[Congressional Record Volume 145, Number 96 (Thursday, July 1, 1999)]
[House]
[Pages H5291-H5323]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FINANCIAL SERVICES ACT OF 1999
The Committee resumed its sitting.
The CHAIRMAN. It is now in order to consider amendment No. 5 printed
in House Report 106-214.
Amendment No. 5 Offered by Mr. Foley
Mr. FOLEY. Madam Chairman, I offer amendment No. 5.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 5 offered by Mr. Foley:
Page 244, after line 18, insert the following new section
(and amend the table of contents accordingly):
SEC. 198A. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.
Section 5(a)(7) of the International Banking Act of 1978
(12 U.S.C. 3103(a)(7)), is amended to read as follows:
``(7) Additional authority for interstate branches and
agencies of foreign banks, upgrades of certain foreign bank
agencies and branches.--Notwithstanding paragraphs (1) and
(2), a foreign bank may--
``(A) with the approval of the Board and the Comptroller of
the Currency, establish and operate a Federal branch or
Federal agency or, with the approval of the Board and the
appropriate State bank supervisor, a State branch or State
agency in any State outside the foreign bank's home State
if--
``(i) the establishment and operation of such branch or
agency is permitted by the State in which the branch or
agency is to be established, and
``(ii) in the case of a Federal or State branch, the branch
receives only such deposits as would be permitted for a
corporation organized under section 25A of the Federal
Reserve Act (12 U.S.C. 611 et seq.), or
``(B) with the approval of the Board and the relevant
licensing authority (the Comptroller in the case of a Federal
branch or the appropriate State supervisor in the case of a
State branch), upgrade an agency, or a branch of the type
referred to in subparagraph (A)(ii), located in a State
outside the foreign bank's home State, into a Federal or
State branch if--
``(i) the establishment and operation of such branch is
permitted by such State; and
``(ii) such agency or branch--
``(I) was in operation in such State on the day before
September 29, 1994; or
``(II) has been in operation in such State for a period of
time that meets the State's minimum age requirement permitted
under section 44(a)(5) of the Federal Deposit Insurance
Act.''.
The CHAIRMAN. Pursuant to House Resolution 235, the gentleman from
Florida (Mr. Foley) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Florida (Mr. Foley).
Mr. FOLEY. Madam Chairman, I yield myself such time as I may consume.
Madam Chairman, the amendment I am offering today is a States' rights
issue. It is noncontroversial, we hope, an amendment that will fix an
anomaly in Federal interstate banking laws. It will also help the flow
of trade from the U.S. to countries all over the world.
This amendment would allow foreign banks currently operating in the
United States to expand their operations as was intended by the Riegle-
Neal Banking and Branching Act by allowing agencies to upgrade to
branches.
In 1994, when the Riegle-Neal Interstate Banking and Branching bill
was passed. Congress sought to allow foreign banks to open additional
branches just like domestic banks. This amendment would conform with
the intent of the original act.
Unfortunately, not one foreign bank has been able to open additional
branches under the Riegle-Neal Federal law provision. While the
intention of the act was to allow expansion of foreign banks, the
provision in current law has proved to be unworkable.
This amendment would allow foreign bank agencies to upgrade to a
branch with the approval of the appropriate chartering agency, the OCC
or the State bank supervisor, and the Federal Reserve Board.
In order to accomplish this upgrade, the agency would have to meet
the State's minimum age requirement for entry, just like domestic
banks. In addition, the agency must meet the requirements for
consolidated home country supervision.
This change in Federal law that I am proposing today is a States'
rights amendment. If passed, it would remove a Federal limitation that
interferes with State law.
The amendment is supported by the Florida Banking Department, the New
York Banking Department, the Texas Banking Department and the
California Banking Department, as well as the Florida International
Bankers Association and Conference of State Bank Supervisors. This
amendment has been fully vetted with the Federal Reserve Board, and
they have indicated that they have no objection to it.
Madam Chairman, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Madam Chairman, I rise in opposition to
the amendment.
The CHAIRMAN. The gentleman from Massachusetts (Mr. Frank) is
recognized for 5 minutes.
Mr. FRANK of Massachusetts. Madam Chairman, I yield myself such time
as I may consume.
Madam Chairman, I should note that under the rules someone is
entitled to 5 minutes in opposition. I would describe myself for these
purposes as leaning against but open to persuasion, I would reassure my
friend, the gentleman from Florida (Mr. Foley). I am not firmly
committed on the subject.
I was interested in what the gentleman said and will listen some
more, but I also wanted to use this occasion to address the general
bill, Madam Chairman. It is a somewhat constricted debate situation.
What I wanted to do was to explain why I would be voting against this
bill, although I think on the subjects that it deals with it does a
good job. That is, I think this is a bill which suffers from
incompleteness.
I think with regard to the regulation of the financial services
industry, this is as good a product as we can expect from a broad
representative body. I think the Committee on Banking and Financial
Services on both sides worked seriously and well under the leadership
of the chairman and the ranking member.
The problem is, in my mind, it carries out a pattern that is too much
present in America today and that I think threatens great harm even as
it makes some specific progress, and that is a pattern in which we do a
good job of fostering conditions in which the capitalist system can
flourish. It is in our interest that the capitalist system flourish.
Capitalism clearly has established itself as the superior way for a
society to generate wealth, and the generation of wealth is very
important. It is important in and of itself because it provides
resources for individuals to enjoy themselves, and it is important as a
way to provide the resources which help us deal with other problems.
On the other hand, we have learned that capitalism, as great an
engine as it is in generating wealth, can have some downsides. In
particular, the era of capitalism in which we now are, a kind of
globally competitive world, is one where increased wealth is
unfortunately accompanied by increased inequality in many cases and by
an undermining of society's capacity to deal with some of the social
problems that the market does not take care of.
This bill should have been an opportunity to deal with both aspects
of
[[Page H5292]]
that. It is a good piece of legislation for setting forth the
conditions for the financial services industry, central to capitalism.
It is a good situation in which the intermediation function of the
financial services industry can go forward.
We understand that, in and of itself, that is going to leave us some
problems. In particular, I regret terribly the refusal of the majority
to let us deal seriously with the amendment offered by the gentlewoman
from California, which would have tried to deal with those geographic
areas that are left behind.
I do not think we adequately deal with privacy. In fact, in some ways
we may be making it worse. That is, unfortunately, a kind of paradigm
we are following too frequently. We go forward and we provide the
conditions and improve the conditions for wealth to be generated, and I
am for that. I would vote for this bill if we were talking simply about
these conditions and no other were relevant, but to do that while at
the same time we refuse to address the serious problems of poverty in
inner cities, and obviously this is not a bill in and of itself to
alleviate poverty, but it does seem reasonable to me to say to the
large financial institutions they are getting a pretty good set of
conditions here. We are responding to their needs. Can they not make a
little extra effort in the course of this to help the people who are
being left behind? Can they not help the consumers?
I understand if we leave it entirely to the market they would not
want to do that. That is why we ought to be coupling market-enhancing
legislation like this with some reasonable conditions that say they are
going to make more money out of this, and that is a good thing because
that is how our society will prosper. But can they not take a little
bit of the extra money that they are making out of this and worry about
the poor, worry about geographically underserved areas, worry about
consumer protection? Can they not do a little more on privacy? Can they
not maybe restrict a little bit the extra money they are going to make
so people's legitimate privacy concerns can be addressed?
That is the tragedy of this bill. It is a good bill in what it does,
but it is a bad bill in what it does not do.
While in other circumstances I might have felt, well, that is the
best we can do, it has unfortunately become too common in our society.
I will say I am affected on this by what is going on in my own State
where two of the largest banks are merging and are not, in my judgment,
willing to do enough to share the benefits of their merger with people
who are not doing so well.
So I congratulate the work that the leaders of the Committee on
Banking and Financial Services and others have done on the banking
provisions that deal specifically with the financial services, but I
will not be part of a conditioned pattern of helping people make more
money and not worry about those who might be left behind in that very
process.
With that, I would reassure again my friend, the gentleman from
Florida (Mr. Foley), that I am open to persuasion
Madam Chairman, I reserve the balance of my time.
Mr. FOLEY. Madam Chairman, I yield myself such time as I may consume.
Madam Chairman, I believe I have just been given a reprieve from the
gentleman from Massachusetts (Mr. Frank). I did not hear an objection
to my amendment. I feel it is a very good amendment.
Mr. LEACH. Madam Chairman, will the gentleman yield?
Mr. FOLEY. I yield to the gentleman from Iowa.
Mr. LEACH. Madam Chairman, let me say, in hopes that the gentleman
from Massachusetts (Mr. Frank) can still be persuaded to this
amendment, I would inform the gentleman that the Federal Reserve has no
objection to it.
Mr. FRANK of Massachusetts. Madam Chairman, will the gentleman yield?
