[Congressional Record Volume 143, Number 68 (Wednesday, May 21, 1997)]
[House]
[Pages H3088-H3095]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 RIEGLE-NEAL CLARIFICATION ACT OF 1997

  Mrs. ROUKEMA. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1306) to amend the Federal Deposit Insurance Act to clarify 
the applicability of host State laws to any branch in such State of an 
out-of-State bank, as amended.
  The Clerk read as follows:

                               H.R. 1306

       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 cited as the ``Riegle-Neal Clarification Act 
     of 1997''.

     SEC. 2. INTERSTATE BRANCHING.

       Subsection 24(j) of the Federal Deposit Insurance Act (12 
     U.S.C. 1831a(j)) is amended to read as follows:
       ``(j) Activities of Branches of Out-of-State Banks.--
       ``(1) Application of host state law.--The laws of a host 
     state, including laws regarding community reinvestment, 
     consumer protection, fair lending, and establishment of 
     intrastate branches, shall apply to any branch in the host 
     State of an out-of-State State bank to the same extent as 
     such State laws apply to a branch in the host State of an 
     out-of-State national bank. To the extent host State law is 
     inapplicable to a branch of an out-of-State State bank in 
     such host State pursuant to the preceding sentence, home 
     State law shall apply to such branch.
       ``(2) Activities of branches.--An insured State bank that 
     establishes a branch in a host State may conduct any activity 
     at such branch that is permissible under the laws of the home 
     State of such bank, to the extent such activity is 
     permissible either for a bank chartered by the Host State 
     (subject to the restrictions in this section) or for a branch 
     in the host State of an out-of-State national bank.
       ``(3) Coordination with section 44.--No provision of this 
     subsection shall be construed as affecting the applicability 
     of any State law of any home State under subsection (b), (c), 
     or (d) of section 44.
       ``(4) Definitions.--The terms `host State', `home State', 
     and `out-of-State bank' have the same meanings as in section 
     44(f).''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New Jersey [Mrs. Roukema] and the gentleman from Minnesota [Mr. Vento] 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from New Jersey [Mrs. Roukema].
  Mrs. ROUKEMA. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, we are here today to consider very important legislation 
to clarify the Riegle-Neal Interstate Banking Branching Efficiency Act 
of 1994. H.R. 1306 will help to protect the dual banking system by 
preserving the State banking charter as a viable and effective option 
for State banks that wish to operate in an interstate environment.
  It is essential, Mr. Speaker, I stress, to pass this legislation by 
June 1. On that date, interstate branching becomes effective in 48 out 
of the 50 States. In the interstate environment

[[Page H3089]]

that will exist after that date, State banks will be at a distinct 
disadvantage to national banks if we fail to take this action today. 
Failure to remedy this disadvantage will certainly have a negative and 
counterproductive effect on our dual banking system.
  The essence of this legislation is to provide parity between State-
chartered banks and national banks. This bill does not authorize, and I 
stress this, does not authorize new powers for State banks. It 
preserves the right of a State to decide how banks that it charters and 
supervises are operated and what activities those banks can conduct. 
For example, a New Jersey bank branching into New York State will have 
to comply with New Jersey law concerning the composition of its board 
of directors. Another example is that if a New Jersey State-chartered 
bank branches into New York and is permitted to sell securities in New 
Jersey, it may do so in New York if New York State banks are permitted 
to do so or national banks in New York may do so.
  This legislation is critical to the survival of the dual banking 
system. The dual banking system provides an important choice between 
the State or national bank charters and has served this country well 
for over 100 years. I believe it deserves to be reinforced.
  In addition, a strong State banking system is necessary for the 
economic well-being of the individual States and for innovation in 
financial institutions. It is well known in financial circles how 
innovative and creative State-chartered banks have been, indeed, 
setting standards that have ultimately been established at the national 
level.
  This legislation is also important for consumers, because if we do 
not enact this legislation, State banks will likely convert to a 
national charter. Certainly the incentive will be there. The end result 
could be that there will be no consumer protection at the State level. 
Those protections are sometimes stronger than the basic consumer 
protections of Federal law. In addition, it preserves the viability of 
the State charter option for banks that want to branch into other 
States.
  Some at the State level claim that this legislation will harm States 
rights, but I must stress there should be no misunderstanding that this 
legislation will preserve that right and, more important, the ability 
of the States to charter banks and decide how those banks will operate 
and what activities they will conduct. It enhances that. Moreover, it 
recognizes the importance of host State laws by requiring all out-of-
State banks to comply with host State laws in four key areas, community 
reinvestment, consumer protection, fair lending, and intrastate 
branching, unless the State law has been preempted by national banks. 
In that instance the law of the State which issued the charter will 
prevail.
  In recognition of the importance of H.R. 1306 and preserving the 
State banking system and the fundamental rights of the States to 
charter banks, this legislation has broad and overwhelming support from 
many State representatives. I want to stress this. It is an indication 
of how it does protect the dual banking system. We have received the 
wholehearted endorsement of the National Governors Association, which 
represents the views of all the 50 State Governors, and, by the way, 
many of those State Governors, a minimum of 35, have individually 
endorsed this legislation. The Conference of State Bank Supervisors 
supports this legislation, and 35 State banking commissioners have made 
their voices heard with additional individual letters of support. The 
IBAA, the Independent Bankers, a number of State banking associations, 
and the Federal Reserve have all expressed support for this 
legislation. I would add that even the opposition, initial opposition, 
I stress initial opposition, from the State legislators is not 
complete. We have received many letters and testimony of support from 
individual State legislators.
  The legislation today incorporates three changes to further clarify 
the original intent of Riegle-Neal.
  First, the bill clarifies the home State law of a State bank must be 
followed in situations in which a specific host State does not apply to 
a national bank. For example, if a Minnesota State-chartered bank 
branches into Wisconsin, it will be required to follow the lending 
limits established by Minnesota, not Wisconsin.
  The second point that I wish to clarify is that H.R. 1306 ensures 
that when a State bank conducts activities in a host State, it will 
meet the conditions applicable to the exercise of the activity by 
either the State banks or the national banks.
  Finally, this legislation reiterates that certain provisions of 
Riegle-Neal relating to antitrust, State filing requirements, and 
taxation are not changed by this amendment.
  I certainly want to thank the gentleman from Iowa [Mr. Leach], 
chairman of the Committee on Banking and Financial Services, certainly 
our colleagues on the other side, the gentleman from Minnesota [Mr. 
Vento] and the gentleman from New York [Mr. LaFalce] for their 
cooperation and continued willingness to work in a bipartisan manner to 
craft this bill. I believe that it is a good bill that will go a long 
way to preserving the integrity of the dual banking system in an 
interstate climate.
  Mr. Speaker, I include for the Record the endorsements from the 
National Governors Association, the individual Governors' letters, the 
Conference of State Bank Supervisors, the Independent Bankers 
Association of America, and the Federal Reserve Board endorsements of 
this legislation, as follows:
         Board of Governors of the Federal Reserve System
                                   Washington, DC, April 30, 1997.
     Hon. Marge Roukema,
     Chairwoman, Subcommittee on Financial Institutions and 
         Consumer Credit, Committee on Banking and Financial 
         Services, House of Representatives, Washington, DC.
       Dear Madam Chairwoman: You have requested the Board's views 
     on the Riegle-Neal Clarification Act of 1997. In 1994, 
     Congress enacted the Riegle-Neal Interstate Banking and 
     Branching Act (Riegle-Neal Act) to establish a framework that 
     would govern interstate branching. Beginning on June 1, 1997, 
     the Riegle-Neal Act permits banks to establish branches on an 
     interstate basis through mergers with other banks, unless a 
     state has affirmatively chosen by that date not to permit 
     interstate branching within that state. To date, 48 states 
     will permit interstate branching by merger on June 1, 1997.
       The Riegle-Neal Clarification Act of 1997 is an effort to 
     create parity between national and state-chartered banks in 
     operating out-of-state branches. The Riegle-Neal Act created 
     an ambiguity for state-chartered banks with interstate 
     branches that puts state banks at a disadvantage in operating 
     interstate branches. The ambiguity involves the types of 
     state laws that would apply to the operation and activities 
     of interstate branches of that state bank. The Riegle-Neal 
     Clarification Act of 1997 seeks to clarify this ambiguity by 
     subjecting the interstate branches of state banks to the same 
     laws of the host state that apply to interstate branches of 
     national banks. Under the Riegle-Neal Clarification Act of 
     1997, state banks and national banks would equally be subject 
     to the community reinvestment, consumer protection, fair 
     lending, and intrastate branching laws of the state in which 
     the branch operates.
       The Board believes that this legislation is important in 
     maintaining the health of the dual banking system. It removes 
     an unnecessary obstacle to interstate branching by state 
     banks while at the same time preserving the ability of states 
     to establish uniform practices for all interstate branches in 
     areas that are of particular concern to the states. 
     Accordingly, the Board supports passage of the Riegle-Neal 
     Clarification Act of 1997 and urges Congress to enact this 
     legislation prior to the June 1, 1997, effective date of the 
     Riegle-Neal Act.
           Sincerely,
                                                   Alan Greenspan,
     Chairman.
                                  ____

