[Congressional Record Volume 143, Number 17 (Tuesday, February 11, 1997)]
[Senate]
[Pages S1226-S1239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. D'AMATO (for himself, Mr. Grams, Mr. Gramm and Mr. 
        Bennett):
  S. 298. A bill to enhance competition in the financial services 
sector, and for other purposes; to the Committee on Banking, Housing, 
and Urban Affairs.


           THE DEPOSITORY INSTITUTION AFFILIATION ACT OF 1997

  Mr. D'AMATO. Mr. President, today with the cosponsorship of my 
colleagues, Senators Gramm, Grams, and Bennett, I am introducing the 
``Depository Institutions Affiliation Act of 1997,'' to modernize the 
laws governing the financial services industry in a comprehensive, 
progressive fashion. I am pleased that Representative Richard Baker, 
chairman of the Housing Banking Subcommittee on Capital Markets, 
Securities and Government Sponsored Enterprises, will introduce similar 
legislation, joined by Representatives McCollum, La Falce, and Dreier. 
This legislation will promote efficiency and fair competition between 
all financial service providers and make U.S. financial firms stronger 
in global competition.
  Mr. President, Congress has been struggling to modernize the 
financial system since before I became a member of the Banking 
Committee in 1981. That effort must continue and should conclude 
successfully in this Congress. Our existing legal framework is 
fundamentally outdated. The Glass-Steagall and Bank Holding Company 
Acts impose regulatory structures that are inadequate for today's 
global marketplace and the financial needs of consumers.
  Mr. President, our Nation's entire financial system --including 
traditional banks, insurance companies, and securities firms--faces a 
future that is somewhat unsettled. Competitive developments in the 
marketplace and the

[[Page S1227]]

technological revolution that is well underway have brought about 
significant changes in the financial system, domestic and 
international. And these changes have already had a significant 
influence on all financial services providers and their customers.
  Mr. President, there is widespread recognition that the United States 
must adopt a regulatory regime that recognizes market realities and 
assesses and controls risk. Our present patchwork of financial laws 
protects particular industries, restrains competition, prevents 
diversification that would limit risks, restricts potential sources of 
capital, and undermines the efficient delivery of financial services 
and the competitive position of our financial institutions in world 
markets.
  Mr. President, Congress' reform effort in the 105th Congress must be 
forward-looking, not merely a reengineering of the legacy and laws from 
the New Deal. Our reform effort must not be limited in its design by 
unfounded fears and outdated philosophies. The far-reaching changes we 
are witnessing require a top-to-bottom examination of long-standing 
conventions about the way our financial system should be structured and 
regulated as we approach the 21st century. Already, banks and 
competitors from outside the conventional banking system are jockeying 
for position and advantage as competition heats up for control of 
market share and customers in a world of electronic commerce.
  Existing institutions that fight for legislative restrictions to 
protect their markets are fighting the last war. Debate over financial 
modernization that focuses primarily on issues like the future of the 
banking franchise or gerrymandering markets through piecemeal 
legislation to protect a particular market segment is too narrow from a 
public policy standpoint. Such a narrow approach addresses questions 
and solves problems that existed in the 1970's and 1980's; however, the 
year 2000 is quickly approaching and the policy debate in Congress and 
among industry leaders should be oriented toward the future. Technology 
and new financial competitors from outside the traditional arena will 
now provide an important and new catalyst for meaningful change and 
long overdue comprehensive financial modernization.
  Mr. President, in its consideration of financial modernization, the 
new Congress will need to explore a number of new and important issues, 
including:
  Given all the technological changes and new players in the market, 
what does it mean to be a bank? Does it make sense to maintain an 
artificial distinction between banks and nonbanks? Does it make sense 
to preserve the fiction that banking and commerce are somehow separate? 
Does it make sense to prohibit information-driven firms from owning or 
affiliating with banks now that financial services are in large part 
information processing activities?
  How will the old system of deposit insurance fit into this 
environment? Should more complex institutions be required to give up 
deposit insurance, as was suggested by one of the Federal Reserve Bank 
presidents?
  How do we ensure that technology results in greater choice, lower 
fees and fair, readily available access by consumers? The experience we 
are having with ATM's raises questions about whether consumers will 
share in the benefits of technology or whether the benefits will go 
primarily to the owners of that technology.
  How can we protect individual privacy now that computers make it so 
easy to collect and disseminate personal information? This is such a 
sensitive concern that the Congress directed the Federal Reserve to 
conduct a study.
  I do not know the answers, but these are provocative questions which 
require careful study and debate.
  Others are studying these issues as well.
  Last year, Congress directed the Treasury Department to conduct a 
study of all issues relating to a common charter for all federally 
insured depository institutions as part of the law stabilizing and 
eventually merging the two Federal deposit insurance funds (BIF and 
SAIF) (P.L. 104-208). The Treasury Department is expected to submit 
that study next month.
  The Treasury Department appointed a consumer electronic payments task 
force which will include the principal Federal agencies involved in the 
payments system.
  In addition, the Treasury Department is completing a study on the 
strengths and weaknesses of our financial services system in meeting 
the needs of the system's users.
  Most recently, Federal Reserve Chairman Greenspan announced formation 
of a committee that will look at the Fed's role in the payments system 
of the future.

  Mr. President, I introduce the Depository Institution Affiliation Act 
as a prelude to a vigorous debate about the future of our financial 
system. Let me explain how the Depository Institution Affiliation Act 
[DIAA] will make the financial system safer, more stable, and more 
competitive. I will submit a more detailed section-by-section 
explanation of the bill at the end of my remarks. The bill is virtually 
identical to legislation that I have previously sponsored or 
cosponsored in 1987 (S. 1905) and in 1989 (S. 530). In the previous 
Congress, it was S. 337. With the exception of technical and conforming 
changes to reflect the enactment of banking laws since its original 
introduction, the text of the bill is unchanged.
  Mr. President, comprehensive financial modernization as proposed in 
this reform legislation would produce many beneficial changes for all 
financial intermediaries.
  First, the legislation will enable all financial intermediaries--
commercial banks, investment banks, thrifts, and so forth--to attract 
financial capital and managerial expertise by eliminating existing 
restrictions on ownership by and affiliations among depository and 
nondepository firms. However, the DIAA preserves all the safety-and-
soundness and conflict-of-interest protections of the present system, 
while providing legal flexibility for a company to meet the financial 
needs of consumers, businesses, and others.
  Mr. President, some detractors of DIAA describe it as too radical 
because it permits these affiliations. However, this type of common 
ownership is already allowed by our laws and has existed for decades 
without any evidence of problems. Federal law and public policy 
expressly allows commercial companies to own and affiliate with a 
variety of federally insured banks--for example, credit card banks, 
limited purpose banks, trust companies, and so forth--and savings and 
loans. For example, unitary thrift holding companies have proven that 
finance and commerce can be mixed safely. In fact, the lack of 
ownership restrictions on thrifts has worked to expand the capital and 
managerial talent available to thrifts. And the successful record of 
unitary holding companies demonstrates that broader ownership 
affiliations can actually strengthen depository institutions through 
greater diversification and financial strength. Moreover, the reality 
is that nonbank organizations, including telecommunications, cable 
companies, and software firms are designing and delivering banklike 
financial services and products over the Internet and World Wide Web 
without owning a bank.
  Second, this bill will facilitate diversification and assure fair 
competition by creating a new charter alternative for all companies 
interested in entering or diversifying in the financial services 
field--a financial services holding company--FSHC. These FSHC's will be 
authorized to engage in any financial activity through separately 
regulated affiliates of the holding company. The bill would permit the 
merging of banking and commerce under carefully regulated circumstances 
by allowing a FSHC to own both a depository institution and companies 
engaged in both financial and nonfinancial activities.
  Third, this legislation will insulate insured subsidiaries--for 
example, banks--from the more risky business activities of its 
affiliates, as well as the parent holding company. It would not 
authorize or allow these activities to be conducted in a bank's 
operating subsidiary.
  Mr. President, by authorizing this alternative regulatory framework, 
the legislation would essentially exempt a FSHC's subsidiaries and 
affiliates from those sections of the Glass-Steagall and Bank Holding 
Company Acts that restrict mixing commercial banking with other 
financial--securities, investment banking, and so forth--and

[[Page S1228]]

nonfinancial activities--retailing, technology, manufacturing. A FSHC 
would be able to diversify into any activity through affiliates of the 
holding company, with such affiliates subject to enhanced regulation.
  Fourth, this bill will enhance substantially the quality and 
effectiveness of regulation through functional regulation. The 
regulation of the bank and nonbank affiliates of financial services 
holding companies would be along functional lines. The insured bank 
affiliate would be regulated by Federal and State bank regulators, the 
securities affiliate by the Securities and Exchange Commission, and so 
on. Thus, for each affiliate, existing regulatory expertise and 
resources will be applied to protect consumers, investors, and 
taxpayers. Functional regulation will also assure that competition in 
discrete products and services is fair by eliminating advantages 
attributable to current loopholes, regulatory gaps, and cost subsidies.
  Finally, the bill would improve coordination and supervision of the 
overall financial system by permitting more effective analysis and 
monitoring of aggregate stability and vulnerability to severe 
disruptions and breakdown.
  By removing unnecessary barriers to competition between providers of 
financial service in the United States, this legislation will permit 
U.S. capital markets to maintain their preeminence, and will allow U.S. 
financial intermediaries to respond to growing competition from foreign 
companies.
  Mr. President, I want to underscore that the DIAA would not require 
existing firms to alter their regulatory structure. By permitting 
financial services providers to become FSHC's, such providers will have 
the option to phase gradually into, or expand within, the financial 
services industry.
  Mr. President, the DIAA provides a solid platform and a sound 
approach to modernizing our financial structure. I recognize that this 
bill can be improved, and I am specifically requesting constructive and 
helpful comments to improve and to refine the major principles 
underlying the bill. As the committee proceeds to hearings and further 
consideration of the bill, I intend to make changes and adjustments in 
order to ensure competitive fairness, promote safety and soundness; 
achieve depositor, investor, and consumer protection; and assure 
effective and efficient functional regulation. Modernization of the 
financial services industry should not include the preemption of State 
consumer protection laws.
  Mr. President, in the absence of congressional action, the 
Comptroller of the Currency and the Federal Reserve Board have acted to 
achieve limited modernization with results often of questionable legal 
authority and public policy results. Specifically, I am concerned about 
the OCC's action to permit a bank's operating subsidiaries to engage in 
activities that are not permissible for the bank. I believe this 
regulation is unwise. And I am deeply concerned that the Comptrollers 
action may subject federally insured banks to excessive risks and 
expose the bank insurance funds, and therefore taxpayers, to 
unnecessary liability. Congress can never forget the lessons of the 
savings and loan crisis in the late 1980's. In addition, the Fed's 
recent actions to increase the aggregate level of business a section 20 
securities affiliate may engage in and its proposal to reduce or even 
eliminate important firewalls and safeguards that have existed for over 
a decade are also imprudent.

  Mr. President, the rivalry between regulators to attempt unilaterally 
to set public policy and alter the competitive balance for their 
constituencies is not wholesome or helpful. The regulators actions will 
never be a substitute for comprehensive and balanced congressional 
action. For far too long, Congress has ceded the field to piecemeal 
deregulation by bank regulators and the courts. The time has come for 
Congress to decide on a legal and policy framework that prepares our 
financial institutions for the new century and the challenges of a 
rapidly changing global economy. The 105th Congress must address and 
resolve the important questions relating to the health and future of 
the banking industry in the broader context of a financial system that 
is increasingly composed of nonbank financial service providers. We 
must focus on the needs of our economy for credit and growth in the 
future and the next century. We must focus on financial stability, 
safety and soundness, fair competition, and functional regulation of 
all financial service providers--whether they are banks, investment 
banks, insurance companies, finance companies or even 
telecommunications or computer companies.
  Mr. President, the benchmark provisions, principles, and purposes of 
DIAA, as stated above, have been tested and explored over the years. 
During a decade of debate several studies, including a 1991 study by 
the Treasury Department entitled, ``Modernizing the Financial System: 
Recommendations for Safer More Competitive Banks'', these principles 
and the framework of the bill have become the centerpiece of an 
emerging consensus in favor of forward-looking, balanced and prudent 
approach to modernization. I am hopeful that a new study underway by 
the Treasury Department and due to be submitted to Congress in March 
related to a common bank and thrift charter will reach similar 
conclusions.
  Mr. President, by continuing to work together, as demonstrated by the 
BIF/SAIF bill last year, the Congress and the administration can 
overcome the complaints of vested interests and reform our antiquated 
financial services laws. We should not miss this opportunity for 
constructive bipartisanship. I believe that this bill provides a good 
starting point for the 105th Congress to act on financial 
modernization. Passage of this bill will be a high priority for the 
Banking Committee. I believe this is a realistic objective.
  Mr. President, I ask unanimous consent that a more detailed section-
by-section summary of the bill be reprinted in the Record.
  There being no objection, the summary was ordered to printed in the 
Record, as follows:

  Depository Institution Affiliation Act--Section-by-Section Analysis

     Section 1: Short title
       Section 1 provides that this Act be cited as the 
     ``Depository Institution Affiliation Act''.
     Section 2: Findings and purpose
       The purpose of this Act is to promote the safety and 
     soundness of the nation's financial system, to increase the 
     availability of financial products and services to consumers, 
     businesses, charitable institutions and government in an 
     efficient and cost effective manner. In addition, this Act 
     aims to promote a legal structure governing providers of 
     financial services that permits open and fair competition and 
     affords all financial services companies equal opportunity to 
     serve the full range of credit and financial needs in the 
     marketplace. This Act also aims to ensure that domestic 
     financial institutions and companies are able to compete 
     effectively in international financial markets. Finally, this 
     Act aims to regulate financial activities and companies along 
     functional lines without regard to ownership, control, or 
     affiliation.


