[Congressional Record Volume 144, Number 14 (Tuesday, February 24, 1998)]
[House]
[Pages H512-H515]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXAMINATION PARITY AND YEAR 2000 READINESS FOR FINANCIAL INSTITUTIONS
ACT
Mr. LEACH. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 3116) to address the year 2000 computer problems with regard to
financial institutions, to extend examination parity to the Director of
the Office of Thrift Supervision and the National Credit Union
Administration, and for other purposes, as amended.
The Clerk read as follows:
H.R. 3116
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 ``Examination Parity and Year
2000 Readiness for Financial Institutions Act''.
SEC. 2. YEAR 2000 READINESS FOR FINANCIAL INSTITUTIONS.
(a) Findings.--The Congress finds that--
(1) the Year 2000 computer problem poses a serious
challenge to the American economy, including the Nation's
banking and financial services industries;
(2) thousands of banks, savings associations, and credit
unions rely heavily on internal information technology and
computer systems, as well as outside service providers, for
mission-critical functions, such as check clearing, direct
deposit, accounting, automated teller machine networks,
credit card processing, and data exchanges with domestic and
international borrowers, customers, and other financial
institutions; and
(3) Federal financial regulatory agencies must have
sufficient examination authority to ensure that the safety
and soundness of the Nation's financial institutions will not
be at risk.
(b) Definitions.--For purposes of this section--
(1) the terms ``depository institution'' and ``Federal
banking agency'' have the same meanings as in section 3 of
the Federal Deposit Insurance Act;
(2) the term ``Federal home loan bank'' has the same
meaning as in section 2 of the Federal Home Loan Bank Act;
(3) the term ``Federal reserve bank'' means a reserve bank
established under the Federal Reserve Act;
(4) the term ``insured credit union'' has the same meaning
as in section 101 of the Federal Credit Union Act; and
(5) the term ``Year 2000 computer problem'' means, with
respect to information technology, any problem which prevents
such technology from accurately processing, calculating,
comparing, or sequencing date or time data--
(A) from, into, or between--
(i) the 20th and 21st centuries; or
(ii) the years 1999 and 2000; or
(B) with regard to leap year calculations.
(c) Seminars and Model Approaches to Year 2000 Computer
Problem.--
(1) Seminars.--
(A) In general.--Each Federal banking agency and the
National Credit Union Administration Board shall offer
seminars to all depository institutions and insured credit
unions under the jurisdiction of such agency on the
implication of the Year 2000 computer problem for--
(i) the safe and sound operations of such depository
institutions and credit unions; and
(ii) transactions with other financial institutions,
including Federal reserve banks and Federal home loan banks.
(B) Content and schedule.--The content and schedule of
seminars offered pursuant to subparagraph (A) shall be
determined by each Federal banking agency and the National
Credit Union Administration Board taking into account the
resources and examination priorities of such agency.
(2) Model approaches.--
(A) In general.--Each Federal banking agency and the
National Credit Union Administration Board shall make
available to each depository institution and insured credit
union under the jurisdiction of such agency model approaches
to common Year 2000 computer problems, such as model
approaches with regard to project management, vendor
contracts, testing regimes, and business continuity planning.
(B) Variety of approaches.--In developing model approaches
to the Year 2000 computer problem pursuant to subparagraph
(A), each Federal banking agency and the National Credit
Union Administration Board shall take into account the need
to develop a variety of approaches to correspond to the
variety of depository institutions or credit unions within
the jurisdiction of the agency.
(3) Cooperation.--In carrying out this section, the Federal
banking agencies and the National Credit Union Administration
Board may cooperate and coordinate their activities with each
other, the Financial Institutions Examination Council, and
appropriate organizations representing depository
institutions and credit unions.
SEC. 3. REGULATION AND EXAMINATION OF SERVICE PROVIDERS.
(a) Regulation and Examination of Savings Association
Service Companies.--
(1) Amendment to home owners' loan act.--Section 5(d) of
the Home Owners' Loan Act (12 U.S.C. 1464(d)) is amended by
adding at the end the following:
``(7) Regulation and examination of savings association
service companies, subsidiaries, and service providers.--
``(A) General examination and regulatory authority.--A
service company or subsidiary that is owned in whole or in
part by a savings association shall be subject to examination
and regulation by the Director to the same extent as that
savings association.
``(B) Examination by other banking agencies.--The Director
may authorize any other Federal banking agency that
supervises any other owner of part of the service company or
subsidiary to perform an examination described in
subparagraph (A).
