Director.

  Mr. DODD. Madam President, with consideration of the conference 
report on the Interstate Banking Efficiency Act, we have finally 
reached the last legislative hurdle to the long-sought goal of 
nationwide banking and branching.
  We have thoroughly debated the merits of interstate banking and 
branching for many years. At long last, we have arrived at a bipartisan 
consensus on this important issue. I, and others, have had to 
compromise and temporarily put aside issues of great importance to us 
in order to get to this point. I would have liked to see certain 
banking-related provisions involving bank sales of insurance included 
in this conference agreement, but their inclusion might have once again 
unnecessarily delayed enactment of this important legislation. These 
matters are still important to me and it will continue to pursue them 
but this was not the right time.
  The swift movement of interstate banking legislation through both 
Houses indicates just how strong this consensus is. In the 103d 
Congress, the legislation has received almost unanimous support with 
only one negative vote cast against it throughout its consideration by 
both Houses.
  This overwhelming consensus demonstrates the widespread understanding 
that it is high time that we allow our banks to branch into other 
States. The restrictions on bank branching we have had in place are 
unprecedented in the industrialized world and must be eliminated if our 
banks are to remain competitive.
  Madam President, the positive impact of interstate banking and 
branching will be widely felt. Full interstate branching will improve 
bank efficiencies, ease regional economic slumps, boost consumer 
conveniences, ameliorate the impact of future credit crunches, and 
enhance the safety and soundness of the banking industry.
  Our banking system will benefit, but most importantly, this 
conference agreement, when enacted, will be a boon to consumers. Bank 
customers nationwide will be able to enjoy a fuller range of services 
available in any State in which their bank operates.
  This conference agreement before us today takes into account the many 
concerns that have been raised about interstate banking and branching 
over the years. It strikes the proper balance between creating a more 
efficient national banking system and protecting States rights and the 
dual banking system. It respects the interests of States by giving them 
a long transition time and requiring branches to abide by applicable 
State laws.
  The conference agreement contains safeguards to preserve safety and 
soundness by prohibiting undercapitalized institutions from 
participating in interstate branching. It meets community needs by 
maintaining community reinvestment act requirements. It ensures 
competition and diversity of services by providing safeguards against 
over concentration of banking assets in any one State.
  Here is the crux of the conference agreement: Just 1 year after this 
conference agreement is enacted, a banking organization will be able to 
operate banks in any or all of the 50 States just 1 year after 
enactment. Three years after enactment, a bank will be able to 
establish branches outside its home State, if the State in which the 
branches would be located permits it. Foreign banks will have 
comparable authority to domestic banks to establish 
interstate operations.


                         special olympics coins

  There are several additional provisions of the conference report I 
would like to mention briefly. First, the agreement authorizes the 
minting and issuance of several commemorative coins. One of these 
coins--which is of particular importance and significance to me--will 
commemorate the 1995 Special Olympics World Game to be held July 1 
through July 9, 1995, in New Haven, CT. The funds raised by a surcharge 
on commemorative $1 coins will be used to help fund the cost of the 
games--the largest sporting event in the world in 1995. The games are a 
world-class competition which will provide an opportunity for very 
special athletes to demonstrate their talents, dedication, and courage. 
The coin incurs no net cost to the Government.
  Second, I would like to address two provisions that have aroused much 
controversy and resulted in some opposition to what is otherwise a 
noncontroversial bill.


