[Congressional Record Volume 144, Number 39 (Tuesday, March 31, 1998)]
[House]
[Pages H1827-H1831]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 10, FINANCIAL SERVICES ACT OF 1998
Mr. FROST Mr. Speaker, I yield 3 minutes to the gentleman from New
York (Mr. LaFalce).
Mr. LaFALCE. Mr. Speaker, the Republican leadership wants the United
States House of Representatives to play Russian roulette with the
future of the credit union industry. We refuse to play that game.
One month ago, the Supreme Court cast in doubt the future viability
of federally chartered credit unions; and men and women of goodwill in
both the Republican and Democratic parties said, we have an enormous
problem and we must come up with an immediate solution. Working
together, working cooperatively, working collegially, we came up with
that solution, an excellent solution that passed, I believe,
unanimously by voice vote last Thursday.
Some have now said that what the Republican leadership has done in
joining together this unanimously passed credit union bill, which could
pass the House floor tonight or tomorrow by voice vote in my judgment
if brought up separately, is give credit union members a first-class
ticket on the ship Titanic. We do not know if that is going to be the
case. Because if this should pass, it would be a long sail; and it
might go down.
But we in the Democratic Party do not wish to play Russian roulette
with the future of the credit union industry. We have the solution. We
want to pass that solution today independently and solve the problem
once and for all.
With respect to H.R. 10, who opposes it? The consumer groups oppose
it. Who else opposes it? The administration opposes it. As a matter of
fact, the most recent statement of opposition says that the Treasury
Department will recommend that the President veto the bill in its
present form, and that is the bill that the Republican leadership
wishes to attach the credit union bill to. We reject that approach.
There are so many problems with H.R. 10. Now, a rule ought to permit
us to deal with those problems, the problems of the National Bank
Charter in particular, the problems of the Thrift Charter. The rule
does not permit even one amendment on any of the issues the Treasury
says will compel it to recommend a veto with respect to the National
Bank Charter and the Thrift Charter. Not one amendment is permitted on
the National Bank Charter or the Thrift Charter by this Committee on
Rules.
This rule must be rejected.
The SPEAKER pro tempore. The gentleman from New York (Mr. Solomon),
the chairman of the Committee on Rules, has 15\1/2\ minutes remaining.
The gentleman from Texas (Mr. Frost) has 23\1/2\ minutes remaining.
[[Page H1828]]
Mr. SOLOMON. Mr. Speaker, I yield such time as he may consume to the
gentleman from Claremont, California, (Mr. Dreier), vice chairman of
the Committee on Rules, who is a very valuable Member and has formerly
served on the Committee on Banking and Financial Services. He and I do
not always agree on these banking matters, but I yield him such time as
he may consume.
Mr. DREIER. Mr. Speaker, I thank my friend from Glens Falls, the
distinguished chairman of the committee, for yielding me the time.
I do rise in support of this rule. The distinguished chairman of the
Committee on Banking and Financial Services, the gentleman from Iowa
(Mr. Leach), and the gentleman from Virginia (Mr. Bliley), chairman of
the Committee on Commerce, have worked long and hard to produce what
many believe to be a fragile compromise to bring about long overdue
reforms to the financial services industry; and, for that reason, they
deserve to be heard; and that is why I am going to be voting in support
of the rule.
At the same time, as has been said during this debate earlier, I have
more than a few very serious concerns about H.R. 10 that I do not
believe can be fixed by the amendments that have been made in order
under this bill. I think they could have if we had been able to make a
substitute that I was proposing in order, but I do not believe they can
be fixed under the structure that we now have.
Among those many concerns is the fact that H.R. 10 imposes massive
new regulatory burdens on financial institutions, destroys a very
valuable private sector charter, and encourages excessive litigation.
We are going to hear a lot today about how functional regulation will
create a more level playing field for financial services firms to
compete. But, in reality, Mr. Speaker, functional regulation does
little more than saddle already highly regulated companies with
additional layers of government regulation and bureaucracy in an effort
to protect markets of less competitive firms. It responds to the
parochial interests of government regulators rather than the
preferences of consumers, which really should be our top priority here.