                                               Independent Bankers


                                       Association of America,

                                     Washington, DC, May 15, 1997.
       Dear Representative: On May 7, the Financial Institutions 
     Subcommittee of the House Banking Committee unanimously voted 
     out H.R. 1306, the Riegle-Neal Clarification Act of 1997. The 
     bill is designed to correct an oversight in the Riegle-Neal 
     Interstate Banking and Branching Act that harms the dual 
     banking system by giving national banks a decided edge over 
     state chartered banks that operate interstate. The 
     Independent Bankers Association of America is the only 
     national trade association that exclusively represents the 
     interests of our nation's community banks.
       Currently, national banks are subject to the same rules in 
     every state in which they operate. State banks, in contrast, 
     are subject to different operating rules in every state in 
     which they have branches. Therefore, there is no consistency 
     in the operations of an interstate bank with a state charter. 
     This is an incentive to any bank that wishes to operate on an 
     interstate basis to do so from a national charter.

[[Page H3090]]

       The Riegle-Neal Clarification Act clarifies that generally, 
     state chartered banks will operate under the laws of their 
     chartering state wherever they do business, up to the powers 
     of national banks. State chartered banks would remain subject 
     to host state laws on intrastate branching, community 
     reinvestment, consumer protection, and fair lending laws.
       The dual banking system has helped to create the strongest, 
     most efficient, and safest banking system in the world. As we 
     enter the age of interstate branching, it is important that 
     the impact of the states be felt, through state chartered 
     banks, to insure that the positives of the dual banking 
     system are felt in the interstate arena.
       Therefore, the IBAA urges you to support H.R. 1306 when it 
     comes up for a vote. Thank you.
           Sincerely,
     Ronald K. Ence,
                                  Director of Legislative Affairs.
     Peter M. Kravitz,
     Legislative Counsel.
                                  ____



                               National Governors Association,

                                   Washington, DC, April 30, 1997.
     Hon. Marge Roukema,
     Chair, Financial Institutions and Consumer Credit 
         Subcommittee, Committee on Banking and Financial 
         Services, U.S. House of Representatives, Washington, DC.
     Hon. Bruce Vento,
     Ranking Member, Financial Institutions and Consumer Credit 
         Subcommittee, Committee on Banking and Financial 
         Services, U.S. House of Representatives, Washington, DC.
       Dear Madam Chair and Representative Vento: We are writing 
     to express our support for the Riegle-Neal Clarification Act 
     of 1997, which is designed to ensure that implementation of 
     the Riegle Neal Interstate Banking Act does not 
     unintentionally disadvantage state chartered banks.
       During negotiations over the act, the Governors worked to 
     ensure that states had ample time to develop state 
     implementing legislation on an issue in which Congress had 
     taken ten years to reach consensus. The three-year timeline 
     for states was ambitious, but all states have now considered 
     interstate banking and branching legislation. In addition, 
     state banking commissioners, through the Conference of State 
     Bank Supervisors, have developed regulatory agreements that 
     permit state banks to use a one-stop approach for 
     application, approval, and supervision when branching 
     interstate. This ensures that states retain control over the 
     conduct of state-chartered banking operations and that state 
     banks remain competitive with the national bank system.
       However, Governors believe legislation is needed to ensure 
     that state-chartered banks that branch interstate can remain 
     competitive with national bank branches. specifically, state-
     chartered banks need to be certain which host state laws they 
     are subject to and which powers they may exercise 
     consistently. National banks have certainty or consistency in 
     both of these areas. Policy adopted by the National 
     Governors' Association asserts that federal law must not 
     disadvantage state-chartered banks.
       The existence of a competitive state charter is the 
     foundation of our dual banking system. The dual banking 
     system has been the source for almost all the major 
     innovations in our banking industry, from deposit insurance 
     to branch banking to interstate branching. Weakening the 
     state charter can only harm the dual banking system, harming 
     both consumers and the industry. The proposed legislation 
     will restore balance to our dual banking system by ensuring 
     that a state charter provides the same certainty and 
     consistency as its federal counterpart. Therefore, we urge 
     Congress to adopt the Reigle-Neal Clarification Act as law 
     before the nationwide trigger to interstate branching on June 
     1, 1997.
       Please call on us if we can be of any further assistance in 
     supporting this legislation. Thank you for your consideration 
     in this matter.
       Sincerely,
     Gov. Paul E. Patton,
       Chair, Committee on Economic Development and Commerce.
     Gov. Edward T. Schafer,
       Committee on Economic Development and Commerce.
                                  ____

                                                 State of Arizona,


                                             Executive Office,

                                       Phoenix, AZ, April 3, 1997.
     Hon. Marge Roukema,
     Chairwoman, Subcommittee on Financial Institutions and 
         Consumer Credit, House Banking Committee, Washington, DC.
       Dear Congresswoman Roukema: Thank you for scheduling your 
     Subcommittee so that you may receive testimony on the 
     legislative proposal which seeks clarification of the Riegle-
     Neal Interstate Banking and Branching bill. I want to be 
     certain that our state chartered banks can remain competitive 
     in our dual banking system.
       Our Arizona State Banking Department is continuing to 
     receive applications for new banks. If these amendments are 
     not approved by Congress, it is quite possible that new 
     applications would all be for a national charter.
       It is my recommendation that you and your Committee respond 
     positively to these amendments as proposed by the Conference 
     of State Bank Supervisors.
           Sincerely,
                                                   Fife Symington,
     Governor.
                                  ____