Mr. FOLEY. I yield to the gentleman from Massachusetts.
Mr. FRANK of Massachusetts. When the gentleman tells me the Federal
Reserve has no objection, is he trying to get me to be for it or
against?
Mr. LEACH. Madam Chairman, will the gentleman yield?
Mr. FOLEY. I yield to the gentleman from Iowa.
Mr. LEACH. Madam Chairman, fair enough.
In addition, the New York Banking Department, the Texas Banking
Department, the California Banking Department and the Conference of
State Bank Supervisors are leaning in this direction. So I believe it
is a very thoughtful, very professional amendment, and I certainly want
to compliment the gentleman for bringing it forth, and I am just
hopeful for getting unanimity.
Mr. FRANK of Massachusetts. Madam Chairman, I yield myself such time
as I may consume.
Madam Chairman, let me say that I have been persuaded, and I will
support this amendment. When the gentleman mentioned the Texas Banking
Department, my colleague from Texas urged me on.
I will say, as we improve this bill and its specific impact on the
financial services industry, I regret even more our collective
unwillingness to do more than we are doing and to do, in fact, what we
could easily do to help those who are being left behind. It is an
inappropriate continuation of a pattern of helping the wealthy and the
powerful, and we all benefit to some extent from that, but ignoring the
other end of the society.
Mr. FOLEY. Madam Chairman, I move adoption of the amendment and I
yield back the balance of my time.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Florida (Mr. Foley).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider amendment No. 6 printed
in House Report 106-214.
Amendment No. 6 Offered by Ms. Slaughter.
Ms. SLAUGHTER. Madam Chairman, I offer amendment No. 6.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 6 offered by Ms. Slaughter:
Page 244, after line 18, insert the following new section:
SEC. 198A. FAIR TREATMENT OF WOMEN BY FINANCIAL ADVISERS.
(a) Findings.--The Congress finds as follows:
(1) Women's stature in society has risen considerably, as
they are now able to vote, own property, and pursue
independent careers, and are granted equal protection under
the law.
(2) Women are at least as fiscally responsible as men, and
more than half of all women have sole responsibility for
balancing the family checkbook and paying the bills.
(3) Estate planners, trust officers, investment advisers,
and other financial planners and advisers still encourage the
unjust and outdated practice of leaving assets in trust for
the category of wives and daughters, along with senile
parents, minors, and mentally incompetent children.
(4) Estate planners, trust officers, investment advisers,
and other financial planners and advisers still use sales
themes and tactics detrimental to women by stereotyping women
as uncomfortable handling money and needing protection from
their own possible errors of judgment and ``fortune
hunters''.
(b) Sense of the Congress.--It is the sense of the Congress
that estate planners, trust officers, investment advisers,
and other financial planners and advisers should--
(1) eliminate examples in their training materials which
portray women as incapable and foolish; and
(2) develop fairer and more balanced presentations that
eliminate outmoded and stereotypical examples which lead
clients to take actions that are financially detrimental to
their wives and daughters.
The CHAIRMAN. Pursuant to House Resolution 235, the gentlewoman from
New York (Ms. Slaughter) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from New York (Ms. Slaughter).
Ms. SLAUGHTER. Madam Chairman, I yield myself such time as I may
consume.
Madam Chairman, I am offering this noncontroversial amendment to
express the sense of Congress that financial advisors should treat
women fairly in drafting wills and trusts. Specifically, financial
planners should be urged to modify their training materials to
eliminate examples that portray women as incapable and foolish and
should develop fairer and more balanced presentations to clients that
eliminate outmoded and stereotypical examples. These stereotypical
examples lead clients to place more financial restrictions on female
heirs.
[[Page H5293]]
In the past year, I have learned that estate planners and financial
advisors still encourage the unjust practice of leaving assets in trust
for senile parents, minors, mentally incompetent children and all wives
and daughters.
Women were ostensibly included to protect them from the perceived
inability to manage money. However, in researching this issue, I found
the real reason to include wives and daughters in this list has little
to do with protection. The financial advisors are simply selling a
product.
By adding women to this list, financial advisors have substantially
increased their sales base, which, of course, increases their own
income and bottom line.
Financial planners sell a trust on several arguments. First, they try
to sell a trust based on protection; in other words, the inexperience
of the woman. Or they try to sell a trust based on tax advantages which
do not seem to be as important for sons.
A sure sales pitch is suggesting to a husband that in the event of
his wife's remarriage a trust would prevent some other man from
enjoying his hard-earned assets. These things which have worked so well
in the past are alive and healthy today and always to the detriment of
women.
As I found out, this is not just a relic from the 1950s. An article
in a monthly publication from August, 1998, includes an example of how
clients should protect their financially irresponsible daughter and her
equally financially irresponsible spouse without disinheriting them.
{time} 1930
The article's author, a financial planner, advises the clients to
devise a trust for the daughter to prevent creditors from accessing the
principal. The financial planners sell the trust by saying it will
serve as a deterrent to keep the daughter's inheritance out of the
spendthrift son-in-law's hands. No such restrictions are proposed for
any son who might have a spendthrift wife.
A specific example from the financial planner further illustrates my
point on the selling tactics currently used.
The financial planners publication said, ``Mr. Smith loves his wife,
but he does not love the way she handles money. He knows she is a big
spender, and he realizes that he never had the time or patience to
teach her how to deal with financial matters . . . Mr. Smith wants a
wall built around the assets he leaves behind. The wall is designed to
protect Mrs. Smith from herself. It is a wall that will keep con men
and well-intended amateur financial advisers out, and if Mrs. Smith
remarries, her new husband cannot touch the money in the trust, nor
will he get any should he outlive her, unless she puts instructions to
that effect in her will.''
These unfair practices were brought to my attention by a woman from
Florida who was herself negatively affected by these practices. Her
mother's will directed that her estate be directed into five equal
parts for her children, then set up an individual trust for each of her
daughters, and directed that her sons be given their money outright.
At the time the will was drawn up, she was 28 years old and her
sisters were in their twenties. Her brothers, who were deemed
apparently capable of handling their inheritance outright, were 21 and
14.
The trust set out for Kappie Spencer and her sisters for their
``protection'' provided for them to receive the annual interest on the
assets. Her mother's will contained provisions for withdrawing the
principal only for the health, support, and proper care of her
daughters and their children, and they could only touch the principal
for these very limited reasons if they had exhausted every other source
of income available to them.
Surely we would all agree that these restrictions are deeply unfair
and condescending to all women.
This amendment is an important step forward to ensure a woman's
financial well-being. Because women live longer than men, they need to
support themselves longer, but they also earn less than men, wait
longer to start saving for retirement, put aside less money, and take
fewer of the risks that produce greater returns.
Husbands, however well-intentioned, then aggravate the situation by
trying to shield their wives from any decisions regarding money by
setting up a trust arrangement, giving a banker, a lawyer, or an
accountant control of the purse strings. This may be good business for
the financial planner, but it is offensive to keep the spouse in the
dark about finances.
With more women handling the checkbook and finances in their
families, these outdated selling tactics by financial planners have to
be exposed for the patronizing practices which they clearly are. While
we cannot mandate society's attitudes, we should encourage a rethinking
of these financial practices.
I ask my friends on both sides of the aisle to support this
amendment, and I thank the gentleman for accepting this amendment.
Mr. LEACH. Madam Chairman, will the gentlewoman yield?
Ms. SLAUGHTER. I yield to the gentleman from Iowa.
Mr. LEACH. Madam Chairman, we are very happy to accept this
amendment. I would say it is brought to the Congress in a very
thoughtful way by one of the most respected members of this body. I
think that reflects on the amendment itself.
Ms. SLAUGHTER. I thank the chairman very much.
Mr. VENTO. Madam Chairman, will the gentlewoman yield?
Ms. SLAUGHTER. I yield to the gentleman from Minnesota.
Mr. VENTO. Madam Chairman, I would say that I certainly rise in
support, and in the absence the gentleman from New York (Mr. LaFalce),
we are pleased to receive the gentlewoman's amendment.
Ms. SLAUGHTER. I thank the gentlemen very much.
The CHAIRMAN. All time has expired.
The question is on the amendment offered by the gentlewoman from New
York (Ms. Slaughter).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider amendment No. 7 printed
in House Report 106-214.
Amendment No. 7 Offered by Mr. Cook
Mr. COOK. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 7 offered by Mr. Cook:
Page 311, strike line 4 and all that follows through page
312, line 16 and insert the following new section (and amend
the table of contents accordingly):
SEC. 241. STUDY OF LIMITING THROUGH REGULATION FEES
ASSOCIATED WITH PROVIDING FINANCIAL PRODUCTS.
Not later than 1 year after the date of enactment of this
Act, the Comptroller General of the United States shall
submit a report to the Congress regarding the consequences of
limiting, through regulation, commissions, fees, or other
costs incurred by customers in the acquisition of financial
products.