                statute of limitations/revival of claims

  One of my colleagues is very upset about the provision of the 
conference report--unrelated to interstate banking and branching--that 
will effectively extend the statute of limitations for tort claims 
brought by the FDIC and the RTC. The provision is a compromise 
proposal, put forward by the other body, that narrows the scope of the 
provision that was attached to the interstate banking bill on the 
Senate floor. It will allow the FDIC and RTC to revive expired claims 
involving fraud and intentional misconduct.
  I know we will have the opportunity to debate this issue more fully. 
However, I would just like to take a minute to try and put this matter 
in perspective. We have debated the issue of extending the statute of 
limitations and reviving expired claims many times over the last 5 
years. The compromise contained in the conference agreement--a rather 
extraordinary provision allowing for the retroactive revival of expired 
claims--is very similar to the compromise that has been struck on 
several other occasions. It is no better and no worse.
  The provision has been widely mischaracterized. It is a true 
compromise that gives both sides something but does not in anyway take 
away existing authority from the Government to pursue S&L wrongdoers. 
It enhances the regulators' ability to recover losses from failed 
financial institutions--maybe not as much as some would like--but it 
certainly will not hinder the RTC's or FDIC's ability to pursue claims.
  While some of my colleagues might not view it as the ideal solution, 
it is a balanced compromise that is certainly not a reason to vote 
against or block this very important banking legislation that has been 
so many years in the making.


                       texas homestead provision

  The other part of the conference report to which a few of my 
colleagues object, would reverse an Office of Thrift Supervision [OTS] 
regulation that has preempted the so-called homestead provision of the 
Texas State Constitution. The Texas Constitution prohibits a lender 
from requiring a borrower to use his or her homestead as security for 
many types of loans.
  This is a very controversial matter within the State of Texas and 
while I understand that there are strongly held views on both sides of 
the issue, I would hope that my colleagues would not allow this 
provision of the conference report to doom the whole interstate banking 
bill. The conferees struggled with this issue and it was not an easy 
decision but I'm sure we will have other opportunities to address it.
  In conclusion, the wider economic benefits that interstate banking 
and branching will bring are too important to delay any longer. Full 
interstate banking and branching authority will cushion the impact of 
future credit crunches by bringing badly needed capital to impacted 
region from other parts of the country. Past bank failures and regional 
economic slumps might have been prevented if banks had been able to 
hold loan portfolios with greater geographic diversity that interstate 
banking will provide.
  This conference report is well crafted and establishes a sensible and 
consistent approach which will promote bank efficiency and growth. We 
have reached an ideal time to act on this enormously critical 
legislation which will bolster the long term health of our banking 
system. I strongly urge my colleagues to support this significant 
change to our current system.