    TITLE I--CREATION AND CONTROL OF DEPOSITORY INSTITUTION HOLDING 
                               COMPANIES

     Section 101
       This section creates a new type of financial company, a 
     depository institution holding company (DIHC), and sets out 
     the terms and conditions under which such a company can be 
     established and must be operated.
       Subsection (a) Definitions. This subsection defines terms 
     used in this section.
       Paragraph (a)(1) defines a DIHC to be any company that 
     files a notice with the National Financial Services Committee 
     (see Title II of this Act) that it intends to comply with the 
     provisions of this section, and controls an insured 
     depository institution, or, either (i) has, within the 
     preceding 12 months filed a notice under subsection (b) of 
     this section to establish or acquire control of a federally 
     insured depository institution or a company owning such a 
     federal insured depository institution, or (ii) controls a 
     company which, within the preceding 12 months, has filed an 
     application for federal deposit insurance, provided that such 
     notice or application has not been disapproved by the 
     appropriate Federal banking agency or withdrawn. Any holding 
     company which elects to become a DIHC and which does not 
     control any banks that are not FDIC insured, will lose its 
     status as a bank holding company immediately upon filing the 
     notice of its election to become a DIHC. Similarly, a savings 
     and loan holding company that elects to become a DIHC will 
     lose that status upon filing the notice of its election to 
     become a DIHC. To assure that each bank controlled by a DIHC 
     would be subject to regulation and supervision by an 
     appropriate federal banking agency, owners of uninsured banks 
     would not be able to avail themselves of the opportunity to 
     become a DIHC, unless they agreed to convert such uninsured 
     banks into federally insured depository institutions.
       Paragraph (a)(2) gives the term `bank holding company' the 
     meaning given to it in Section 2(a) of the Bank Holding 
     Company Act of 1956, as amended.

[[Page S1229]]

       Paragraph (a)(3) gives the term `savings and loan holding 
     company' the meaning given to it in section 10(a) of the Home 
     Owners' Loan Act.
       Paragraph (a)(4) defines for this section, except paragraph 
     (5) of subsection (f), the term `affiliate' of a company as 
     any company which controls, is controlled by, or is under 
     common control with such a company.
       Paragraph (a)(5) gives the term `appropriate Federal 
     banking agency' (AFBA) the meaning given to it in section 3 
     of the Federal Deposit Insurance Act.
       Paragraph (a)(6) gives the term `insured depository 
     institution' the meaning given to it in section 3(c)(2) of 
     the Federal Deposit Insurance Act.
       Paragraph (a)(7) gives the term `State' the meaning given 
     to it in section 3(a) of the Federal Deposit Insurance Act.
       Paragraph (a)(8) defines the term `company' to mean any 
     corporation, partnership, business trust, association or 
     similar organization. However, corporations that are majority 
     owned by the Untied States or any State are excluded from the 
     definition of company.
       Paragraph (a)(9) defines control by one company over 
     another. For purposes of this section, the term ``control'' 
     means the power, directly or indirectly, to direct the 
     management or policies of a company, or to vote 25% or more 
     of any class of voting securities of a company.
       There are three exceptions from the definition of control. 
     These pertain to ownership of voting securities acquired or 
     held:
       1. as agent, trustee or in some other fiduciary capacity;
       2. as underwriter for such a period of time as will permit 
     the sale of these securities on a reasonable basis; or in 
     connection with or incidental to market making, dealing, 
     trading, brokerage or other securities-related activities, 
     provided that such shares are not acquired with a view toward 
     acquiring, exercising or transferring control of the 
     management or policies of the company;
       3. for the purpose of securing or collection of a prior 
     debt until two years after the date of the acquisition; and
       In addition, no company formed for the sole purpose of 
     proxy solicitation shall be deemed to be in control of 
     another company by virtue of its acquisition of the voting 
     rights of the other company's securities.
       Paragraph (a)(10) defines the term `adequately capitalized' 
     with respect to an insured depository institution has the 
     meaning given to it in section 38(b)(1) of the Federal 
     Deposit Insurance Act.
       Paragraph (a)(11) defines the term `well capitalized' with 
     respect to an insured depository institution has the meaning 
     given to it in section 38(b)(1)(A) of the Federal Deposit 
     Insurance Act.
       Paragraph (a)(12) defines the term `minimum required 
     capital' with respect to an insured depository institution as 
     the amount of capital that is required to be adequately 
     capitalized.
       Subsection (b): Changes in Control of Insured Depository 
     Institutions. This subsection provides that any DIHC wishing 
     to acquire control of an insured depository institution or 
     company owning such insured depository institution must 
     comply with the requirements of the Change in Bank Control 
     Act. Failure to comply with these requirements will subject 
     the relevant DIHC to the penalties and procedures provided in 
     subsections (i) through (m) of this section, in addition to 
     otherwise applicable penalties.
       Subsection (c): Affiliate Transactions. This subsection 
     authorizes supplemental regulation of the transactions of 
     insured depository institutions controlled by DIHCs with 
     their affiliates. These regulations would be in addition to 
     the restrictions on interaffiliate transactions provided for 
     under sections 23A or 23B of the Federal Reserve Act. This 
     subsection gives each AFBA some flexibility to promulgate and 
     adapt rules and regulations in response to changing market 
     conditions so that the AFBA has at all times the capability 
     to prevent insured depository institutions under its 
     supervision that are controlled by DIHCs from engaging in 
     transactions that would compromise the safety and soundness 
     of such insured depository institutions or that would 
     jeopardize the deposit insurance funds.
       Moreover, other provisions of this Act assure that the AFBA 
     will have the capability to enforce these regulations 
     vigorously (subsection (i) of this section) and that any 
     violations of these regulations will be more severely 
     punished than violations of regulations applicable to insured 
     depository institutions that are not controlled by DIHCs 
     (subsections (i), (j), (k) and (l) of this section).
       Subparagraph (c)(1)(A) empowers the AFBA to develop rules 
     and regulations to prevent insured depository institutions 
     under its supervision that are also controlled by a DIHC from 
     engaging in unsafe or unsound practices involving the DIHC or 
     any of its affiliates, including unsafe and unsound practices 
     that may arise in connection with transactions covered by 
     sections 23A and 23B of the Federal Reserve Act.
       Subparagraph (c)(1)(B) empowers the AFBA to create certain 
     exceptions to the provisions of the preceding subparagraph, 
     if the AFBA deems that such exceptions are reasonable and in 
     the public interest and not inconsistent with the purposes of 
     this Act. These exemptions may relate to certain institutions 
     or classes of institutions, or to certain transactions or 
     classes of transactions, including transactions covered 
     under Sections 23A or 23B of the Federal Reserve Act.
       Paragraph (c)(2) provides that any rules adopted under 
     subparagraph (c)(1)(A) shall be issued in accordance with 
     normal rulemaking procedures and shall afford interested 
     parties the opportunity to comment in writing and orally on 
     any proposed rule.
       Paragraph (c)(3) grandfathers specific interaffiliate 
     transactions approved by a Federal regulatory agency prior to 
     the enactment of this Act, exempting them from rules and 
     regulations promulgated under subparagraph (c)(1)(A).
       Paragraph (c)(4) makes it clear that sections 23A and 23B 
     of the Federal Reserve Act will apply to every insured 
     depository institution controlled by a depository institution 
     holding company.
       Paragraphs (c)(5) and (c)(6) prohibit any insured 
     depository institution in a DIHC from extending credit to or 
     purchasing the assets of a securities affiliate and providing 
     other types of financial support to that DIHC's securities 
     affiliate except for daylight overdrafts that relate to U.S. 
     government securities transactions if the daylight overdrafts 
     are fully collateralized by U.S. government securities as to 
     principal and interest.
       Paragraph (c)(7) prohibits insured depository institutions 
     in a DIHC from issuing various guarantees for the enhancement 
     of the marketability of a securities issue underwritten or 
     distributed by a securities affiliate of that DIHC.
       Paragraph (c)(8) prohibits insured depository institutions 
     in a DIHC from extending credit secured by or for the 
     purposes of purchasing any security during an underwriting 
     period of for 30 days thereafter where a securities affiliate 
     of such institution participates as an underwritten or member 
     of a selling group.
       Paragraph (c)(9) prohibits insured depository institutions 
     in a DIHC from extending credit to an issuer of securities 
     underwritten by a securities affiliate for the purpose of 
     paying the principal of those securities or interest for 
     dividends on those securities.
       Paragraph (c)(10) defines ``securities affiliate'' for the 
     purposes of paragraphs (c)(5), (6), (7), (8) and (9).
       Subsection (d): Capitalization. This subsection regulates 
     the capitalization of insured depository institutions that 
     are controlled by a DIHC.
       Paragraph (d)(1) requires that insured depository 
     institutions controlled by a DIHC be well capitalized.
       Paragraph (d)(2) provides that if the AFBA finds that an 
     insured depository institution subsidiary of a DIHC is not 
     well capitalized, the DIHC shall have thirty days to reach 
     an agreement with the AFBA concerning how and according to 
     what schedule the insured depository institution will 
     bring its minimum capital back into conference with 
     requirements. During that time the insured depository 
     institution shall operate under the close supervision of 
     the AFBA.
       In the event that the DIHC does not reach an agreement 
     within thirty days with the AFBA on how and according to what 
     schedule the capital of the insured depository institution 
     will be replenished, the DIHC will be required to divest the 
     insured depository institution in an orderly manner within a 
     period of six months, or such additional period of time as 
     the AFBA may determine is reasonably required in order to 
     effect such divestiture.
       Paragraph (d)(3) states that in view of the enhanced 
     regulatory control over insured depository institutions 
     controlled by DIHCs, no AFBA may regulate the capital of the 
     DIHC. Thus, no AFBA may require the DIHC itself to enter into 
     any other agreement regarding the maintenance of capital in 
     its insured depository institution affiliates. The capital of 
     the DIHC would, however, be regulated by any other agency 
     having jurisdiction over it. For example, if the DIHC were 
     also a registered broker/dealer, it would have to conform to 
     the minimum capital requirements mandated by the SEC.
       Subsection (e): Interstate Acquisitions and Activities of 
     Insured Depository Institutions. This subsection subjects 
     interstate acquisitions of an insured depository institution 
     by a DIHC to the same restrictions as those applicable to 
     bank holding companies under section 3(d) of the Bank Holding 
     Company Act of 1956, as amended, and it subjects interstate 
     acquisitions of savings associations by a DIHC to the same 
     restrictions as those applicable to savings and loan holding 
     companies.
       Subsection (f): Differential Treatment Prohibition; Laws 
     Inconsistent with this Act. This subsection does two things. 
     First, it prohibits adversely differential treatment of DIHCs 
     and their affiliates, including their insured depository 
     institution affiliates, except as this Act specifically 
     provides. Second, this subsection ensures that state and 
     federal initiatives do not undermine achievement of the 
     purposes of this Act. Whether couched as affiliation, 
     licensing or agency restrictions or as constraints on access 
     to state courts, such laws effectively perpetuate market 
     barriers and deny consumers the opportunity to choose between 
     different financial products and services.
       Paragraph (f)(1) notwithstanding any other federal law, 
     prohibits states from enacting laws that discriminate against 
     DIHCs or against their affiliates, including their insured 
     depository institution affiliates. This paragraph also 
     prohibits, notwithstanding any other federal law, federal and 
     state regulatory agencies from discriminating by rule, 
     regulation, order or any other means against DIHCs or against 
     their affiliates, including

