[Congressional Record Volume 141, Number 65 (Friday, April 7, 1995)]
[Extensions of Remarks]
[Pages E860-E861]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  INTRODUCTION OF LEGISLATION TO ELIMINATE THE GROWTH CAP ON LIMITED 
                             PURPOSE BANKS

                                 ______

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                         Friday, April 7, 1995
  Mr. LaFALCE. Mr. Speaker, I am happy to join my colleague, 
Congressman Castle, in introducing the Castle-LaFalce bill lifting the 
cap on the annual asset growth of limited purpose banks. This growth 
cap, imposed under the 1987 Competitive Equality Banking Act [CEBA] 
imposes an arbitrary and unnecessary regulatory burden. Its removal 
will enhance 
[[Page E861]] the ability of these financial institutions to serve 
their customers and communities, increase the availability of credit, 
and maintain assets on their balance sheets.
  I always believed these restrictions were anticompetitive and should 
never have been imposed. But, in any case, Congress intended these 
restrictions to be only a temporary measure which were ultimately to be 
reconsidered as part of comprehensive banking legislation, so that 
Congress--not the regulators or the courts--could define more precisely 
the regulatory supervision over financial service institutions and 
competition among financial service providers.
  Although many years have passed, such comprehensive reform has never 
passed. I am hopeful that we can accomplish that important goal in this 
Congress. But the changes Mr. Castle and I are recommending in this 
legislation can no longer wait. This is virtually the only financial 
services arena in which time is standing still. There have otherwise 
been substantial changes in the laws and regulations governing the 
financial services industry that have enhanced diversification 
opportunities for other financial services providers, and made full 
service banks more efficient, strong, and competitive. In that context, 
these arbitrary CEBA restrictions are even more untenable and 
unreasonable.
  There is also no regulatory need for these restrictions. In 1989 and 
1991, Congress enacted legislation to increase the ability of 
regulators to ensure that all banks are run in a safe and sound manner.
  If we are truly committed to reducing the regulatory burden on 
financial institutions and allowing them to better serve their 
communities, these restrictions must be eliminated as part of that 
effort.


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