                     remarks about chairman riegle

  I would like to take a moment to say a special word of thanks to our 
outgoing chairman, Senator Don Riegle. This may be the last banking 
bill he manages on the floor of the Senate. Chairman Riegle is to be 
commended for his strong and persistent leadership in bringing this 
issue before us today.
  In recognition of his efforts on this and other important banking 
legislation over the years, the conferees unanimously voted to name 
this historic legislation in his and Chairman Neal's honor. It would 
certainly be a fitting tribute to him if we could pass this bill now. I 
can think of no better way to recognize Chairman Riegle's great 
contribution and his successful term as Banking Committee chairman. He 
has a record of which he can be very proud. I have enjoyed working with 
him these many years and wish him much future success.
  Mr. DOLE. Madam President, today is an important day for the banking 
community. We have just passed the Interstate Banking Efficiency Act of 
1994. This bill, among other things, will enable bank holding companies 
to acquire banks in any State 1 year after enactment of this 
legislation, and generally enable a bank to merge with a bank in 
another State after June 1, 1997.
  I voted for final passage of this bill, but I did so with caution and 
reserve. Many bank mergers have occurred in the banking community in 
recent years. And there seems to be a clear trend toward these mergers 
in an effort to provide customers with one-stop shopping for banking 
products. With banks mergers, come more financial products available to 
local customers, more efficient and less-costly administration, 
streamlining of banking operations across the Nation. And competition. 
But with it also comes, perhaps the end of an era. The possible 
dwindling in the number of local neighborhood banks. Banks where you 
were greeted by someone you grew up with. Banks who knew not only your 
business, but you as a person. Relationship banking that could make the 
determination to lend your startup business the necessary capital to 
expand because of who you were, not because of what your credit history 
looked like. This type of banking is what creates the fuel for our 
Nation's economy--the small businesses across the country.
  I voted for this package because I believe interstate banking will 
foster competition, and will provide a more varied array of financial 
products to the local communities that do not yet have such 
alternatives. But I do so with the hope, the belief, that the banking 
community and Congress will not forget to continually strive toward a 
healthy balance of relationship, neighborhood banking, and one-stop 
shopping.
  I also had reservations regarding how this bill would affect State 
rights and State laws. Through many discussions, and changes, I now 
feel comfortable that consideration was given to ensuring that State's 
rights would not be preempted arbitrarily. Under this bill, States have 
the option to opt-out of this legislation or opt-in prior to the June 
1, 1997, effective date. Interpretations concerning the Federal 
preemption of State laws will undergo a process that is more accessible 
to the public for comments, more responsible, and more open than what 
we have had in the past--especially as it relates to community 
reinvestment, consumer protection, fair lending, and establishment of 
intrastate branches.
  All in all, I think that this is a good bill. It may not be a perfect 
bill, nor even an excellent bill, but I believe that passage of this 
bill was inevitable. Even without this bill, many banks are already 
merging across State lines. This bill clarifies the procedure and the 
intent of Congress in this area. And this clarification is very much 
needed. And for this reason, I support the bill.
  Mr. ROTH. Madam President, I rise in support of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act of 1994. As a conferee 
on the legislation, I believe that the report shows the excellent work 
of many Members and their staffs, both in the House and the Senate. I 
wish to express my appreciation particularly to Chairmen Gonzalez and 
Neal as well as to ranking Republican Leach on the House side, and to 
Chairman Riegle and Senator D'Amato on the Senate side, for their 
courtesy, patience, and understanding with respect to my concerns.
  This legislation allows bank holding companies to acquire banks in 
any State in 1 year. It also allows bank holding companies to 
consolidate their subsidiaries after June 1, 1997, in any State unless 
that State has opted out of interstate branching by that time.
  Therefore, while this legislation does unconditionally authorize 
interstate banking, the same cannot be said of interstate branching. 
Instead, the legislation gives the policymakers in each State a choice 
whether or not to allow interstate branching in their State.
  In this legislation, we do not make that policy judgment for any 
State. Rather, we have attempted to construct for the States a fair 
choice. To make the choice fair, the legislation seeks to protect State 
interests in three different ways:
  First, the conference report--unlike the House bill--gives each State 
an ample timeframe, from the date of enactment to June 1, 1997, to 
decide whether to opt out of interstate branching. The House bill would 
have allowed interstate branching to occur even before a State decided, 
thereby creating additional constituent pressure in favor of State 
approval. But the conferees rejected that approach, with the result 
that each State has at least until June 1, 1997, to decide without such 
additional pressure.
  I say that each State has at least until June 1, 1997, in that any 
State that desires additional time beyond that date may simply opt-out 
before that date. Then, under the legislation, it may opt-in at any 
later time it finally decides. This is a point that is not well 
understood by commentators seeking to provide a simplified explanation 
of the legislation. But this is, indeed, how the legislation works. The 
1997 date is there for a State to act by such time or be deemed to have 
elected interstate branching. But if a State needs more time to resolve 
tax or enforcement issues, for example, it may affirmatively obtain as 
much time as it needs under the legislation. Each State has the power 
to write its own script.