[[Page S1230]]

     their insured depository institution affiliates, except as 
     this Act specifically provides. This is intended to assure 
     that the primary purpose of this Act--the enhancement of 
     competition in the depository institution sector--will be 
     fulfilled.
       Paragraph (f)(2) finds that certain State affiliation and 
     licensing laws restrain legitimate competition in interstate 
     commerce, deny consumers freedom of choice in selecting an 
     insured depository institution and threaten the long-term 
     safety and soundness of insured depository institutions by 
     limiting their access to capital.
       Accordingly, with the exception of certain laws related to 
     insurance and real estate brokerage which are treated in 
     Subsection (g), this paragraph preempts any provision of 
     federal or state law, rule, regulation or order that is 
     expressly or impliedly inconsistent with the provisions of 
     this section. The preempted statutes include state banking, 
     savings and loan, securities, finance company, retail or 
     other laws which restrict the affiliation of insured 
     depository institutions or their owners, agents, principals, 
     brokers, directors, officers, employees or other 
     representatives with other firms. Similarly, laws prohibiting 
     cross marketing of products and services are preempted 
     insofar as such cross marketing activities are conducted by 
     DIHCs, their affiliates, or by any agent, principal, broker, 
     director, officer, employee or other representative. By 
     contrast, nondiscriminatory state approval, examination, 
     supervisory, regulatory, reporting, licensing, and similar 
     requirements are not affected.
       Paragraph (f)(3) removes a common uncertainty under state 
     licensing and qualification to do business statutes, which 
     leaves an out-of-state insured depository institution's 
     access to another state's courts unresolved. Under this 
     provision, so long as such an insured depository institution 
     limits its activities to those which do not constitute the 
     establishment or operation of a ``domestic branch'' of an 
     insured depository institution in that other state, it can 
     qualify to maintain or defend in that state's court any 
     action which could be maintained or defended by a company 
     which is not an insured depository institution and is not 
     located in that state, subject to the same filing, fee and 
     other conditions as may be imposed on such a company. This 
     paragraph is not intended to grant states any power that they 
     do not currently have to regulate the activities of out-of-
     state insured depository institutions.
       Paragraph (f)(4) makes clear that a state, except subject 
     to the provisions of this Act, may not impede or prevent any 
     insured depository institution affiliated with a DIHC or any 
     DIHC or affiliate thereof from marketing products and 
     services in that state by utilizing and compensating its 
     agents, solicitors, brokers, employees and other persons 
     located in that state and representing such a insured 
     depository institution, company, or affiliate. However, to 
     the extent such persons are performing loan origination, 
     deposit solicitation or other activities in which an insured 
     depository institution may engage, those activities cannot 
     constitute the establishment or operation of a ``domestic 
     branch'' at any location other than the main or branch 
     offices of the insured depository institution.
       Paragraph (f)(5) contains a special definition of 
     ``affiliate'' and ``control'' for purposes of paragraphs (2) 
     through (4) this subsection only. Control is deemed to occur 
     where a person or entity owns or has the power to vote 10% of 
     the voting securities of another entity or where a person or 
     entity directly or indirectly determines the management or 
     policies of another entity or person. Unlike the definition 
     of affiliate set forth in paragraph (4) of subsection (a), 
     this definition encompasses not only corporate affiliations 
     but affiliations between corporations and individuals.
       Subsection (q): Securities, Insurance and Real Estate 
     Activities of Insured Depository Institutions. In order to 
     facilitate functional regulation of the activities of DIHCs 
     this section prohibits insured depository institutions 
     controlled by DIHCs from conducting certain securities, 
     insurance and real estate activities currently permissible 
     for some insured depository institutions.
       Subparagraph (g)(1)(A) provides that no insured depository 
     institution controlled by a DIHC shall directly engage in 
     dealing in or underwriting securities, or purchasing or 
     selling securities as agent, except to the extent such 
     activities are performed with regard to obligations of the 
     United States or are the type of activities that could be 
     performed by a national bank's trust department (12 U.S.C. 
     92a).
       Subparagraph (g)(1)(B) provides that no insured depository 
     institution controlled by a DIHC shall directly engage in 
     insurance underwriting.
       Subparagraph (g)(1)(C) provides that no insured depository 
     institution controlled by a DIHC shall directly engage in 
     real estate investment or development except insofar as these 
     activities are incidental to the insured depository 
     institution's investment in or operation of its own premises, 
     result from foreclosure on collateral securing a loan, or are 
     the type of activities that could be performed by a national 
     bank's trust department.
       Paragraph (g)(2) clarifies that nothing in this subsection 
     shall be construed to prohibit or impede a DIHC or any of its 
     affiliates (other than an insured depository institution) 
     from engaging in any of the activities set forth in paragraph 
     (1) or to prohibit an employee of an insured depository 
     institution that is an affiliate of a DIHC from offering or 
     marketing products or services of an affiliate of such an 
     insured depository institution as set forth in paragraph (1).
       Paragraph (g)(3), however, contains significant limits on 
     DIHC entry into the businesses of insurance agency and real 
     estate brokerage. No DIHC could enter these fields de novo. 
     Rather, they would have to purchase either an insurance 
     agency or real estate brokerage business which had been in 
     business for at least five years prior to passage of the Act.
       Paragraph (g)(4) provides that nothing in this subsection 
     will require the breach of a contract entered into prior to 
     enactment of this Act.
       Subsection (h): Tying and Insider Lender Provisions. This 
     section subjects DIHCs to the tying provisions of section 106 
     of the Bank Holding Company Act Amendments of 1970 and to the 
     insider lending prohibitions of section 22(h) of the Federal 
     Reserve Act. These sections prohibit tying between products 
     and services offered by insured depository institutions and 
     products and services offered by the DIHC itself or by any 
     of its other affiliates. Note, however, that these tying 
     provisions do not apply to products and services that do 
     not involve an insured depository institution. The insider 
     lending provisions severely limit loans by an insured 
     depository institution to officers and directors of the 
     insured depository institution. For purposes of both 
     provisions, the AFBA will exercise the rulemaking 
     authority vested in the Federal Reserve with regard to 
     these limitations.
       Subsection (i): Examination and Enforcement. This 
     subsection provides that the AFBA shall use its examination 
     and supervision authority to enforce the provisions of this 
     section, including any rules and regulations promulgated 
     under subsection (c). In particular, it is intended that each 
     AFBA should structure its examination process so as to 
     uncover possible violations of the provisions of this section 
     and that the agency should not hesitate to make full use of 
     its cease-and-desist powers or to impose as warranted the 
     special penalties discussed below, if it believes that an 
     insured depository institution under its supervision that is 
     controlled by a DIHC is in violation of any provisions of 
     this section.
       This subsection also grants the AFBA authority to examine 
     any other affiliate of the DIHC as well as the DIHC itself in 
     order to ensure compliance with the limitations of this 
     section or other provisions of law made applicable by this 
     section such as sections 23A and 23B of the Federal Reserve 
     Act.
       In addition, this subsection grants each AFBA the right to 
     apply to the appropriate district court of the United States 
     for a temporary or permanent injunction or a restraining 
     order to enjoin any person or company from violation of the 
     provisions of this section or any regulation prescribed under 
     this section. The AFBA may seek such an injunction or 
     restraining order whenever it considers that an insured 
     depository institution under its supervision or any DIHC 
     controlling such an insured depository institution is 
     violating, has violated or is about to violate any provision 
     of this section or any regulation prescribed under this 
     section. In seeking such an injunction or restraining order 
     the AFBA may also request such equitable relief as may be 
     necessary to prevent the violation in question. This relief 
     may include a requirement that the DIHC divest itself of 
     control of the insured depository institution, if this is the 
     only way in which the violation can be prevented.
       This injunctive power will enable the AFBA to move speedily 
     to stop practices that it believes endanger the safety and 
     soundness of an insured depository institution under its 
     supervision that is controlled by a DIHC. If necessary to 
     protect the depositors and safeguard the deposit insurance 
     funds, the AFBA may request that the injunction proceedings 
     be held in camera, so as not to provoke a run on the insured 
     depository institution.
       Subsection (j): Divestiture. This subsection states that an 
     AFBA may require a DIHC to divest itself of an insured 
     depository institution, if the agency finds that the insured 
     depository institution is engaging in a continuing course of 
     action involving the DIHC or any of its affiliates that would 
     endanger the safety and soundness of that insured depository 
     institution. Although the DIHC would have the right to a 
     hearing and to judicial review and have one year in which to 
     divest the insured depository institution, it should be 
     emphasized that the insured depository institution would 
     operate under the close supervision of the AFBA from the 
     date of the initial order until the date the divestiture 
     is completed. This is intended to safeguard the insured 
     depository institution in question, its depositors and the 
     deposit insurance funds.
       Subsection (k): Criminal Penalties: This subsection 
     provides for criminal penalties for knowing and willful 
     violations of the provisions of this section, even if these 
     violations do not result in an initial or final order 
     requiring divestiture of the insured depository institution. 
     For companies found to be in violation of the provisions of 
     this section the maximum penalty shall be the greater of (a) 
     $250,000 per day for each day that the violation continues or 
     (b) one percent of the minimum required capital of the 
     insured depository institution per day for each day that the 
     violation continues, up to a maximum of 10% of the minimum 
     capital of the insured depository institution--a fine that

[[Page S1231]]

     could amount to tens of millions of dollars for a large 
     insured depository institution. Such a fine is designed to be 
     large enough to deter even large insured depository 
     institutions from violating the provisions of this section.
       For individuals found to be in violation of the provisions 
     of this section the penalty shall be a fine and/or a prison 
     term. The maximum fine shall be the greater of (a) $250,000 
     or (b) twice the individual's annual rate of total 
     compensation at the time the violation occurred. The maximum 
     prison sentence shall be one year. In addition, individuals 
     violating the provisions of this section will also be subject 
     to the penalties provided for in Section 1005 of Title 18 for 
     false entries in any book, report or statement to the extent 
     that the violation included such false entries.
       A DIHC and its affiliates shall also be subject to the 
     Criminal penalties provisions of the Financial Institutions 
     Reform, Recovery and Enforcement Act of 1989 and the 
     Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer 
     Recovery Act of 1990 to the same extent as a registered bank 
     holding company, savings and loan holding company or any 
     affiliate of such companies.
       Subsection (1): Civil Enforcement, Cease-and-Desist Orders, 
     Civil Money Penalties. This subsection provides for civil 
     enforcement, cease-and-desist orders and civil money 
     penalties consistent with subsections (b) through (s) and 
     subsection (u) of section 1818 of Title 123 for any company 
     or person that violates the provisions of this section in the 
     same manner as they apply to a state member insured bank, and 
     grants the AFBA the power to impose such penalties after 
     providing the company or person accused of such violation the 
     opportunity to object in writing to its finding.
       Subsection (m): Judicial Review. This subsection provides 
     for judicial review of decisions reached by an AFBA under the 
     provisions of this section. This right to review includes a 
     right of judicial review of statutes, rules, regulations, 
     orders and other actions that would discriminate against 
     DIHCs or affiliates controlled by such companies.
     Section 102: Amendment to the Bank Holding Company Act of 
         1956
       This section contains a conforming amendment to the 
     definition of the term ``bank'' in the Bank Holding Company 
     Act to ensure that a DIHC owning an insured depository 
     institution will be regulated under this Act rather than 
     the Bank Holding Company Act.
     Section 103: Amendments to the Federal Reserve Act
       This section clarifies the application of Section 23A of 
     the Federal Reserve Act to certain loans and extensions of 
     credit to persons who are not affiliated with a member bank. 
     Section 23A contains a provision that was intended to prevent 
     the use of ``straw man'' intermediaries to evade section 
     23A's limitations on loans and extensions of credit to 
     affiliates. Contrary to its original purpose, the provision 
     may also be literally read to restrict a bona fide loan or 
     extension of credit to a third party who happens to use the 
     proceeds to purchase goods or services from an affiliate of 
     the insured depository institution; such a loan could occur, 
     for example, if a customer happened to use a credit card 
     issued by an insured depository institution to buy an item 
     sold by the insured depository institution's affiliate. This 
     section clarifies that such loans and extensions of credit 
     are not covered by section 23A as long as (i) the insured 
     depository institution approves them in accordance with 
     substantially the same standards and procedures and on 
     substantially the same terms that it applies to similar loans 
     or extensions of credit that do not involve the payment of 
     the proceeds to an affiliate, and (ii) the loans or 
     extensions of credit are not made for the purpose of evading 
     any requirement of section 23A.
     Section 104: Amendments to the Banking Act of 1933
       Subsection (a) amends section 20 of the Glass-Steagall Act 
     so that it does not apply to member banks that are controlled 
     by DIHCs.
       Subsection (b) amends section 32 of the Glass-Steagall Act 
     so that it does not apply to officers, directors and 
     employees of affiliates of a single depository institution 
     holding company.
     Section 105: Amendment to the Federal Deposit Insurance Act
       This section amends the Change in Bank Control Act to 
     provide that an acquisition of a DIHC controlling an insured 
     depository institution may only be accomplished after 
     complying with that Act's procedures. It also modifies the 
     definition of ``control'' in the Change in Savings and Loan 
     Control Act to conform it to the definition in section 
     101(a)(9) of this Act.
     Section 106: Amendment to the Securities Exchange Act of 1934
       This section amends the Securities Exchange Act of 1934 to 
     provide for the registration and regulation of Broker 
     Dealers.
     Section 107: Amendment to the Home Owners' Loan Act
       This section amends section 11 of the Home Owners' Loan Act 
     in order to apply Section 101(c)(1)(B) of this section to 
     savings associations.
     Section 108: Amendment to the Community Reinvestment Act
       This section amends the Community Reinvestment Act to make 
     it applicable to acquisitions of insured depository 
     institutions by DIHC's.