In short, this is really the Japanization of our financial services
industry. By preventing the chartering of any new unitary thrift
holding companies, H.R. 10 also punishes sound, profit-making private-
sector companies because another industry wants them obliterated as a
competitor.
Because H.R. 10 confers a competitive advantage to so-called
grandfathered thrifts, Congress will be under constant pressure to take
the next step, which is to impose a Soviet-style growth cap on that
industry like that which was imposed on the non-bank banks 11 years
ago. Imagine if 10 years ago, as computer makers began to embrace the
Windows operating system, Congress mandated that all computers be
loaded only with a DOS operating system. The cry of outrage would be
deafening.
I also find it troubling that H.R. 10 attempts to hide behind the
mantle of States' rights in an effort to perpetuate an obsolete
regulatory system that is destructive to the economy. The U.S. has six
major, well-entrenched financial regulators and a duplicative set of
regulators in all 50 States. In the name of States' rights, H.R. 10
significantly increases uncertainty over the scope of State regulation
of insurance. This, in turn, will lead to costly and unnecessary
litigation. It will increase the insurance products to consumers, again
the group that should be our top priority.
If my colleagues agree that excessive litigation is an ever-
tightening noose around the neck of our economy, they should think
twice about supporting a bill that promises litigation against any bank
that attempts to devise innovative financial products and services for
its customers, the consumer.
Mr. Speaker, in early 1995, the gentleman from Iowa (Mr. Leach) began
the process that eventually led to H.R. 10 by focusing initially on a
narrow Glass-Steagall repeal bill that was devoid of the regulatory
shenanigans and government intervention that characterizes this current
bill. There was a fear that efforts to pass comprehensive legislation
to modernize the financial services industry would get bogged down by
legislative industry and regulatory turf battles.
Well, Mr. Speaker, those fears have come true once again. Instead of
letting the marketplace determine winners and losers, H.R. 10 attempts
to legislate who can compete with whom and who can produce and sell
what. It is bad for consumers; and, Mr. Speaker, it is therefore bad
for our economy.
However, as I said, the authors of this measure do deserve to be
heard. So I do support the rule, but I will oppose this bill when it
comes forward.
Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from
Michigan (Mr. Dingell).
(Mr. Dingell asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, one of the problems of this bill has been
put together by two categories of people. First of all, a bunch of
people out there in the business world think they are going to cut a
fat hog free from exemptions and free from responsibilities and free
from good sense controls to ensure that there would be fair behavior
and proper behavior in the marketplace. The other is a group of people
who do not understand what is going on in the financial world.
Financial world people think it runs on money. It does not. It runs
on public confidence. And as long as we remember that and craft our
laws in the proper fashion, we will have the confidence of the public
and we will have the most successful financial operation in the whole
world.
I rise not in anger but really in sorrow. And I want to say that I
have tried to work with my Republican colleagues to cut a deal to
preserve certain essential protections for American investors, for
American consumers, and for the American financial community and
industry.
{time} 1745
Regrettably, I did not do that. I was not successful. But in any
event, we are now confronted with whether or not this rule should be
granted. It is with regret I suggest to my colleagues that the rule
ought not be granted and, rather, that we ought to proceed to go back
to the drawing board and come up with a better piece of legislation,
which protects consumers, which protects investors, and which protects
the confidence of the American people in what is the most
extraordinarily successful financial community, financial undertaking
in the history of the world.
Let us look at some of the defects in this. One of the most
noteworthy is that the bill, under the rule, we would find would
preempt State insurance commissioners from regulating the solvency of
insurance companies. I have an amendment that would have corrected this
problem. The rule does not permit me to offer it. Certainly to attack
the solvency of the insurance world and the insurance industry is not
the way to enhance confidence or, indeed, to ensure the safety of
American investing public.