The CHAIRMAN. Pursuant to House Resolution 235, the gentleman from
Utah (Mr. Cook) and a Member opposed each will control 5 minutes.
Mr. DINGELL. Madam Chairman, I rise in opposition to the amendment.
The CHAIRMAN. The gentleman from Michigan (Mr. Dingell) will be
recognized for 5 minutes.
The Chair recognizes the gentleman from Utah (Mr. Cook).
Mr. COOK. Madam Chairman, I yield myself such time as I may consume.
Madam Chairman, I want to thank the Committee on Rules for allowing
me to offer this amendment, which would replace the existing section
241 with a provision requiring the General Accounting Office to study
the consequences of limiting, through regulation, commissions, fees, or
other costs incurred by customers in the acquisition of financial
products.
Through this study, Congress could determine the potential negative
effects of the regulation of commissions and fees before directing
regulators to impose such rules.
Currently section 241 of H.R. 10 would mandate that financial
regulators impose rules requiring the disclosure of commissions, fees,
or other costs incurred by customers in the acquisition of financial
products. In my view, this could be tantamount to price controls, and
really has no place in financial modernization.
The provision in the bill is currently a solution in search of a
problem. The question of the effectiveness of disclosing fees and
commissions in protecting customers is really untested. There is little
indication that disclosing fees and commissions beyond
[[Page H5294]]
the extensive disclosure that is currently required would significantly
benefit customers.
Such a requirement could even have unanticipated negative
consequences. Disclosure of fees and commissions could stifle
competition or threaten financial innovation or market liquidity.
Furthermore, the fee disclosure provision is vaguely worded. The term
``other costs incurred by customers'' could be expansively and
inappropriately interpreted to include, for example, markups on
securities transactions, which have been specifically excluded from the
bill's language. Markups are of a very different nature than fees and
commissions, but it could be wrongly swept into any rules resulting
from the bill.
The fee disclosure proposal contradicts a policy of regulatory
reform. This proposal would impose significant new compliance burdens
for those affected. This proposal runs counter to streamlining
regulation, which is the purpose of this carefully crafted bipartisan
legislation.
The SEC and other financial regulators already have the full
authority to require that fees and commissions be disclosed. Indeed, in
many cases, such disclosure is already mandated. No regulator has
suggested that they need additional authority in this area. Forcing
regulators to broaden fee disclosure regulations represents
congressional micro-management of the regulatory process.
The financial services industry is arguably the most competitive in
our economy, and is expected to become increasingly more competitive
with passage of H.R. 10. Before we mandate additional government
regulation, we should be sure it will not jeopardize this growing
financial market.
I urge all my colleagues to support this amendment.
Madam Chairman, I reserve the balance of my time.
Mr. DINGELL. Madam Chairman, I yield myself 3 minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Madam Chairman, with all respect to the author of this
amendment, the amendment would keep consumers in the dark, and
financial providers would enjoy it mightily.
Section 241 of H.R. 10 includes a noncontroversial and commonsense
provision that passed the House last year in similar legislation. It
requires all financial services regulatory agencies to prescribe or
revise rules to improve the disclosure of commissions, fees, and other
costs incurred by consumers in the purchase of financial products.
This section does not regulate or limit fees. That would be done by
the market. Section 241 merely requires disclosure so consumers can
comparison shop on the basis of understandable and accurate disclosure.
This helps both competition and consumers.
The amendment would delete this disclosure requirement and replace it
with a GAO study, a red herring rate regulation that nobody wants or
seeks. We do not seek to regulate rates.
This bill is already a bust for consumers. We are functioning under a
gag rule. But this amendment simply strips the consumers of banking and
other financial services of one more right, and that is a right to know
what the charges are being assessed against them by the banks and other
financial institutions, and in a sense it significantly changes
existing law.
Madam Chairman, I reserve the balance of my time.
Mr. COOK. Madam Chairman, I yield 30 seconds to my colleague, the
gentleman from Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Madam Chairman, I thank the gentleman for yielding time
to me.
I rise in support of the amendment. This is what the Committee on
Banking and Financial Services adopted. As the gentleman mentioned, the
regulatory authorities already have the authority to impose this. We
are telling them to do this, rather than waiting to see what the
complications would be.
We are seeing increasing transparency in the financial services
market. I think it would be a mistake for us to congressionally impose
this without getting a study on it first. I commend the gentleman for
his amendment, and I rise in support of it.
Mr. DINGELL. Madam Chairman, I yield 30 seconds to my good friend,
the gentleman from New York (Mr. LaFalce)
Mr. LaFALCE. Madam Chairman, I realize there was a discrepancy on
this issue between the approach taken by the gentleman from Michigan
(Mr. Dingell) and the Committee on Banking and Financial Services, but
my personal preference would be to obtain the language that is in the
print before us right now.
I believe in disclosure, and I do not favor the amendment offered by
the gentleman from Utah (Mr. Cook). I associate myself with the remarks
of the gentleman from Michigan (Mr. Dingell).
Mr. COOK. Madam Chairman, I yield myself such time as I may consume.
Madam Chairman, I would like to remind the gentleman from Michigan
and the gentleman from New York that basically my amendment restores
the Committee on Banking and Financial Services language that I think
was brokered in a bipartisan agreement between myself and the gentleman
from Vermont (Mr. Sanders).
It was, of course, changed in the Committee on Commerce, and I very
much respect their opinions, but felt that this was kind of agreed to
back in the Committee on Banking and Financial Services. I just wanted
to make that point.
Madam Chairman, I reserve the balance of my time.
Mr. DINGELL. Madam Chairman, I yield myself such time as I may
consume.
Madam Chairman, what we are talking about here is a banking system
and a financial system that is going to be fair and open. The
gentleman, I am sure, will recall that this amendment was adopted
unanimously, unanimously by the House last year. This is not something
that has been snuck up into the proceedings in some curious fashion, it
was in the bill last year. It was adopted overwhelmingly in the
Committee on Commerce.
It simply says, disclose. Tell the truth. There is nothing wrong with
that.
Madam Chairman, I yield back the balance of my time, with an
expression of respect and affection for my colleague on the other side.
Mr. COOK. Madam Chairman, I yield myself the balance of my time.
Madam Chairman, I thank the gentleman. I very much appreciate that. I
just want to quickly say that the fee disclosure proposal does
contradict, I think, a policy of regulatory reform, and this proposal
would impose, I think, significant new compliance burdens for those
affected. I think it does run counter to deregulation, which I think
has been a hallmark of this Congress.
I urge my colleagues' support.
Madam Chairman, I yield back the balance of my time.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Utah (Mr. Cook).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Mr. COOK. Madam Chairman, I demand a recorded vote, and pending that,
I make the point of order that a quorum is not present.
The CHAIRMAN. Pursuant to House Resolution 235, further proceedings
on the amendment offered by the gentleman from Utah (Mr. Cook) will be
postponed.
The point of no quorum is considered withdrawn.
It is now in order to consider amendment No. 8 printed in House
Report 106-214.
Amendment No. 8 Offered by Mrs. Roukema
Mrs. ROUKEMA. Madam Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 8 offered by Mrs. Roukema:
Page 312, after line 16, insert the following new subtitle
(and amend the table of contents accordingly):
Subtitle E--Banks and Bank Holding Companies
SEC. 251. CONSULTATION.
(a) In General.--The Securities and Exchange Commission
shall consult and coordinate comments with the appropriate
Federal banking agency before taking any action or rendering
any opinion with respect to the
[[Page H5295]]
manner in which any insured depository institution or
depository institution holding company reports loan loss
reserves in its financial statement, including the amount of
any such loan loss reserve.
(b) Definitions.--For purposes of subsection (a), the terms
``insured depository institution'', ``depository institution
holding company'', and ``appropriate Federal banking agency''
have the same meaning as in section 3 of the Federal Deposit
Insurance Act.
The CHAIRMAN. Pursuant to House Resolution 235, the gentlewoman from
New Jersey (Mrs. Roukema) and a Member opposed each will control 5
minutes.
Mr. DINGELL. I rise in opposition to the amendment, Madam Chairman.
The CHAIRMAN. The gentleman from Michigan (Mr. Dingell) will be
recognized for 5 minutes in opposition to the amendment.
The Chair recognizes the gentlewoman from New Jersey (Mrs. Roukema).
Mrs. ROUKEMA. Madam Chairman, I yield myself 2 minutes and 40
seconds.
Madam Chairman, this issue is very straightforward and it is very
clear. Members do not have to know anything about loan loss reserves or
about accounting to understand this amendment.
Quite simply, the amendment requires the regulators, that is, the SEC
and the Federal banking agencies, to communicate and coordinate before
taking any action.
I must stress, there is misinformation out there. I must stress, it
does not establish a different accounting system or anything that is
bank-friendly in this rule. It does not lower accounting standards. It
keeps the same accounting gap standards.