                   TITLE II--SUPERVISORY IMPROVEMENTS

     Section 201: National Financial Services Committee
       This section establishes a standing committee, the National 
     Financial Services Oversight Committee (Committee), in order 
     to provide a forum in which federal and state regulators can 
     reach a consensus regarding how the regulation of insured 
     depository institutions should evolve in response to changing 
     market conditions. In addition, the Committee also provides a 
     mechanism through which various federal regulatory agencies 
     could coordinate their responses to a financial crisis, if 
     such a crisis were to occur. The Committee comprises all 
     federal agencies responsible for regulating financial 
     institutions or financial activities, and it is structured to 
     allow state regulators to participate in its deliberations.
       The Committee consists of the Chairman of the Secretary of 
     the Treasury, who is also the Chairman of the Committee, the 
     Chairman of the Board of Governors of the Federal Reserve 
     System, the Chairman of the FDIC, the Director of the Office 
     of Thrift Supervision, the Comptroller of the Currency, the 
     Secretary of Commerce, the Attorney General, the Chairman of 
     the SEC, and the Chairman of the CFTC.
       The Committee is directed to report to Congress within one 
     year of enactment of this Act on proposed legislative or 
     regulatory actions that will improve the examination process 
     to permit better oversight of all insured depository 
     institutions. It is also directed to establish uniform 
     principles and standards for examinations.


                               TITLE III

     Section 301: Effective date
       The Act will become effective on the date of enactment.

  Mr. GRAMS. Mr. President, I rise today in support of the Depository 
Institution Affiliation Act, which has been drafted by Senate Banking 
Committee Chairman Alfonse D'Amato. This landmark piece of legislation 
will modernize the archaic laws that govern our financial services 
industry. Passage of this legislation will benefit consumers, increase 
the availability of venture capital for job creation, and bolster the 
international competitiveness of America's financial services industry.
  There is a clear need to modernize the outdated laws that govern 
America's financial services industry, because financial services play 
a vital role in our daily lives. We take out loans to go to college, to 
buy a car, and to purchase a home. We buy insurance to provide greater 
security to ourselves and our families. We make investments throughout 
our life so that we may retire in comfort and dignity.
  Today, technological advancements and increased innovation in the 
delivery of financial services make it easier than ever for consumers 
to get loans, purchase insurance, and invest their earnings. 
Unfortunately, our archaic and burdensome laws governing financial 
institutions continue to discourage, rather than encourage, such 
advancement and innovation.
  The laws to which I am referring are not those governing the safety 
and soundness of financial institutions, such as setting minimum 
capital requirements or requiring periodic oversight by Federal or 
State regulators. Safety and soundness laws and regulations are 
beneficial and necessary, as they enhance the security of the consumer 
whenever he or she deposits money in a bank or purchases an insurance 
policy.
  The outdated laws to which I am referring are the laws that create 
barriers to competition by artificially compartmentalizing the three 
major sectors of financial services--banking, securities, and 
insurance. For example, under the Banking Act of 1933, more commonly 
known as the Glass-Steagall Act, banks are generally barred from 
directly investing in corporate securities, underwriting new corporate 
issues or sponsoring mutual funds. Under the Bank Holding Company Act 
of 1956, securities underwriters, insurance underwriters, and 
nonfinancial companies are generally prohibited from owning banks or 
being owned by a bank holding company.
  These outdated financial institution laws hurt consumers by 
artificially increasing the costs of financial services, reducing the 
availability of financial products, and reducing the level of 
convenience in the delivery of financial services. These laws hurt 
small businesses--an engine of job growth in the American economy--by 
artifically limiting the amount of equity capital available for 
expanded activity. These

[[Page S1232]]

laws weaken the international competitiveness of America's financial 
institutions by prohibiting them from offering the range of financial 
services that foreign financial institutions may offer.

  It should be noted that the Glass-Steagall Act--which created the 
compartmentalized structure of financial services that we have today--
was based upon the false premise that the massive amount of bank 
failures that occurred during the Great Depression was caused by the 
securities activities that these banks conducted. However, just the 
opposite is true: Diversification in financial services actually 
increased the safety and soundness of the banks. Between 1929 and 1933, 
26.3 percent of all national banks failed. However, the failure rate 
for those banks that conducted securities activities was lower. Of the 
national banks in 1929 that either had securities affiliates or had 
internal bond departments, only 7.2 percent had failed by 1933. The 
message from these statistics is clear: We should encourage competition 
and diversification, not discourage it.
  Last year, Congress passed a bipartisan and comprehensive legislative 
initiative to reform the Telecommunications Act and stimulate 
competition and innovation in the telecommunications industry. Similar 
action is needed this year to stimulate the growth and global 
competitiveness of our financial services industry.
  The Depository Institution Affiliation Act creates a new Financial 
Services Holding Company structure that will permit banks, thrifts, 
securities companies and insurance companies to affiliate and cross-
market their products. This structure will do this while maintaining 
consumer protections and the safety and soundness of the Federal 
deposit insurance system.
  This legislation will greatly benefit consumers. The D'Amato bill's 
termination of affiliation restrictions will significantly increase 
competition in the financial services industry. Consumers' costs in the 
purchase of insurance, securities and banking products will be lowered. 
The bill's termination of crossmarketing restrictions will increase 
consumer convenience, as consumers will be able to do one-stop shopping 
for all of their financial services needs. The D'Amato bill does all of 
this while maintaining the statues and regulations that protect 
consumers from fraud and discrimination.
  This legislation will maintain the safety and soundness of the 
Federal deposit insurance system. The D'Amato bill protects banks from 
being affected by affiliate and holding company insolvency by 
implementing firewalls that prohibit affiliates from raiding the 
insured bank. As added protection, it requires that if a bank becomes 
anything less than satisfactorily capitalized, the Financial Services 
Holding Company must immediately divest of the bank.
  This legislation will provide for competitive equality among all 
financial services providers. Its provisions have been carefully 
crafted to provide a level playing field for banks, thrifts, securities 
companies and insurance companies. This charter up approach will permit 
all of these companies to become Financial Services Holding Companies, 
and will not prevent current financial institutions from conducting any 
activities that they currently conduct.
  In closing, I look forward to supporting Chairman D'Amato in his 
efforts to pass financial modernization legislation. It is my hope that 
1997 will be the year that we join together and create a bipartisan 
bill that will reform our laws so that America's financial institutions 
will be able to compete, innovate and grow to meet the challenges of 
the 21st century.
                                 ______
                                 
      By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Levin, Mr. 
        Inouye, Mr. Coverdell, and Mr. Abraham):
  S. 299. A bill to require the Secretary of the Treasury to mint coins 
in commemoration of the sesquicentennial of the birth of Thomas Alva 
Edison, to redesign the half dollar circulating coin for 1997 to 
commemorate Thomas Edison, and for other purposes; to the Committee on 
Banking, Housing, and Urban Affairs.


     THE THOMAS ALVA EDISON SESQUICENTENNIAL COMMEMORATIVE COIN ACT

  Mr. LAUTENBERG. Mr. President, I rise on behalf of Senators DeWine, 
Levin, Inouye, Coverdell, Abraham, and myself, to introduce legislation 
that would direct the Secretary of the Treasury to mint coins 
commemorating the 150th anniversary of Thomas Alva Edison's birth. The 
introduction of this legislation today, February 11, is significant 
because Thomas Edison was born 150 years ago.
  Mr. President, few Americans have had a greater impact on our Nation, 
and our world, than Thomas Edison. He produced more than 1,300 
inventions, including the incandescent light bulb, the alkaline 
battery, the phonograph, and motion pictures.
  In 1928, the Congress saw fit to award to Mr. Edison a Congressional 
Gold Medal ``for development and application of inventions that have 
revolutionized civilization in the last century.'' The legislation I am 
introducing today would once again honor one of the world's greatest 
inventors by issuing both commemorative and circulating coins with Mr. 
Edison's likeness.
  These coins not only would honor the memory of Thomas Edison, they 
would also raise revenue to support organizations that preserve his 
legacy. The two New Jersey Edison sites, the ``invention factory'' in 
West Orange and the Edison Memorial Tower in Edison, are both in need 
of repair. Irreplaceable records and priceless memorabilia are in 
danger of being destroyed because of moisture damage and structural 
problems. Each year, 9,000 young students visit the West Orange site to 
learn about the great inventor. Our legislation, at no cost to the 
Government, would provide the funds necessary to protect these and five 
other historical sites so that generations of schoolchildren can 
continue to visit them.
  Let me emphasize that this legislation would have no net cost to the 
Government. In fact, because circulating coins are a source of 
Government revenue known as seigniorage, this bill would reduce 
Government borrowing requirements, thereby lowering the annual interest 
payments on the national debt. An Edison commemorative coin program 
also has strong support among America's numismatists, whose interest is 
crucial to the success of any coin program.
  Mr. President, I introduced similar legislation at the end of the 
104th Congress. I introduce it again on the 150th birthday of this 
great American inventor with the anticipation that my colleagues will 
join me in honoring the memory of Thomas Alva Edison while providing 
sorely needed funds to important historical sites.
  I urge my colleagues to support this legislation and ask unanimous 
consent that a copy of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 299

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Thomas Alva Edison 
     Sesquicentennial Commemorative Coin Act''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) Thomas Alva Edison, one of America's greatest 
     inventors, was born on February 11, 1847, in Milan, Ohio;
       (2) the inexhaustible energy and genius of Thomas A. Edison 
     produced more than 1,300 inventions in his lifetime, 
     including the incandescent light bulb and the phonograph;
       (3) in 1928, Thomas A. Edison received the Congressional 
     gold medal ``for development and application of inventions 
     that have revolutionized civilization in the last century''; 
     and
       (4) 1997 will mark the sesquicentennial of the birth of 
     Thomas A. Edison.
                      TITLE I--COMMEMORATIVE COINS

     SEC. 101. COIN SPECIFICATIONS.

       (a) Denominations.--In commemoration of the 
     sesquicentennial of the birth of Thomas A. Edison, the 
     Secretary of the Treasury (hereafter in this Act referred to 
     as the ``Secretary'') shall mint and issue--
       (1) not more than 350,000 $1 coins, each of which shall--
       (A) weigh 26.73 grams;
       (B) have a diameter of 1.500 inches; and
       (C) contain 90 percent silver and 10 percent copper; and
       (2) not more than 350,000 half dollar coins, each of which 
     shall--
       (A) weigh 12.50 grams;
       (B) have a diameter of 1.205 inches; and
       (C) contain 90 percent silver and 10 percent copper.
       (b) Legal Tender.--The coins minted under this title shall 
     be legal tender, as provided in section 5103 of title 31, 
     United States Code.

[[Page S1233]]

       (c) Numismatic Items.--For purposes of section 5134 of 
     title 31, United States Code, all coins minted under this 
     title shall be considered to be numismatic items.

     SEC. 102. SOURCES OF BULLION.

       The Secretary shall obtain silver for minting coins under 
     this title only from stockpiles established under the 
     Strategic and Critical Materials Stock Piling Act.

     SEC. 103. DESIGN OF COINS.