It was only about 10 years ago that lax regulation allowed the
savings and loan industry to become insolvent, and that cost the
American taxpayer more than $150 billion. I wonder if we are prepared,
then, to gamble with the taxpayers' money once again, this time on
insurance. If Members vote for this rule, that is what is going to be
moving forward in the financial community.
Does it surprise anyone that the managers amendment would also
preempt State securities administrators from enforcing antifraud
statutes to protect investors? I have an amendment that would have
fixed this problem, but the rule does not allow me to offer it.
Last Congress we enacted legislation that confirmed State
responsibility for enforcement of security antifraud statutes, simply
because they do a good job. Many of these issues are local in
character, and because we do not have enough money to put into Federal
responsibilities.
Are we going to allow that authority to be taken away from the
States? I suggest not. My counsel to my colleagues is, let us not vote
for a bad rule; let us reject the rule and go on.
Mr. DREIER. Mr. Speaker, I am happy to yield 3 minutes to my very
good friend and classmate, the gentleman from Ohio (Mr. Oxley), who
worked long and hard as chairman of the subcommittee.
[[Page H1829]]
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, I rise in support of this rule.
Let us take a look at where we have been. We have been, the last many
years, controlled in this financial services industry essentially by
court decisions and by fiat from unelected regulators and bureaucrats.
Is that the way we want our financial services industry to be
conducted? Or do we want to have the Congress of the United States, who
is responsible to the voters and the citizens of this country, to make
these ultimate decisions?
If we do not pass this rule, we do not have the opportunity to have
Congress step in where courts and regulators have always penetrated and
give us an opportunity to set the basic framework for financial
services into the next century. That is really what this debate is all
about.
But we cannot get to that debate, no matter what our particular
position is, unless we pass this rule. This has been heavy lifting.
Those of us who have worked in the Committee on Banking and Financial
Services and the Committee on Commerce trying to craft compromises have
worked long and hard to get to this day.
In my own Subcommittee on Finance and Hazardous Materials, we had a
historic agreement between two warring factions that had gone on for
years and years, the independent insurance agents and the banks. The
insurance agents finally recognized that today banks are going to be
able to sell insurance, and banks finally recognized that they had to
follow a certain set of guidelines and be regulated by State insurance
regulators. We came to that historic agreement, something that had held
up this legislation time and time and time again.
So we have seen these compromises made, and we have seen this product
come together for the first time in 10 attempts by this recent Congress
to reform Glass-Steagall. The WTO agreement that was recently signed in
Geneva opens up markets all over the world. Countries all over the
world are liberalizing their markets and allowing Americans and other
companies to come in and compete for insurance.
We gave up nothing in those agreements in WTO, but other countries
throughout the world, 100 of them, have agreed to open up their
markets, many of which have been closed from time immemorial.
Are we going to, in this Congress, fail to pass a rule and fail to
pass a bill that would modernize our financial structure at the same
time we see the rest of the world coming our way and opening up their
markets? I hope not. There has been too much work, too much sincere
effort at compromise to get us where we are today to throw it all away
and say Congress is incapable of dealing with these difficult issues.
I ask all of my colleagues on both sides of the aisle, vote for this
rule. Give us an opportunity to explain how effective this bill can be
in providing a modern financial services industry that will be the envy
of the world.
Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from
Minnesota (Mr. Vento).
(Mr. VENTO asked and was given permission to revise and extend his
remarks.)
Mr. VENTO. Mr. Speaker, I rise in strong opposition to the rule. Not
because there is substantive differences with regards to the bill
itself, H.R. 10, where, as my colleague referred to it as Titanic, no,
not because of that, but this rule does not permit us to deal with the
major substantive issues that this body needs to deal with.
This bill was heard in neither the Committee on Commerce nor the
Committee on Banking and Financial Services. This bill is an assault on
the committee process in this House. This was put together by a few
individuals and excluding those that disagree with them; and now they
are surprised and say to us, in order to debate it, we have to do it
according to this rule.
What does this rule do? First of all, it hijacks the credit union
bill, which is a noncontroversial bill that could pass and should pass.