``(C) Applicability of section 8 of the federal deposit
insurance act.--A service company or subsidiary that is owned
in whole or in part by a saving association shall be subject
to the provisions of section 8 of the Federal Deposit
Insurance Act as if the service company or subsidiary were an
insured depository institution. In any such case, the
Director shall be deemed to be the appropriate Federal
banking agency, pursuant to section 3(q) of the Federal
Deposit Insurance Act.
``(D) Service performed by contract or otherwise.--
Notwithstanding subparagraph (A), if a savings association, a
subsidiary thereof, or any savings and loan affiliate or
entity, as identified by section 8(b)(9) of the Federal
Deposit Insurance Act, that is regularly examined or subject
to examination by the Director, causes to be performed for
itself, by contract or otherwise, any service authorized
under this Act or, in the case of a State savings
association, any applicable State law, whether on or off its
premises--
``(i) such performance shall be subject to regulation and
examination by the Director to the same extent as if such
services were being performed by the savings association on
its own premises; and
``(ii) the savings association shall notify the Director of
the existence of the service relationship not later than 30
days after the earlier of--
``(I) the date on which the contract is entered into; or
``(II) the date on which the performance of the service is
initiated.
``(E) Administration by the director.--The Director may
issue such regulations and orders, including those issued
pursuant to section 8 of the Federal Deposit Insurance Act,
as may be necessary to enable the Director to administer and
carry out this paragraph and to prevent evasion of this
paragraph.
``(8) Definitions.--For purposes of this section--
``(A) the term `service company' means--
``(i) any corporation--
[[Page H513]]
``(I) that is organized to perform services authorized by
this Act or, in the case of a corporation owned in part by a
State savings association, authorized by applicable State
law; and
``(II) all of the capital stock of which is owned by 1 or
more insured savings associations; and
``(ii) any limited liability company--
``(I) that is organized to perform services authorized by
this Act or, in the case of a company, 1 of the members of
which is a State savings association, authorized by
applicable State law; and
``(II) all of the members of which are 1 or more insured
savings associations;
``(B) the term `limited liability company' means any
company, partnership, trust, or similar business entity
organized under the law of a State (as defined in section 3
of the Federal Deposit Insurance Act) that provides that a
member or manager of such company is not personally liable
for a debt, obligation, or liability of the company solely by
reason of being, or acting as, a member or manager of such
company; and
``(C) the terms `State savings association' and
`subsidiary' have the same meanings as in section 3 of the
Federal Deposit Insurance Act.''.
(2) Conforming amendments to section 8 of the federal
deposit insurance act.--Section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818) is amended--
(A) in subsection (b)(9), by striking ``to any service
corporation of a savings association and to any subsidiary of
such service corporation'';
(B) in subsection (e)(7)(A)(ii), by striking ``(b)(8)'' and
inserting ``(b)(9)''; and
(C) in subsection (j)(2), by striking ``(b)(8)'' and
inserting ``(b)(9)''.
(b) Regulation and Examination of Service Providers for
Credit Unions.--Title II of the Federal Credit Union Act (12
U.S.C. 1781 et seq.) is amended by inserting after section
206 the following new section:
``SEC. 206A. REGULATION AND EXAMINATION OF CREDIT UNION
ORGANIZATIONS AND SERVICE PROVIDERS.
``(a) Regulation and Examination of Credit Union
Organizations.--
``(1) General examination and regulatory authority.--A
credit union organization shall be subject to examination and
regulation by the Board to the same extent as that insured
credit union.
``(2) Examination by other banking agencies.--The Board may
authorize to make an examination of a credit union
organization in accordance with paragraph (1)--
``(A) any Federal regulator agency that supervises any
activity of a credit union organization; or
``(B) any Federal banking agency that supervises any other
person who maintains an ownership interest in a credit union
organization.
``(b) Applicability of Section 206.--A credit union
organization shall be subject to the provisions of section
206 as if the credit union organization were an insured
credit union.
``(c) Service Performed by Contract or Otherwise.--
Notwithstanding subsection (a), if an insured credit union or
a credit union organization that is regularly examined or
subject to examination by the Board, causes to be performed
for itself, by contract or otherwise, any service authorized
under this Act, or in the case of a State credit union, any
applicable State law, whether on or off its premises--
``(1) such performance shall be subject to regulation and
examination by the Board to the same extent as if such
services were being performed by the insured credit union or
credit union organization itself on its own premises; and
``(2) the insured credit union or credit union organization
shall notify the Board of the existence of the service
relationship not later than 30 days after the earlier of--
``(A) the date on which the contract is entered into; or
``(B) the date on which the performance of the service is
initiated.