       (a) Design Requirements.--
       (1) In general.--The design of the coins minted under this 
     title shall be emblematic of the many inventions made by 
     Thomas A. Edison throughout his prolific life.
       (2) Designation and inscriptions.--On each coin minted 
     under this title there shall be--
       (A) a designation of the value of the coin;
       (B) an inscription of the years ``1847-1997''; and
       (C) inscriptions of the words ``Liberty'', ``In God We 
     Trust'', ``United States of America'', and ``E Pluribus 
     Unum''.
       (3) Obverse of coin.--The obverse of each coin minted under 
     this title shall bear the likeness of Thomas A. Edison.
       (b) Design Competition.--Before the end of the 3-month 
     period beginning on the date of enactment of this Act, the 
     Secretary shall conduct an open design competition for the 
     design of the obverse and the reverse of the coins minted 
     under this title.
       (c) Selection.--The design for the coins minted under this 
     title shall be--
       (1) selected by the Secretary after consultation with the 
     Commission of Fine Arts; and
       (2) reviewed by the Citizens Commemorative Coin Advisory 
     Committee.

     SEC. 104. ISSUANCE OF COINS.

       (a) Quality of Coins.--Coins minted under this title shall 
     be issued in uncirculated and proof qualities.
       (b) Mint Facility.--Only 1 facility of the United States 
     Mint may be used to strike any particular quality of the 
     coins minted under this title.
       (c) Commencement of Issuance.--The Secretary may issue 
     coins minted under this title beginning on and after the date 
     of enactment of this Act.
       (d) Termination of Minting Authority.--No coins may be 
     minted under this title after July 31, 1998.

     SEC. 105. SALE OF COINS.

       (a) Sale Price.--The coins issued under this title shall be 
     sold by the Secretary at a price equal to the sum of--
       (1) the face value of the coins;
       (2) the surcharge provided in subsection (d) with respect 
     to such coins; and
       (3) the cost of designing and issuing the coins (including 
     labor, materials, dies, use of machinery, overhead expenses, 
     marketing, and shipping).
       (b) Bulk Sales.--The Secretary shall make bulk sales of the 
     coins issued under this title at a reasonable discount.
       (c) Prepaid Orders.--
       (1) In general.--The Secretary shall accept prepaid orders 
     for the coins minted under this title before the issuance of 
     such coins.
       (2) Discount.--Sale prices with respect to prepaid orders 
     under paragraph (1) shall be at a reasonable discount.
       (d) Surcharges.--All sales of coins minted under this title 
     shall include a surcharge of--
       (1) $14 per coin for the $1 coin; and
       (2) $7 per coin for the half dollar coin.

     SEC. 106. GENERAL WAIVER OF PROCUREMENT REGULATIONS.

       (a) In General.--Except as provided in subsection (b), no 
     provision of law governing procurement or public contracts 
     shall be applicable to the procurement of goods and services 
     necessary for carrying out this title.
       (b) Equal Employment Opportunity.--Subsection (a) shall not 
     relieve any person entering into a contract under the 
     authority of this title from complying with any law relating 
     to equal employment opportunity.

     SEC. 107. DISTRIBUTION OF SURCHARGES.

       (a) In General.--Subject to section 5134(f) of title 31, 
     United States Code, the first $7,000,000 of the surcharges 
     received by the Secretary from the sale of coins issued under 
     this title shall be promptly paid by the Secretary as 
     follows:
       (1) Museum of arts and history.--Up to \1/7\ to the Museum 
     of Arts and History, in the city of Port Huron, Michigan, for 
     the endowment and construction of a special museum on the 
     life of Thomas A. Edison in Port Huron.
       (2) Edison birthplace association.--Up to \1/7\ to the 
     Edison Birthplace Association, Incorporated, in Milan, Ohio, 
     to assist in the efforts of the association to raise an 
     endowment as a permanent source of support for the repair and 
     maintenance of the Thomas A. Edison birthplace, a national 
     historic landmark.
       (3) National park service.--Up to \1/7\ to the National 
     Park Service, for use in protecting, restoring, and 
     cataloguing historic documents and objects at the ``invention 
     factory'' of Thomas A. Edison in West Orange, New Jersey.
       (4) Edison plaza museum.--Up to \1/7\ to the Edison Plaza 
     Museum in Beaumont, Texas, for expanding educational programs 
     on Thomas A. Edison and for the repair and maintenance of the 
     museum.
       (5) Edison winter home and museum.--Up to \1/7\ to the 
     Edison Winter Home and Museum in Fort Myers, Florida, for 
     historic preservation, restoration, and maintenance of the 
     historic home and chemical laboratory of Thomas A. Edison.
       (6) Edison institute.--Up to \1/7\ to the Edison Institute, 
     otherwise known as ``Greenfield Village'', in Dearborn, 
     Michigan, for use in maintaining and expanding displays and 
     educational programs associated with Thomas A. Edison.
       (7) Edison memorial tower.--Up to \1/7\ to the Edison 
     Memorial Tower in Edison, New Jersey, for the preservation, 
     restoration, and expansion of the tower and museum.
       (b) Excess Payable to the National Numismatic Collection.--
     After payment of the amounts required under subsection (a), 
     the Secretary shall pay the remaining surcharges to the 
     National Museum of American History in Washington, D.C., for 
     the support of the National Numismatic Collection at the 
     museum.
       (c) Audits.--Each organization that receives any payment 
     from the Secretary under this section shall be subject to the 
     audit requirements of section 5134(f)(2) of title 31, United 
     States Code.

     SEC. 108. FINANCIAL ASSURANCES.

       (a) No Net Cost to the Government.--The Secretary shall 
     take such actions as may be necessary to ensure that minting 
     and issuing coins under this title will not result in any net 
     cost to the United States Government.
       (b) Payment for Coins.--A coin shall not be issued under 
     this title unless the Secretary has received--
       (1) full payment for the coin;
       (2) security satisfactory to the Secretary to indemnify the 
     United States for full payment; or
       (3) a guarantee of full payment satisfactory to the 
     Secretary from a depository institution whose deposits are 
     insured by the Federal Deposit Insurance Corporation or the 
     National Credit Union Administration Board.
                      TITLE II--CIRCULATING COINS

     SEC. 201. AUTHORITY TO REDESIGN HALF DOLLAR CIRCULATING 
                   COINS.

       Section 5112(d) of title 31, United States Code, is amended 
     by inserting after the 6th sentence the following: ``At the 
     discretion of the Secretary, half dollar coins minted after 
     December 31, 1996, and before July 31, 1998, may bear the 
     same design as the commemorative coins minted under title I 
     of the Thomas Alva Edison Sesquicentennial Commemorative Coin 
     Act, as established under section 103 of that Act.''.
                                 ______
                                 
      By Mr. FEINGOLD (for himself and Mr. Kohl):
  S. 300. A bill to prohibit the use of certain assistance provided 
under the Housing and Community Development Act of 1974 to encourage 
plant closings and the resultant relocation of employment, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.


        The Prohibition of Incentives for Relocation Act of 1997

 Mr. FEINGOLD. Mr. President, I introduce legislation to 
address an important and timely issue for the citizens of my State of 
Wisconsin, and for others all over our Nation--the issue of job piracy.
  Last month, officials in the State of Michigan announced a new 
initiative designed to lure businesses from other States into their own 
borders. Businesses are provided a tempting incentive to relocate 
there, tax-free status for 15 years, if they relocate to select regions 
of the State. The communications director for the Michigan Jobs 
Commission, Jim Tobin, was quoted in the Wisconsin State Journal as 
saying that the new so-called renaissance zones program ``will 
aggressively pursue Wisconsin companies for relocation into Michigan.'' 
Presumably, other States bordering Michigan will be targeted as well.
  I was extremely disappointed to hear that my neighboring State had 
chosen to blatantly target Wisconsin jobs, rather than focusing its 
energies on creating new jobs for its residents. In my opinion, 
economic development ought not be thought of as a zero-sum game. We 
live in an era of increasing economic interdependence, and responsible 
elected officials should be focusing on regional and national solutions 
to the crises in our States' most economically distressed areas, not on 
raiding each others' jobs.
  Upon hearing of the new Michigan initiative, my colleagues Senator 
Kohl and Congressman Tom Barrett and I requested investigations from 
several Federal agencies in order to ascertain whether and to what 
degree Federal funds are being used to finance the renaissance zones 
initiative. We feel strongly that our constituents' tax dollars should 
not have to help finance the efforts of those across State lines who 
attempt to steal their jobs.
  Fortunately, most Federal economic development grant programs, such 
as those funded by the Small Business Administration and the Economic 
Development Administration, currently include antipiracy language. 
However,

[[Page S1234]]

this important anti-piracy provision is conspicuously absent in the 
Community Development Block Grant [CDBG] Program and several other 
small programs administered by the Department of Housing and Urban 
Developmen [HUD].
  Today, Senator Kohl and I are introducing the Prohibition of 
Incentives for Relocation Act of 1997, a bill we have introduced 
previously, in both the 103d and 104th Congresses. It would simply make 
the CDBG, HUD special purpose grants, and HUD economic development 
grants consistent with other domestic economic development grant 
programs, by prohibiting HUD funds from being used for activities that 
are intended, or likely to facilitate, the closing of an industrial or 
commercial plant, or the substantial reduction of operations of a 
plant; and result in the relocation or expansion of a plant from one 
area to another area. Identical legislation is being introduced in the 
House by Representative Barrett and Representative Kleczka.
  We became aware of this problem in the way the CDBG language is 
currently drafted several years ago. In 1994, Briggs and Stratton, one 
of Wisconsin's major employers, announced that its Milwaukee plant 
would be closing. As a result, over 2,000 jobs at the plant were lost. 
The total economic impact on the community was even worse: For every 
four Briggs jobs lost, an estimated one additional job from a supplier 
or other business that relied on Briggs was lost.
  At the same time as the Milwaukee closing, Briggs and Stratton 
expanded two of its plants in other States. I do not dispute its right 
to do so. But what I find objectionable, Mr. President, is that Federal 
dollars, CDBG funds, were used to facilitate the transfer of these jobs 
from one State to another. This was, in my opinion, a completely 
inappropriate use of Federal funds. The Community Development Block 
Grant Program is designed to expand employment opportunities and 
economic growth, not simply move jobs from one community to another. 
There is no way to justify to my constituents that they are sending 
their tax dollars to Washington to be distributed to other States in 
order to attract jobs out of our State, leaving behind communities 
whose economic stability has been destroyed.
  Mr. President, it is not clear if CDBG dollars are being used by the 
State of Michigan to finance their piracy of jobs from my State and 
from our other Midwestern neighbors. But in any event, the statute 
should be revised to prohibit such usage. It is an issue of fairness, 
and it deserves our attention. I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 300

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PROHIBITION OF USE OF CERTAIN ASSISTANCE TO 
                   ENCOURAGE PLANT CLOSINGS AND RESULTANT 
                   RELOCATION OF EMPLOYMENT.

       (a) Authorizations.--Section 103 of the Housing and 
     Community Development Act of 1974 (42 U.S.C. 5303) is 
     amended--
       (1) by inserting ``(a)'' before ``The Secretary''; and
       (2) by adding at the end the following new subsection:
       ``(b) Prohibition of Use of Assistance to Encourage Plant 
     Closings and Resultant Relocation of Employment.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, no amount from a grant made under section 106 shall be 
     used for any activity that is intended or is likely to--
       ``(A) facilitate the closing of an industrial or commercial 
     plant or the substantial reduction of operations of a plant; 
     and
       ``(B) result in the relocation or expansion of a plant from 
     one area to another area.
       ``(2) Notice.--The Secretary shall, by notice published in 
     the Federal Register, establish such requirements as may be 
     necessary to implement this subsection. Such notice shall be 
     published as a proposed regulation and take effect upon 
     publication. The Secretary shall issue final regulations, 
     taking into account public comments received by the 
     Secretary.''.
       (b) Special Purpose Grants.--Section 107 of the Housing and 
     Community Development Act of 1974 (42 U.S.C. 5307) is amended 
     by adding at the end the following new subsection:
       ``(g) Prohibition of Use of Assistance To Encourage Plant 
     Closings and Resultant Relocation of Employment.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, no amount from a grant made under this section shall be 
     used for any activity that is intended or is likely to--
       ``(A) facilitate the closing of an industrial or commercial 
     plant or the substantial reduction of operations of a plant; 
     and
       ``(B) result in the relocation or expansion of a plant from 
     one area to another area.
       ``(2) Notice.--The Secretary shall, by notice published in 
     the Federal Register, establish such requirements as may be 
     necessary to implement this subsection. Such notice shall be 
     published as a proposed regulation and take effect upon 
     publication. The Secretary shall issue final regulations, 
     taking into account public comments received by the 
     Secretary.''.
       ``(c) Economic Development Grants.--Section 108(q) of the 
     Housing and Community Development Act of 1974 (42 U.S.C. 
     5308(q)) is amended by adding at the end the following new 
     paragraph:
       ``(5) Prohibition of use of assistance to encourage plant 
     closings and resultant relocation of employment.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, no amount from a grant made under this subsection shall 
     be used for any activity that is intended or is likely to--
       ``(i) facilitate the closing of an industrial or commercial 
     plant or the substantial reduction of operations of a plant; 
     and
       ``(ii) result in the relocation or expansion of a plant 
     from one area to another area.
       ``(B) Notice.--The Secretary shall, by notice published in 
     the Federal Register, establish such requirements as may be 
     necessary to implement this paragraph. Such notice shall be 
     published as a proposed regulation and take effect upon 
     publication. The Secretary shall issue final regulations, 
     taking into account public comments received by the 
     Secretary.''.
                                 ______
                                 
      By Mr. McCAIN:
  S. 301. A bill to authorize the Secretary of the Interior to set 
aside up to $2 per person from park entrance fees or assess up to $2 
per person visiting the Grand Canyon or other national park to secure 
bonds for capital improvements to the park, and for other purposes; to 
the Committee on Energy and Natural Resources.