It is urgently needed. It should pass on suspension. But what this rule
does is said we cannot talk about and we cannot vote and will not vote
on the thrift charter and the character of the thrift charter. This
rule says we cannot and will not talk about the credit union bill, even
though it incorporates it into this. No vote. No consideration.
This rule suggests that we will not vote on something called an
operating subsidiary in terms of the corporate structure that a
financial institution may choose.
This rule dismisses something called deference in terms of what
regulators have, both State and Federal, and sets up some cockamamy
type of court procedure in terms of how we are going to arrive at that.
To suggest it is going to eliminate the court, this sends an engraved
invitation to the courts to deal with this issue in a highly unusual
and, I think, yet ineffectual matter.
On and on this bill goes and offers a few amendments on topics that
have little substantive effect in terms of what was going on, which
were never heard. This bill certainly was opposed by consumer groups,
opposed by the administration, opposed, of all groups, by the American
Bankers Association. And Republicans are bringing this bill up here? I
cannot believe it.
In fact, if we pass this bill, we will be taking a step backward, not
forward. This does violence and undercuts and atrophies the National
Bank Charter. We are suggesting we are going to modernize banks at the
same time we are doing undercutting one of the most innovative charters
we have in terms of providing opportunities for financial growth in
this economy.
This will be a step backwards from where we are going in terms of
facing the problems and providing the tools that our economy needs in
order to be successful.
This rule needs to be defeated. If we send this over to an icy death
in the Senate, we will envy progress that can be made and should be
made on financial modernization in this session. Members should vote no
on this and reject this type of tactics. We ought to know there is
something wrong with it. If Members read all 350 pages and they think
they understand it, then vote for it. But if they do not, they better
not vote for it.
Ask your leadership to provide some leadership and to provide the
opportunity to deal with the people's business and not to jam these
things through on a partisan manner. But to start calling for a
partisan vote in terms of a financial modernization bill, I will tell
my colleagues there is something dramatically wrong with the direction
they are going. Vote no.
Mr. Speaker, I rise in opposition to this rule on H.R. 10. Why am I
opposed? Let me count the ways.
First, I object strenuously to this attempt to hijack H.R. 1151 by
linking it to H.R. 10. Regardless of the underlying merit of H.R. 10,
regardless of where one might stand on the politics or the process that
has brought us here today, there is no rational reason to link this 350
plus pages of controversial bill with the must-pass credit union
legislation. This rule must be viewed as an attempt to slow down, if
not imperil, the solution to the credit union membership dilemma
resulting from the Supreme Court's February ruling. There is no other
way to view it. If this rule passes, I urge that the motion to recommit
contain instructions to pass only the credit union legislation as
passed by the Banking Committee last week.
Many Members filed many amendments to this bill. Yet we see only
five, and really only three substantive, amendments before us under
this. There definitely should be time and certainly accommodation to
address the key issues on this bill. There should be an opportunity to
improve this bill. But against the backdrop of a self-imposed deadline
and the excuse for urgent action on the credit union issue, this House
and the public are to be short changed on even a debate, much less a
fair vote on the policies at hand.
The most important amendment discussed last night in the Rules
Committee was the LaFalce Vento/Bentsen amendment to reinstate and
restore the Banking Committee's financially viable and safe operating
subsidiary for national banks. The operating subsidiary amendment
raised issues of great import to the overall issue of financial
modernization and to the Members of the Banking Committee and the
Administration. But adoption of this deficient rule would mean that
amendment won't even be considered. We can't vote on an alternative
corporate structure for banks, or stop the shredding of the national
bank charter the policy in the H.R. 10 that is before the House. This
rule on H.R. 10 denies all of us a vote on the key issue in this bill.
No, we can't discuss substance on the future of financial services in
this country. But we can discuss an amendment--for twenty minutes--that
would gut the Community Reinvestment Act for banks with less than $250
[[Page H1830]]
million in assets, an issue that has nothing to do with financial
institution modernization. This amendment was not offered in either
Committee's consideration and certainly represents yet another poison
pill for this rule and H.R. 10, or should I say the H.R. Titanic.