  At our committee markup of the legislation, I had filed an amendment 
to provide each State 3 years to act. The bill at that time only 
allowed each State a single year. At that time, several other items 
were also unresolved, so as part of a compromise on these matters, the 
chairman agreed to allow each State 2 years to act. Thereafter, various 
State organizations voiced their support for 3 years and I was pleased 
to join in a successful effort on the Senate floor to extend the date 
to June 1, 1997. This fulfills the purpose of my 3 years amendment, 
which was to provide a State such as Delaware, whose general assembly 
meets every spring, a minimum of three legislative sessions to address 
this complex subject.
  This was one of the major issues resolved in conference, and I am 
pleased to say that the prerogatives of the States are protected in the 
conference report.
  The second area where the conference report protects State interests 
is that of State taxation. In providing each State with a fair choice 
on interstate branching, the last thing we wanted to do is to create a 
threat to any State's collection of tax revenues. Of course, there is 
no way we could guarantee to every State that tax collections in future 
years would be the same as the current level. We cannot make such a 
guarantee even if we don't pass this legislation.
  However, when we were last on the Senate floor considering this 
legislation, I was able to secure a provision as part of the managers' 
amendment that makes clear that the authority of the States to tax as 
they are taxing today remains undiminished by this legislation. I am 
pleased that the provision is retained in the conference report.
  Remember that the legislation provides a choice for each State 
regarding interstate branching within its State. It is quite 
conceivable that not all States will make the same election under this 
legislation. But no matter what choice a State may make, my amendment 
makes clear that the taxing authority of the State, whether or not it 
elects interstate branching, remains undiminished by this legislation. 
Of course, it is equally appropriate to note that nothing in the 
legislation augments the tax authority of any State.
  It is my purpose in espousing my amendment to preserve the status quo 
in State taxation not only between all tax collectors and all taxpayers 
but also to preserve the current equilibrium among individual States. 
Only in this way can tax considerations, which are so important to 
States in establishing State policy and to banks in determining their 
future plans, be reduced so that States and banks may consider the 
banking merits of interstate branching.

  When a bank holding company participates in interstate branching, it 
does not act as some amorphous glob, lacking in distinct legal 
entities. In adopting a method of taxation, a State is not precluded 
from treating those entities as it chooses, subject, of course, to any 
Federal and constitutional restraints. The State of Delaware, for 
example, treats different entities within a bank's corporate structure 
differently, treating some as part of the bank, some as distinct 
taxable entities, and some as either, depending upon the election by 
the taxpayer. Under this legislation, Delaware will have an 
undiminished claim on the earnings of the entities it hosts and an 
undiminished right to maintain or create a tax structure which 
complements such entities.
  This, of course, is true for all the States. My amendment assures 
that their structural decisions need not be driven by tax 
considerations and that their tax structure not be driven by interstate 
branching considerations.
  Since this legislation neither decreases nor increases the taxation 
authority of the States but leaves it where it is today, banks wishing 
to consider interstate branching will be able to do so more on the 
basis of banking factors and less on the basis of tax factors. It 
should be noted, therefore, that my amendment not only protects State 
interests but taxpayer interests as well.
  The third area where State interests are preserved concerns the 
interstate extension of credit. As members of the Senate Banking 
Committee will recall, I was the original sponsor of the savings clause 
in this legislation that provides that nothing in the bill affects 
section 5197 of the Revised Statutes or section 27 of the Federal 
Deposit Insurance Act. The Senate Banking Committee included the 
savings clause in the bill reported by the committee and I am pleased 
to note that the House and Senate conferees have agreed to adopt this 
provision.
  The credit card industry is a very significant component of the 
economy of Delaware and the United States. Today, without nationwide 
interstate branching, a bank that provides credit across State lines 
may, under section 5197 of the revised statutes and section 27 of the 
Federal Deposit Insurance Act, charge interest allowed by the State 
where the bank is located. This is true today even if the bank 
providing the credit is part of a multistate bank holding company.
  Thus, if a Delaware bank that is a subsidiary of a bank holding 
company provides credit to a customer who lives in a second State where 
another subsidiary bank of that same bank holding company is located, 
the Delaware bank may collect Delaware loan charges from borrowers in 
that second State because the bank is located in Delaware, not in the 
second State.