                                             State of Mississippi,


                                       Office of the Governor,

                                    Jackson, MS, February 4, 1997.
     Hon. Trent Lott,
     U.S. Senate, Washington, DC.
       Dear Senator Lott: I am writing to ask for your support 
     concerning the Riegle-Neal Interstate Banking and Branching 
     Efficiency Act of 1994. This Act will have a significant 
     impact on the viability of State bank charters for financial 
     institutions that wish to operate in more than one state.
       The trigger date for nationwide interstate branching is 
     June 1, 1997. Banks that operate in more than one state are 
     deciding whether a National or State bank charter would 
     better meet their needs in this new environment. To preserve 
     the State charter as an attractive choice for all banking 
     organizations, all 50 states, the FDIC, and the Federal 
     Reserve have signed agreements to recognize a multi-state 
     bank's home state as the primary authority for supervision 
     and regulation.
       Unfortunately, some believe that Riegle-Neal is ambiguous 
     on the application of host state laws to the branches of out-
     of-state, State-chartered banks, leading to uncertainty on 
     the part of many banks. Certainty about the legal 
     requirements for host state branches is an important 
     consideration in the choice of a National or State charter.
       We are asking Congress to provide this certainty and to 
     eliminate any ambiguity with an amendment clarifing that, in 
     general, home state law applies to out-of-state branches of 
     State-chartered banks and that host state law applies only to 
     those branches to the same extent that it applies to out-of-
     state branches of National banks. In addition, host state 
     branches should also be allowed to exercise powers granted by 
     their home state, at least to the extent allowed for national 
     banks operating in that state.
       Resolving these perceived problems is critical to the 
     survival of State-chartered interstate banks and ultimately 
     to the well-being of the dual banking system. The banking 
     industry currently perceives that Riegle-Neal gives an 
     advantage to national banks in the interstate environment. 
     Federal legislation to resolve this problem will restore the 
     balance necessary to maintain our dual banking system, 
     especially if enacted before the June 1st trigger date for 
     nationwide interstate branching. In his letter to you, Acting 
     Commissioner John S. Allision included background materials, 
     talking points, the amendment, and the changes to current 
     law. I encourage you to support this effort.
           Sincerely,
                                                     Kirk Fordice,
     Governor.
                                  ____

                                              State of New Jersey,


                                       Office of the Governor,

                                      Trenton, NJ, March 31, 1997.
     Hon. Marge Roukema,
     House of Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Representative Roukema: I understand that as chair of 
     the House Banking and Financial Services Committee's 
     Subcommittee on Financial Institutions and Consumer Credit, 
     you will soon be introducing legislation to clarify a 
     provision of the Riegle-Neal Interstate Banking and Branching 
     Efficiency Act of 1994. Your legislation will preserve the 
     viability of the state banking charter for those banks in our 
     state that wish to operate in other states.
       For decades, the nation's dual banking system has served 
     consumers and businesses well. Many of the innovations we now 
     take for granted--including checking accounts, ATMs, and 
     adjustable rate mortgages--were all initiated by state banks. 
     In addition, giving financial institutions the choice between 
     seeking a state or a national charter has helped keep 
     regulatory agencies efficient and regulatory costs lower.
       Under the provisions of Riegle-Neal, state banking systems 
     were given until this June to prepare for interstate banking. 
     However, many state systems have been facing difficulties in 
     meeting this deadline because Riegle-Neal is unclear 
     regarding the issue of which state law applies to an 
     interstate branch of a bank holding a state charter. To put 
     it simply, it did not fully address whether, for example, the 
     branch of a New Jersey state-chartered bank operating in New 
     York would be governed by New Jersey state banking law or New 
     York state banking law.
       Your bill would clear up the ambiguity in Riegle-Neal by 
     making it clear that, in general, the state in which a bank 
     is chartered will govern the activities of all of that bank's 
     branches, even those operating in other states. This 
     provision would apply only to the extent that either a host 
     state law allows or to the extent allowed for a national 
     bank. Your legislation provides state chartered banks the 
     certainty necessary to make the decision whether or not they 
     want to branch out into another state.
       As a Governor, I believe it is important that states retain 
     the ability to decide what activities banks it charters and 
     supervises can undertake. This legislation does not grant 
     state banks any new powers, it simply retains authority that 
     has long been theirs.
       I am writing to the New Jersey delegation and your 
     colleagues on the Banking and Financial Institutions 
     Committee urging them to express their support for our dual 
     banking system--and for the important role of the

[[Page H3091]]

     state banking system in our national economy--by cosponsoring 
     your legislation.
           Sincerely,
                                           Christine Todd Whitman,
     Governor.
                                  ____

                                             Governor Pete Wilson,


                                                State Capitol,

                                      Sacramento, CA, May 9, 1997.
     Hon. Jim Leach,
     House of Representatives,
     Washington, DC.
       Dear Jim: I am writing to ask for your support on the 
     Riegle-Neal Interstate Banking and Branching Efficiency Act 
     of 1994, which will have a significant impact on the 
     viability of state bank charters for financial institutions 
     wanting to operate in more than one state.
       June 1st is the trigger date for nationwide interstate 
     branching, and banks operating in more than one state are 
     deciding whether a national or state bank charter would 
     better meet their needs in this new environment. To preserve 
     the state charter as a viable choice for all banking 
     organizations, all 50 states, the Federal Deposit Insurance 
     Corporation and the Federal Reserve have signed agreements to 
     recognize a multi-state bank's home state as the primary 
     authority for supervision and regulation.
       Unfortunately, some believe that Riegle-Neal is ambiguous 
     on the legal application of host state laws to the branches 
     of out-of-state and state-chartered banks. This ambiguity is 
     causing uncertainty on the part of some banks. Certainty 
     about the legal requirements for host state branches is an 
     important consideration in the choice of a national or state 
     charter. As a result we are asking Congress to provide this 
     certainty and eliminate the ambiguity with an amendment.
       Fixing these perceived problems is critical to the survival 
     of state-chartered interstate banks, and ultimately to the 
     well-being of the dual banking system. The banking industry 
     currently perceives that Riegle-Neal gives an advantage to 
     national banks in the interstate environment. Federal 
     legislation to resolve this problem will restore the balance 
     necessary to maintain our dual banking system, especially if 
     enacted before the June 1st trigger date. I urge you to 
     support this legislation.
           Sincerely,
     Pete.
                                  ____