                       NATIONAL PARKS LEGISLATION

   Mr. McCAIN. Mr. President, I introduce legislation that would allow 
us to make desperately needed improvements within America's national 
parks.
  The National Parks Capital Improvements Act of 1997 would allow 
private fundraising organizations to enter into agreements with the 
Secretary of the Interior to issue taxable capital development bonds. 
Bond revenues would then be used to finance park improvement projects. 
The bonds would be secured by an entrance fee surcharge of up to $2 per 
visitor at participating parks, or a set-aside of up to $2 per visitor 
from current entrance fees.
  Our national park system has enormous capital needs--by last 
estimate, over $3 billion for high priority projects such as improved 
transportation systems, trail repairs, visitor facilities, historic 
preservation, and the list goes on and on. The unfortunate reality is 
that even under the rosiest budget scenarios our growing park needs far 
outstrip the resources currently available.
  A good example of this funding gap is at Grand Canyon National Park. 
The park's recently approved park management plan calls for over $300 
million in capital improvements, including a desperately needed 
transportation system to reduce congestion. Despite this enormous need 
for funding, the Grand Canyon received only $12 million from the 
Federal Government last year for operating costs. The gap is as wide as 
the Grand Canyon itself. Clearly, we must find a new way to finance 
park needs.
  Revenue bonding would take us a long way toward meeting our needs 
within the national park system. Based on current visitation rates at 
the Grand Canyon, a $2 surcharge would enable us to raise $100 million 
from a bond issue amortized over 20 years. That is a significant amount 
of money which we could use to accomplish many critical park projects.
  I want to emphasize, however, the Grand Canyon would not be the only 
park eligible to benefit from this legislation. Any park unit with 
capital needs in excess of $5 million is eligible to participate. Among 
eligible parks, the Secretary of the Interior will determine which may 
take part in the program.
  I also want to stress that only projects approved as part of a park's 
general management plan can be funded through bond revenue. This 
proviso eliminates any concern that the revenue could be used for 
projects of questionable value to the park.

[[Page S1235]]

  In addition, only organizations under agreement with the Secretary 
will be authorized to administer the bonding, so the Secretary can 
establish any rules or policies he deems necessary and appropriate.
  Under no circumstances, however would, investors be able to attach 
liens against Federal property in the very unlikely event of default. 
The bonds will be secured only by the surcharge revenues.
  Finally, the bill specifies that all professional standards apply and 
that the issues are subject to the same laws, rules, and regulatory 
enforcement procedures as any other bond issue.
  The most obvious question raised by this legislation is: Will the 
bond markets support park improvement issues, guaranteed by an entrance 
surcharge? The answer is yes, emphatically. Americans are eager to 
invest in our Nation's natural heritage, and with park visitation 
growing stronger, the risks would appear minimal. For example, a recent 
Washington Times editorial printed on December 8, 1996, noted that park 
visitation has increased to nearly 280 million since 1983, so that now 
more than a quarter of a million people visit our national parks every 
year. That editorial went on to point out that attendance is expected 
to further increase to well over 300 million by the turn of the 
century.
  Are park visitors willing to pay a little more at the entrance gate 
if the money is used for park improvements? Again, yes. Time and time 
again, visitors have expressed their support for increased fees 
provided that the revenue is used where collected and not diverted for 
some other purpose devised by Congress.
  With the fee demonstration program currently being implemented at 
parks around the Nation, an additional $2 surcharge may not be 
necessary or appropriate at certain parks. Under the bill, those parks 
could choose to dedicate $2 per park visitor from current entrance fees 
toward a bond issue.
  Finally, I want to point out that the bill will not cost the Treasury 
any money? On the contrary, it will result in a net increase in Federal 
revenue. First, the bonds will be fully taxable. Second, making 
desperately needed improvements sooner rather than later will reduce 
total project costs.
  Mr. President, this legislation seeks to use park entrance fees to 
their fullest potential through bonds. I appreciate that some details 
may remain to be worked out in this bill and I encourage the 
administration and other interested groups to work with me to fine tune 
this legislation. But, I believe that use of revenue bonds to pay the 
staggering costs for capital improvements within our parks is an idea 
whose time has come.
  America has been blessed with a rich natural heritage. The National 
Park Service Organic Act, which created the National Park Service, 
enjoins us to protect our precious natural resources for future 
generations and to provide for their enjoyment by the American people. 
The National Parks Capital Improvements Act must pass if we are to 
successfully fulfill the enduring responsibilities of stewardship with 
which we have been vested. I urge my colleagues to support me in this 
important effort.
  I ask unanimous consent that copies of letters supporting this 
legislation from the Environmental Defense Fund, the National Trust for 
Historic Preservation, the Grand Canyon Fund, the National Park 
Foundation, the Grand Canyon Trust, the Friends of Acadia, Mount 
Rainier, North Cascades & Olympic Fund and the Rocky Mountain National 
Park Associates, Inc., be included in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                      Rocky Mountain National Park


                                             Associates, Inc.,

                                 Estes Park, CO, February 3, 1997.
     Senator John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain, Permit me to add a voice of support 
     for the bill you are reintroducing known as the National 
     Parks Capital Improvement Act.
       Many of us affiliated as non profit and philanthropic 
     partners working to improve and enhance America's National 
     Park System are searching for innovative solutions to address 
     the pressing needs of our parks. The concept of the National 
     Parks Capital Improvements Act may be innovative within the 
     context of national parks, but it is clearly a well-tested 
     tool in the private sector and it is needed now for our park 
     fix-up kits. It is my understanding that it permits bonds to 
     be issued at our parks--at least those areas having special 
     long-term needs and those adept at revenue generation. This 
     legislation is not designed to address every need of the 
     maintenance backlog which is fast accumulating within the 
     National Park System. But in specific parks--like that of 
     Grand Canyon or others with carefully defined Master Plans--
     this authority to issue bonds could be put to beneficial use 
     immediately, addressing critically important infrastructure 
     and visitor services improvement programs.
       I hasten to add that not many parks have non profit 
     partnerships as strong as Grand Canyon National Park has with 
     its affiliates, the Grand Canyon Association and the Grand 
     Canyon Fund. The key to making this bond issuance authority 
     work effectively is the leadership and managerial competence 
     coming from these non profit partners. The National Park 
     Service is fortunate to have such strong non profit friends 
     who are able to both create and manage this financing plan 
     within the context of our National Park System.
       I applaud your foresight and your leadership in 
     reintroducing the National Parks Capital Improvements Act in 
     this current session of Congress. I heartily endorse your 
     concern and your continued efforts in seeking new solutions 
     to help our national parks.
           Kindest regards,
                                                   C.W. Buchholtz,
     Executive Director.
                                  ____

                                       National Trust for Historic


                                                 Preservation,

                                 Washington, DC, February 3, 1997.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: On behalf of the more than 250,000 
     members of the National Trust for Historic Preservation, I am 
     writing to express our support for the National Parks 
     Improvements Act of 1997. This legislation creates, in the 
     form of revenue bonds, an innovative mechanism for funding 
     the backlog of capital investment and deferred maintenance 
     needs in our National Park System.
       Recently, Senator Craig Thomas, the new Chairman of the 
     Subcommittee on Parks, Historic Preservation and Recreation, 
     expressed the view that the challenges facing the National 
     Parks System--specifically the backlog of deferred 
     maintenance, repair and restoration needs--must be addressed 
     outside that normal annual appropriation process. The 
     National Trust for Historic Preservation has a particular 
     interest in finding sources of funding for the $1 to $2 
     billion backlog of restoration and rehabilitation needs for 
     the 20,000 historic structures in our National Parks. The 
     National Parks Improvement Act of 1997 provides a solution to 
     the complex problem, and we look forward to working with you 
     on this legislation.
           Sincerely,
     Edward M. Norton, Jr.
                                  ____



                                      Grand Canyon Fund, Inc.,

                               Grand Canyon, AZ, January 31, 1997.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: We are very pleased to offer our 
     enthusiastic support of your new legislation, which will 
     enable the National Park Service and private partners to use 
     taxable revenue bond funding for the benefit of our 
     irreplaceable national parks. We understand the new 
     legislation incorporates the necessary changes to accommodate 
     the recreation fee demonstration project and other interests.
       Revenue bonding is an additional tool for private partners 
     to utilize in assisting the National Park Service with 
     meeting the overwhelming backlog of unfunded capital needs. 
     We appreciated your support of the parks with your bill S. 
     1695 (National Parks Capital Improvements Act of 1996) and 
     were very pleased to testify before the United States Senate 
     Subcommittee on Parks, Historic Preservation and Recreation 
     last September. We stand ready to assist you in any 
     appropriate way.
           Sincerely,
     Eugene P. Polk,
       Chairman.
     Robert W. Koons,
       President.
                                  ____



                                            Friends of Acadia,

                                          Maine, February 3, 1997.
     Re S. 1695--National Parks Capital Improvements Act of 1997.
     Senator John McCain,
     Senator Ben Nighthorse Campbell,
     Subcommittee on Parks, Historic Preservation, and Recreation.
       Dear Sen. McCain, Sen. Campbell and Committee Members: 
     Friends of Acadia enthusiastically supports S. 1695, the 
     National Parks Capital Improvements Act of 1997. Please add 
     these comments directly to the record.
       The bill would allow as much as a $2.00 user surcharge for 
     visitors to Grand Canyon National Park and allow the issuance 
     of bonds by a nonprofit park cooperator. The bill can apply 
     to other, unspecified parks as well.

[[Page S1236]]

       Friends of Acadia endorses this resourceful idea and thinks 
     it may be applicable to Acadia National Park, which has an 
     approved general management plan and currently has capital 
     needs exceeding $5 million.
       We respectfully request that, based on conditions unique to 
     a given park, an individual park may be allowed to set the 
     surcharge within or above the fee demonstration amount, if it 
     is a fee demonstration park.
       Friends of Acadia is an independent nonprofit organization 
     whose mission is to protect and preserve Acadia National Park 
     and the surrounding communities. We recently raised $4 
     million in private funds to leverage a $4-million park 
     capital appropriation.
       This was a model private-public partnership. Its success 
     demonstrates that federal dollars can be effectively 
     multiplied by innovative use of philanthropic nonprofits, as 
     is envisioned in this bill.
       Friends of Acadia urges passage of S. 1695.
       Thank you for your consideration of and support for this 
     effort.
           Sincerely,
                                                    Heidi A. Beal,
     Director of Programs.
                                  ____



                                     National Park Foundation,

                                 Washington, DC, February 3, 1997.
     Hon. John McCain,
     U.S. Senate, Washington, DC.
       Dear Senator McCain: Last year the National Park Foundation 
     enjoyed working with you on several pieces of legislation, 
     including a bill you authored which would have allowed the 
     use of taxable bonds to finance long-term capital 
     improvements within the National Park System. This bill, the 
     National Parks Capital Improvements Act, would have generated 
     additional revenue for America's natural, cultural and 
     historic treasures through an innovative public-private 
     partnership.
       As the 105th Congress begins, we look forward to working 
     closely with you and your staff on legislation designed to 
     help conserve and protect National Parks.
       Thank you for your consistent, thoughtful support of Grand 
     Canyon National Park and the leadership you have shown in 
     developing solutions to help the entire National Park System.
           Sincerely,
                                                        Jim Maddy,
     President.
                                  ____



