[Congressional Record Volume 141, Number 99 (Friday, June 16, 1995)]
[House]
[Pages H6079-H6081]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   MY ADVICE TO THE PRIVILEGED ORDERS

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Texas [Mr. Gonzalez] is recognized for 60 
minutes as the designee of the minority leader.
  Mr. GONZALEZ. Mr. Speaker, serving in a body as unique as this is in 
the world, I believe the only such representative body in the world as 
our House of Representatives reveals, we still have the people 
exercising the ultimate decision as to whom they want to represent them 
in this most formidable and auspicious and important body known as our 
national legislative branch.

[[Page H6080]]


                              {time}  1445

  It used to be that even though you have open and free elections, the 
limitations were of such a nature that the general citizenry in a given 
sector had not too much choice between candidates, to a certain extent 
perhaps it is true today because of the horrendous cost in campaigning 
in modern day American politics and the consequent power behind the 
power going to those who have the money, directly or indirectly.
  I rise as one of the most privileged persons, not only in the United 
States, but I think in the world. I have said this often and from the 
beginning. In no other country would the likes of myself, with no 
particular economic recourse, social position, or the like, have won 
election in an entire county with the most formidable opposition that 
could be developed, well monied, well prepared, and as an individual 
with no particular economic resources, but having had the privilege of 
serving in varying capacities since youth, had been in intimate contact 
and association with every sector, not just of my own neighborhood, but 
the county.
  That, again, happened because of unique circumstances. I was one of 
the so-called first breakthroughs in that area of the country. But even 
at that dim age, it was considered quite a startling event that the 
then county judge, also serving as juvenile court judge, would have 
picked me to head the juvenile court staff in that county at that time. 
That is quite a number of years ago. It was my first exposure to the 
public matter. The last thing I ever thought would be that I would be 
engaged in seeking public office. I grew up in the context of the world 
that is long gone past, and structured so differently from today that 
there is no way I could bring to today's mind and evoke that period of 
time.
  I rise because there are very important things happening that the 
average citizen is not going to know about, even after they happen, 
until he feels the impact or the effect, if at all it becomes that 
noticeable. This has been the sorry fate for some decades now. Instead 
of this being the most deliberative, considered body, with debate, 
full-blown debate, that has not been the case for quite some decades.
  If I were to be asked after all these years and all of this what is 
the thing you think, it isn't any great accomplishment or anything, but 
I think the greatest thing I would say is that I did stimulate and 
create the conditions for debate, where there would be no escaping and 
sashaying with fine toe dancing out of the issues.
  Now, next week the Committee on Banking and Finance, as it is known 
now, is expected to mark up what euphoniously is called a regulatory 
relief bill. The number of that bill is H.R. 1362. I say it should be 
1313, because it is sure going to be unlucky for the consumers if it 
gets enacted. It is equally bad for bank safety, believe it or not, and 
a disaster as far as public beneficial and creative policy is 
concerned.
  Some of it, of course, like most things, makes some sense. There are 
parts of the banking statute that impose needless burdens, and we 
enacted legislation last year that repealed a pretty good substantial 
number of duplicative or needless or outdated regulations. We did that 
last year. But, unhappily, the bill that the Committee on Banking and 
Financial Services is about to take up is a grab bag of banking, 
lobbyist-driven excesses. As reported from the subcommittee, the bill 
guts important safety and soundness regulations, rips the heart out of 
basic consumer protection laws, and grants legal protection for 
careless and crooked bank officers and directors.
  It is unbelievable, yet we have got it. I feel it urgent enough for 
me to take time on this day, where normally I would be preparing to go 
home, in order to bring the attention of my colleagues, including those 
who are members of the committee, about this.
  In addition to that, as bad as that is, the bill effectively 
prohibits the Justice Department from enforcing fair lending laws, 
which took years of struggle for us to finally have enacted some time 
ago. Oh, the lobbyists are celebrating greatly, but the bank customers 
and the taxpayers, my advice is you better check your wallets. You are 
about to be fleeced.
  Here is an example. Under this bill a customer whose credit card is 
lost or stolen has his liability jacked up tenfold, tenfold. If an ATM 
card is lost or stolen, the customer's whole bank account can easily be 
wiped out, with no recourse.
  What this means is that credit cards are about to become far riskier 
to customers, so much so that they might want to tear up their 
automatic teller cards and rely on old-fashioned transactions with bank 
tellers. But many banks are raising their fees, so customers, if they 
can find a bank in their neighborhood, may find it too expensive to do 
that.