  Now suppose that under this legislation the Delaware bank and the 
bank in the second State are merged into a single bank with branches in 
the two States. Can the branch of the consolidated bank that is located 
in Delaware still collect Delaware loan charges from borrowers in the 
second State? I raised this question at hearings on the interstate 
branching legislation last year. At that time the legislation did not 
include the savings clause.
  As part of the hearing record, the FDIC responded in writing to my 
question that it was uncertain whether interstate branching might 
adversely affect the right of a Delaware bank to collect Delaware loan 
charges from borrowers in other States in which the Delaware bank might 
establish branches. The FDIC response indicated that provisions of the 
legislation could be interpreted to mean that Congress intended these 
bills to prohibit exportation of interest rates by an out-of-State 
bank--the Delaware bank, in my example--into a State in which it 
operates a branch, thereby restricting 12 U.S.C. 85 and 1831d--the 
provisions embraced by the savings clause. Moreover, the FDIC said: 
``It could be argued that Congress intended any bank choosing to 
operate a branch in another state to be subjected to that State's 
interest rate limitations. * * *''
  This response greatly concerned me. I immediately began to take steps 
to address this potential threat not only to Delaware's credit card 
industry but to all banks that extend credit to borrowers who reside 
outside the State where the bank or, under this legislation, the branch 
making the loan or other extension of credit is located.
  In order to ensure that banks providing credit to out-of-State 
borrowers would be unaffected by structural changes brought about by 
interstate branching legislation, I offered the savings clause in 
committee, and it is now part of this conference report.
  The essential point of my amendment is that a branch of a bank that 
provides credit across State lines may impose its State law loan 
charges even though there is a branch of that same bank in the State of 
its customer. The savings clause is intended to preserve this 
efficiency of uniformity from the credit-provider's viewpoint, 
notwithstanding formal or structural changes that may occur through 
mergers within a bank holding company under this legislation. 
Essentially, the Delaware branch of a bank providing credit remains 
located in Delaware even if, through a branch, it may be argued that 
the bank is also located in the State where the borrower resides. The 
savings clause means that the establishment of a branch in the 
borrower's State does not defeat the powers that a Delaware bank enjoys 
today under section 5197 of the Revised Statutes or section 27 of the 
Federal Deposit Insurance Act. Of course, the savings clause is not 
intended to suggest that when a branch makes a loan to a borrower who 
resides in the same State as the branch that somehow the branch can use 
section 5197 of the Revised Statutes or section 27 of the Federal 
Deposit Insurance Act to impose the loan charges authorized by the laws 
of some other State. When the branch makes such an in-State loan to a 
local customer, the law of the State where the branch and the customer 
are located applies.