Mr. Speaker, I have worked long and hard and in good faith on a
financial services modernization bill for many years as have most of my
colleagues on the Banking and Financial Services Committee. This rule
and this bill make a mockery of a deliberate consideration and of the
contributions of many Members. This is a bad faith effort to avoid
issues that this House should consider. This measure was reported from
the Banking Committee over nine months ago. This rule and this H.R. 10
has made partisan a bill that was a balanced, bipartisan effort when it
passed the Banking Committee on June 20, 1997 with the support of 10
Democrats. A version of H.R. 10 was also passed by the House Commerce
Committee and our two committees began work last fall on a compromise.
But the fact is H.R. 10 for the past five months has been a moving
target. Just last night, March 30th, the 350 page version that is
before the House was finalized. If Members are comfortable with such a
procedure and the resulting substance, then we could dispense with the
committees and let a handful of the select and self-appointed decide
what we will vote upon and what we can debate. If you are willing to
dismiss the committees in favor of such a procedure, just vote for this
rule. And I hope you can explain this 350 page bill and why banks and
others are cut off at the knees and impacted adversely. I cannot and I
will vote no on this pseudo modernization bill. I urge you to do the
dame.
Vote ``no'' on the rule at the very least to provide the time to pull
together a serious debate and a balanced bill for consideration by the
House. Vote no on this rule and send a message to the Republican
Leadership to schedule the credit union bill for the suspension
calendar tomorrow, instead of sending it down to the icy waters of a
protracted consideration with the other body. Vote no on this rule.
Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Virginia (Mr. Bliley), chairman of the Committee on
Commerce for a response.
Mr. BLILEY. Mr. Speaker, I thank the gentleman for yielding me this
time. I had not planned to speak again, but after the last speech by
the gentleman in the well, the gentleman from Minnesota, I feel
obligated to do so.
The gentleman worked long and hard in his committee. He produced a
bill with a by-two-vote majority, and the chairman reserved the right
to vote against it on the floor.
The insurance agents were opposed. The insurance companies were
opposed. The brokers were opposed. The banks were opposed. Indeed, the
banks have been opposed to everything we have tried to do ever since
day one. Why? Because they get everything they want from the
regulators. They do not want a bill.
I will tell my colleagues, if we do not get a bill in this Congress
before we get back to it or our successors get back to it in the next
Congress, the regulators will have given even more authority, and it
will be even harder to move a bill. So it rings kind of hollow.
If we do not vote for this rule, we do not get to consider the
underlying bill and the various amendments. And we must remember, even
as it goes across the aisle to the other body, they will have to be
considered in committee. They will have to be considered on the floor.
There will be a conference which the gentleman from Minnesota will be a
member of. There will be opportunities to further improve the bill.
But if we stop it tonight, as we can do if we vote against this rule,
there will be no bill this year. It will be even harder to move in the
next year.
Mr. FROST. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise to oppose this rule for
the unfortunate and unfair linking of H.R. 1151 and the very bad
provisions eliminating the Community Reinvestment Act.
I rise in opposition to the rule on H.R. 10, the Financial Services
Competition Act of 1997. While I support the provisions dealing with
Credit Unions, I cannot support the rule on this bill as it stands,
coupled with H.R. 1151.
The rule joins H.R. 1151, non-controversial credit union legislation,
with H.R. 10. This unnecessarily links H.R. 1151, the overwhelmingly
bipartisan supported credit union legislation, to the more
controversial H.R. 10, thus endangering passage of H.R. 1151.
H.R. 1151 was passed out of the Banking Committee by voice vote last
week and has received the bipartisan support of the leadership both in
the House and Senate.
There is no question that the credit union legislation would pass
both Houses of Congress this year and be signed into law by the
President. Therefore, H.R. 1151 should not be jeopardized by the more
controversial H.R. 10.