  The bill makes it a whole lot easier for banks to engage in 
discriminatory practices. Can you feature that? After all of this ado 
over these years about antidiscrimination fights and please, thanks to 
one especially zany amendment, the Justice Department is barred from 
investigating fair lending cases.
  Another provision wipes out laws that provide the information and the 
data that can provide lending discrimination. Fully 35 percent of 
lenders are exempted from the Home Mortgage and Disclosure Act. 
Therefore, under this bill, even if the Justice Department wanted to 
investigate a case, it would not have access to lending data.
  And that is not all. The bill wipes out any kind of case built on 
desperate impact theories, cases that attack situations that look fair 
but are in fact discriminatory in their result. This means about the 
only way a customer could win a fair lending case is for the lending 
officer to say flat out, ``We do not make loans to your kind of 
people.''
  Banks will have nothing to fear, or if they want to engage in 
discriminatory lending, they can do so, as long as they are not just 
absolutely blatant about it.
  This provision, in my book, makes the bill unacceptable on its own. 
But the bank lobby grab bag bill gets even worse. Bank officers and 
directors whose bank fails, mind you, here are banks, bank owners and 
directors who fail, either through incompetency or crookedness or what 
have you, will have the taxpayer pick up the tab. They will have a 
whole lot less to worry about under this bill. It is a rollback to what 
we have for years fought so much against in the past.
  The Government will have to accept settlement offers or run the risk 
of having to pay the legal costs of the defendants. Defendants are 
given new defenses that the courts have refused to accept. A bank 
president with a bad business judgment gets off scot-free, because 
under this bill stupidity is made a valid defense against liability.
  Oddly enough, if you can say that anything more could be odder, the 
vast new protection this bill grants the bank insiders come from the 
very party that regularly ridicules the Government for not recovering 
more money from the crooks and the incompetents who raided banks 
throughout the wild days of the eighties.
  You would think that the party of rugged responsibility, and that is 
my opposition party, the so-called Republican Party, would want to 
demand that bank officers and directors be responsible. But far from 
it. They are making it far easier for incompetence and outright 
hooligans to rob a whole new generation of banks and customers.
  One idea the Republicans had was to exempt the whole new class of 
banks from the requirement that the bank audit committee actually be 
independent and objective, not the captive management of management and 
insiders. But an outside audit committee is only required for a big 
bank, those of $500 million resources or more.
  Thankfully, we may be able to preserve this protection. It sounds 
like a small thing, but the eighties taught us that a bank that does 
not have an independent audit committee has very little protection 
against a crooked management. If the majority changes its mind, the 
opposition party, and insists on gutting the independent audit 
committee requirement, my friends and fellow citizens, you better get 
ready for a fast increase in the number of banks that are robbed from 
the inside by their own management.
  Inside robberies would be made easier by yet another provision of the 
bill that remains in place, a huge new increase in loans permitted for 
insiders.
  Now, banks used to be chartered for a reason. In fact, that is still 
the basic law. This was the exact and single-

[[Page H6081]]
minded purpose for the chartering of a bank. Public need and 
convenience. Those were the words of the statute as enacted originally. 
Public need, convenience, or necessity.
  One thing you would like to have is a bank that makes loans to the 
community. We have a very simple law, and, incidentally, the banks hate 
it, to try to target that, the Community Reinvestment Act. Banks hate 
the idea of having to show that they are doing a service to the 
community. The administration has responded to legitimate concerns 
about complexity in compliance with community reinvestment. So a new 
regulation is now in place that should make life a whole lot simpler 
for everyone.
  But lo and behold, the banks did not want a regulation that is 
sensible or easy to live with. They do not want anything that requires 
them to show they are serving the customers.

                              {time}  1500

  So the bill now in the Committee on Banking and Financial Services, 
true to lobby demands, would exempt 90 percent of all banks from having 
to comply with the Community Reinvestment Act at all and renders the 
law, consequently, meaningless and useless for the rest.
  Still other parts of this nefarious bill apparently will enable banks 
to change their charges and fees without prior notice, without any 
notice, just arbitrarily. This, of course, will make banks one of the 
few businesses in the country that do not have to tell customers about 
price changes. It is absolutely unbelievable to me, a child of the 
depression era in which we saw, felt, and suffered the excesses of the 
banks then that are now being put back in. So I think anybody who knows 
me knows exactly that this is what I would be doing today.
  Banks already do not have a list price on their main product; that 
is, loans. Most loans are tied to a prime rate number, but guess what, 
the great majority of loans are made well above or well below that 
price. Favored customers pay below the posted rate, but small 
businesses pay more, lots more. Of course, since there is no meaningful 
disclosure law, bank customers have a hard time finding the best deal. 
It is about to get harder for bank customers to know much about price 
changes or other bank services as well, check processing, credit card 
fees or whatever else, because this pending bill apparently strips away 
requirements that such price changes be disclosed.
  Another provision of this bill wipes out any meaningful disclosure 
about interest payments on customer deposits. So when you understand 
this bill, you discover that the customer loses any ability to easily 
find out who offers the best deal on deposits and who offers the best 
deal on services. The customer also suffers huge new liabilities in the 
case of credit card or ATM loss or fraud. The bank regulatory relief 
bill may deny some lobbyist some way, a wish or a hope, but it is their 
relief bill still. I cannot think of a lobbyist that the bill leaves 
unhappy.
  I have been around here some time, privileged to have been so by the 
constituents in the 20th Congressional District of Texas for a good 
period. Since my special election in 1961, to be precise. So I have 
been here long enough to know that whenever there is a feeding frenzy 
like this, it is the poor folks out on the beltway who will end up 
crying and gypped and stolen from.
  No matter how you look at it, this legislation will make it difficult 
or impossible for customers to know what a bank is charging for loans 
and services. This is incredible to me, a child of that period of time 
in which it was obvious that the suffering demanded that there be 
regulatory imposition. And here, now, has moved full circle. So that it 
is impossible for customers to know what a bank is charging for loans 
and services and close to impossible to avoid huge losses in credit 
card or ATM card frauds, virtually impossible to win a case involving 
discrimination and very much likely to be paying more for bank fraud 
and mismanagement, which are bound to increase, of course, thanks to 
the way this bill shreds safety and the soundness requirements.
  When this legislation reaches the floor, it will be called regulatory 
relief. A better name is, customer grief bill. The lobbyists and the 
special interests have run amok, and if this bill is enacted, it will 
be a sad day for the customer and the taxpayer. Instead of making up 
this bill next week, the Committee on Banking and Financial Services 
would be better advised to tear it up and to start all over.
  I wish somehow and, in fact, pray that something happens in the 
interim in that we can prevail and perhaps do so. But the reality is 
that the chances of that happening are minimal and, therefore, I am 
reporting to my colleagues here on the record so that nobody can say 
that nobody told them so.

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