It does not eliminate, and this is the most important thing, it does
not eliminate the SEC's statutory authority under the law to set
accounting standards for these publicly-held companies, but it does
require regulators, including the SEC, to communicate and coordinate.
This is extremely important because it has meant that over time, and
particularly within this last year in the Sun Trust case, which I will
not go into the details of, there was quite a bit of disagreement here,
but it turned out that the SEC, when it took its action against Sun
Trust, had had no consultation with the Fed, who is the functional
regulator.
It seems very clear that, unfortunately, because of lack of
clarification in the law about the requirements for coordination, the
banks are being subjected to a kind of regulatory whipsaw. That is what
this amendment is designed to deal with. Bank regulators are required
by Federal law to apply gap or stricter standards to the banks.
{time} 1945
We are not loosening that in any way. We are applying those same
statutory requirements.
I had a hearing on June 16 on this subject, and we have received a
multiple number of assurances from the SEC that they will work with the
banking agencies. Yet that guidance that we have given them has never
been followed. The type of prior consultation coordination with the
banking agencies that are absolutely essential here have not been done.
I think we have to make it clear that we are not going to stand for
this whipsawing back and forth and we will have a clear definition of
responsibility.
Madam Chairman, I reserve the balance of my time.
Mr. DINGELL. Madam Chairman, I yield myself 3 minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Madam Chairman, I begin by expressing great respect and
affection to the gentlewoman from New Jersey (Mrs. Roukema). I would
like to read the essential part of the language of the amendment. It
says ``The Securities and Exchange Commission shall consult and
coordinate comments with the appropriate Federal banking agency before
taking any action or rendering any opinion''.
Now, that is pretty broad authority. It makes essentially the SEC, by
the requirement for coordinating, subservient with regard to all of the
matters under its jurisdiction in dealing with the banking regulators.
For example, they could be compelled to address questions of behaviors
of bank on accounting and accounting principles.
What the amendment really has in practical effect is the ability for
the SEC to be prevented from imposing the same honest financial
reporting it requires from other companies. I think we should ask the
question why should the banks not play by the same rules that everybody
else plays by?
We have got a lot of troubles with accounting and with misapplication
of sound accounting principles. I think we ought to take a look at the
requirements now, which are generally accepted accounting principles,
GAP, as opposed to RAP.
Accounting trickery can afford enormous savings to wrongdoers. It can
be sanctified by banking regulators as it has been in the past. It can
cost taxpayers billions of dollars again, as it did in the 1980s when
banking regulators permitted the use of regulatory accounting, which
enabled the banks to then phony up their goodwill and to look solid and
solvent where, in fact, they were not.
Bank regulators have said in the hearings before the Committee on
Banking and Financial Services, they do not need this authority. The
amendment is unnecessary.
The question then is, why would we treat banks differently than
others in terms of the reporting which they must make to the regulatory
agencies and to the shareholders and stockholders in their periodic
reports? Who then but the banks would want to evade the responsibility
of telling the truth? How would honest reporting and accounting under
the jurisdiction of regulators who treat everybody the same way be
bettered by permitting the banks to achieve separate different special
and probably more favorable treatment?
Madam Chairman, I reserve the balance of my time.
Mrs. ROUKEMA. Madam Chairman, I yield 15 seconds to the gentleman
from Iowa (Mr. Leach), the chairman of the Committee on Banking and
Financial Services.
Mr. LEACH. Madam Chairman, I would just like to say that I think the
amendment that the gentlewoman from New Jersey (Mrs. Roukema) has
brought is a very thoughtful and reasonable amendment and that it
deserves to be added to this bill.
I recognize that what the gentleman from Michigan (Mr. Dingell) says
has a basis in good thought, but I think this is a true improvement.
Mrs. ROUKEMA. Madam Chairman, I yield 1 minute to the gentleman from
Florida (Mr. McCollum), a senior member from the committee.
(Mr. McCOLLUM asked and was given permission to revise and extend his
remarks.)
Mr. McCOLLUM. Madam Chairman, I want to strongly support this
amendment of the gentlewoman from New Jersey (Mrs. Roukema). I think
that, with all due respect to the gentleman from Michigan (Mr.
Dingell), banks are different from other corporations for good reason.
Banks involve safety and soundness issues. We do not want a bank to
fail.
Banks make loans. That is their business. When they make loans, they
need loan loss reserves in order to have the padding to assure that
they do not fail. That is a business that is best understood by banking
regulators.
Yes, the Securities and Exchange Commission should regulate the
corporate functions of a bank like it does any other corporation,
except that it needs to be aware more than apparently it has been
lately of the concerns we all have if we have failures, bankruptcies,
defaults that could occur in a down and weak economy.
We have been blessed by a strong one right now. We do not want to see
banks put in jeopardy. We do not want to see our deposits in banks put
in jeopardy by the potential of their failure if their loans go south
and they do not have enough loan loss reserves.
Let us do what the gentlewoman is asking. The gentlewoman from New
Jersey (Mrs. Roukema) is simply asking that bank regulators coordinate
with the SEC anytime loan loss reserves are involved. That is what
should be passed. That is this amendment. Vote yes.
Mr. DINGELL. Madam Chairman, I reserve the balance of my time.
Mrs. ROUKEMA. Madam Chairman, I yield 30 seconds to the gentleman
from Minnesota (Mr. Vento), the ranking member of the Subcommittee on
Financial Institutions and Consumer Credit.
[[Page H5296]]
Mr. VENTO. Madam Chairman, I rise in support of the amendment. This
does not change the Federal accounting standard board or the
principles. It does not change the accounting rules or the standards.
It simply says that, when one is going to apply them, that one has to
have coordination.
The primary regulators here, after all, of banks are the Federal
Deposit Insurance Corporation, the Comptroller of the Currency, the
State Regulatory Authorities. The fact is the bank should not be pulled
in two directions at once.
The fact is most of these are guidelines. They claim that they are
cooperating with the regulators. In fact, of course, they keep going
and circumventing them around. The fact is that the instance that is
brought up here actually reduced the amount of loan loss reserves. It
took money out of the bank. We need those loan loss reserves. We need
safety and soundness. We need this amendment.
I want to rise in support of Mrs. Roukema's amendment which will
require the Securities and Exchange Commission to consult and
coordinate with the appropriate Federal banking agency on the issue of
loan loss reserves before issuing any comments, taking any action, or
rendering any opinion on the level of an institution's loan loss
reserves.
This amendment will ensure that the SEC cannot take significant
actions that could have a critical or negative impact upon the adequacy
of capital that a bank has without communicating with the proper
banking regulator. This amendment should help ensure that FDIC insured
institutions will not be caught flat footed when the inevitable
downward tick of the business cycle hits.
Bank regulators have been strongly stressing that better attention be
paid to credit quality in their portfolios. The regulators have been
asking banks to have proper reserves. The amendment will have the
positive impact of assuring that the SEC cannot act unilaterally to
lower important loan loss reserves without consulting with those
responsible to assure that the banks are operating in a safe and sound
manner.
The amendment does not change accounting standards. It does not alter
FASB interpretations. It does not eliminate SEC authority. It is a
simple and fair amendment that requires regulatory discourse.
When I asked the SEC witness at our Financial Institutions and
Consumer Credit Subcommittee what the SEC's relationship would be with
the banking regulators in the instance of a challenge or an issue with
regards to an institution's loan loss reserves, the response was there
was a hope to continue conferring with the bank regulators. This
amendment should do the trick.
I thank the gentlewoman, Chairwoman Roukema, for bringing this
amendment for the consideration of the House and ask my colleagues to
support it.
The CHAIRMAN. As a member of the reporting committee controlling time
in opposition to the amendment, the gentleman from Michigan (Mr.
Dingell) will have the right to close.
Mrs. ROUKEMA. Madam Chairman, I yield 30 seconds to the gentleman
from Alabama (Mr. Bachus), a member of the committee.
(Mr. BACHUS asked and was given permission to revise and extend his
remarks.)
Mr. BACHUS. Madam Chairman, we have five agencies that regulate the
banks, including the OTS, the FDIC, the Federal Reserve, the
Comptroller of the Currency, and the SEC. They all got together said we
have overlapping jurisdiction. That is causing concerns. Some warned we
need to coordinate our efforts.
The SEC simply does not, has not done that. They have questioned the
other organizations, their interpretations on what are the loan loss
reserve requirements. They do not have the experience these other
regulators have with the banks. Someone has to take the lead.
The bottom line, the SEC cannot come in here like a bull in a China
shop and overrule these other banks on their auditing practices and on
their reserve practices. This is a great amendment.
Madam Chairman, I would like to thank the gentlewoman from New Jersey
for all of her hard work on this legislation and her efforts on this
amendment. I would also like to discuss a related accounting matter.