                                           Grand Canyon Trust,

                                                 February 6, 1997.
     Hon. John McCain,
     Washington, DC.
       Dear Senator McCain: I am writing to express Grand Canyon 
     Trust's support for the National Parks Capital Improvements 
     Act of 1997, legislation to authorize a $2.00-per-person 
     surcharge on entrance fees at Grand Canyon and other national 
     parks to secure bonds for capital improvements.
       We believe the proposed legislation will greatly assist the 
     efforts of the National Park Service and other entities to 
     generate the additional funding so urgently needed to 
     maintain, repair and enhance the infrastructure of Grand 
     Canyon National Park and others in the National Park System. 
     We support the proposed use of the $2.00-per-person surcharge 
     to generate incremental revenue for park capital projects.
       Grand Canyon Trust shares your concerns that the park 
     system's, and particularly Grand Canyon National Park's, 
     pressing infrastructure and resource management needs will 
     not be met unless Congress acts to provide the new authority 
     proposed in this legislation. If those needs are not met, the 
     environment in the parks and visitors' experiences will 
     continue to deteriorate, an unacceptable and unnecessary fate 
     for America's ``crown jewels,'' the national parks.
       We look forward to working with you to achieve passage of 
     this important legislation.
           Sincerely,
                                              Geoffrey S. Barnard,
     President.
                                  ____

                                     Mount Rainier, North Cascades


                                               & Olympic Fund,

                                    Seattle, WA, January 31, 1997.
     Senator John McCain,
     Washington, DC.
       Dear Senator McCain: On behalf of the Mount Rainier, North 
     Cascades & Olympic Fund, I would like to state our strong 
     support for the upcoming bill that is replacing S. 1695.
       The Fund is a non-profit organization, dedicated to the 
     preservation and restoration of Washington's National Parks. 
     Organizations such as the Fund, have been created throughout 
     the United States to help fill the increasing gap between 
     national park needs and funds. In 1995, these non-profits 
     contributed approximately $16 million dollars to national 
     parks throughout the nation. However, even this impressive 
     figure is only scratching the surface of the National Park 
     Services needs.
       ``The National Park Service was created in 1916, with a 
     mandate to manage the national parks in such a manner . . . 
     as will leave them unimpaired for the enjoyment of future 
     generations.'' As financial pressures have mounted, it has 
     become increasingly difficult for the parks to fulfill this 
     mission.
       I believe that passage of the National Parks Capital 
     Improvements Act, will help parks such as the Grand Canyon, 
     fulfill their mission to protect our national treasures for 
     present and future generations.
       Thank you for your efforts to preserve and protect our 
     natural heritage.
           Sincerely,
                                                     Kim M. Evans,
     Executive Director.
                                  ____



                                   Environmental Defense Fund,

                                    Boulder, CO, February 9, 1997.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: In a recent report, the General 
     Accounting Office told the United States Congress that ``the 
     national park system is at a crossroads.'' The General 
     Accounting Office confirmed what many of us have known for 
     some time: while the national park system is growing and 
     visitation is increasing, the resources available to manage 
     and protect these resources are falling far short of what is 
     needed to preserve America's natural and historical heritage. 
     As a result, the backlog of repairs and maintenance needed 
     throughout the national park system has grown to $4 billion.
       Last year, you proposed legislation that would have 
     authorized a limited number of not-for-profit entities to 
     issue taxable bonds, the proceeds of which would have been 
     used to make critically needed investment in units of the 
     national park system. Without creative and innovative 
     approaches such as this, we very likely will never close the 
     gap between the financial resources that are needed to manage 
     and protect our national park system, and the resources that 
     are available.
       I understand that you plan to introduce a similar bill in 
     the 105th Congress, and I am writing to offer the 
     Environmental Defense Fund's support for this undertaking. 
     While no one piece of legislation will solve all of the 
     problems confronted by the national park system, your 
     legislation is a big step in the right direction.
       I look forward to working with you as your proposal works 
     its way through the legislative process.
           Respectfully,
                                                  James B. Martin,
                                          Senior Attorney.

 By Mr. CHAFEE (for himself, Mr. Rockefeller, Mr. Frist, Mr. Jeffords, 
                           and Ms. Collins):

  S. 302. A bill to amend title XVIII of the Social Security Act to 
provide additional consumer protections for Medicare supplemental 
insurance; to the Committee on Finance.


                  THE MEDIGAP PORTABILITY ACT OF 1997

  Mr. CHAFEE. Mr. President. Last year, the President signed into law 
bipartisan legislation that provides greater portability of health 
insurance for working Americans. Today, I join with my colleagues, 
Senator Rockefeller, Senator Frist, Senator Jeffords, and Senator 
Collins, in the introduction of a bipartisan bill that will provide 
some of the same guarantees for Medicare beneficiaries who buy Medicare 
supplemental insurance or MediGap policies.
  Of the 38 million Medicare beneficiaries, about 80 percent, or 31 
million, have some form of Medicare supplemental insurance, whether 
covered through an employer-sponsored health plan, Medicaid or another 
public program, or a private MediGap policy. Our bill does several 
important things for Medicare beneficiaries who have had continuous 
coverage:
  First, it guarantees that if their plan goes out of business or the 
beneficiary moves out of a plan service area, he or she can buy another 
comparable policy. These rules also would apply to a senior who has had 
coverage under a retiree health plan or Medicare Select if their plan 
goes out of business.
  Second, it encourages beneficiaries to enroll in Medicare managed 
care by guaranteeing that they can return to Medicare fee-for-service 
and, during the first year of enrollment, get back their same MediGap 
policy if they decide they do not like managed care. Under current law, 
if a senior wishes to enroll in a Medicare managed care plan, he or she 
has two options. The MediGap policy may be dropped if the senior 
chooses a managed care program, or the individual can continue to pay 
MediGap premiums in the event that the policy is needed again some 
day--a very costly option for those on fixed incomes. Many seniors fear 
that if they lose their supplemental policy after entering a managed 
care plan, it may be financially impossible for them to reenroll in 
MediGap.
  Third, it bans preexisting condition exclusion periods for Medicare 
beneficiaries who obtain MediGap policies when they are first eligible 
for Medicare. Under current law, any time insurers sell a MediGap 
policy, they can limit or exclude coverage for services related to 
preexisting health conditions for a 6-month period.
  Fourth, it establishes a guaranteed open enrollment period for those 
under

[[Page S1237]]

65 who become Medicare beneficiaries because they are disabled. Under 
current Federal law, Medicare beneficiaries are offered a 6-month open 
enrollment period only if they are 65. There are approximately 5 
million Americans who are under 65 years of age and are enrolled in the 
Medicare program. Currently, they do not have access to MediGap 
policies unless State laws require insurers to offer policies to them. 
Our bill provides for a one-time open enrollment period for the current 
Medicare disabled, which will guarantee access to all MediGap plan 
options for almost 5 million disabled Americans.
  It is true that this bill does not go as far as some would like. Our 
bill leaves to the states more controversial issues, such as continuous 
open enrollment and community rating of MediGap premiums. I believe, 
however, that this legislation will provide seniors similar guarantees 
to those that we provided to working Americans under the Kassebaum-
Kennedy legislation.
  Mr. FRIST. Mr. President, I rise to speak in support of the MediGap 
Portability Act of 1997. The importance of this legislation is best 
expressed by the many stories of individuals who have unsuccessfully 
tried to obtain adequate Medicare supplemental coverage. Therefore, I 
would like to share with you the experience of one of my constituents--
Gary Purcell, a 60-year-old retired professor from the University of 
Tennessee.
  To say the least, Dr. Purcell's health status has been a challenge 
for him. Despite a history of multiple illnesses including lupus, 
hypertension, diabetes, severe heart and kidney disease, and recurrent 
life-threatening skin infections, this man kept working. Even after 
suffering a stroke, he kept working. Dr. Purcell fought to remain 
productive, but as his condition deteriorated, he was forced to retire 
on disability. He subsequently developed prostate cancer and recently 
suffered an amputation of the left leg.
  One day last fall, he received a letter saying he was eligible for 
Medicare due to disability. In fact, the situation was a little more 
complicated than that. Since he had not yet reached his 65th birthday, 
Dr. Purcell was actually being reassigned to Medicare, thus losing his 
private health insurance coverage. Due to the fact he is eligible for 
Medicare because of disability and not age, and because of preexisting 
medical conditions, Dr. Purcell could not obtain MediGap coverage and 
he had no other insurance options. As a result, he will incur high out-
of-pocket costs to fill the many gaps in Medicare's coverage. Although 
Dr. Purcell will be eligible for supplemental coverage at age 65, 5 
years from now, until then he will have to spend $500 per month or 25 
percent of his income on medications to make up for what Medicare does 
not cover.
  Dr. Purcell explored other options--ways of obtaining less expensive 
drugs, but the bottom line is, he will still have to pay massive sums 
of money for his medications, money which he does not have. 
Unfortunately, his situation is not unique. Many seniors, as well as 
other individuals with disabilities, are suffering as well.
  How did this happen? What is the real issue? MediGap insurance 
policies offer coverage for Medicare's deductibles and coinsurance and 
pay for many services not covered by Medicare. However, for several 
reasons, the current MediGap laws do not always meet the needs of 
Medicare beneficiaries--especially individuals with disabilities.
  First, under current law, individuals with disabilities who qualify 
for full Medicare benefits before the age of 65 must wait to purchase 
MediGap coverage until they reach that age. At that time, they are 
given a 6-month period of open enrollment. This means that unlike the 
elderly, they cannot obtain MediGap insurance when they become eligible 
for Medicare.
  Second, even when obtainable, MediGap coverage may be limited. During 
the open enrollment period, insurers may not use a preexisting 
condition to refuse a policy for an individual. However, coverage for a 
specific preexisting condition can be delayed for up to 6 months. This 
is called underwriting. Even though alternative policies which do not 
use the underwriting process are available, they do not necessarily 
offer comparable coverage. Further, Federal law does not guarantee that 
these alternatives will continue in the future. Thus, individuals with 
disabilities on Medicare may not receive the same choices of MediGap 
plans as their senior counterparts.
  Third, such stringent requirements hinder the efforts of seniors who 
wish to try a Medicare managed care option. They are afraid of not 
being able to receive comparable supplemental coverage should they 
decide to return to the traditional fee-for-service Medicare. 
Accordingly, they do not take the risk of changing. This is perhaps one 
reason that enrollment in Medicare managed care lags far behind the 
rest of the population. We must encourage this transition if we are to 
slow the growth of Medicare costs.
  Fourth, those Medicare beneficiaries whose employer-provided wrap-
around plans are reducing or dropping benefits after they become 
eligible for Medicare will have difficulties purchasing additional 
coverage.
  Finally, we must consider those who have enrolled in Medicare managed 
care plans which terminate contracts with Medicare or whom move outside 
the service area of their plan. In these circumstances, beneficiaries 
often need to return to the traditional Medicare program and may again 
wish to obtain supplemental coverage.
  To summarize, although our current policies may encourage many 
members of the aging population to obtain continuous coverage, they are 
deficient in encouraging the same for individuals with disabilities who 
are unable to obtain supplemental coverage even if they have had 
continuous insurance coverage. They also limit the choices of seniors 
who wish to switch plans or whose retiree plans terminate or limit 
coverage. The situation is simply unfair.
  Last fall, the President signed the Health Insurance Portability and 
Accountability Act of 1996 (the ``Kassebaum-Kennedy'' bill) which 
addressed health insurance portability for the small group market. The 
Medigap Portability Act addresses similar issues for seniors and 
individuals with disabilities.
  First, seniors will now have more choices than were available before. 
They will be able to explore the managed care options now available, 
yet still return to their original Medigap plans if they change their 
minds.
  Second, if their retiree health plans terminate or substantially 
reduce benefits, seniors will still have access to supplemental health 
insurance without regard to previous health status.
  Finally, if their insurance plans should go out of business, seniors 
will still have Medigap options.
  In other words, it guarantees choice and security for senior citizens 
on Medicare.
  In addition, the bill guarantees access to the same coverage 
available to seniors for individuals with disabilities in three ways:
  First, it insures that anyone will be able to enroll in a Medigap 
plan of their choosing without discrimination during the first 6 months 
of their eligibility for full Medicare benefits, regardless of age.
  Second, the bill guarantees that the disabled will still have the 
same access to the array of Medigap choices that are available to 
seniors after the enrollment period ends, although restrictions may 
apply.
  And, third, individuals with disabilities who are currently enrolled 
in the Medicare program will have a one-time open enrollment period to 
guarantee their access to all Medigap plan options.
  Dr. Purcell is a responsible middle income American who fell through 
the safety net. He lost both rights and choices. In his own words, ``I 
find it so frustrating that I had really planned for the retirement 
period and had tried to prepare myself as prudently as possible * * * 
Yet, I had no idea that my comprehensive coverage would cease after 
only 2 years. Even though I have always done my best to be a good 
worker and to provide for my family, the rug was pulled out from under 
me anyway. I feel so helpless.''
  Dr. Purcell went on to say, ``I thought the issue through and tried 
to determine where I might have the most impact just as one person * * 
* I felt that my best option was to go to the people who represent me * 
* * in the national legislature.''

