[Congressional Record Volume 140, Number 140 (Friday, September 30, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               NATIONAL TREATMENT IN BANKING ACT OF 1994

  The SPEAKER pro tempore (Mr. Peterson of Florida). Pursuant to House 
Resolution 543 and rule XXIII, the Chair declares the House in the 
Committee of the Whole House on the State of the Union for the 
consideration of the bill, H.R. 4926.

                              {time}  1429


                     in the committee of the whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 4926) to require the Secretary of the Treasury to identify 
foreign countries which may be denying national treatment to U.S. 
banking organizations and to assess whether any such denial may be 
having a significant adverse effect on such organizations, and to 
require Federal banking agencies to take such assessments into account 
in considering applications by foreign banks under the International 
Banking Act of 1978 and the Bank Holding Company Act of 1956, with Mr. 
Barlow in the chair.
  The Clerk read the title of the bill.

                              {time}  1430

  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Massachusetts [Mr. Frank] will be 
recognized for 30 minutes, and the gentleman from Iowa [Mr. Leach] will 
be recognized for 30 minutes.
  The Chair recognizes the gentleman from Massachusetts [Mr. Frank].
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield such time as he may 
consume to the gentleman from New York [Mr. Schumer], the sponsor of 
the bill.
  (Mr. SCHUMER asked and was given permission to revise and extend his 
remarks.)
  Mr. SCHUMER. Mr. Chairman, let me begin by expressing my sincere 
thanks to my coauthor, the gentleman from Iowa [Mr. Leach], to the 
gentleman from Texas [Mr. Gonzalez], and the staff of the Committee on 
Banking, Finance and Urban Affairs, and especially to the gentleman 
from Massachusetts [Mr. Frank], and the staff of his Subcommittee on 
International Development, Finance, Trade and Monetary Policy, who 
worked exceptionally hard to shepherd this legislation through the 
process today to the floor today.
  Mr. Chairman, I am most pleased this measure is before the full House 
for consideration. I would urge my colleagues to cast an affirmative 
vote on an important issue in the U.S. financial services industry 
which accounts for fully 6 percent of our GNP and for America's 
position in the global economy. The National Treatment in Banking Act 
represents a positive, creative step in this direction by establishing 
American insistence on the consistent application of the national 
treatment principle for banking organizations worldwide.
  Simply put, the objective of H.R. 4926 is to provide an effective 
tool to encourage nations around the world to grant U.S. banking 
organizations and, by extension, to all foreign banks the same rights 
to do business in their respective national markets as they do in their 
domestic banks. So what this bill does, Mr. Chairman, is very simple. 
It expands the notion of financial services. It is not a protectionist 
measure but quite the opposite. It provides our government tools to 
open up foreign markets that have not been fair to us.
  National treatment, as everyone knows, means that our banks have to 
be treated like other banks. And it is a principle, I think, we all can 
agree upon.
  It is particularly important at this time, in light of the urgent 
need to negotiate a satisfactory agreement on financial services as 
part of the GATT. It is designed, as I say, to open up foreign markets, 
not close American markets. It seeks to establish a level playing field 
that permits open, fair competition. It has the support of the 
administration and bipartisan support. The gentleman from Iowa [Mr. 
Leach], the gentleman from Nebraska [Mr. Bereuter], and others have 
been strong advocates from the other side of the aisle.
  For these and many other reasons, I urge my colleagues to vote yes 
and strike a blow for the kind of fair and open rules of competition 
that create wealth and prosperity, not only for the United States but 
for the global community of nations.

  Mr. Chairman, permit me to begin by expressing my sincere thanks to 
my coauthor, Mr. Leach, to Chairman Gonzalez and the Banking Committee 
staff, and especially to Chairman Barney Frank and the staff of his 
Subcommittee on International Development and Finance, who worked 
exceptionally hard to shepherd this legislation through the process to 
the floor today.
  Mr. Chairman, I am most pleased that this measure is before the full 
House for consideration today. I would urge all my colleagues to cast 
an affirmative vote for a bill that addresses an important issue for 
the U.S. financial services industry, which accounts for fully 6 
percent of our GNP, and for America's position in the global economy. I 
have long been involved in efforts to assure a level playing field for 
financial services worldwide by trying to open foreign markets still 
closed to U.S. banks, securities firms, and insurance companies. The 
National Treatment in Banking Act of 1994 represents a positive, 
concrete step in this direction by clearly establishing American 
insistence on the consistent application of the national treatment 
principle for banking organizations worldwide. It would amend U.S. 
banking laws to: (1) require the Secretary of the Treasury to identify 
countries that deny national treatment, with significant adverse 
effects, to U.S. banks; (2) authorize the Treasury Secretary to publish 
such assessment; and (3) require U.S. banking regulators to take such 
Treasury notices into account in deciding applications by foreign banks 
seeking to establish new entities in the United States. The bill would 
not affect foreign banking offices already established and operating in 
the United States.
  Simply put, the objective of H.R. 4926 is to provide an effective 
tool to encourage nations around the world to grant to U.S. banking 
organizations--and by extension to all foreign banks--the same rights 
to do business in their respective national markets as they grant to 
their domestic banks. In the case of the United States, this means 
affording to U.S. banks overseas nothing more--but nothing less--than 
the national treatment the United States affords to foreign banks 
operating in our market, something we've been doing as a matter of law 
since we passed the International Banking Act 16 years ago. American 
providers of financial services are the unquestioned world leaders in 
innovation, quality, and efficiency, and it is really unacceptable that 
they continue to face trade barriers that deny them the opportunity to 
compete fairly in significant overseas markets. They should be 
permitted to enter and operate in foreign markets in the same way that 
foreign banks and financial institutions have access to the large and 
lucrative U.S. market.
  Mr. Chairman, this bill is particularly important at this time in 
light of the urgent need to negotiate a satisfactory agreement on 
financial services as part of the General Agreement on Trade in 
Services [GATS]. The Uruguay round negotiations, completed last 
December, failed to achieve an adequate convention on financial 
services, but allowed a limited period for further talks in this realm 
of critical importance to today's global economy and to America's place 
in it. But the clock is ticking--this negotiating period could end as 
early as mid-1955--and therefore it is imperative that the U.S. 
Congress act now to maintain pressure on America's trading partners to 
resolve the remaining issues and reach a multilateral accord that 
ensures fairness for all financial service providers, including 
American ones.