I have been informed by a constituent that the Federal Accounting
Standards Board (FASB) may propose a rule eliminating an accounting
practice known as ``pooling''.
Pooling is an accounting method used when two companies merge to
become one.
In a pooling, the acquiring and acquired companies simply combine
their financial statements.
I believe it is important that this issue be discussed publicly
before any final rule is implemented.
In addition, it is my understanding that in the past the Federal
Accounting Standards Board has not always sought adequate input from
the accounting or banking communities on proposed changes in
regulations.
I appreciate the Chairwoman's efforts on the pending amendment. I
would appreciate it if she would keep this in mind when the conference
committee meets so that we include language either in this bill or
future legislation to ensure that this process is an open and fair one.
I thank the gentlewoman for her time and attention to this matter.
Mrs. ROUKEMA. Madam Chairman, I yield such time as he may consume to
the gentleman from Georgia (Mr. Barr).
(Mr. BARR of Georgia asked and was given permission to revise and
extend his remarks.)
Mr. BARR of Georgia. Madam Chairman, I rise in support of the
amendment offered by the gentlewoman from New Jersey.
Madam Chairman, I appreciate the chairwoman of the Subcommittee of
the Financial Institutions and Consumer Credit, Marge Roukema, for
following my lead and bringing this issue to the attention of the House
of Representatives today. This amendment comes about from my initial
letter to the Securities and Exchange Commission (SEC) in November
1998. Last fall, I wrote the Chairman of the Securities and Exchange
Commission (SEC) the following letter detailing my concerns with the
loan loss reserve issue:
November 9, 1998.
In re inquiry by the SEC into Sun Trust's accounting
practices.
Hon. Arthur Levitt, Jr.,
Chairman, Securities and Exchange Commission, Washington, DC.
Dear Chairman Levitt: It has come to my attention that the
Securities and Exchange Commission (SEC) has begun an inquiry
into the accounting practices of Sun Trust Bank. The $60.7
billion-asset Sun Trust Bank, based in Atlanta, announced the
SEC has opened an inquiry examining its policies for loan-
loss reserves as part of a review of the pending acquisition
of Crestar Financial Corporation.
It is my understanding that a bank's loan loss reserve is
arrived at by evaluating prior loan loss expectations and
future loan loss expectations. In addition, a loan loss
reserve is a subjective matter which is determined every
quarter by a bank's management, its board of Directors, and
the banks principal regulator as to the adequacy of the level
at any given time. Banking experts believe the SEC's actions
are the first time the Commission has judged a bank's reserve
to be too large. With a fluctuating economy it would be
imprudent to expect institutions to operate in a manner in
which they maintain only marginal reserves.
As a member of the House of Representatives Banking and
Financial Institutions Committee, I am concerned about the
SEC's review of SunTrust's accounting practices.
I would like to review the SEC's decision with someone from
your staff. I would therefore appreciate someone contacting
my Banking Legislative Assistant, Sarah Dumont, at (202) 225-
2944, to schedule a meeting to discuss this issue further.
With warm regards, I am,
Very truly yours,
Bob Barr,
Member of Congress.
In addition, my staff met with the SEC, and it was determined a
hearing should be held to discuss this very important issue. Therefore,
I contacted the Chairman of the Banking Committee at the start of the
106th Congress to request a hearing.
January 20, 1999.
In Re loan loss reserve hearing.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House
of Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: As the 106th Congress begins, and the
Banking and Financial Services Committee begins to formulate
its agenda for the upcoming session, I wanted to take this
opportunity to outline a proposed hearing for the Banking
Committee to consider.
In September 1998, the Securities and Exchange Commission
(SEC) found that some banks been aggressively reserving for
future loan losses which the Commission argued made it
difficult for investors to understand the real profit picture
of these banks. In the past, bank regulators often
scrutinized banks for under-reserving.
With a fluctuating economy, many experts agree it is
inadvisable to expect institutions to operate in a manner in
which they maintain only marginal reserves. However, the
SEC's recent inquiry into the ``excess'' reserves at some
banks is the first time the Commission has judged a bank's
reserve to be too large. The SEC puts forth the novel
arguments that banks which over-reserve for
[[Page H5297]]
future loan-losses make it difficult for investors to
understand the true profit picture.
This increased scrutiny of banks' earnings management has
sent mixed signals to the banking community. It is my
understanding a loan loss reserve is a subjective matter
which is determined every quarter by a bank's management, its
Board of Directors, and the banks principal regulator as to
the adequacy of the level at any given time. Under the
scenario not advocated by the SEC, banks are now faced with a
highly uncertain and arbitrary regulatory environment.
A hearing to clarify the past and approaching loan-loss
reserve levels would serve a beneficial purpose to clarify
regulatory efforts of the SEC and its effects on current
banking regulatory procedures.
I will look forward to hearing from you with regard to this
proposed hearing.
With warm regards, I am,
Very truly yours,
Bob Barr,
Member of Congress.
In addition, on February 11, 1999, I sent a followup letter to
Chairman Leach, expressing the urgency of this issue and the concern
this uncertainty would have on the banking community. I emphasized a
hearing would bring clarity to an issue that is confusing and dangerous
to the health of the banking industry.
February 11, 1999.
In re loan loss reserve hearing.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House
of Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: I wanted to express my appreciation to
both you and Chairwoman Roukema for your commitment to pursue
the issue of loan loss reserve limits, and the Security and
Exchange Commission's regulation of these limits in the
Committee this session.
As you know, in September 1998, the Securities and Exchange
Commission (SEC) found that some banks had been aggressively
reserving for future loan losses, which the Commission argued
made it difficult for investors to understand the real profit
picture of these banks. In the past, bank regulators were
often scrutinized banks for under-reserving.
Banks are highly regulated and closely supervised by
regulatory agencies familiar with the individual banks they
regulate and the credit quality of their loan portfolios. It
is inefficient, unreasonable, and inappropriate for the SEC
to exert discretion over a bank's credit philosophy, which
could result in banks lowering the level of reserves they put
aside to protect against credit losses. With a fluctuating
economy, to undertake such actions or implement policies
discourages banks from conservatively reserving for loan
losses. Such a policy by the SEC could in fact be detrimental
to the health of our financial industry.
This action taken by the SEC now places our banks in a
highly uncertain and arbitrary regulatory environment. A
hearing to clarify the past and approaching loan-loss reserve
levels would clarify regulatory efforts of the SEC, and its
effects on current banking regulatory procedures.
With warm regards, I am,
Very truly yours,
Bob Barr,
Member of Congress.
On June 16, 1999, Chairwoman Roukema held a hearing per my request.
Again, I thank you, the Chairwoman, for promptly responding to my
request for a hearing to determine the process and controversies on
setting the adequate loan loss reserve amounts.
As I made you aware of my concerns when the SEC's conducted a 2-month
review process of a bank in my congressional district, this bank was
penalized and required to restate its earnings by $100 million. During
the investigation, the SEC began to question the ``excessive'' reserves
at predominately conservative banks. This finding sent a ripple effect
across the financial services community. In my opinion, the SEC has
over-stepped its authority by attempting to coerce banks into adopting
less conservative lending practices.
What the SEC may discourage as ``aggressively'' reserving, the bank
regulators and others may support as ``conservatively reserving. There
is broad agreement among the industry that an accurate earnings picture
is vital for out financial institutions to operate successfully. I am
not aware of any complaints filed by bank analysts alleging dishonest
or misleading financial reports. Moreover, the bank regulators reviewed
banks records and found they complied with all current laws and
regulations. When it became clear to me the SEC was acting without the
support of the appropriate banking regulators, I wrote to Chairman
Leach, asking hearings be held to look into the SEC's finding that some
banks had been improperly reserving for future loan losses.
It seems clear the SEC has engaged in heavy-handed tactics, resulting
in at least one bank (SunTrust) restating its earnings from 1994 to
1996; thereby cutting its reserves by $100 million. The SEC's inquiry
into the ``excess'' reserves at some banks is the first time in recent
history the Commission has judged a bank's reserve to be too large, and
argued that over-reserving for future loan losses makes it difficult
for investors to understand the true profit picture.
Madam Chairman, as you and I were told back in March during the mark-
up of H.R. 10, the SEC and bank regulators have been working together
to publish a joint clarification on banks' loan loss reserves. This
clarification was to include the methodology and accounting rules as
well as documentation and disclosure requirements to help guide banks.
However, that clarification never reached a consensus.
On its own initiative, the SEC pushed for the recent issuance of the
Financial Accounting Standards Board (FASB) clarifying rule on
Statements No. 5, Accounting for Contingencies, and No. 114, Accounting
by Creditors for Impairment of a Loan, published on April 12, 1999. The
FASB clarification was meant to help guide the Generally Accepted
Accounting Principles (GAAP). Instead, the rule seems to have left
banks in a state of confusion. This is distressing.