``(d) Administration by the Board.--The Board may issue
such regulations and orders as may be necessary to enable the
Board to administer and carry out this section and to prevent
evasion of this section.
``(e) Definitions.--For purposes of this section--
``(1) the term `credit union organization' means any entity
that--
``(A) is not a credit union;
``(B) is an entity in which an insured credit union may
lawfully hold an ownership interest or investment; and
``(C) is owned in whole or in part by an insured credit
union; and
``(2) the term `Federal banking agency' has the same
meaning as in section 3 of the Federal Deposit Insurance Act.
``(f) Expiration of Authority.--This section and all powers
and authority of the Board under this section shall cease to
be effective as of December 31, 2001.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Iowa (Mr. Leach) and the gentleman from New York (Mr. LaFalce) each
will control 20 minutes.
The Chair recognizes the gentleman from Iowa (Mr. Leach).
Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume.
(Mr. LEACH asked and was given permission to revise and extend his
remarks.)
Mr. LEACH. Mr. Speaker, I rise in support of H.R. 3116, the
Examination Parity and Year 2000 Readiness for Financial Institutions
Act. This bill is a product of hearings which the Committee on Banking
and Financial Services held in November and February to examine the
potential impact of the year 2000 computer problem on the Nation's
financial institutions. It was reported from committee on February 5 on
a voice vote with broad bipartisan support, and I want to express my
appreciation to the minority for their cooperation, particularly the
gentleman from New York (Mr. LaFalce), and assistance in facilitating
timely action on this bill.
For those of our colleagues who may not yet be aware of this issue,
the year 2000 problem, or Y2K problem, as it is sometimes called,
arises from the fact that most computers represent the year with only
two digits. Hence, 1998 is simply recorded as ``98.'' Unfortunately,
that means when the clock rolls over to January 1, 2000, many computers
may incorrectly assume that 00 means 1900 rather than 2000. As a
result, computers may reject data entries, calculate erroneous results,
or simply shut down.
As inconsequential as this issue may appear, it is clear from
testimony presented at the committee's hearing that the year 2000
problem poses a serious challenge to the banking sector and to the
economy as a whole. Thousands of financial institutions in the United
States rely on computers for such functions as check clearing, direct
deposit, accounting, automated teller machines, ATM networks, credit
card processing, and electronic data exchanges with external parties.
Even passenger security systems, vaults, phone systems, elevators,
and other building systems could malfunction if embedded data-sensitive
microchips failed to process the year 2000 date change.
Most of the effort to address the year 2000 problem does not require
new legislation. The bill before us today is designed to deal with a
couple of discrete aspects of the problem as it relates to financial
institutions.
First, H.R. 3116 requires Federal financial regulatory agencies to
hold seminars for financial institutions on the implications of the
problem for safe and sound operations, and to provide model approaches
for solving common problems. The bill gives the agency broad latitude
to work together and with outside industry organizations to accomplish
these objectives.
Second, H.R. 3116 extends to the Office of Thrift Supervision and the
National Credit Union Administration the authority to examine the
operations of service corporations or other entities that perform
services under contracts for thrifts and credit unions, thereby giving
these two financial regulatory agencies statute parity with the other
three, the Fed, the OCC, and the FDIC, which already have such
authority.
Mr. Speaker, I urge my colleagues to vote aye on this important
measure, and I would like to thank in particular the staff for all of
their work for what appears to be a very esoteric but surprisingly
sophisticated issue.
Mr. Speaker, I reserve the balance of my time.
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Mr. Speaker, I join with my friend and colleague, the
distinguished chairman of the Committee on Banking and Financial
Services, in urging the House to suspend the rules and approve H.R.
3116, the Examination Parity and Year 2000 Readiness for Financial
Institutions Act.
It is imperative that Congress give greater focus to the potential
ramifications of what is being called the year 2000 or Y2K problem. We
have a series of date-related programming problems that can adversely
affect computer operations, beginning, really, as early as January of
1999. If not corrected, these problems could create serious disruptions
throughout our economy.
Credit cards could read as expired, insurance policies could get
lost, checks could bounce, phone lines could crash, and entire computer
systems could fail under the weight of nonsensical dates.