  Mr. Chairman, this bill is designed to open foreign markets, not 
close the American market. It seeks to establish and enforce a level 
playing field that permits open, fair competition among all nations. 
While I share the wishes of many that the securities and insurance 
industries be included in this legislation, that goal unfortunately is 
not practical at this time, and we should proceed now with a bill I 
hope and believe we can pass, a bill that will still contribute very 
positively to the ultimate, broader objective of ensuring fairness for 
all financial service providers. Let us take advantage now of a real 
opportunity not only to send a clear signal of our concerns and 
intentions, but also to pass a bill that permits us to take meaningful 
and effective action when justified. The National Treatment in Banking 
Act has administration and strong bipartisan support; Mr. Leach, Mr. 
Bereuter, and others have been strong advocates from the other side of 
the aisle on the Banking Committee, which reported the bill out by 
unanimous voice vote.
  For all of these and many other reasons, Mr. Chairman, I urge my 
colleagues in the House to vote yes, and thus strike a blow for the 
kind of fair and open rules of competition that create wealth and 
prosperity not only for the United States, but for the global community 
of nations.
  Mr. LEACH. Mr. Chairman, I yield myself such time as I may consume.
  (Mr. LEACH asked and was given permission to revise and extend his 
remarks.)
  Mr. LEACH. Mr. Chairman, first let me just stress, this resolution is 
very heavy in principle and a bit lighter on implementation. But it 
does make clear to the world that this Congress expects equal treatment 
for our financial institutions.
  It also makes clear to the world that fair trade and financial 
institutions is a matter of high priority in this Congress and high 
vigilance in future Congresses.
  I would simply like to stress that unfortunately GATT to date has not 
yet well-addressed the financial services issue.
  I would also like to stress that in one sense, financial services are 
just like any other industry. They involve employment. They involve a 
great deal of labor-intensive effort. But unlike other industries, 
financial services are the grease for virtually everything else. That 
is what credit extension is all about.
  So this particular industry is particularly important. It is one that 
we lead the world in. It is one that we should not shy away from making 
clear that we expect equal competitive laws being adopted.
  Finally, let me just express particular thanks to the leadership of 
the gentleman from New York [Mr. Schumer], and the gentleman from 
Massachusetts [Mr. Frank], as well as the gentleman from Nebraska [Mr. 
Bereuter], on our side of the aisle. I would say in this regard that if 
it were not for the insistence of the gentleman from Massachusetts [Mr. 
Frank], that this issue not be ducked, we would not be dealing with it 
late in this Congress. So for him in particular, this Member would like 
to express great admiration.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield such time as he may 
consume to the gentleman from Texas [Mr. Gonzalez], who I must say has 
helped the Committee on Banking, Finance and Urban Affairs compile in 
housing and interstate banking, et cetera, a very impressive 
legislative record this year.
  (Mr. GONZALEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. GONZALEZ. Mr. Chairman, I rise in strong support. I want to 
complement the gentleman from Massachusetts [Mr. Frank], the gentleman 
from New York [Mr. Schumer], the minority leader and his associates on 
the minority side, the gentleman from Iowa [Mr. Leach].
  Mr. Chairman, the National Treatment in Banking Act was adopted 
unanimously in the Banking Committee.
  This legislation is not a complex bill. It directs the Treasury 
Department conduct an annual survey and determine if other nations 
provide national treatment, that is, do these foreign countries treat 
U.S. banks the same way they treat their own domestic financial 
institutions?
  This policy of national treatment has been the official position of 
the United States for over a generation since the passage of the 
International Banking Act of 1978.
  The remainder of the bill says that if foreign countries do not 
provide U.S. firms with national treatment, we reserve the right to 
possibly deny applications from banks in these countries that seek to 
open or extend business activities in the United States.
  This legislation should not be controversial; it is not a trade 
agreement nor will it, under any circumstances, precipitate retaliation 
measures.
  It is commonsense, about-time, reversal of the United States all-too-
often role of being the patsy of the international financial markets.
  Fortunately, most of the important members of the world financial 
community provide U.S. firms with national treatment and access to 
their domestic markets. Nothing in this bill affects our relationships 
with these countries or our international treaties.
  There are notable exceptions where countries enjoy having their banks 
do business in the United States but deny, either by law or regulation, 
business opportunities for our firms in their country. It is simply 
unfair that they can have it both ways. Their one-way street policy 
leaves our firms competing with their banks in the United States, even 
without the opportunity to enter the domestic market of the foreign 
country.
  The Banking Committee believes enough is enough. It is time for a 
realistic policy because at stake are U.S. jobs and economic 
opportunities for U.S. firms. Very simply, the issue is fairness.
  I commend Chairman Frank for his leadership for bringing this bill to 
the floor and I applaud the two sponsors of the bill, Congressman Chuck 
Schumer and Congressman Jim Leach for putting together the bipartisan 
coalition who will today pass this legislation.
  Mr. LEACH. Mr. Chairman, I yield 3 minutes to the gentleman from 
Nebraska [Mr. Bereuter], whose leadership on this issue has been so 
impressive.
  (Mr. BEREUTER asked and was given permission to revise and extend his 
remarks.)
  Mr. BEREUTER. Mr. Chairman, this Member rises in strong support of 
the National Treatment in Banking Act of 1994, H.R. 4926, and this 
Member would like to commend the gentleman from Texas, the chairman of 
the committee, Mr. Gonzalez, the gentleman from Iowa, the ranking 
minority member, Mr. Leach, particularly the gentleman from 
Massachusetts, the chairman of the Subcommittee on International 
Development, Finance, Trade and Monetary policy, Mr. Frank for his 
innovative approach which is the basis of this legislation, and the 
gentleman from New York, the legislation's sponsor, Mr. Schumer, for 
their hard work in bringing this legislation to the floor.
  Mr. Chairman, the National Treatment in Banking Act of 1994 is 
important legislation which will help open foreign financial service 
markets to U.S. banks.
  First, this legislation requires the Secretary of the Treasury to 
identify foreign countries which unfairly deny national treatment to 
U.S. banks or simply treat U.S. banks differently than domestic banks.
  Second, this legislation requires the Secretary of the Treasury to 
assess whether a foreign country's denial of national treatment is 
having an adverse impact on U.S. banking organizations.
  Third, this legislation requires that Federal banking agencies 
consider the Secretary of the Treasury's finding when evaluating 
applications for overseas financial firms wishing to conduct business 
here in the United States.