This present confusion over excessive reserve amounts creates a
disincentive for banks to maintain the necessary protection against
today's fluctuating economy. Unfortunately, banks are receiving
conflicting signals concerning loan loss withholdings by two differing
interest groups: the SEC and the bank regulators.
Aren't we supposed to learn from our mistakes? One need only look to
the Savings and Loan debacle in the 1980's to understand the urgent
need to create a clear and concise, uniform standard regarding loan
loss reserves. The safety and soundness of our banking industry is
vitally important to our economy and it is obvious the SEC's mandate
does not reflect common sense or the well-being of the American people.
That should alarm everyone.
The financial security and lifetime savings of millions of Americans
depends on the ability of banks to establish and follow safe, sound and
reasonable lending practices. Maintaining adequate and realistic loan
loss reserves is a key part of this process. Any concerns the SEC has
with the market value of financial institutions must be reasonable,
based on common sense, and arrived at in conjunction with the banks and
bank deregulators. Moreover, these loan loss reserve guidelines must
not be allowed to become the tail wagging the regulatory dog; seen as
more important than the goal of protecting basic fiscal soundness of
our banks. Hopefully, the SEC will end its efforts to force hanks to
drop conservative lending policies, at least without clear
congressional action.
Congress of the United States,
Washington, DC, February 11, 1999.
In re loan reserve hearing.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House
of Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: I wanted to express my appreciation to
both you and Chairwoman Roukema for your commitment to pursue
the issue of loan loss reserve limits, and the Security and
Exchange Commission's regulation of those limits in the
Committee this session.
As you know, in September 1998, the Securities and Exchange
Commission (SEC) found that some banks had been aggressively
reserving for future loan losses, which the Commission argued
made it difficult for investors to understand the real profit
picture of these banks. In the past, bank regulators were
often scrutinized banks for under-reserving.
Banks are highly regulated and closely supervised by
regulatory agencies familiarly with the individual banks they
regulate and the credit quality of their loan portfolios. It
is inefficient, unreasonable, and inappropriate for the SEC
to exert discretion over a bank's credit philosophy, which
could result in banks lowering the level of reserves they put
aside to protect against credit losses. With a fluctuating
economy, to undertake such actions or implement policies
discourages banks from conservatively reserving for loan
losses. Such a policy by the SEC could in fact be detrimental
to the health of our financial industry.
This action taken by the SEC now places our banks in a
highly uncertain and arbitrary regulatory environment. A
hearing to clarify the past and approaching loan-loss reserve
levels would clarify regulatory efforts by the SEC, and its
effects on current banking regulatory procedures.
With warm regards, I am,
Very truly yours,
Bob Barr,
Member of Congress.
____
Congress of the United States,
Washington, DC, January 20, 1999.
In re loan loss reserve hearing.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House
of Representatives, Rayburn House Office Building,
Washington DC.
Dear Mr. Chairman: As the 106th Congress begins, and the
Banking and Financial Services Committee begins to formulate
its agenda for the upcoming session, I wanted to
[[Page H5298]]
take this opportunity to outline a proposed hearing for the
Banking Committee to consider.
In September 1998, the Securities and Exchange Commission
(SEC) found that some banks had been aggressively reserving
for future loan losses which the Commission argued made it
difficult for investors to understand the real profit picture
of these banks, In the past, bank regulators often
scrutinized banks for under-reserving.
With a fluctuating economy, many experts agree it is
inadvisable to expect institutions to operate in a manner in
which they maintain only marginal reserves. However, the
SEC's recent inquiry into the ``excess'' reserves at some
banks is the first time the Commission has judged a bank's
reserve to be too large. The SEC puts forth the novel
argument that banks which over-reserve for future loan-losses
make it difficult for investors to understand the true profit
picture.
This increased scrutiny of banks' earnings management has
sent mixed signals to the banking community. It is my
understanding a loan loss reserve is a subjective matter
which is determined every quarter by a bank's management, its
Board of Directors, and the bank's principal regulator as to
the adequacy of the level at any given time. Under the
scenario not advocated by the SEC, banks are now faced with a
highly uncertain and arbitrary regulatory environment.
A hearing to clarify the past and approaching loan-loss
reserve levels would serve a beneficial purpose to clarify
regulatory efforts of the SEC and its effects on current
banking regulatory procedures
I will look forward to hearing from you with regard to the
proposed hearing.
With warm regards, I am,
Very truly yours,
Bob Barr,
Member of Congress.
____
Markup of H.R. 10, the Financial Services Act of 1999, Wednesday, March
10, 1999, House of Representatives, Committee on Banking and Financial
Services, Washington, DC.
The Chairman. The Clerk will call up the amendment.
Ms. Cole. Amendment offered by Mr. Barr. Page 96 after
line----
The Chairman. Without objection, the amendment will be
considered as read and Mr. Barr is recognized.
Mr. Barr. Thank you, Mr. Chairman. Mr. Chairman, this
amendment provides for at least a partial redress for a
problem that has arisen last fall in which the Securities and
Exchange Commission, in not consulting with federal banking
agencies, took action against a major bank--in this case, Sun
Trust--forcing it to lower its loan loss reserves after it
had already set those, by $100 million.
As far as I know, Mr. Chairman, this is the first instance
in which the SEC or any federal agency has taken against a
bank for being perhaps, too conservative in seeking to
protect its customers, its shareholders, against possible
problems in the future economy.
If in fact, we are witnessing here some action or policy on
the part of the SEC that is going to create uncertainty with
regard to banks being able to establish proper and
conservative reserves for future loan losses, then I think at
least it ought to be something that is done in consultation
with the banking agencies, the federal banking agencies.
I have been looking at this and appreciate very much the
very strong support and active involvement of Chairwoman
Marge Roukema in this regard as well.
And what I have proposed here, Mr. Chairman, is a very
simple, straightforward amendment that simply requires that
within 60 days after the enactment of this Act the SEC and
the federal banking agencies will consult with each other
concerning these matters of future loan loss reserves, so
that we don't have a patchwork lack of policy in this regard.
Moreover, Mr. Chairman, at subparagraph B, I provide that
pursuant to and as a result of these negotiations the SEC and
the banking agencies submit a report to the Congress
reflecting the results of their consultation, so that we can
have, and so that the banking industry knows where they
stand.
I think this is very, very prudent and a good management
too, Mr. Chairman, and will avoid the disruptions that
certainly will occur if the SEC is allowed to unilaterally,
without consulting with the banking agencies, force banks
after the fact to lower their loan loss reserves.
This is not, as far as I can tell, Mr. Chairman, an
instance in which Sun Trust had done anything wrong. As a
matter of fact, they were being very, very prudent in setting
their future loan loss reserves.
So I would urge other members to adopt this very reasonable
approach which hopefully will avoid further disruptions. It
will impose no significant cost on anybody but hopefully will
avoid significant costs in the future by forcing the SEC to
work with the federal banking agencies as opposed to possibly
adverse to them.
I understand that the SEC is interested in working
something out on this, Mr. Chairman, but I don't think that
obviates the need for this amendment at this time. If in
fact, something is worked out then that will be just fine.
But I do think that it is important for this committee at
this time and for the full House in taking up consideration
of H.R. 10 to tell the SEC, if you are going to take this
sort of action which is something that is very novel, at
least do so in consultation with the federal banking
agencies.
So that the banks know where things stand and if they do
have to change their policies at least they know in advance
as opposed to coming in--the SEC that is--coming in after the
fact and forcing them to expend very significant sums of
money and causing disruptions to shareholders and to the
banking community.
I would urge adoption of the amendment.
The Chairman. Mrs. Roukema.
Mrs. Roukema. Mr. Chairman, may I be recognized out of my
own time?
The Chairman. Yes, you are.
Mrs. Roukema. Thank you. Thank you, Mr. Chairman.
I apologize to you and all the members of the committee,
and now especially to Mr. Barr because I have arrived so
late here.
Believe it or not because of weather conditions I have been
traveling since 7 o'clock yesterday morning to get back here
to Washington. And you might not believe that, but that was
the fact, and I apologize for being late but it couldn't be
helped. God wasn't working with me today.
Now, Mr. Barr and I have been working on this. I think we
have had consistent opinions on this problem of loan loss
reserves, and I believe he and I have the same amendment that
was put forth.
However, I have been working with the SEC and the other
regulators on this and I have just learned moments before I
entered here that aside from it being imminent where we had a
draft of the agreement that the SEC and the regulators are
working on the same things that Mr. Barr and I had been
trying to get agreement on, I have just been informed not
more than two or three minutes ago that agreement has been
completely reached by all parties, including the SEC, and
that the final agreement is being faxed.
Now, it is my understanding that accomplishes completely
what Mr. Barr and I have been trying to do here. So I would
say that pending receipt of that final agreement, I don't
know whether there is any point to passing this legislation,
this amendment or not, or whether we should reserve judgment
until Mr. Barr, I, and other staff and the Chairman go over
it, because I believe it has accomplished our purpose.