The potential implications for the United States and, indeed, the
global economy are virtually mind-boggling.
[[Page H514]]
But even if these problems can be averted, the economic costs of
resolving the problems will still be enormous.
The cover story in this week's Business Week estimates that
correcting year 2000 problems could cost the economy roughly $119
billion in lost economic output, simply between now and the year 2001.
This would cut roughly half a percentage point off economic growth in
2000 and early 2001, roughly equal to the estimated economic damage
anticipated from the financial crisis in Asia.
The year 2000 problem is particularly serious for financial
institutions and their regulations. The failure of computers to
distinguish between the year 2000 and the year 1900 or the risk they
will misread dates as commonly used symbols for ``die dates'' in
financial accounting could result in loan schedules being
miscalculated, debts being cancelled, payments and bank statements
being delayed, electronic funds transfers being lost, 100-year interest
charges and late payment fees being imposed on consumers, and a
virtually limitless variety of other problems.
Some analysts warn and believe that the entire financial system could
shut down New Year's Day 2000. Fortunately, the Federal Reserve Board,
other bank regulators, and the Nation's larger banks have taken the
year 2000 problem quite seriously for several years and have spent
considerable sums to develop and test potential solutions.
But the same has not always been true of smaller banks, thrift
institutions, and credit unions. These institutions sometimes lag
behind in year 2000 compliance, in part because they do not fully
comprehend the potential disruptions that would occur and also, to a
certain extent, because they lack the resources to commit to developing
solutions.
Smaller institutions are further hampered by the fact that they
typically outsource most data processing, check clearance, credit card,
and other computer dependent operations, to outside service providers
and assume that these companies will handle the year 2000 problems.
Unfortunately, these companies often face problems of their own in
resolving year 2000 problems. Any failures to make appropriate
adjustments in these computer networks will easily be compounded
throughout the entire financial system.
As of now, the Comptroller of the Currency, and only the Comptroller,
has the authority to examine the operations of affiliated service
corporations and outside vendors that perform services for banks to
monitor compliance in resolving year 2000 problems.
Clearly, this authority must be expanded on a uniform basis to permit
comparable examination of year 2000 compliance by service providers to
thrift institutions and credit unions.
H.R. 3116 addresses these problems in several ways. First, it directs
the Federal bank, thrift, and credit union regulatory agencies to offer
seminars to financial institutions on the implications of the year 2000
computer problem on safe and sound operations.
Second, it requires each agency to make available to financial
institutions model approaches for addressing year 2000 computer and
data processing problems.
And, third, the bill provides the necessary authority to the Office
of Thrift Supervision and the National Credit Union Administration to
examine the operations of affiliated service corporations and outside
vendors that provide services under contract to thrifts and credit
unions.
{time} 1445
This will provide both agencies with comparable authority to the bank
regulatory agencies for monitoring the Year 2000 compliance.
Mr. Speaker, I again applaud the gentleman from Iowa (Mr. Leach)
chairman of the committee, and the staff, both the majority and the
minority, for working on this bill. It is extremely timely and
important legislation. It is necessary to assure the safety and
soundness of our financial system. I strongly urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. LEACH. Mr. Speaker, I yield 5 minutes to the distinguished
gentlewoman from New Jersey (Mrs. Roukema) chairman of the Subcommittee
on Financial Institutions and Consumer Credit.
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Mr. Speaker, I do not believe I will take the whole 5
minutes, but I do want to rise in strong support of H.R. 3116. I am an
original cosponsor and believe this is a very far-reaching bill and we
are giving adequate time to address the problem of Y2K, as it has come
to be none, and we need this advance planning time.
Certainly, we will be addressing the readiness question in this
legislation, as well as providing parity and examination authority
among the Federal banking agencies and the National Credit Union
Administration.
The gentleman from Iowa (Mr. Leach) has very well, along with the
gentleman from New York (Mr. LaFalce) our ranking member, explained the
Y2K problem. And in a nutshell I would simply say that it is the
ability of a financial institution's computers to recognize data in
their own computer base as well as databases from other systems. And I
will not go into the full and complete explanation that Chairman Leach
has made, except that I would also say, however, that as has been noted
that financial institutions are spending millions of dollars and man-
hours trying to fix their systems presently, and what we are doing here
today, both for the Y2K problem, as well as the parity question for
examination authority, is hopefully negating those problems and we will
be saving both the industry and the consumers untold billions of
dollars both in unnecessary disruptions and inconveniences and a lot of
legal questions that could arise.