  Mr. Chairman, in nearly every service and industrial sector the 
United States is, perhaps, the most open market in the world. Since 
World War II, the United States vast and lucrative market has been the 
world's engine of growth for the war-torn countries of Europe and 
Japan. More recently, the United States market has stimulated the 
export-driven economies of countries like Korea, Taiwan Singapore, 
Thailand, and now China.
  Unfortunately Mr. Chairman, the United States past policy to 
stimulate foreign economies by encouraging them to export here has, 
perhaps, worked too well. Now, the United States is faced with chronic 
trade deficits--like July's whopping $11 billion trade deficit in goods 
and services.
  What then, Mr. Chairman, should the United States do to remedy our 
chronic trade deficits? There are those who say, we must erect barriers 
immediately to stem the flow of foreign goods; however, Mr. Chairman, 
this simple response is not the answer. Unfortunately, the U.S. 
Congress tried that philosophy in the Smoot-Hawley legislation of the 
1930's and it only precipitated a serious depression and financial 
disaster for the country.
  No, Mr. Chairman, we must attempt to give U.S. goods and service 
exporters a level playing field by attempting to lower barriers to 
foreign markets rather than by raising our own. Of course, retaliation 
against foreign countries in the form of higher tariffs and denied 
market access must always be a last-resort possibility, but first we 
must attempt to encourage foreign countries to open their markets to 
U.S. goods and services.
  Mr. Chairman, in many sectors and industries, United States trade 
officials have long enjoyed the use of trade remedies which enable them 
to persuade foreign countries to open their markets. For example, trade 
officials have used section 301 trade legislation to open foreign 
markets for U.S. good and service exports covered under bilateral and 
multilateral trade agreements. Additionally, U.S. trade officials have 
another tool, special 301 trade legislation, to require that foreign 
countries respect the intellectual property rights of U.S. patent and 
copyright holders.

  But unfortunately, Mr. Chairman, U.S. trade officials and negotiators 
have not been given the appropriatie tools--or crowbars as Secretary of 
the Treasury, Lloyd Bentsen puts it--to pay open foreign markets for 
the U.S. financial services industry.
  Mr. Chairman, the National Treatment in Banking Act of 1994, strikes 
the appropriate balance in attempting to open up overseas financial 
markets to U.S. banking organizations. While it does not automatically 
sanction foreign economies for restricting access to U.S. banking 
organizations, it approximately requires that Federal financial 
regulatory agencies consider the foreign treatment of U.S. banks when 
evaluating applications for overseas financial firms wishing to conduct 
business here in the United States.
  Mr. Chairman, this Member was very disappointed that U.S. trade 
officials failed to reach a successful agreement on trade in financial 
services during the last stages of negotiations of the Uruguay round 
trade agreement. Nevertheless, by prospectively applying this national 
treatment policy to foreign banks wishing to enter or expand in the 
United States, U.S. negotiators--who have long sought a level playing 
field for U.S. financial institutions in world maarkets--should finally 
have the tools and negotiating leverage to accomplish this important 
task.
  Frankly, Mr. Chairman, this legislation is long overdue. Action on 
the issue has been delayed, in part, by committee jurisdictional 
disputes. One of the results is that, despite their world-wide 
recognition as innovative leaders, U.S. banks have fallen completely 
off the list of the world's largest 25 banks in the last 10 years. 
Nevertheless, Mr. Chairman, it is not too late; by passing this 
legislation, we can help ensure that U.S. financial institutions are 
treated fairly in competing for markets in foreign countries. 
Therefore, this Member strongly urges his colleagues to support this 
legislation.
  Mr. DEUTSCH. Mr. Speaker, I think it vital that, before we adjourn, 
we pass H.R. 4926, the National Treatment in Banking Act, in order to 
insure that American banks receive fair access to overseas markets. 
However, before we vote, I want to make my colleagues aware of several 
provisions contained in the recently passed Riegle-Neal interstate 
banking bill that may cause American banks to have problems overseas. I 
refer to the fact that there are several provisions contained in this 
bill that will make it significantly more difficult for foreign banks 
operating in this country to expand their operations. We need to 
address these problems in the next Congress.
  In the interstate bill, we adopted the basic philosophy that foreign 
banks should be treated exactly the same as domestic banks. 
Unfortunately, the interstate bill does not recognize that most foreign 
banking organizations operating in the United States are fundamentally 
different than domestic banks. The interstate bill overlooks a 
fundamental difference between these two types of institutions: Foreign 
branches do not take insured retail deposits, whereas domestic branches 
do. And I'm not just speculating about industry practice. Rather, I'm 
talking about three fundamental legal distinctions contained in the 
1991 Foreign Bank Supervision Enhancement Act and in the interstate 
bill. First, foreign banks cannot operate FDIC-insured retail branches. 
Second, foreign banks cannot carry Federal deposit insurance. Third, 
the interstate bill provides that foreign banks cannot accept deposits 
of less than $100,000 unless the total amount of such deposits does not 
exceed 1 percent of the average deposits in the branch.
  So, foreign bank branches are institutions which deal only in 
wholesale activities. Their customer base is not retail depositors, but 
rather industries involved in the provision of export financing. An 
excellent example was provided by Florida's senior U.S. Senator, Bob 
Graham, in the September 13, 1994, Congressional Record, at page S 
12781.