                                           Office of the Governor,


                                                State Capitol,

                                   Des Moines, IA, April 23, 1997.
     Hon. Marge Roukema,
     Chairwoman, Subcommittee on Financial Institutions and 
         Consumer Credit, House of Representatives, Washington, 
         DC.
       Dear Congresswoman Roukema & Members of the Subcommittee: I 
     am writing to express my strong support for the swift passage 
     of H.R. 1306, your legislation to clarify the Riegle-Neal 
     Interstate Branching Efficiency Act.
       My concern about the law as it currently stands is that 
     Iowa state-chartered banks feel uncertain about which laws 
     apply to them when they branch across state lines. National 
     banks in Iowa feel no such uncertainty. Like all businesses, 
     banks prefer to operate in an environment of certainty. If we 
     cannot remedy this situation, state-chartered banks that want 
     to operate across state lines will convert to national 
     charters.
       As a Governor, I am Iowa's top economic development 
     officer. I am the individual ultimately responsible for 
     ensuring and protecting the economic opportunity for all of 
     Iowa's citizens and businesses. I believe that it is critical 
     to the economic well being of my state to maintain a strong 
     state banking system. In Iowa, there are 57 national banks 
     and 408 state chartered banks. Your legislation is necessary 
     to keep the state banking charter a viable option for state 
     chartered institutions that wish to operate in an interstate 
     environment.
       Riegle-Neal clearly establishes that host state law applies 
     to the branches of out of state banks in four key areas: 
     intrastate branching, community reinvestment, consumer 
     protection, and fair lending. This important provision 
     ensures that our state can continue to protect our citizens 
     through legislation that applies equally to all banks.
       In other areas, it seems simplest to follow the ``home 
     state/host state'' model created by Riegle-Neal. An Iowa 
     state-chartered bank is an Iowa state-chartered bank no 
     matter where it operates; therefore, it makes sense that it 
     continue to operate under Iowa laws, except in those four 
     areas carved out for both national and state-chartered banks.
       The reason for our dual banking system is that both state 
     and federal governments recognize banks as powerful tools of 
     economic policy. If Iowa loses its ability to supervise and 
     regulate banks--or even if Iowa is left with only the 
     smallest banks to regulate--it also loses its ability to 
     affect public policy and economic development through banking 
     law and regulation.
       The National Conference of State Legislatures has expressed 
     concern about ceding some of the individual state 
     legislature's authority over institutions chartered by other 
     states. Without these amendments, however, I believe that the 
     legislatures and the governor's offices around the country 
     will lose even more of their authority over their own state 
     chartered institutions, as these institutions opt for a 
     federal charter.
       Iowa has done an excellent job in crafting a state banking 
     charter that meets the needs of our communities and 
     contributes to the economic well being of the state. 
     Unfortunately, without your legislation, this perceived 
     advantage to having a national bank charter when a bank 
     chooses to operate in more than one state will lead to these 
     institutions opting for a national charter. Unintended 
     policies that create artificial incentives to convert to a 
     national charter are devastating to the dual banking system, 
     and threaten state economic policy.
       A meaningful choice between a state or a national banking 
     charter is the essence of the dual banking system. The dual 
     banking system has served this country well for over 100 
     years and has promoted an efficient, flexible and innovative 
     delivery system for financial services around this country. 
     Your legislation will restore balance to our dual banking 
     system by ensuring that a state charter provides the same 
     consistency and certainty as its federal counterpart. 
     Therefore, I urge Congress to adopt your legislation as law 
     before the nationwide trigger to interstate branching on June 
     1.
           Sincerely,
                                                Terry E. Branstad,
     Governor of the State of Iowa.
                                  ____



                                            State of Nebraska,

                                      Lincoln, NE, April 18, 1997.
     Representative Jack Leach,
     Rayburn House Office Building, Washington, DC
       Dear Representative Leach: I am writing to share my 
     thoughts and ask for your support on an important issue 
     concerning the impact Riegle-Neal Interstate Banking and 
     Branching Efficiency Act of 1994 will have on the continuing 
     viability of the state bank charter for financial 
     institutions that wish to operate in more than one state. I 
     have always been a strong supporter of the dual banking 
     system and feel it needs to be preserved.
       As the law stands now, Riegle-Neal creates an unintended 
     incentive for a state-chartered bank to switch to a national 
     charter in order to enjoy the full benefits of interstate 
     branching. Current law may disadvantage host state branches 
     of state-chartered banks in the area of powers. Under current 
     law, state-chartered banks whose home states authorize powers 
     comparable or superior to those of national banks relinquish 
     these powers when they branch into states where bank powers 
     are more restrictive than those of national banks.
       When confronted with these situations, it is not difficult 
     to imagine a state-chartered bank in the home state switching 
     to a national charter in order to facilitate their branching 
     plans. A solution to this problem would be to allow a host 
     state branch of a state-chartered bank to exercise home state 
     powers to the same extent as a national bank or a bank 
     chartered by the host state, whichever is greater. This would 
     ensure that host state branches of state-chartered banks 
     would not be at a competitive disadvantage to host state 
     branches of a national bank.
       Fixing this anticipated problem in Riegle-Neal before the 
     June 1, 1997 trigger date for nationwide banking is important 
     to the survival of state-chartered interstate banks. 
     Fortunately, federal legislation to clarify this provision of 
     Riegle-Neal has been introduced by Congresswoman Roukema in 
     the House and Senator D'Amato in the Senate. In its simplest 
     form, the issue boils down to parity for financial 
     institutions operating in an interstate environment and, 
     ultimately, the well being of the dual banking system.
           Sincerely,
                                               E. Benjamin Nelson,
     Governor.
                                  ____

                                        South Dakota Department of


                                      Commerce and Regulation,

                                                   March 19, 1997.
     Neil Milner, CAE, CEO,
     Pierre, SD, Conference of State Bank Supervisors, Washington, 
         DC.
       Dear Neil: I am sure you are aware the Governor is snowed 
     under with legislation and other concerns, however, he did 
     ask me to respond to your letter to him regarding the 
     amendments proposed for Riegle-Neal, he supports CSBS's 
     position, and he will be glad to help in any way he can. He 
     had already directed me to contact each of congressional 
     delegates and request their support which I have done. He 
     also wanted me to thank you for your kind comments regarding 
     his efforts and that he looks forward to seeing you and JC 
     sometime soon.
       The Governor also wanted me to specifically congratulate 
     you on your new position and the work you are doing and that 
     he looks forward to working with you in achieving the goals 
     you have set for CSBS.
           Very truly yours,
                                                Richard A. Duncan,
     Director of Banking.
                                  ____

                                              State of Washington,


                                        Office of the Governor

                                       Olympia, WA, April 7, 1997.
     Hon. Marge Roukema,
     U.S. House of Representatives,
       Dear Representative Roukema: I am writing to ask for your 
     support on an important issue concerning the impact the 
     Riegle-Neal Interstate Banking and Branching Efficiency Act 
     of 1994 will have on the viability of the state bank charter 
     for financial institutions that wish to operate in more than 
     one state.
       The trigger date for nationwide interstate branching is 
     June 1 of this year. Banks that operate in more than one 
     state are deciding whether a national or state bank charter 
     would better meet their needs in this new environment. To 
     preserve the state charter as

[[Page H3092]]

     an attractive choice for all banking organizations, all 50 
     states, the FDIC and the Federal Reserve have signed 
     agreements to recognize a multi-state bank's home state as 
     the primary authority for supervision and regulation.
       Unfortunately, some believe that Riegle-Neal is ambiguous 
     on the application of host state laws to the branches of out-
     of-state, state-chartered banks, leading to uncertainty on 
     the part of many banks. Certainty about the legal 
     requirements for host state branches is an important 
     consideration in the choice of a national or state charter.
       We are asking Congress to provide this certainty and 
     eliminate any ambiguity with an amendment that clarifies 
     that, in general, home state laws applies to out-of-state 
     branches of state-chartered banks, and that host state law 
     only applies to those branches to the same extent that it 
     applies to out-of-state branches of national banks. In 
     addition, host state branches should also be allowed to 
     exercise powers granted by their home state, at least to the 
     extent allowed for national banks operating in that state.
       Fixing these perceived problems is critical to the survival 
     of state-chartered interstate banks, and ultimately to the 
     well-being of the dual banking system. The banking industry 
     currently perceives that Riegle-Neal gives an advantage to 
     national banks in the interstate environment. Federal 
     legislation to resolve this problem will restore the balance 
     necessary to maintain our dual banking system, especially if 
     enacted before the June 1st trigger date for nationwide 
     interstate branching. Enclosed are background materials, 
     talking points, the amendment and the changes to current law. 
     It is my understanding that Senator D'Amato is working on 
     passing this important amendment. I urge you to support this 
     effort.
           Sincerely,
                                                       Gary Locke,
     Governor.
                                  ____