In addition, H.R. 10 is a creation of the Republican leadership with
no input from democratic Members. In their effort to patch together
compromise legislation from bills marked up by the Commerce and Banking
Committee, the Republican leadership has stripped the bill of important
consumer protection amendments.
While the Dingell/LaFalce amendment that was made in order represents
some key Democratic consumer protection provisions, there were a number
of other important Democratic consumer protection amendments that were
not made in order. Instead, the rule makes in order a Bachus amendment
that would strip essential Community Reinvestment Act provisions, an
amendment that was not considered by either the Banking or Commerce
Committees.
Based on the linkage of the non-controversial credit union
legislation and the lack of Democratic consultation, I oppose this
rule.
Mr. FROST. Mr. Speaker, I yield 4 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski).
Mr. KANJORSKI. Mr. Speaker, a year ago, in a bipartisan effort, a
young man from Ohio joined me to put together a bill to solve the
problem of allowing American credit unions to continue to survive in
anticipation of the Supreme Court ruling that happened a little more
than a month ago. That bill was fairly simple. Here is the copy of it.
As of this moment, we have 207 cosponsors in this House in support of
H.R. 1151. But understanding the legislative process, H.R. 1151 came to
the hearing process and the markup; and, ultimately, last week, H.R.
1151 survived as a bill of approximately 31 pages that did not satisfy
anyone completely but satisfied enough of the Members of this House
that almost the majority are still cosponsors of H.R. 1151.
And if left to come to this floor, I have not any doubt it would
survive on a voice vote under suspension to be sent on to the Senate
and with a good opportunity to be taken up to the Senate and passed as
it is presently structured and sent on to the President for his
signature.
The indication today from the notification we have received from the
Secretary of the Treasury, we would have his recommendation that the
President sign the bill and put it into law, thus freeing the credit
unions from captivity.
Instead, that 35-page bill has been weighed down by the Committee on
Rules tonight by 350 pages of some of the most contentious financial
modernization, if that is what it can be called, legislation that we
can imagine.
The thing that disturbs me about the House of Representatives when
they do something like this is they try and defy the rules of physics.
There is no way this little skinny bill is going to carry this heavy
contentious bill into law.
So the ultimate result will be that we subject the 70 million
American members of credit unions that we may end up, over the next 42
days of legislative days, without the rescue, without the life jacket
that is absolutely necessary that could be obtained if the leadership
and the Committee on Rules would just free H.R. 1151.
{time} 1800
Now I guess there are people like me that this jointure is trying to
attract. I have told the leadership on both sides of the aisle that in
the present state of what I know about H.R. 10, the modernization bill,
not even if the Deity himself came to Earth and asked me to vote for
that bill could I support it.
I am talking to the 207 Members now that are now cosponsors of 1151.
It is time that we assert our right, by voting ``no'' on this rule, to
free 1151 to go through the process and assure 70 million Americans
that they will have the right to exercise their free choice in
financial services in this country, and then perhaps, I suggest to the
leadership that we take the process that was
[[Page H1831]]
carried on to come up with a compromise 1151 and apply those same
tactics to trying to solve the financial modernization bill.
There are amendments that were offered that would have given great
strength to that bill. The gentleman from Michigan (Mr. Dingell)
indicated desires, the gentleman from New York (Mr. LaFalce) indicated
desires, the gentleman from California (Mr. Dreier) indicated desires,
amendments that would help that bill. Instead, H.R. 10 is going to sink
1151 unless we are smart enough today to vote ``no'' on this rule.
Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume.
In all my 31 years in government I have never seen anything happen
like is happening today. The phones are ringing off the hook, including
my own, and they are coming from the friendly banker, and this lobbying
effort is something I have never seen in my life happen here, and the
country is going to regret it because this body is not going to work
its will.
Mr. Speaker, I withdraw the resolution from consideration.
The SPEAKER pro tempore (Mr. Barrett of Nebraska). The gentleman from
New York (Mr. Solomon) withdraws House Resolution 403.
____________________