       I was recently in a conversation with an American business 
     person who is involved in the sale of United States 
     agricultural products, primarily in the Caribbean and Latin 
     America, and that individual told me that the typical 
     transaction . . . for the sale of an American agricultural 
     product to Argentina is to have an Argentine bank in the 
     United States provide the letters of credit and other export 
     financing which are the essential ingredients to making the 
     transaction viable. Without ready access to these foreign 
     banks and their branches, it makes that transaction a more 
     difficult one.

  In the Miami area alone, there are over 70 offices of foreign banks. 
These banks have been a very important component of our State's ability 
to enhance export opportunities. They've also been equally important in 
California, New York, Illinois, Texas, and Washington State.
  Mr. Speaker, I am concerned that because of these limitations, 
foreign banks who are so important to the export financing of U.S.-made 
products and services, will not be able to expand. Today, States make 
their own determinations about how they want to treat foreign banks. 
Unfortunately, the interstate bill prevents States from making that 
determination. We need to change Federal law in a way which recognizes 
the basic differences between wholesale activities of foreign banks and 
retail activities of domestic banks, so that all States may be able to 
take advantage of the export-enhancing operations of foreign banks.
  Mr. Speaker, as we consider the National Treatment in Banking Act, to 
encourage countries to allow U.S. banks greater market access, we must 
realize that we are passing laws that enact impediments to banks from 
other countries which wish to operate on a national basis here. This is 
not so much a foreign bank issue as it is an issue related to the 
effective marketing and exporting of American products.
  Next year, I hope that Congress will give serious attention to 
legislation which returns to the States their ability to allow entry by 
foreign banks. In addition, I hope that the Banking Committee will look 
more closely at this issue and its impact on American exports.
  Mrs. ROUKEMA. Mr. Chairman, I rise in support of H.R. 4926, the 
National Treatment in Banking Act.
  I want to commend the authors of this legislation, our Banking 
Committee colleague from New York, Mr. Schumer, and our own ranking 
member, Mr. Leach, for their strong and persistent support for the 
equalization of treatment for U.S. banks who operate in foreign 
nations.
  I also want to commend our colleague, Mr. Frank for his efforts as 
the chairman of our International Development and Financial 
Institutions Subcommittee to fashion a bill which addresses the 
concerns of the Banking Committee while not treading on the 
jurisdiction of several other committees with jurisdiction over 
international trade issues.
  H.R. 4926 directs the Treasury Secretary, in consultation with 
Federal banking agencies, to identify foreign countries that deny 
national treatment, such as equal access to competitive markets, to 
U.S. banking companies and to assess whether denial of this treatment 
is adversely affecting U.S. financial institutions.
  If there is such a determination, the Secretary is instructed to 
publish the findings in the Federal Register and the regulators are to 
take this into consideration when considering applications and notices 
filed by foreign banks.
  This is good legislation which helps provide important and equal 
treatment for our banks operating abroad.
  I urge passage of this legislation.
  Mr. ROTH. Mr. Chairman, the bill before us, H.R. 4926, the National 
Treatment in Banking Act of 1994, is worth enacting even though it is a 
mere shadow of its former self.
  It is better than nothing, however, and so I urge my colleagues to 
join me in voting for this limited trade-related legislation.
  This legislation would direct the Treasury Secretary to identify 
those countries that do not provide U.S. banks national treatment--that 
is, the same competitive opportunities that are provided a foreign 
country's own domestic banks.
  Then the Secretary would be directed to determine whether this abuse 
were having a significant adverse effect on the affected U.S. banks.
  His determination would have to be published in the Federal Register.
  The rub would come when and if that foreign bank were to make an 
application to do business in the United States under the International 
Banking Act or Bank Holding Company Act.
  Federal bank regulators would then be required to take into account 
whether a foreign bank's host country had been cited in the Federal 
Register for no providing national treatment.
  The regulators would be given the power to reject the foreigner's 
banking application.
  The facts are, witnesses told our committee earlier this year, some 
foreign governments are making Uncle Sam and the rest of us look like 
saps.
  ``Our U.S. financial services sector is one of the world's most 
innovative and competitive, yet we face many foreign barriers that 
limit our ability to penetrate markets abroad,'' said Marc E. Lackritz, 
president of the Securities Industry Association.
  Foreign financial services providers, taking advantage of a captive 
customer base to their benefit, have stepped in to provide the 
financial services our long-standing customers need overseas.
  At the same time, these same foreigners have entered the U.S. capital 
markets where tremendous opportunities for expansion are joined with 
the open regulatory environment that does not exist elsewhere.
  Thus, our foreign competitors have exploited a structural advantage: 
Protection at home, unfettered opportunity in the United States.
  The President wants this bill passed this year because he hopes it 
will be in time to influence the outcome of the GATT Uruguay round of 
trade talks on financial services.
  It is certainly true that the GATT talks will deeply involve 
conditions under which banks and other services will operate in foreign 
lands.
  As presented to the Congress, the GATT accord would not open up 
financial services to U.S. banks, insurers, or securities firms.
  That is the heart of the issue addressed by this legislation--opening 
up foreign markets to U.S. financial services companies--particularly 
in the emerging financial markets in Asia and Latin America.
  In fact, all that GATT would do for financial services, when and if 
approved by the Congress, would be to set a 2-year timeframe for 
continued negotiations on financial services.
  Our goal in this legislation today is simple: To ensure that U.S. 
bankers are treated by other countries the same way foreign financial 
companies are treated in the U.S. market.
  That is called national treatment--and that concept was resisted 
strongly in the GATT talks.
  As originally drafted, this legislation would have closed the 
American market to foreign financial companies if their home country 
does not grant equal access to U.S. financial firms.
  I voted for this broader version, and there was strong bipartisan 
support for it.
  After all, overseas banking generated $5.4 billion in income for U.S. 
financial companies in 1992, and generated a $2 billion trade surplus 
for the United States.
  It should be plain for anyone to see why it is so important to the 
United States that GATT rules be extended to services.
  In 1992, we had an $84 billion deficit in merchandise trade.
  But our services sector generated a $60 billion surplus--offsetting 
three-fourths of our merchandise deficit.
  Last year, 1993, our merchandise deficit shot up to $116 billion--but 
our services trade again generated a $60 billion surplus.
  The message is clear--services is an area where the United States is 
able to win in foreign markets.
  So, we are going to insist that our services firms have access to 
foreign markets, or GATT will have a very shaky future in the U.S. 
Congress.
  The course of events in the GATT talks on financial services will be 
a factor in how we ultimately act and operate under the GATT accord.
  If there continues to be a stonewall against our services companies 
in foreign markets, then our Government negotiators need this 
legislation--even though it is limited only to banks and not to 
securities and insurance companies.
  Congress, in the International Banking Act of 1978 and subsequent 
legislation, provided national treatment for foreign banks in the 
United States.