Certainly the questions that I've asked all have been
answered at least on the phone and in the first draft. So we
are waiting momentarily for that final draft to be here.
Mr. Bachus. Would the Chairwoman yield?
Mrs. Roukema. Yes. Yes, I yield to my friend.
Mr. Barr. If we could procedurally, Mr. Chairman, I would
have no objection to withholding the amendment at this time
so long as we will have an opportunity before a final voting
on H.R. 10 in this committee, to resurrect it if it becomes
necessary. Or if not, we could incorporate the agreement that
we hope has been reached and reflects our views in the final
product.
The Chairman. Let me just respond generally----
Mrs. Roukema. If that is possible that would certainly be a
sensible way, I would think, of approaching the subject.
Because it is something that we do want to see is corrected
in this legislation, if need be.
The Chairman. Well, if the gentlelady would yield, let me
say to both her and Mr. Barr that this is a very
extraordinary subject matter and it is one that would
necessitate Congressional intervention if the various
regulators did not come to mutual understanding.
I appreciate the offer of the gentleman, Mr. Barr. I think
it is the most appropriate offer, and that is to withdraw the
amendment at the moment and then to review what has occurred.
And in that event let me say, the amendment is withdrawn
and the Chair would ask unanimous consent to return to the
subject matter in the event that Mrs. Roukema and Mr. Barr
are dissatisfied in a fundamental way with what is apparently
proceeding today in the Executive Branch.
Without objection so ordered. The subject matter is
reserved and the amendment is withdrawn. Are there further
amendments to Title I?
Mrs. Roukema. Thank you, Mr. Chairman.
Ms. Waters. Mr. Chairman.
The Chairman. I said to Mrs. Waters that I would recognize
her next.
Ms. Waters. Yes, thank you very much, Mr. Chairman. This is
really offered by Mr. Gutierrez. I and Ms. Schakowsky have
supported and co-sponsored this with him. He had to leave so
he asked me to take it up. So the amendment is at the desk.
Mrs. ROUKEMA. Madam Chairman, I yield such time as she may consume to
the gentlewoman from New York (Mrs. Kelly) from the committee.
(Mrs. KELLY asked and was given permission to revise and extend her
remarks.)
Mrs. KELLY. Madam Chairman, I rise in support of the amendment.
I thank my good friend from New Jersey for yielding me time.
Madam Chairman, I rise in strong support of this amendment. This loan
loss reserve issue is creating a great deal of confusion for banks that
are publicly traded on an exchange or market. This situation where they
are torn between directions from their primary bank regulator and the
SEC need not happen if proper
[[Page H5299]]
communications are established between the regulators. In this case--
the proper loan loss reserves needed by the banks--communication was
clearly lacking. This language does not stop the SEC from doing
anything, it simply requires them to communicate as they should have
been doing all along.
We held a hearing on this loan loss reserve issue in our Financial
Institutions Subcommittee on June 16. The message we heard from all
parties involved was that better communication is necessary. I hope all
of my colleagues on both sides of the aisle will join us in support of
this common sense amendment.
Mrs. ROUKEMA. Madam Chairman, I yield such time as he may consume to
the gentleman from New York (Mr. LaFalce), the ranking member.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Madam Chairman, I rise in support of the amendment.
Mrs. ROUKEMA. Madam Chairman, I yield such time as he may consume to
the gentleman from Texas (Mr. Bentsen), also a member of the committee.
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Madam Chairman, I rise in support of the amendment.
Mrs. ROUKEMA. Madam Chairman, I yield myself such time as I may
consume.
Madam Chairman, I want to again stress there is no change in GAP, no
change in the accounting standards or the statutory requirements and
the statutory authority of the SEC. It simply requires absolute
coordination and conferring.
Mr. DINGELL. Madam Chairman, I yield myself such time as I may
consume.
Madam Chairman, let me read the language of the amendment again so
everybody understands what we are talking about. It says, ``The
Securities and Exchange Commission shall consult and coordinate
comments with the appropriate Federal banking agency before taking any
action or rendering any opinion.''
That makes the SEC subject to the bank regulators in matters in which
it has traditionally acted under its powers given it by the Congress of
the United States. Never before has it been subject to the jurisdiction
of the bank regulators.
Now, the bank regulators said they did not need this authority. As a
matter of fact, the joint guidance issued in March of this year by the
SEC and by the bank regulators reaffirmed the importance of credible
financial statements and meaningful disclosure to investors to a safe
and sound financial system.
The joint interagency letter reaffirms the policy set by Congress
that the banks should follow GAP when recording and reporting loan
locations.
I would simply advise my colleagues, there is no reason to do this.
The bank regulators do not seek the authority to have this done. The
only good-hearted folks who want to do it is the bankers. The bankers
simply do not want to tell the people all the things they should. They
want to be able to get things cooked around the way they might like to
have them done.
I would also inform my colleagues that there is something else. This
is going to impose interminable amounts of delay on banks in getting
decisions on matters important to them which are charged to the SEC
because of the immense amount of coordination, the immense amount of
time, the immense amount of effort, and the immense amount of action
that will be required by both the SEC and by the bank regulators.
If my colleagues want to waste time, hurt banking, hurt consumers,
and see to it that the people do not receive an honest picture of
events going on in the bank, this is the amendment for them. If,
however, my colleagues want to continue a system which works generally
well and which causes no problem and which the bank regulators seek no
change, then vote with me. Vote against the amendment.
Madam Chairman, I include for the Record the Joint Release that I
referred to as follows:
Securities and Exchange Commission, Federal Deposit
Insurance Corporation, Federal Reserve Board, Office of
Comptroller of the Currency, Office of Thrift
Supervision,
Washington, DC, March 10, 1999.
joint press release
The Securities and Exchange Commission, Federal Deposit
Insurance Corporation, Federal Reserve Board, Office of
Comptroller of the Currency, and Office of Thrift Supervision
have jointly issued the attached letter to financial
institutions on the allowance for loan losses.
Attachment:
joint interagency letter to financial institutions
Last November, the Securities and Exchange Commission,
Federal Deposit Insurance Corporation, Federal Reserve Board,
Office of Comptroller of the Currency, and Office of Thrift
Supervision (the Agencies) issued a Joint Interagency
Statement in which they reaffirmed the importance of credible
financial statements and meaningful disclosure to investors
and to a safe and sound financial system. The Joint
Interagency Statement underscored the requirement that
depository institutions record and report their allowance for
loan and lease losses in accordance with generally accepted
accounting principles (GAAP). We stress and continue to
emphasize the importance of depository institutions having
prudent, conservative, but not excessive, loan loss
allowances that fall within an acceptable range of estimated
losses. We recognize that today instability in certain global
markets, for example is likely to increase loss inherent in
affected institutions' portfolios and consequently require
higher allowances for credit losses than were appropriate in
more stable times.
Despite the issuance of the November Joint Interagency
Statement, there is continued uncertainty among financial
institutions as to the expectations of the banking and
securities regulators on the appropriate amount, disclosure
and documentation of the allowance for credit losses. The
Agencies now announce additional measures designed to address
this continued uncertainty. These measures are consistent
with the Agencies' mutual objective of, and focus on,
addressing prospectively, where feasible, issues related to
improving the documentation, disclosure, and reporting of
loan loss allowances of financial institutions.
The Agencies are establishing a Joint Working Group,
comprised of policy representatives from each of the
Agencies, to gain a better understanding of the procedures
and processes, including ``sound practices,'' used generally
by banking organizations to determine the allowance for
credit losses. An important aspect of the Joint Working
Group's activities will be to receive input from
representatives of the banking industry and the accounting
profession on these matters, and will not involve joint
examinations of institutions. The common base of knowledge
that results will facilitate the joint and individual efforts
of the Agencies to provide improved guidance on appropriate
procedures, documentation, and disclosures to the banking
industry. This will assist the banking community in complying
with GAAP and will improve comparability among financial
statements of depository and other lending institutions. The
Joint Working Group will also share information and insights
concerning issues of mutual concern that may arise.
Using information gathered through the Joint Working Group
and from representatives of the accounting profession and the
banking industry, the Agencies will work together to issue
parallel guidance, on a timely basis, and within a year on
the first two items listed below, in the following key areas
regarding credit loss allowances:
Appropriate Methodologies and Supporting Documentation.--
The Agencies intend to issue guidance that will suggest
procedures and processes necessary for a reasoned assessment
of losses inherent in a portfolio and discuss ways to ensure
that documentation supports the reported allowance.
Enhanced Disclosures.--This guidance will address
appropriate disclosures of allowances for credit losses and
the credit quality of institutions' portfolios by identifying
key areas for enhanced disclosures, including the need for
institutions to disclose changes in risk factor and asset
quality that affect allowances for credit losses. The
enhanced disclosures would contribute to better understanding
by investors and the public of the risk profile of banking
institutions and improve market discipline.