  The statement of managers expressly refers to the potential of a 
``branch making the loan or other extension of credit * * * '' This 
language underscores the widespread congressional understanding that, 
in the context of nationwide interstate branching, it is the office of 
the bank or branch making the loan that determines which State law 
applies. The savings clause has been agreed to for the very purpose of 
addressing the FDIC's original concerns and making clear that after 
interstate branching, section 5197 of the Revised Statutes and section 
27 of the Federal Deposit Insurance Act are applied on the basis of the 
branch making the loan.
  Up to this point, I have assumed that the Delaware branch that made 
the loan performed all aspects of soliciting, processing, approving, 
closing, and servicing the loan. But that is not always factually what 
happens. What use may the Delaware branch make of a branch of that same 
bank located in the borrower's State without causing the law of the 
borrower's State to apply? On this point, the analysis of the conferees 
in fashioning section 101(d) is instructive. This section provides 
agency authority for banks and, in some cases, savings associations as 
well.
  The conferees were very careful in drafting this agency authority, 
whereby one bank may use an affiliated bank in another State as its 
agent with respect to some, but not all, aspects of an interstate loan. 
What the conferees intended was to allow the principal bank in State A 
to use an agent bank in State B to assist with deposits and loans in a 
way that the law of State A would be applicable even though the agent 
bank in State B helped in some respects. The statement of managers 
correctly characterizes these permissible functions of the agent as 
``ministerial.'' Excluded from the ministerial category are the 
decision to extend credit, the extension of credit itself, and the 
disbursal of the proceeds of a loan. The House bill had provided for 
the disbursal of proceeds within the agency authority, but as the 
statement of managers points out, the conferees deleted this particular 
authority and substituted the servicing of the loan.
  The rationale for this conference amendment is that the actual 
disbursal of proceeds--as distinguished from delivering previously 
disbursed funds to a customer--is so closely tied to the extension of 
credit that it is a factor in determining, in an interstate context, 
what State's law applies. Thus, the conferees made certain that such 
factors were excluded from the agency authorization. In contrast, 
``ministerial functions * * * such * * * as providing loan 
applications, assembling documents, providing a location for returning 
documents necessary for making the loan, providing loan account 
information * * * and receiving payments * * *'' were all included 
within the authorization, according to the statement of managers.
  When one combines the choice-of-law analysis contained in section 
101(d) with the savings clause, it is clear that the conferees intend 
that a bank in State A that approves a loan, extends the credit, and 
disburses the proceeds to a customer in State B, may apply the law of 
State A even if the bank has a branch or agent in State B and even if 
that branch or agent performed some ministerial functions such as 
providing credit card or loan applications or receiving payments.
  Were it any other way, that is, if the branch in State B could not 
perform at least the ministerial functions of an agent in State B 
without affecting the authority of the bank in State A to apply the law 
of State A to the extension of credit to a customer in State B, then 
Congress would have constructed a significant disincentive to 
nationwide branching in authorizing agency powers for bank holding 
companies that do not elect to engage in interstate branching. Such a 
view misunderstands the basic purpose of the interstate branching 
provisions of this legislation.
  Thus, it is clear that a branch of a multistate bank located in State 
A that approves a loan application and extends credit to a customer in 
State B where the bank also has a branch may, under the savings clause, 
impose loan charges allowed by the law of State A and may, without 
affecting the applicability of State A's law to such charges, use its 
State B facility to perform some ministerial functions regarding such 
extension of credit.
  In conclusion, Madam President, this legislation is well-drawn. It 
provides for interstate banking and erects a framework for the States 
to decide on interstate branching. It is, for the most part, free of 
unrelated mischief such as has dogged efforts in the past. Again, I 
would like to thank Senator Riegle, Senator D'Amato, and other members 
of the committee who were supportive of my concerns.
  The PRESIDING OFFICER. Is there further debate? If not, the question 
is on agreeing to the conference report. The yeas and nays have been 
ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. SIMPSON. I announce that the Senator from Rhode Island [Mr. 
Chafee] and the Senator from Oregon [Mr. Hatfield] are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Oregon [Mr. Hatfield] would vote ``yea.''
  The result was announced--yeas 94, nays 4, as follows:

                      [Rollcall Vote No. 298 Leg.]

                                YEAS--94

     Akaka
     Baucus
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Bradley
     Breaux
     Brown
     Bryan
     Bumpers
     Burns
     Byrd
     Campbell
     Coats
     Cochran
     Cohen
     Conrad
     Coverdell
     Craig
     D'Amato
     Danforth
     Daschle
     Dodd
     Dole
     Domenici
     Durenberger
     Exon
     Faircloth
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Gramm
     Grassley
     Gregg
     Harkin
     Hatch
     Heflin
     Helms
     Hollings
     Hutchison
     Inouye
     Jeffords
     Johnston
     Kassebaum
     Kempthorne
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     Mathews
     McCain
     McConnell
     Metzenbaum
     Mikulski
     Mitchell
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Nunn
     Packwood
     Pell
     Pressler
     Pryor
     Reid
     Riegle
     Robb
     Rockefeller
     Roth
     Sarbanes
     Sasser
     Shelby
     Simon
     Simpson
     Smith
     Specter
     Stevens
     Thurmond
     Wallop
     Warner
     Wellstone
     Wofford

                                NAYS--4

     Boren
     DeConcini
     Dorgan
     Feingold

                             NOT VOTING--2

     Chafee
     Hatfield
       
  So the conference report was agreed to.
  Mr. RIEGLE. Madam President, I move to reconsider the vote.
  Mr. MITCHELL. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. Madam President, after the majority leader has spoken, I 
will make some comments about the bill, and I want to recognize the 
appropriate staff. I will do that at the conclusion of the majority 
leader's remarks.
  Mr. MITCHELL addressed the Chair.
  The PRESIDING OFFICER. The majority leader is recognized.

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