  But, 16 years later, some foreign countries still do not provide 
national treatment for our banks.
  I am talking about such countries as Brazil, Korea, India, Taiwan, 
and Japan--all of whom still being relatively closed to United States 
banks and other financial services despite more than a decade of 
bilateral negotiations on market access.
  Clearly, more arrows are needed in our quiver of trade weapons if we 
are to obtain significantly greater access for financial services.
  This bill would be such an additional weapon. I favor this measure 
because in today's world of emerging democracies our financial services 
industry could provide the financial fuel and leadership for these new, 
struggling economies.
  American financial institutions, risking life and limb of their 
people as well as their money and credit in unlikely places, deserve 
this helping hand from their government.
  The Committee on Banking, on which I serve, approved a broader bill, 
H.R. 3248, the Fair Trade in Financial Services Act, by voice vote on 
March 9, 1994.
  The Senate has passed similar legislation several times. But we 
cannot get a vote on this in the House.
  While the bill before us today applies only to banking, the earlier 
measure covered the securities and insurance industries as well.
  That earlier bill had more teeth in it too: It would have authorized 
the Treasury Secretary--not the Secretary of State or the U.S. Trade 
Representative--to negotiate directly with foreign countries to provide 
more competitive opportunities of suffer being closed out of the U.S. 
market.
  But the bill stalled because the Ways and Means Committee and the 
Energy and Commerce Committee objected to it as an infringement on 
their jurisdictions.
  For these same reasons, we were unavailing in our efforts to 
incorporate the earlier bill in the omnibus banking bill, H.R. 3474, 
the Community Development Financial Institutions Act. That bill became 
law on September 23, 1994, as Public Law 103-325.
  So we are left with this scaled-back version. And we have no idea 
about what the other body would do if we sent this version over to it.
  There is one feature that I do like about this bill: The 
Congressional Budget Office says enactment of H.R. 4926 would result in 
no significant costs to the taxpayers.
  This measure deserves our attention and considered action at this 
time. I urge my colleagues to vote for this bill.
  Mr. LEACH. Mr. Chairman, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield back the balance of 
my time.
  The CHAIRMAN. Pursuant to the rule, the amendment in the nature of a 
substitute printed in the bill shall be considered under the 5-minute 
rule by sections and each section shall be considered as read.
  The Clerk will designate section 1.
  The text of section 1 is as follows:

                               H.R. 4926

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``National Treatment in 
     Banking Act of 1994''.

  The CHAIRMAN. Are there any amendments to section 1?
  If not, the Clerk will designate section 2.
  The text of section 2 is as follows:

     SEC. 2. FAILURE TO ACCORD NATIONAL TREATMENT TO UNITED STATES 
                   BANKING ORGANIZATIONS.