[[Page S1238]]

  Dr. Purcell and the 4 million other disabled Americans he represents 
have legitimate concerns. So do the 34 million senior citizens who are 
also affected by this issue. They are only asking for the same rights 
given to working Americans. They are coming to us, their elected 
representatives, for help. Mr. President, I challenge my colleagues and 
the insurance industry to respond to these beneficiaries. This bill 
will provide freedom of choice for seniors and individuals with 
disabilities. It is a step forward in our battle to improve health care 
access for all of our citizens and I give it my full support.
  Mr. ROCKEFELLER. Mr. President, I am pleased to be reintroducing a 
bill with my colleague from Rhode Island, Senator Chafee, to improve 
the security and protection of Medicare supplemental policies, so-
called MediGap policies. I am especially pleased that Senator Jeffords, 
both the new chairman of the Labor and Human Resources Committee and 
one of the newest members of the Finance Committee, Senator Frist, and 
Senator Collins have joined us this year as original cosponsors of our 
legislation. And I continue to be pleased that similar legislation has 
been introduced in the House of Representatives by the bipartisan team 
of Representatives Nancy Johnson and John Dingell.
  When enacted, our bipartisan, bicameral bill will make MediGap 
policies more portable, more reliable, and more accessible for almost 
40 million Medicare beneficiaries, including 5 million disabled 
Medicare beneficiaries.
  Last year, when we introduced this bill, we were not terribly 
optimistic that it would get enacted before the end of the 104th 
Congress. But we put forward our legislation anyway to share our 
proposal and objectives, begin building momentum for changes we feel 
are necessary, and to preview the fact that we would be back in the 
105th Congress with a concerted effort to make this a legislative 
priority. As it turns out, having identified MediGap improvements as an 
area of bipartisan concern, President Clinton has responded directly by 
adding the same goal of new MediGap protections as a priority he shares 
and included it in his recently submitted budget proposal. We are very 
happy that our bipartisan support for improved MediGap protections got 
noticed by the President and will be pursued by his administration in 
the upcoming budget process.
  Mr. President, too many Americans are falling through the gaps in our 
health care system. For example, consider the situation of a 44-year-
old disabled man from Capon Bridge, WV. He earns too much money to 
qualify for Medicaid and is unable to buy a private MediGap policy 
because of his medical condition. And, there is the 47-year-old woman 
from Slanesville, WV, who is in a similar situation. She was uninsured 
before qualifying for Medicare because of kidney disease. She and her 
husband have too many assets to qualify for Medicaid and they can't 
afford the $300-a-month health insurance policy offered by her 
husband's employer. They have not been able to find an insurer willing 
to sell them a MediGap policy to help with Medicare's hefty cost-
sharing requirements. A MediGap policy would be more affordable for 
them than the insurance policy offered by her husband's employer which 
duplicates, rather than supplements, Medicare's benefits. Many of the 
50,000 disabled West Virginians who qualify for Medicare are in a 
similar situation. This is wrong and we can do better.

  Mr. President, almost 8 in 10 older Americans have opted to purchase 
policies through private insurance companies to fill gaps in their 
Medicare benefits. This MediGap insurance commonly covers the $756 
deductible required for each hospital stay, the part B deductible for 
doctor visits and doctor copayments. MediGap policies also cover 
copayments for nursing home care, extended rehabilitation, or for 
emergency care received abroad. Some MediGap policies cover 
prescription drugs.
  But even MediGap policies have gaps because of insurance underwriting 
practices which prevent beneficiaries from switching MediGap insurers 
or, as in the case of the Medicare disabled, from even initially 
purchasing MediGap protection.
  Employers, looking to lower their health care costs, are increasingly 
cutting back on retiree health benefits. In just 2 years, employer-
sponsored retiree health benefits has dropped by 5 percent. These 
retirees are forced to go out on the private market and purchase 
individual MediGap coverage. Those lucky enough to find insurance will 
find their coverage compromised by preexisting condition limitations. 
Some won't find an insurer willing to sell them a policy at any price.
  In 1990, I worked with Senator Chafee, the minority leader, Senator 
Daschle, and the then-chairman of the Finance Committee, Senator 
Bentsen, On enacting a number of measures to improve the value of 
MediGap policies. We also successfully enacted legislation that 
standardized MediGap policies so that seniors could more easily compare 
the prices and benefits provided by MediGap insurers.
  At that time, Congress also mandated that insurers must sell a 
MediGap policy to any senior wishing to buy coverage when that person 
first becomes eligible for Medicare, without being subject to medical 
underwriting. At the time, there was a worry that including the 
Medicare disabled population in this open enrollment period would 
escalate premiums for current MediGap policyholders. As a result, the 
disabled were not included in this guaranteed issue requirement. Since 
then, 12 States have moved ahead and required insurers to issue 
policies to all Medicare beneficiaries in their States, including the 
disabled. To my knowledge, not one State has reported large hikes in 
premiums as a result of their new laws.
  We have also asked the American Academy of Actuaries for an 
independent analysis of our legislation. We are confident that their 
evaluation of our bill will lay to rest any concerns about wild hikes 
in MediGap premiums because of our provision to end the current law 
discrimination against the disabled.

  Mr. President, our bill would protect all Medicare beneficiaries by 
guaranteeing them MediGap coverage if they are forced to change their 
MediGap insurer, or if their employer stops providing retiree health 
benefits. Specifically, our bill would require MediGap insurers to sell 
Medicare beneficiaries a new MediGap policy without any preexisting 
condition limitations if an individual moves outside the State in which 
the insurer is licensed, or the health plan goes out of business; if an 
individual loses their employer-sponsored retiree health benefits; if 
an individual enrolled in a health maintenance organization [HMO] or 
Medicare Select policy moves outside of a health plan's service area, 
or if the HMO's contract is canceled; or if an individual enrolled in a 
HMO or a Medicare Select policy decides during their first 12 months of 
enrollment to return to a MediGap fee-for-service policy.
  Mr. President, our bill gives Medicare beneficiaries an opportunity 
to try out a managed care plan without worrying about losing their 
option to return to fee-for-service medicine. Understandably, many 
seniors worry about enrolling in a managed care organization if it 
means losing access to their lifelong doctor. Our bill would encourage 
Medicare beneficiaries to try out a managed care plan to see if it 
suits them, but our bill gives them a way back to fee-for-service 
medicine, if that ends up being their personal preference.
  Our legislation bans insurance companies from imposing any 
preexisting condition limitation during the 6-month open enrollment 
period for MediGap insurance when a person first qualifies for 
Medicare. This change from current law makes the rules for MediGap 
policies consistent with the recently enacted Kassebaum-Kennedy bill 
for the under-65 population, and with Medicare coverage which begins 
immediately, regardless of any preexisting conditions.
  Mr. President, our bill also includes a section to help seniors 
choose the right health plan for them by ensuring that they get good 
information on what plans are available in their area. It allows them 
to compare different health plans based on results of consumer 
satisfaction surveys, and will include information on benefits and 
costs.
  Our bill does not directly address affordability. And, even since we 
introduced our original bill last September, there is growing evidence 
that MediGap premiums are skyrocketing. I am hopeful that the Finance 
Committee will take a closer look at this issue

[[Page S1239]]

during its deliberations on other Medicare reform initiatives. Between 
1995 and 1996, large numbers of seniors received double-digit increases 
in their MediGap premiums. These increases were far in excess of Social 
Security cost-of-living increases and varied dramatically across 
States. In my own State of West Virginia, MediGap policies sold by the 
Prudential Insurance Co. increased by 17 percent between 1995 and 1996. 
In Ohio, premiums increased by 30 percent and in California by 37 
percent.

  Congress has considerable history in trying to guarantee at least a 
minimal level of value across all MediGap policies. Under the current 
law, individual and group MediGap policies must spend at least 65 and 
75 percent, respectively, of all premium dollars collected, on 
benefits. If a MediGap plan fails to meet these minimum loss ratios, 
they must issue refunds or credits to their customers.
  Mr. President, while Federal loss ratio standards help assure a 
minimum level of value, they do not prevent insurance companies from 
annually upping premiums as a senior ages. This practice, known as 
attained age-rating, results in the frailest and the lowest income 
seniors facing large, annual premium hikes as they age. I would hope 
that more States would follow the lead of the 10 States that have 
already banned attained age-rating. This would vastly improve the 
affordability of MediGap for the oldest and frailest of our seniors.
  Mr. President, to repeat what I said last year, our bill is a 
targeted, modest, proposal. But it would provide very real and very 
significant help to millions of Medicare beneficiaries who, year in and 
year out, pay out billions of dollars in premiums to have peace of mind 
when it comes to the cost of their health care. It is wrong and unfair 
when senior and disabled citizens in West Virginia and across the 
country are suddenly dropped by insurers or denied a MediGap policy 
just because they move to another State, or their employer cuts back on 
promised retiree health benefits, or because they're disabled.
  Mr. President, it is always a pleasure to be working on legislation 
with the Senator from Rhode Island. Senator Chafee has a long, 
impressive, and, more important, successful record in enacting 
legislation that has helped millions of seniors, children, and 
disabled. I urge my colleagues to join Senators Jeffords, Frist, and 
Collins in cosponsoring this bill, and to help us extend more of the 
health care peace of mind that older and disabled Americans ask for and 
deserve.
                                 ______
                                 
      By Mr. ABRAHAM (for himself and Mr. Levin):
  S. 303. A bill to waive temporarily the Medicare enrollment 
composition rules for the Wellness Plan; to the Committee on Finance.


          medicare waiver for the wellness plan of detroit, mi

  Mr. ABRAHAM. Mr. President, at the end of the last Congress I 
expressed my disappointment at the unwillingness of this body and the 
other Chamber to move legislation that I believe is important to the 
health care of the people of Michigan. Today I rise along with my 
colleague from Michigan, Senator Levin, to reintroduce our legislation 
providing a Medicare 50/50 enrollment composition rule waiver for the 
Wellness Plan of Detroit, MI.
  The Wellness Plan is a federally certified Medicaid health 
maintenance organization located in Detroit, MI. It has approximately 
150,000 enrollees--roughly 140,000 of whom are Medicaid, while only 
about 2,000 are Medicare beneficiaries. Since 1993, the Wellness Plan 
has had a health care prepayment plan contract with Medicare. However, 
technical changes enacted by Congress effective January 1, 1996, 
unintentionally prevent the Wellness Plan from enrolling additional 
Medicare beneficiaries under the HCPP contract. So the Wellness Plan is 
positioned to become a full Medicare risk contractor, it currently is 
precluded from doing so due to the 50/50 Medicare enrollment 
composition rule.
  Mr. President, it is important to note that even the Health Care 
Financing Administration has supported the Wellness Plan receiving this 
plan-specific 50/50 waiver. We also expect a companion bill to be 
introduced in the other Chamber shortly, and we expect it to be 
cosponsored by the entire Michigan delegation.
  Because this legislation is essentially noncontroversial, affects 
only the State of Michigan, and is supported by the entire State 
delegation, it is our earnest hope that the Senate will act on this 
measure as expeditiously as possible. There is no rational 
justification for preventing the Wellness Plan from enrolling new 
Medicare beneficiaries into its health plan. If our goal is to allow a 
wider variety of options and choices of health care plans for our 
seniors, a good place to start is to allow those Michigan residents who 
wish to join this particular health maintenance organization to be able 
to do so.
  Mr. President, I wish to thank my friend and colleague from Michigan, 
Senator Carl Levin, for once again supporting and helping me with this 
effort. I look forward to working with him to see that this measure 
which has such broad support in Michigan becomes enacted in the very 
near future.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 203

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. WAIVER OF MEDICARE ENROLLMENT COMPOSITION RULES 
                   FOR THE WELLNESS PLAN.

       The requirements of section 1876(f)(1) of the Social 
     Security Act (42 U.S.C. 1395mm(f)(1)) are waived with respect 
     to Comprehensive Health Services, Inc. (doing business as The 
     Wellness Plan) for contract periods through December 31, 
     2000.

 Mr. LEVIN. Mr. President, today I am joining with my colleague 
Senator Abraham in introducing legislation that would provide the 
Wellness Plan of Michigan with a Medicare 50/50 enrollment composition 
rule waiver. I was disappointed that Congress did not enact this waiver 
last session as the Wellness Plan is the prototype for the type of 
health maintenance organization into which many Medicare beneficiaries 
will want to enroll. It is my hope that the Senate will act 
expeditiously on this legislation so that Michigan Medicare 
beneficiaries may have the opportunity to enroll in this well-
established, quality plan.

                          ____________________