                                                    State of Utah,


                                       Office of the Governor,

                               Salt Lake City, UT, April 22, 1997.
     Hon. Marge Roukema,
     Chairwoman, Subcommittee on Financial Institutions and 
         Consumer Credit, House Banking Commission, Washington, 
         DC.
       Dear Representative Roukema: Thank you for sponsoring H.R. 
     1306, THE RIEGLE-NEAL CLARIFICATION ACT OF 1997, whose 
     purpose is to preserve the viability of a state banking 
     charter for those banks wanting to operate branches in other 
     states. I understand the bill has twenty cosponsors, 
     including Utah's representative, the Honorable Merrill Cook.
       A strong state banking system is necessary to the economic 
     well-being of my state. In particular, the state component of 
     the dual-banking system has been valuable to the Utah 
     economy. Utah has experienced a vibrant economy throughout 
     the past decade. Both in response to and as a facilitator of 
     the economy, the state has chartered five local commercial 
     banks within the past five years. In contrast, in the last 
     year alone, two large state-chartered banks operating in 
     multiple states, including Utah, have converted to a national 
     bank charter. My Commissioner of Financial Institutions, 
     Edward Leary, informs me that the primary reason for the 
     conversions was the uncertainty of law and powers facing 
     state-chartered banks operating across state borders.
       As a former businessman, I fully understand bankers' desire 
     for certainty when operating in a multi-state environment. It 
     seems to me that this bill ensures that states continue to 
     have a strong voice in shaping both the current and future 
     banking industry across this nation. It does so by restoring 
     balance in the dual-banking system--something the Riegle-Neal 
     Interstate Banking and Branching Act of 1994 expressly 
     intended to maintain.
       I respectfully urge you and your committee to respond 
     positively to this bill as proposed by the Conference of 
     State Bank Supervisors.
           Sincerely.
                                               Michael O. Leavitt,
     Governor.
                                  ____

                                                State of New York,


                                            Executive Chamber,

                                       Albany, NY, April 29, 1997.
     Hon. Jim Leach,
     Chairman, House Banking and Financial
     Services Committee, Washington, DC.
       Dear Chairman Leach: I urge you to support the passage of 
     H.R. 1306, the Riegle-Neal Clarification Act of 1997. This 
     bill would amend the Riegle-Neal Banking and Branching 
     Efficiency Act of 1994 (``Riegle-Neal'') to help maintain the 
     viability and attractiveness of state banking charters as the 
     era of nationwide interstate branching commences on June 1, 
     1997.
       Riegle-Neal may be unclear as to whether consistent rules 
     are used to determine what laws and powers apply to the out-
     of-state branches of state and federally-chartered banks. To 
     the extent it remains uncertain that Riegle-Neal establishes 
     rough parity between charters in this regard, some may 
     conclude that the national bank charter is the preferable 
     option.
       H.R. 1306 would resolve any such ambiguity by making two 
     important clarifications to Riegle-Neal. First, it would 
     establish that a host state's law would apply to the out-of-
     state branches of a state-chartered bank only to the same 
     extent that those laws apply to the branches of out-of-state 
     national banks located in the host state. Second, it would 
     make clear that host state branches would be allowed to 
     exercise powers granted by their home state if such powers 
     are permissible for either banks chartered by the host state 
     or for national bank branches in that host state.
       The recent decision by KeyCorp to consolidate its 
     operations into one bank under a federal charter should serve 
     as a wake up call to all of us who committed to the 
     preservation of the dual banking system. I ask you to give 
     H.R. 1306 your full support.
           Very truly yours,
                                                 George E. Pataki,
     Governor.
                                  ____

                                                State of Delaware,


                                       Office of the Governor,

                                                   March 27, 1997.
     Hon. Marge Roukema,
     Chairwoman, Subcommittee on Financial Institutions and 
         Consumer Credit, House Banking Committee, Washington, DC.
       Dear Congresswoman Roukema: I commend you on scheduling the 
     subcommittee hearing to receive testimony on a legislative 
     proposal which seeks clarification to the Riegle-Neal 
     Interstate Banking and Branching bill. Under current law 
     there is a strong incentive for state-chartered banks, with 
     branches in other states, to convert to national banks. This 
     perverse incentive was not contemplated by Congress when it 
     passed Riegle-Neal in 1994 and should be clarified 
     immediately.
       The goal of the clarifying amendment is to keep the state 
     banking charter a viable choice in an interstate environment, 
     while keeping the state banking system flexible enough to 
     remain laboratories for innovation in the financial services 
     industry. The amendment is carefully crafted to allow a 
     state-chartered bank to operate in a consistent manner across 
     state lines, while not infringing on state sovereignty any 
     more than is allowed by current law. Furthermore, the 
     proposed amendment would clarify that certain compliance and 
     consumer protection laws would continue to apply equally to 
     national and state-chartered bank branches.
       Without this amendment, a state bank that wants to conduct 
     an activity that its home law allows, and which is also 
     allowed for national banks, may switch to a national charter 
     if it cannot conduct this activity as a state-chartered bank 
     in a host state. This amendment only gives that bank the 
     option of remaining a state chartered bank if it wishes to 
     conduct the activities authorized by its own charter in all 
     of the states in which it operates.
       Thank you again for scheduling this important hearing. It 
     is an important first step in Congress's attempt to clarify 
     the intent of Riegle-Neal.
           Sincerely,
                                                 Thomas R. Carper,
     Governor.
                                  ____

                                                State of Michigan,


                                       Office of the Governor,

                                        Lansing, MI, May 14, 1997.
     Hon. Bart Stupak,
     Washington, DC.
       Dear Congressman Stupak: I am writing to ask your support 
     of the Riegle-Neal Clarification Act of 1997 (H.R. 1306), 
     introduced by Representatives Roukema, Leach, and LaFalce. 
     This important legislation concerns the impact the Riegle-
     Neal Interstate Banking and Branching Efficiency Act of 1994 
     will have on the viability of the state bank charter for 
     financial institutions that choose to operate in more than 
     one state. This is an issue of significance to Michigan and 
     Michigan state-chartered banks.
       The trigger date for nationwide interstate branching is 
     June 1 of this year. Banks that operate in more than one 
     state are now deciding whether a national or state bank 
     charter would better meet their needs in this new 
     environment. To preserve the state charter as a viable choice 
     for all banking organizations, all fifty states, the FDIC and 
     the Federal Reserve have signed agreements to recognize a 
     multi-state bank's home state as the primary regulator.
       The problem addressed by the Clarification Act is ambiguity 
     in Riegle-Neal on the application of host state laws to the 
     branches of out-of-state, state-chartered banks, which has 
     led to uncertainty on the part of many banks. Certainty about 
     legal requirements for host state branches is a critical 
     element in the choice of a national or state charter.
       The proposed Clarification Act provides this certainty and 
     eliminates any ambiguity. It clarifies, in general, that home 
     state law applies to out of state branches of state-chartered 
     banks, and that host state law only applies to those branches 
     to the same extent that it applies to out of state branches 
     of national banks. Additionally, host state branches would be 
     allowed to exercise powers granted by their home state, at 
     least to the extent allowed for national banks operating in 
     that state.
       Michigan Financial Institutions Bureau Commissioner Patrick 
     McQueen and I support this legislation. We believe that the 
     Clarification Act is critical to the survival of state-
     chartered interstate banks, and ultimately to the well-being 
     of the dual banking system.
       I urge you to support the Riegle-Neal Clarification Act of 
     1997 (H.R. 1306).
           Sincerely,
                                                      John Engler,
                                                         Governor.