       (A) Identifying Countries That May Be Denying National 
     Treatment to United States Banking Organizations.--The 
     Secretary of the Treasury shall identify, after consultation 
     with the Federal banking agencies, the extent to which 
     foreign countries may be denying national treatment to United 
     States banking organizations.--
       (1) based on information relating to banking in the most 
     recent report under section 3602 of the Omnibus Trade and 
     Competitiveness Act of 1988 (or the most recent update of 
     such report); or
       (2) based on more recent information that the Secretary 
     considers appropriate.
       (b) Assessing Whether Possible Denial of National Treatment 
     May Be Having a Significant Adverse Effect.--
       (1) In general.--The Secretary shall assess, after 
     consultation with the Federal banking agencies, whether the 
     possible denial of national treatment to United States 
     banking organizations by a foreign country identified under 
     subsection (a) may be having a significant adverse effect on 
     such organizations.
       (2) Factors to be considered.--In making any assessment 
     under paragraph (1), the Secretary shall consider appropriate 
     factors, including the following:
       (A) The extent of United States trade with and investment 
     in the foreign country, the size of the foreign country's 
     markets for banking services, and the extent to which United 
     States banking organizations operate or seek to operate in 
     those markets.
       (B) The importance of operations by United States banking 
     organizations in the foreign country to the export of goods 
     and services by United States firms to such country.
       (C) The extent to which the foreign country provides in 
     advance to United States banking organizations a written 
     draft of any measure of general application that the country 
     proposes to adopt, such as regulations, guidelines, or 
     other policies regarding new products and services, in 
     order to allow an opportunity for such organizations to 
     comment on the measure and for such comments to be taken 
     into account by the foreign country.
       (D) The extent to which the foreign country--
       (i) makes available, in writing, to United States banking 
     organizations the foreign country's requirements for 
     completing any application relating to the provision of 
     financial services by any such organization;
       (ii) applies published, objective standards and criteria in 
     evaluating any such application from any United States 
     banking organization; and
       (iii) renders administrative decisions relating to any such 
     application within a reasonable period of time.
       (3) Solicitation of comments.--Before making any assessment 
     under paragraph (1), the Secretary may solicit comments 
     concerning the effect of the possible denial of national 
     treatment on United States banking organizations from 
     interested parties.
       (c) Publication.--The Secretary may publish a notice in the 
     Federal Register of--
       (1) any assessment made under subsection (b)(1) with 
     respect to any country; and
       (2) any change made with respect to any assessment under 
     such subsection which was previously published in the Federal 
     Register.
       (d) Definitions.--The following definitions shall apply for 
     purposes of this section:
       (1) Banking organization.--
       (A) In general.--The term ``banking organization'' means 
     any bank, any bank holding company (including any company 
     required to file reports pursuant to section 4(f)(6) of the 
     Bank Holding Company Act of 1956), and any savings and loan 
     holding company (as such term is defined in section 
     10(a)(1)(D) of the Home Owners' Loan Act).
       (B) Banking terms.--For purposes of this paragraph, the 
     terms ``bank'' and ``bank holding company'' have the same 
     meaning as in section 2 of the Bank Holding Company Act of 
     1956.
       (2) Federal banking agencies.--The term ``Federal banking 
     agencies'' has the same meaning as in section 3(z) of the 
     Federal Deposit Insurance Act.
       (3) National treatment.--The term ``national treatment'' 
     means, with respect to any foreign country, treatment that 
     offers United States banking organizations the same 
     competitive opportunities (including effective market access) 
     in such country as are available to the foreign country's 
     domestic banking organizations in like circumstances.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.

  The CHAIRMAN. Are there any amendments to section 2?


                    amendment offered by mr. dreier

  Mr. DREIER. Mr. Chairman, I offer an amendment. The Clerk read as 
follows:

       Amendment offered by Mr. Dreier: Page 2, line 10, strike 
     ``The Secretary'' and insert ``Effective as of the date of 
     the enactment of an Act establishing expedited procedures for 
     the consideration in the Senate and the House of 
     Representatives of a bill submitted by the President to 
     implement trade agreements with respect to financial 
     services, the Secretary''.

  Mr. DREIER (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record?
  The CHAIRMAN. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  Mr. DREIER. Mr. Chairman, this bill is intended to represent a carrot 
and stick approach to negotiating financial services agreements. While 
I am concerned with any prospect that barriers will be imposed on trade 
in banking services, at least the goal of this legislation is to 
promote the opening of foreign markets to more free trade.
  I was concerned that the failure to extend fast-track trade 
negotiating authority to the administration as part of the Uruguay 
Round Agreement implementing legislation had upset the balance of this 
proposal by denying the administration the tools needed to negotiate 
financial services national treatment agreements. We would be left with 
a stick but no carrot.