So, Mr. Speaker, I do rise in complete support of this bill. I think
we should note that particularly that in dealing with the parity
authority for the Federal regulators, as well as the NCUA and the OTC,
that what we are doing here is providing services to savings
associations and credit unions to help them fulfill their part of the
safety and soundness mandate of the banking institutions.
Again, I urge full support of the legislation and I thank the
gentleman from Iowa for his leadership.
Mr. LEACH. Mr. Speaker, I yield 5 minutes to the gentlewoman from
Maryland (Mrs. Morella).
Mrs. MORELLA. Mr. Speaker, I thank the gentleman for yielding the
time to me, and I rise to commend the gentleman from Iowa (Mr. Leach)
and the gentleman from New York (Mr. LaFalce) the ranking member, and
the sponsors of this legislation on the Committee on Banking and
Financial Services on their effort to ensure that our Nation's
financial institutions are adequately addressing the Year 2000 computer
problem.
It has been said that almost 70 percent of all the network computers
around the world are connected to banking and financial institutions.
If that is so, then the Year 2000 computer problem, left unattended,
could not only detrimentally affect every depositor and creditor in
that computer-dependent industry, but also could potentially cripple
international commerce. It is clear that our Nation's financial
institutions must move expeditiously to ensure that they will not be at
risk at the beginning of the new millennium.
H.R. 3116, the Examination Parity and Year 2000 Readiness for
Financial Institutions Act, will help them achieve that goal. By
requiring the industry to provide seminars for financial institutions
on the implications of the Year 2000 problem for safe and sound
operations, as well as developing model approaches for solving common
year 2000 problems in such areas as vendor contracts, the bill takes an
important first step to better assure American customers and depositors
that their local banks and credit unions will be safe and open for
business when the Year 2000 rolls around.
Mr. Speaker, as you know, we in Congress have been working diligently
over the past 2 years to raise the Nation's awareness and to push our
Federal Government, as well as State and local governments, and private
industry, for immediate corrective action. We have done this through
legislation and an ongoing series of current congressional hearings and
attentive oversight, even with the national Republican radio address.
[[Page H515]]
As chair of the House Committee on Science's Subcommittee on
Technology, we have held six hearings on the Year 2000 problem, many in
conjunction with the Committee on Government Reform and Oversight's
Subcommittee on Operations, chaired by the gentleman from California
(Mr. Horn).
In legislation, we required the creation of a national Federal
strategy on the Year 2000 problem. Federal quarterly reporting
requirements and a statutory prohibition on the Federal purchase of any
information technology which is not Year 2000 compliant.
I am also very pleased that the President has finally joined with
Congress to help ensure that our Nation will address the Year 2000
problem in a timely and effective manner. The President's recent
Executive order establishing a Year 2000 Conversion Council, chaired by
John Koskinen, to make correcting the problem the highest priority
attention for both the public and private sector, is vital to our
Nation's ability to correct the problem by the unrelenting deadline.
This is an important step if we are to avert catastrophic failure of
government and industry computer systems. We have been calling for
leadership from our Nation's chief executive for over a year. The
President is at last giving this issue the attention it deserves.
And while I am anxious to work with Mr. Koskinen and the national
Year 2000 Council on future efforts, today I intend to support this
necessary measure to ensure the American people that not only is their
money safe, but they will have reasonable timely access to it in the
Year 2000 and beyond.
So, Mr. Speaker, I urge all of my colleagues to join me in passing
H.R. 3116. I also want to again congratulate Chairman Leach and Ranking
Member LaFalce for their leadership, and I look forward to working with
them as Congress moves to enact other Year 2000 solutions.
Mr. LaFALCE. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume
just to conclude by saying this issue is extraordinarily important for
consumers. It is important for America's competitive position abroad.
To become Year 2000 compliant will involve a multi-billion dollar cost
to the economy and success or failure will affect the competitive
position of many types of private sector organizations at home and
abroad.
I am particularly concerned at home with the competitive position of
various vendors to financial institutions, some of which are on top of
the problem, some of which are less so. Abroad, we could literally see
a run to American financial institutions who are on top of the problem,
in contrast with foreign competitors. Europe is intertwined with a
series of problems related to European Community. In Asia there is a
series of very different kinds of problems. Neither in the world is
putting as much attention as the United States is. So as there are
challenges, there are also potential opportunities for those
institutions who are on top of this particular subject matter.