[[Page H3093]]

     
                                  ____
Comments of Senator Margarita Prentice, Washington State Senator, 11th 
  District--Before the U.S. House of Representatives Subcommittee on 
       Financial Institutions and Consumer Credit--April 30, 1997

       Good afternoon. I am Margarita Prentice, a state legislator 
     from the state of Washington and the Ranking Minority member 
     of our Senate Financial Institutions Committee. I very much 
     appreciate the invitation to appear before this Committee and 
     to have the opportunity to discuss banking policy in our 
     state. I am here today to support H.R. 1306, the Riegle-Neal 
     Clarification Act of 1997.
       In 1996, I chaired the Committee that shepherded interstate 
     branching legislation successfully through the state 
     legislature. We enacted a bill to ``opt in'' early, and 
     Washington state is now open to interstate branching.
       I traveled 3,000 miles to be here today to support the 
     efforts of the Washington Director of Financial Institutions, 
     John Bley, and his colleagues from around the country in 
     asking for your support for early passage of a clarifying 
     amendment to Riegle-Neal.
       Washington has always been a strong dual banking state. We 
     currently have 21 national banks, 63 state-chartered banks, 
     15 state-chartered savings banks and seven federal savings 
     and loans. We also have seven foreign banks offices, which 
     have made a tremendous contribution to our development as a 
     major trading center. The last three years, the state issued 
     seven charters to new community banks seeking to serve our 
     citizens.
       The state charter has always been an important factor in 
     Washington state's economic development policy. We have been 
     able to provide credit to an expanding economy because we 
     have an active banking sector. Economic development through 
     credit availability was a priority of our former Governor, 
     Mike Lowry, and continues to be a priority for Governor Gary 
     Locke.
       I applaud this Committee for the state options that you 
     provided in Riegle-Neal. In fashioning Riegle-Neal in this 
     manner, Congress ensured that each state could consider a 
     wide range of policy choices, and then craft legislation that 
     would meet the needs of each state. Giving the states this 
     ability to carefully consider the issue and to make the 
     policy decisions that were right for them helped the process 
     and encouraged states to opt-in to nationwide branching.
       We took the policy options you gave us and over a six month 
     consensus building process worked out a bill for our state on 
     a non-controversial, bipartisan basis with the support of all 
     financial institutions, large and small.
       We knew that the challenge to make the state chartered 
     banking system viable in an interstate environment would be 
     tremendous, not only to our state but to all states.
       We were especially pleased that Director Bley was appointed 
     to chair the Interstate Task Force set up through CSBS. For 
     the past three years, this Task Force has worked to developed 
     a system to make interstate branching work for state-
     chartered banks as well as national banks.
       As you know, the nation's state bank supervisors have 
     signed a historic cooperative agreement to make interstate 
     branching work. Every state will be a home state and a host 
     state. Unfortunately, if Congress does not pass H.R. 1306, 
     this work may all have been for naught. Without a change in 
     current law, banks may turn disproportionately to a national 
     charter, making it difficult for local legislatures to set 
     banking policy.
       One of the most effective tools states have for economic 
     development is their jurisdiction over state-chartered banks. 
     If these institutions move toward a national charter, states 
     will lose a great deal of their current ability to influence 
     economic growth and productivity. Furthermore, the banking 
     industry as a whole will lose the benefit of innovations that 
     may begin at the state level and are later adopted on a 
     national level.
       When we considered how interstate branching was going to 
     affect our citizens in the state of Washington, we understood 
     the policy of ``home state supervision'' that you set forth 
     in Riegle-Neal.
       We understood that if a bank were headquartered in our 
     state, our laws would apply to that institution wherever it 
     chose to operate except in the areas of consumer protection, 
     fair leading, community reinvestment and intrastate 
     branching. We understood that host state law would apply to 
     the same extent to both a national bank and an out-of-state, 
     state-chartered bank. This means that banks chartered in 
     Washington would have confidence in the laws applied to them 
     when they branch out of state, and our consumers would have 
     confidence in the laws that protect them when they use any 
     bank, state or national, in our state.
       We understood that the home state was the primary 
     regulator, which was determined by where the charter was 
     issued. Therefore, we believed that a bank chartered in 
     Washington state, opening branches in California, would 
     comply with the laws relating to the corporate governance of 
     its Washington charter. California's laws in the area of 
     consumer protection, community reinvestment, fair lending and 
     intrastate branching would apply just like the system you 
     have set up for national banks.
       The dual banking system is important because it promoted 
     efficiency, flexibility, innovations in our banking system 
     industry. The states have been the testing ground for 
     interest bearing checking accounts, adjustable rate mortgages 
     and ATMs.
       While the states have worked very hard to keep the state 
     system competitive in our interstate environment, I'm here 
     today to discuss with you the reality of what we are finding 
     in Washington State. We opted in to interstate branching 
     early, on June 6, 1996.
       To date, only a very small number of banks have chosen to 
     branch and keep a state charter. These are very small 
     institutions that have crossed the border into Idaho.
       However, we have also ``lost'' several large institutions 
     who have chosen a national charter, and will be conducting a 
     banking business in our state. These banks told us that 
     the ambiguity in Riegle-Neal caused them to switch to a 
     national charter because the national charter provides 
     more certainty.
       We do not believe this was your intention when the bill was 
     passed.
       Some have asserted that if you change Riegle-Neal now, the 
     states that have already opted-in will have opted in under 
     different rules. However, when we opted in, we believed that 
     home states had the primacy over their institutions and 
     therefore this amendment strengthens that view.
       It has also been asserted that states could individually 
     ``fix'' the problem that this amendment attempts to address. 
     In Washington state, we have already authorized our banks to 
     conduct, at any location, any activity that we have 
     authorized.
       Our problem is that time is running short. June 1, the 
     nationwide trigger date, is upon us. It would be very 
     difficult, if not impossible, for 50 state legislatures to 
     enact this change. In our state, the legislature has already 
     adjourned for this year. Even if 50 state legislatures were 
     able to act, the federal law problem would still exist.
       Our local communities and the state's role in public policy 
     formation will suffer if Congress does not adopt these 
     clarifying amendments to Riegle-Neal. It is true that 
     traditionally, the states seek to defend their absolute 
     authority over the financial institutions that operate within 
     their borders. Some see these proposed amendments as a 
     dangerous preemption of that authority. However, states will 
     lose much more authority if they are no longer supervising 
     state-chartered financial institutions, or are supervising 
     only the smallest, community-based institutions. We must 
     abandon our pursuit of the perfect to preserve the good; and 
     our dual banking system has brought a great deal of good to 
     our citizens, our businesses, and our banking industry.
       The virtue of our dual banking system is that the states 
     have the ability to affect economic development through 
     policy decisions for our state-chartered banks. Clearly, if 
     our largest, most influential banking institutions feel they 
     must convert to national charters, this will seriously reduce 
     our ability to affect our own economic destiny.
       State-chartered institutions, and state regulation, are 
     intimately connected to their local communities in a unique 
     way. We want to make sure that all of Washington state's 
     institutions have the opportunity to choose this connection. 
     We want to make sure that federal law does not interfere with 
     any bank's ability to choose freely between equally 
     attractive state and federal charters.
       I urge you to enact H.R. 1306 as quickly as possible to 
     restore the necessary balance to the dual banking system and 
     ensure that state charters remain a viable option for any 
     financial institution that values its connection to its 
     community.
       Thank you for your attention. I would be pleased to answer 
     any questions you may have.