                              {time}  1440

  During fast-track negotiations for the Uruguay round legislation, 
administration representatives repeatedly argued that extension of 
fast-track is critical to completing new trade agreements. One of the 
negotiating touted by the administration was in the area of financial 
services. The case was made that when the administration's fast-track 
authority expires upon adoption of the legislation implementing the 
Uruguay Round Agreement, trade negotiations, including those dealing 
with banking and financial services, would be left in a state of 
suspended animation.
  My response to this apparent loss of negotiating authority was to 
prepare an amendment to delay implementation of this bill until fast-
track authority is extended to the administration for financial service 
negotiations. However, when I discussed this amendment with 
representatives of the Treasury Department, I was told that they 
believe that they had the authority to negotiate national treatment in 
banking agreements without fast-track authority. It appears that at 
least in the area of financial services, fast-track authority is not as 
pressing a concern as some might have thought.
  Mr. Chairman, I would like to engage the chairman of the subcommittee 
in this matter.
  Mr. Chairman, I would ask the gentleman from Massachusetts [Mr. 
Frank], is it his understanding that while the administration would 
have preferred to have fast-track authority for the completion of the 
Uruguay round financial services negotiations, they believe that they 
have adequate authority to successfully complete these negotiations 
without the fast-track procedures?
  Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?
  Mr. DREIER. I am happy to yield to the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentleman for 
yielding.
  Mr. Chairman, that is the understanding. The administration does 
believe it has adequate authority to agree to the financial services 
negotiations under the Uruguay round. They point to section 135 of the 
implementing bill, which does set up negotiating objectives for 
continued talks and financial services.
  They also know that the statement of administrative action 
establishes procedures for reporting to Congress and for consultation 
with both Congress and industry throughout the negotiation period.
  Mr. DREIER. I thank the gentleman.
  Mr. LEACH. Mr. Chairman, will the gentleman yield?
  Mr. DREIER. I am happy to yield to the gentleman from Iowa, the 
distinguished ranking member.
  Mr. LEACH. Mr. Chairman, the explanation the gentleman has given is 
similar to the views of this gentleman. I would simply stress that it 
is my view that the administration has not given near high enough 
priority to date to the financial services issue, and that, quite 
frankly, it is something that must be done.
  This bill partly moves in the direction of expressing congressional 
concern, but I think it should be understood as critical that GATT also 
include financial services. I would simply hope that that message be 
conveyed to those conducting negotiations on behalf of the United 
States at this time.
  Mr. DREIER. Mr. Chairman, that happens to be our goal here.
  Mr. Chairman, I ask unanimous consent to withdraw the amendment.
  The CHAIRMAN. Without objection, the amendment is withdrawn.
  There was no objection.
  The CHAIRMAN. The Clerk will designate section 3. The text of section 
3 is as follows:

     SEC. 3. APPLICATIONS BY FOREIGN BANKS AND OTHER PERSONS OF A 
                   FOREIGN COUNTRY.

       (a) Applications Under the International Banking Act of 
     1978.--Section 7(d) of the International Banking Act of 1978 
     (12 U.S.C. 3105(d)) is amended by adding at the end the 
     following new paragraph:
       ``(6) Additional standard.--In acting on any application 
     under paragraph (1), the Board shall take into account 
     whether the Secretary of the Treasury has published a notice, 
     in accordance with section 2(c) of the National Treatment in 
     Banking Act of 1994, that the possible denial of national 
     treatment to United States banking organizations by the 
     foreign bank's home country identified under section 2(a) of 
     such Act may be having a significant adverse effect on such 
     organizations.''.
       (b) Applications Under the Bank Holding Company Act of 
     1956.--Section 5 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1844) is amended by adding at the end the following 
     new subsection:
       ``(g) Applications by a Foreign Bank.--In considering any 
     application or notice under section 3 or 4 by any foreign 
     bank (as defined in section 1(b) of the International Banking 
     Act of 1978), the Board shall take into account whether the 
     Secretary of the Treasury has published a notice, in 
     accordance with section 2(c) of the National Treatment in 
     Banking Act of 1994, that the possible denial of national 
     treatment to United States banking organizations by the 
     foreign bank's home country identified under section 2(a) of 
     such Act may be having a significant adverse effect on such 
     organizations.''.
       (c) Amendment To Change in Bank Control Act.--Section 7(j) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)) is 
     amended by adding at the end the following new paragraph:
       ``(19) Notice by a person of a foreign country.--
       ``(A) In general.--In considering a notice under this 
     subsection by a person of a foreign country, the appropriate 
     Federal banking agency shall take into account whether the 
     Secretary of the Treasury has published a notice, in 
     accordance with section 2(c) of the National Treatment in 
     Banking Act of 1994, that the possible denial of national 
     treatment to United States banking organizations by such 
     person's home country identified under section 2(a) of such 
     Act may be having a significant adverse effect on such 
     organizations.
       ``(B) Person of a foreign country defined.--For purposes of 
     this paragraph, the term `person of a foreign country' 
     means--
       ``(i) any entity that--
       ``(I) is organized under the laws of the foreign country, 
     or
       ``(II) has the entity's principal place of business in the 
     foreign country;
       ``(ii) an individual who--
       ``(I) is a citizen of the foreign country, or
       ``(II) is domiciled in the foreign country; and
       ``(iii) any person that is, directly or indirectly, under 
     the control of any entity or individual described in clause 
     (i) or (ii).''.
       (d) Amendment to National Bank Act.--Section 5155 of the 
     Revised Statutes (12 U.S.C. 36) is amended by adding at the 
     end the following new subsection:
       ``(i) Application by a Bank Which Is a Person of a Foreign 
     Country.--In considering any application under this section 
     by any bank which is a person of a foreign country (as 
     defined in section 7(j)(19)(B) of the Federal Deposit 
     Insurance Act), the Comptroller of the Currency shall take 
     into account whether the Secretary of the Treasury has 
     published a notice, in accordance with section 2(c) of the 
     National Treatment in Banking Act of 1994, that the possible 
     denial of national treatment to United States banking 
     organizations by such person's home country identified under 
     section 2(a) of such Act may be having a significant adverse 
     effect on such organizations.''.
       (e) Amendment to Federal Deposit Insurance Act.--Section 
     18(c) of the Federal Deposit Insurance Act (12 U.S.C. 
     1828(c)) is amended by adding at the end the following new 
     paragraph:
       ``(12) Application by a bank which is a person of a foreign 
     country.--In considering any merger transaction under this 
     subsection involving any bank which is a person of a foreign 
     country (as defined in section 7(j)(19)(B), the responsible 
     agency shall take into account whether the Secretary of the 
     Treasury has published a notice, in accordance with section 
     2(c) of the National Treatment in Banking Act of 1994, that 
     the possible denial of national treatment to United States 
     banking organizations by such person's home country 
     identified under section 2(a) of such Act may be having a 
     significant adverse effect on such organizations.''.
       (f) Amendment to Federal Reserve Act.--The 3d undesignated 
     paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 
     321) is amended in the proviso by inserting ``, including 
     section 5155(i) of the Revised Statutes,'' after 
     ``limitations and restrictions''.


