[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.

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