  Mrs. ROUKEMA. Mr. Speaker, I reserve the balance of my time.
  Mr. VENTO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of this measure. The legislation will 
maintain the dynamic balance between the chartering of national and 
State banks and banking systems. This is a necessary measure. It must 
be enacted to clarify and ensure the viability of America's dual 
banking system. This banking system has served our Nation well. The 
increased competition, intrinsic within the context of the dual banking 
system, has produced many new products for consumers, expanded credit 
opportunities for local communities and produced a vibrant American 
banking system.
  However, with June 1 approaching, the implementation date for 
interstate branching, there is a concern that the law will lead to 
disparate treatment of national and out-of-State State chartered banks 
in a host State. Congress must act to address that possibility.
  While I strongly support America's dual banking system, I do not 
believe that such a system should be maintained at any price. I 
recognized when we passed the law in 1994 that a consequence of the 
Riegle-Neal interstate banking and branching law which this legislation 
addresses could place State-chartered banks at a competitive 
disadvantage. However, if the cost of correcting this deficiency had 
been an overall sacrifice of consumer and community protection laws, 
overriding

[[Page H3094]]

States rights or granting broad, new authority for banks, I would have 
objected to this measure.
  This measure does not sacrifice consumer or States rights to maintain 
a viable dual banking system. Working with the gentlewoman from New 
Jersey [Mrs. Roukema], subcommittee chairman, and the gentleman from 
Iowa [Mr. Leach], the chairman, and others, the committee has been able 
to narrow and clarify the legislation. Instead of an overly broad 
approach, we have crafted a bill that will maintain a viable State 
banking system without unduly infringing on States rights and 
prerogatives.
  Under this bipartisan legislation, State laws, particularly those 
affecting consumer protection, community reinvestment, fair lending, 
and intrastate branching will be preserved.
  Only under the limited circumstances in which the Comptroller 
preempts host State laws for national banks will out-of-State State-
chartered banks similarly be exempted from the laws of the host State. 
In those cases, the out-of-State bank will be required to follow its 
own home State laws as regards such activity.
  Mr. Speaker, importantly we should keep in mind that in those 
instances, the home State law cannot be weaker than the Federal law. In 
fact, Federal law will be the floor and any home State law will be an 
additional protection for consumers within the host State.
  Clearly, concerns still exist about the impact of the basic Riegle-
Neal interstate law upon the State consumer protection, community 
reinvestment and fair lending laws. However, the basis of those 
concerns go to the original act, and the preemption authority of the 
Comptroller. This measure, H.R. 1306, the proposal we are considering, 
does not expand that authority. Rather, this measure harmonizes those 
actions to ensure that out-of-State State-chartered banks are treated 
the same as host State banks or national banks.
  Mr. Speaker, when Congress did consider the original Riegle-Neal law, 
we did debate the national preemption authority. The House version of 
the interstate bill did eliminate the override authority. However, the 
House did not sustain that position in conference with the Senate.
  I believe that both the gentleman from Iowa [Mr. Leach], the 
chairman, and the gentlewoman from New Jersey [Mrs. Roukema], 
subcommittee chairman, agree with me that the preemption authority of 
the Comptroller should not be liberally used. There must be a clear and 
overwhelming rationale for the exercise of such Comptroller power.
  In the absence of this measure, however, most State banks with out-
of-State bank branches will likely change to a national charter causing 
the atrophy of the dual banking State-national banking system. This 
measure clarifies the authority of State banks to engage in activities 
to the extent to which they can conduct any activity in a host State. 
This bill does not grant banks new powers. It respects home and host 
State regulatory authority with the appropriate Federal oversight to 
determine bank powers. The bill does provide a safeguard to limit the 
extent to which a bank may exercise its authority geographically and 
ensures a level playing field within a host State between banks.

                              {time}  1145

   Mr. Speaker, the House Committee on Banking and Financial Services 
supports the bill banking system. This bipartisan bill is a needed step 
to ensure that our State banks remain a viable force in the 
marketplace, able to meet the needs of consumer and local communities.
  I urge my colleagues to support this measure.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. ROUKEMA. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Washington [Mr. Metcalf].
  Mr. METCALF. Mr. Speaker, I rise today in support of this important 
legislation that preserves States' authority over a crucial area of 
their economic well-being while establishing greater competition in the 
banking industry.
  As a member of the Committee on Banking and Financial Services in the 
House and in my previous experiences in the State senate, I have seen 
major changes in the financial and banking arena in the last few years. 
I have great concern about some changes because they allow large, out-
of-State national banks to branch into almost any State. This may be 
good for the large, but many of us see it as a huge threat for many 
smaller State-chartered banks, the very same banks that make their 
livelihood in small towns making small loans to small businesses which, 
in my opinion, is the backbone of the Nation. The Riegle-Neal 
Clarification Act corrects this imbalance by preserving the State 
charter as a viable option for banks that seek to branch across State 
lines.
  H.R. 1306 levels the playing field for small financial institutions 
and helps to maintain the dual banking system, which is an objective 
for many Members of this House. A vote for H.R. 1306 will be a vote for 
States rights, retaining State control over their economic direction. I 
urge my colleagues to vote for this important bill.
  Mrs. ROUKEMA. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Nebraska [Mr. Bereuter].
  (Mr. BEREUTER asked and was given permission to revise and extend his 
remarks.)
  Mr. BEREUTER. Mr. Speaker, I rise in support of H.R. 1306, and I urge 
its adoption.
  Mr. Speaker, this Member rises in strong support of this important 
legislation which preserves the State bank charter as a viable, 
competitive alternative to the national bank charter. The dual banking 
system in the United States has been vital to the development of the 
world's strongest banking system. State-chartered banks are often the 
laboratory where new, innovative products are tested and perfected. 
Checking accounts, electronic funds transfers, and bank insurance sales 
were all introduced by State-chartered banks.
  However, the dual banking system has come under assault recently. The 
Clinton administration has tried on no less than five occasions to 
impose Federal examination fees, or taxes, on State-chartered banks, 
only to have them rejected overwhelmingly by the House Banking 
Committee. Now, there is opposition to this legislation which was 
introduced to ensure that the Riegle-Neal Interstate Banking and 
Branching Efficiency Act will be implemented in a manner which meets 
its intended goal, which is to permit State-chartered banks to branch 
across State lines.
  This Member was intimately involved in the original Riegle-Neal Act, 
and was concerned at that time that States' rights were protected. 
That's why this Member proposed and was joined by his distinguished 
colleague from Minnesota, Mr. Vento, in offering the opt out provision 
which was eventually included in that act. However, this Member most 
certainly does not agree with the argument, being made by groups 
ranking from the Consumer Federation of America to Consumers Union and 
the National Conference of State Legislatures, that the bill is an 
assault on States' rights. This Member believes that this measure 
actually reinforces States' rights by maintaining the viability of the 
State charter by ensuring parity with the national bank charter.
  Therefore, Mr. Speaker, this Member will vote in favor of this 
legislation and urges his colleagues to join him in approving this 
important protection of the dual banking system.
  Mr. VENTO. Mr. Speaker, I yield such time as he may consume to the 
distinguished gentleman from New York [Mr. LaFalce].
  Mr. LaFALCE. Mr. Speaker, I thank the gentleman from Minnesota for 
yielding this time to me.
  Mr. Speaker, I would encourage all my colleagues to support this bill 
which I am very proud to have been an original cosponsor of and to 
support it because I do believe its passage is vital to maintain the 
dual banking system. It is the dual banking system that by giving banks 
a choice of Federal or State charters has helped to ensure that our 
U.S. banking industry has remained strong and competitive. By allowing 
this choice the dual banking system has created a healthy tension, 
indeed a competition, if my colleagues will, between the Federal bank 
charter and the State bank charter, and this has ensured that both 
Federal and State charters remain flexible, remain open to 
incorporating new market innovations. Indeed, many of the banking 
products which are commonplace today were first introduced under State 
charters and later incorporated into the Federal charter.
  Now, when Congress passed the Interstate Banking and Branching bill 
of 1994, it did not, in my judgment, adequately anticipate the negative 
impact