                    amendment offered by mr. dreier

  Mr. DREIER. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Dreier: Page 10, after line 14, 
     insert the following new section:

     SEC. 4. CONSISTE4NCY WITH BILATERAL AND MULTILATERAL 
                   AGREEMENTS.

       No authority under this Act or any amendment made by this 
     Act to any other law may be used to take any action with 
     respect to a foreign country which is inconsistent with any 
     bilateral or multilateral agreement that governs financial 
     services in which such country is obligated to provide 
     national treatment for United States banking organizations.

  Mr. DREIER (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  Mr. DREIER. Mr. Chairman, a free-trade agreement is a very complex, 
multifaceted agreement that reduces barriers to trade in a wide range 
of goods and services. Banking and financial services are generally an 
important part, but only one part, of such an agreement.
  The purpose of my amendment is to ensure that countries which have 
entered free-trade agreements with the United States that include 
banking are not subject to the enforcement process in this bill
  For example, Mr. Chairman, less than a year ago we passed the North 
American Free-Trade Agreement. In that we agreed to the general 
principle of national treatment in financial services, but throughout 
the agreement there are exceptions to the principle of free trade. In a 
complex trade agreement, it is possible that U.S. negotiators would 
agree to provide some exceptions or reservations for our trading 
partner in the area of banking in exchange for U.S. exceptions in 
another area.
  I do not believe that the national treatment review authority 
provided to the Treasury Department in this bill should override or 
call into question those negotiated agreements. In some cases, the 
United States may have agreed to less than full national treatment. In 
other cases, if a trade agreement provides for full national treatment 
in banking services, and that treatment is not provided, the U.S. 
Government should first use the dispute resolution process contained in 
the agreement, not resort to unilateral action.
  Again, Mr. Chairman, to use NAFTA as an example, if Canada or Mexico 
were not meeting their commitments in the area of banking services, the 
appropriate course of action would be to first initiate action through 
the NAFTA dispute resolution process.
  Mr. Chairman, I yield to the distinguished gentleman from 
Massachusetts [Mr. Frank], chairman of the subcommittee.
  Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentleman for 
yielding. We welcome this amendment. The committee report states that 
we do not intend for this legislation to alter the obligations of the 
United States under the international agreement. The gentleman's 
amendment to the bill removes any possible ambiguity on this point.
  Mr. DREIER. Mr. Chairman, I thank the gentleman.
  Mr. Chairman, I yield to the gentleman from Iowa [Mr. Leach], the 
ranking member of the full committee.
  Mr. LEACH. Mr. Chairman, I would only stress that this is a unique 
legislative circumstance in one sense. This was part of the original 
bill, and it was not included before it was brought to the floor to 
avoid certain jurisdictional concerns, but it is a very thoughtful 
aspect of any approach of this nature. I think it is appropriate that 
the gentleman from California [Mr. Dreier], from the Committee on 
Rules, has brought the bill back more precisely to its original intent. 
It is a welcome amendment.
  Mr. FRANK of Massachusetts. Mr. Chairman, if the gentleman will 
continue to yield, I think it is a wonderful amendment.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from California [Mr. Dreier].
  The amendment was agreed to.
  The CHAIRMAN. Are there any further amendments to the bill? If not, 
the question is on the committee amendment in the nature of a 
substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore [Mr. 
Scott] having assumed the chair, Mr. Barlow, chairman of the Committee 
of the Whole House on the State of the Union, reported that that 
committee, having had under consideration the bill (H.R. 4926) to 
require the Secretary of the Treasury to identify foreign countries 
which may be denying national treatment to U.S. banking organizations 
and to assess whether any such denial may be having a significant 
adverse effect on such organizations, and to require Federal banking 
agencies to take such assessments into account in considering 
applications by foreign banks under the International Banking Act of 
1978 and the Bank Holding Company Act of 1956, pursuant to House 
Resolution 543, he reported the bill back to the House with an 
amendment adopted by the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on the amendment to the committee 
amendment in the nature of a substitute adopted by the Committee of the 
Whole?
  If not, the question is on the committee amendment in the nature of a 
substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The bill was passed.
  The title of the bill was amended so as to read: ``A bill to require 
the Secretary of the Treasury to identify foreign countries which may 
be denying national treatment to U.S. banking organizations and to 
assess whether any such denial may be having a significant adverse 
effect on such organizations, and to require Federal banking agencies 
to take such assessments into account in considering certain 
applications and notices by foreign banks and other persons of a 
foreign country.''.
  A motion to reconsider was laid on the table.

                          ____________________