Mr. Speaker, let me just conclude by saying that also from a job
sense, we are going to see perhaps the greatest shortage of software
engineers and technicians in the history of the country in almost any
industry. And it is important for individuals not only in the financial
services sector, but in other types of critical industries, to be very
sensitive to these issues. Obviously, relating to airlines which is one
most in the public mind, but there are many others as well.
In any regard, this is a very, very modest bill that the Congress is
putting forth. Behind the bill is also the sense that involved is an
education process of which the Congress is a part. And while this bill
will not be an answer to anything, it is intended to precipitate
serious attention to the issue.
Mr. Speaker, with that, I have no further requests for time. I would
like to thank particularly the gentleman from New York (Mr. LaFalce)
and the gentlewoman from New Jersey (Mrs. Roukema), as well as the
gentlewoman from Maryland (Mrs. Morella) for her thoughtful attention.
Mr. PAUL. Mr. Speaker, this Legislation, H.R. 3116, will not solve
the Year 2000 problem. Giving some financial regulators ``statutory
parity'' with other regulators will not solve the problem. Everyone
will have to take responsibility to secure that their own systems will
be Year 2000-compliant. We must hope that the government will be as
diligent in its compliance with the so-called Millennium Bug problem as
it want the private sector to be.
The General Accounting Office (GAO) has reported unfavorably on the
FDIC's readiness. Before the Subcommittee on Financial Services and
Technology, Committee on Banking, Housing and Urban Affairs, US Senate,
Jack L. Brock, Jr., Director, Governmentwide and Defense Information
Systems, testified on February 10, 1998 (Year 2000 Computing Crisis:
Federal Deposit Insurance Corporation's Efforts to Ensure Bank's
Systems Are Year 2000 Compliant) that the Federal Deposit Insurance
Corporation (FDIC) has not met its own ``y2k-compliant'' standards.
According to GAO, the FDIC has not yet completed the assessment phase
of the remediation process, despite its own standard that banks under
the agency's supervision should have completed this phase by the end of
the third quarter of 1997.
The bill requires the regulators to provide information (seminars,
etc.), make available to financial institutions model approaches to
address the Year 2000 problem, and to give the regulators examination
authority to examine third party service provides under contract to
federally-insured institutions.
James Mills, of NAFCU, testified before the House Committee on
Banking and Financial Services, ``Historically, the role of providing
education and training is one best performed by the private sector,
namely trade associations and industry-related organizations . . .
Rather than require federal agencies to offer seminars, perhaps any
legislative efforts should require federal agencies to participate in
such programs or make it advisable and permissible to participate.''
NAFCU believes that the focus of H.R. 3116 should be strictly limited
to ensuring compliance. In its present form, H.R. 3116 contains a broad
and permanent expansion of NCUA's examination and regulatory authority
. . . Legitimate questions may be raised as to whether, absent the year
2000 issue, NCUA, as a federal financial regulatory agency, should have
the authority not just to examine but to actually regulate private
business enterprises incorporated under the laws of various states. The
authority given to NCUA in H.R. 3116, is not limited to the examination
and regulation of credit unions, but would allow NCUA to examine and
regulate third-party businesses, vendors and outside providers. Do the
members of the Committee intend to give NCUA authority to regulate
private entities?''
Ellen Seidman, Director OTS, added, ``Clearly, the primary
responsibility and liability for Year 2000 compliance rests with the
regulated institutions themselves, including those that rely on service
providers . . . Some service providers, however, have been resistant to
these contractual provisions and, as a result, thrifts have been
hindered in their ability to contract for services.''
This bill raises legal liability questions that may actually thwart a
financial institution's ability to address the y2k problem more
effectively. Introducing legislation on the y2k issue would only give
more people more incentive to sue companies which are not compliant.
How does the bill define ``year 2000 compliance''? It isn't clear. Such
ambiguity only causes further problems. The real problem with y2k isn't
the computers, its the people. More legislation will only compound the
problem.
Year 2000 issues with computers cause numerous headaches but by no
means unsolvable problems. Solutions exist, and since we do exist in a
relatively free market, we should allow it to work.
Mr. LEACH. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Shaw). The question is on the motion
offered by the gentleman from Iowa (Mr. Leach) that the House suspend
the rules and pass the bill, H.R. 3116, 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.
____________________