[[Page H3095]]

that it might have on State-chartered banks interested in branching 
outside their home States. However, in the 2\1/2\ years since that 
legislation passed it has become clear that State-chartered banks 
wanting to branch outside their home States are at a significant 
disadvantage relative to national banks branching outside their home 
State.
  Why so? Well, it is due to the fact that the national bank regulator 
has the authority to permit national banks to conduct operations in all 
the States with some level of consistency. In contrast, under the 
existing interstate legislation State banks branching outside their 
home State must comply with a multitude of different State banking laws 
in each and every State in which they operate.
  So the complications of complying with so many different State laws 
in order to branch interstate has led many State banks to conclude, and 
might lead even more to conclude, that it would be much easier to 
switch to a national Federal charter. It could get so bad that it could 
bring about the demise of the dual banking system. The legislation we 
are considering today attempts to prevent this from occurring.
  Despite comprehensive agreements reached last year between all 50 
State bank regulators, which attempted to equalize the situation 
between State and national banks, many State banks continue to find 
that there are simply too many legal complications and uncertainties to 
deal with in trying to determine applicable law.
  The Interstate Clarification Act of 1997, today's bill, makes it 
clear that generally State-chartered banks branching outside their home 
State will operate under the laws of the host State except in narrow 
instances where host State law is inapplicable for the branches of an 
out-of-State national bank. Now this should contribute significantly to 
providing State banks with some degree of certainty and consistency as 
they conduct business in various States and should not artificially 
disadvantage either State or nationally chartered institutions.
  It should be emphasized though that the new legislation does nothing 
to change the original law which requires both national banks and State 
banks to comply with the laws of the host State in four important areas 
of law, community reinvestment, consumer protection, fairer lending, 
and intrastate branching. Those host State laws must still apply.
  Mr. VENTO. Mr. Speaker, I reserve the balance of my time.
  Mrs. ROUKEMA. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Delaware [Mr. Castle], a valuable member of the 
committee.
  Mr. CASTLE. Mr. Speaker, I thank the gentlewoman for yielding me the 
time.
  Mr. Speaker, I rise in strong support of H.R. 1306, which will 
clarify the Riegle-Neal Interstate Banking Act to protect the viability 
of the State banking charter.
  Our Nation has always had a dual banking system. A bank can choose a 
State charter or a national charter. As a former Governor, I can tell 
you how important maintaining a State charter is. An attractive State 
bank charter helps attract banking and business to a State. It helps 
produce jobs and revenue that help all citizens. This has been 
important to the success of Delaware and many other States.
  As we enter the age of interstate banking and branching it is 
necessary to ensure that State banks can compete fairly with national 
banks as more banking is done between States and across the Nation. 
This legislation will ensure that there is a level playing field 
between State banks and national banks. At the same time, it will 
protect consumers and maintain all necessary safety and soundness 
standards for all banks.
  This is an excellent bill that enjoys bipartisan support. I 
congratulate the gentlewoman from New Jersey [Mrs. Roukema], the 
chairman, the gentleman from Minnesota [Mr. Vento], ranking member, and 
the members of the committee and urge its passage.
  Mr. VENTO. Mr. Speaker, I reserve the balance of my time.
  Mrs. ROUKEMA. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Iowa [Mr. Leach], the distinguished chairman of the full 
Committee on Banking and Financial Services.
  Mr. LEACH. Mr. Speaker, I thank the gentlewoman for yielding this 
time to me, and I will be very brief, and I just would like to thank 
her very much for her fine work in shepherding this bill through her 
subcommittee and would stress that, A, it has the strong support of the 
committee, it is procompetitive, it enhances competition between State 
and national banks and therefore is very proconsumer because it will 
give consumers more options and more places to do business. It makes 
prudential sense; it makes competitive sense. It is a modest bill, but 
nonetheless a significant bill, and because the timing in which certain 
other laws go into place, it is brought in a very timely basis to this 
floor, and I urge its adoption.
  Mr. VENTO. Mr. Speaker, I have no further requests for time. I 
reserve the balance of my time.
  Mrs. ROUKEMA. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would just like to conclude by again thanking my 
ranking member and all the members on the committee. We worked in a 
very positive bipartisan way to clarify any ambiguities that existed, 
we have refined those applications of the law with respect to 
consumers, and above all, we have, I think with this action, protected 
the dual banking system while at the same time gaining the advantages 
of interstate banking.
  Mr. VENTO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I just want to thank the gentlewoman from New Jersey 
[Mrs. Roukema} again for her work in terms of her managing this bill 
within the subcommittee, and the hearings that were requested, I think, 
were very helpful in terms of shaping and finally resolving some of the 
questions that I and other Members have and the leadership of our 
colleague from New York, one of the principle sponsors of this bill, a 
bill so important to his State he obviously gave great detail on that.
  Mr. Speaker, again I would ask Members to support the bill.
  Mr. BACHUS. Mr. Speaker. I rise today in support of H.R. 1306, the 
Riegle-Neal Clarification Act of 1997. I commend Chairwoman Roukema for 
taking the lead on this issue and acting forcefully to make sure that 
interstate branching does not result in artificial impediments to the 
continued growth of State chartered banks. This bill will simply 
clarify the original intent of the Riegle-Neal Interstate Branching and 
Efficiency Act of 1994 which I cosponsored. This law, which goes into 
effect June 1, needs this clarification to fully address the issue of 
various State banking regulations and how this would affect a bank 
headquartered in one State operating a branch in another.
  Mr. Speaker, we have heard almost unanimous testimony that the 
unfortunate and unintended consequences of our failure to make these 
clarifications will be the devaluation of State bank charters in favor 
of national charters and the gradual decline of the State banking 
system. I am a firm believer in the dual banking system of State and 
federally chartered institutions and I am certain that the innovation 
and tremendous strength enjoyed by the American financial marketplace 
is due in part to the dynamic created by these separate charters. It 
will be indeed unfortunate if a vibrant State bank is unwilling or 
unable to take advantage of interstate branching. Many State banks will 
simply not expand rather than compete with national banks in another 
State or convert to a national charter in order to grow. Therefore, Mr. 
Speaker, I urge my colleagues to vote for H.R. 1306.
  Mr. VENTO. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore [Mr. Barrett of Nebraska]. All time has 
expired.
  The question is on the motion offered by the gentlewoman from New 
Jersey [Mrs. Roukema] that the House suspend the rules and pass the 
bill, H.R. 1306, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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