[Congressional Record Volume 142, Number 140 (Wednesday, October 2, 1996)]
[Extensions of Remarks]
[Page E1904]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      REGULATORY RELIEF PROVISIONS

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                       Wednesday, October 2, 1996

  Mr. LaFALCE. Mr. Speaker, the continuing resolution for fiscal year 
1997, which passed the Senate yesterday, includes a number of 
significant regulatory relief provisions for financial institutions. I 
have been a long-time advocate of removing regulatory requirements that 
impose duplicative or burdensome application, reporting, or examination 
requirements on financial institutions. A number of such provisions 
have been incorporated within this legislation. Unfortunately, these 
provisions have been at risk because of anticonsumer provisions 
incorporated in the same bill.
  Fortunately, the current legislation removes the more extreme 
proposals that were included in earlier House regulatory relief bills 
that would have repealed key sections of consumer protection laws and 
severely weakened important safety and soundness protections for 
financial institutions. I am particularly pleased to see that a 
provision that would have immediately repealed the civil liability 
sections of the Truth in Savings Act was dropped in last minute changes 
to the bill. However, I continue to be concerned with a number of 
sections that were retained in the continuing resolution that weaken 
important consumer disclosures and legal remedies.
  I am concerned, for example, with several changes made in section 
2605 that change current procedures relating to automobile leases under 
the Consumer Leasing Act. The section would appear to create a safe 
harbor from any enforcement action or civil liability for false or 
misleading lease disclosures by permitting auto lessors ``who use the 
material aspects of any model disclosure form'' to be deemed to be ``in 
compliance with the disclosure requirements'' of the act. This wording 
does not clarify if these lessors would be in compliance only with the 
requirement to provide disclosure or with requirements elsewhere in the 
act to provide truthful and complete disclosure. Certainly I believe 
the latter interpretation would be overly broad and inappropriate. But 
the wording is potentially vague enough to shield abusive lessors from 
possible civil litigation and provide them with a basis to challenge 
administrative actions.
  A second change would modify current requirements for lease 
advertising to weaken current consumer disclosure regarding auto 
leases. It would eliminate two sets of key disclosures in current 
advertisements: the requirement to disclose the type and amount of any 
lease-end liabilities and charges, and the requirement to disclose 
whether or not a consumer has an option to purchase the property. These 
disclosures involve information that consumers need to know to make an 
informed choice among available automobile leases.
  The legislation also retains language that repeals current 
requirements for the collection and publication of annual data on bank 
lending to small businesses, small farms and minority business. In 
1993, Congress required the Federal Reserve to collect and publish data 
from the June bank Call Reports on the number and size of loans to 
small business. This data has become an invaluable source of 
information on the sources and availability of credit to U.S. small 
businesses. This information is critical to monitoring the lending 
performance of banks. And it also provides extremely important 
information to assist the SBA, business organizations, and consumer 
groups in directing small business owners to local institutions that 
have strong records of lending to small businesses.
  Several additional provisions also raise concerns as providing for 
potential abuse of consumers. Section 2105 changes current disclosure 
requirements for adjustable rate mortgage loans under the Truth In 
Lending Act to permit lenders to simplify disclosure of potential 
interest rate and payment fluctuation for variable-rate loans. 
Currently lenders are required to show a historic example of how the 
rates and payments for loans comparable to that being offered had 
actually changed over a recent period of time. Lenders now would have 
the option of disclosing only the maximum potential payment for a 
$10,000 loan originated at a recent interest rate. This option would 
virtually eliminate more meaningful disclosure of historic rate and 
cost fluctuations and provide disclosure with little relevance to most 
loans actually offered to consumers.
  Two additional provisions also trouble me. The first, in section 
2302, would prohibit information contained in self-testing studies by 
banks that document violations of the Fair Housing Act and the Fair 
Credit Opportunities Act from being used in administrative actions and 
civil suits where the bank has made any effort to remedy these 
violations. A second proposal, in section 2305, requires debt 
collection agencies to identify themselves to consumers only in the 
first contact. All further efforts to collect a debt could presumably 
be represented in ways that tended to misinform, confuse or intimidate 
the consumer without violating the Fair Debt Collection Practices Act.
  Mr. Speaker, these are examples of sections contained in the 
continuing resolution that I believe raise potential problems for 
consumers. These present important issues that I hope the Banking 
Committee will have an opportunity to reconsider in the next Congress.

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