The Agencies will work together to encourage and support
the Financial Accounting Standards Board's process of
providing additional guidance regarding accounting for
allowances for loan losses. The Agencies emphasize that GAAP
requires that management's determination be based on a
comprehensive, adequately documented, and consistently
applied analysis of the particular institution's exposures,
the effects of its lending and collection policies, and its
own loss experience under comparable conditions.
In addition, the Agencies will support and encourage the
task force of the American Institute of Certified Public
Accountants (AICPA) that is developing more specific guidance
on the accounting for allowances for credit losses and the
techniques of measuring the credit loss inherent in a
portfolio at a particular date. In particular, the AICPA task
force will focus on providing guidance on how best to
distinguish probable-losses inherent in the portfolio as of
the balance sheet date--the guidepost agreed to by the
Agencies for reporting allowances in accordance with GAAP--
from possible or future losses not inherent in the balance
sheet
[[Page H5300]]
as of that date. Additionally, the Agencies will ask the
AICPA task force to consider recently developed portfolio
credit risk measurement and management techniques that are
consistent with GAAP as part of this effort. The AICPA
project already has been initiated and will include
representatives from the accounting profession and the
banking industry, as well as observers from the SEC and the
banking agencies.
Senior staff of the Agencies will continue to meet to
discuss banking industry accounting and financial disclosure
policy issues of interest that affect the transparency of
financial reporting and bank safety and soundness. These
discussions will address progress in the application of
accounting and disclosure standards by banking
institutions, including those impacting the allowance for
credit losses, with particular focus on recently
identified issues and trends. The meetings also will be
used to coordinate projects of the Agencies in areas of
mutual interest. The first of these meetings was held on
January 27.
The Agencies believe that the actions announced above will
promote a better and clearer understanding among financial
institutions of the appropriate procedures and processes for
determining credit losses in accordance with GAAP. The
Agencies intend that these steps will enhance the
transparency of financial information and improve market
discipline, consistent with safety and soundness objectives.
In recognition of the specialized regulatory nature of the
banking industry and in order to resolve ongoing
uncertainties in the industry, with the announcement of these
initiatives, the Agencies' focus, in so far as feasible, will
be on enhancing allowance practices going forward.
____
To: Washington, Consuela.
Subject: More on loan loss.
Re: the transcript I just sent you--I know a few of the bank
regulators kind of waffled or ducked a little on the
answer to ``do we need regulation?'' but NONE of them
said anything close to ``yes.''
Also, below is an excerpt from the appendix to the OCC's
written testimony for the loan loss hearing (also on the H.
Banking website):
Question 4. Please discuss whether the SEC has consulted
with and coordinated its comments on loan loss reserves with
the Federal Reserve and other federal banking regulators.
Please discuss whether you believe consultation between the
SEC and the regulators prior to the SEC issuing loan loss
reserve comments would be workable and whether prior
consultation would promote a more consistent approach to
GAAP.
Answer 4. Although SEC staff occasionally consult with the
OCC's Chief Accountant's staff on accounting issues, the SEC
has not generally done so on issues involving comments for a
specific registrant, particularly regarding the registrant's
loan loss reserve.
The OCC believes that such consultation would promote a
more consistent approach to GAAP. However, because of
examination timing and other logistical issues, such
consultation, if practiced for all filings, might detract
from the SEC's ability to ensure that registrants receive
timely reviews of their statements. A more efficient approach
would be for the SEC to consult with bank regulators on
filings where it has significant questions pertaining to a
registrant's loan loss reserve.
The CHAIRMAN. The question is on the amendment offered by the
gentlewoman from New Jersey (Mrs. Roukema).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Mrs. ROUKEMA. Madam Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 235, further proceedings
on the amendment offered by the gentlewoman from New Jersey (Mrs.
Roukema) will be postponed.
Sequential Votes Postponed In Committee Of The Whole
The CHAIRMAN. Pursuant to House Resolution 235, proceedings will now
resume on those amendments on which further proceedings were postponed
in the following order: Amendment No. 1 offered by the gentleman from
North Carolina (Mr. Burr), amendment No. 4 offered by the gentleman
from Georgia (Mr. Barr), amendment No. 7 offered by the gentleman from
Utah (Mr. Cook), and amendment No. 8 offered by the gentlewoman from
New Jersey (Mrs. Roukema).
The Chair will reduce to 5 minutes the time for any electronic vote
after the first vote in this series.
Amendment No. 1 Offered By Mr. Burr of North Carolina
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment No. 1 offered by the gentleman from North Carolina
(Mr. Burr) on which further proceedings were postponed and on which the
ayes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 238,
noes 189, not voting 7, as follows:
[Roll No. 268]
AYES--238
Abercrombie
Aderholt
Archer
Armey
Bachus
Baird
Baker
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Biggert
Bilbray
Bilirakis
Bishop
Bliley
Blunt
Boehlert
Boehner
Bonilla
Boswell
Boucher
Brady (TX)
Brown (FL)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Cannon
Castle
Chabot
Chambliss
Chenoweth
Clay
Clayton
Clyburn
Coble
Coburn
Collins
Combest
Cook
Cooksey
Cox
Cramer
Crane
Cubin
Cunningham
Davis (FL)
Davis (VA)
Deal
Delahunt
DeLay
DeMint
Diaz-Balart
Dickey
Dixon
Doolittle
Dreier
Duncan
Dunn
Edwards
Ehrlich
Emerson
Etheridge
Everett
Ewing
Fletcher
Fowler
Franks (NJ)
Gallegly
Gekas
Gibbons
Gillmor
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Herger
Hilleary
Hilliard
Hobson
Horn
Houghton
Hoyer
Hulshof
Hunter
Hyde
Isakson
Istook
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Jones (NC)
Kasich
Kelly
Kildee
King (NY)
Kingston
Kleczka
Knollenberg
LaHood
Largent
Latham
LaTourette
Lazio
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCollum
McCrery
McHugh
McInnis
McIntosh
McIntyre
McKeon
Meek (FL)
Metcalf
Miller (FL)
Minge
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Ose
Oxley
Packard
Paul
Payne
Pease
Peterson (MN)
Peterson (PA)
Pickering
Pitts
Pombo
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Ramstad
Reynolds
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Rush
Salmon
Sanford
Sawyer
Saxton
Schaffer
Scott
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shows
Shuster
Simpson
Skelton
Smith (TX)
Souder
Spence
Spratt
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Toomey
Towns
Traficant
Udall (CO)
Vitter
Walden
Walsh
Wamp
Watkins
Watt (NC)
Watts (OK)
Weiner
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wise
Wolf
Wynn
Young (AK)
Young (FL)
NOES--189
Ackerman
Allen
Andrews
Baldacci
Baldwin
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Blagojevich
Blumenauer
Bonior
Bono
Boyd
Brady (PA)
Brown (OH)
Campbell
Capps
Capuano
Cardin
Carson
Clement
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Danner
Davis (IL)
DeFazio
DeGette
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Ehlers
Engel
English
Eshoo
Evans
Farr
Fattah
Filner
Foley
Forbes
Ford
Frank (MA)
Frelinghuysen
Frost
Gejdenson
Gephardt
Gilchrest
Gilman
Gonzalez
Gordon
Green (WI)
Gutierrez
Hall (OH)
Hefley
Hill (IN)
Hill (MT)
Hinchey
Hinojosa
Hoeffel
Hoekstra
Holden
Holt
Hooley
Hostettler
Hutchinson
Inslee
Jackson (IL)
Jackson-Lee (TX)
Johnson, Sam
Jones (OH)
Kanjorski
Kaptur
Kennedy
Kilpatrick
Kind (WI)
Klink
Kolbe
Kucinich
Kuykendall
LaFalce
Lampson
Lantos
Larson
Leach
Lee
Levin
Lofgren
Lowey
Luther
Maloney (CT)
Maloney (NY)
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McKinney
McNulty
Meehan
Meeks (NY)
Menendez
Mica
Millender-McDonald
Miller, Gary
Miller, George
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Nussle
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Petri
Phelps
Pickett
Pomeroy
Porter
Rahall
Rangel
Regula
Reyes
Riley
Rivers
Rodriguez
Roemer
[[Page H5301]]
Roukema
Roybal-Allard
Royce
Ryan (WI)
Ryun (KS)
Sabo
Sanchez
Sanders
Sandlin
Scarborough
Schakowsky
Serrano
Sherman
Sisisky
Skeen
Slaughter
Smith (MI)
Smith (NJ)
Smith (WA)
Snyder
Stabenow
Stark
Stearns
Tanner
Tiahrt
Tierney
Turner
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Waters
Waxman
Wexler
Weygand
Woolsey
Wu
NOT VOTING--7
Borski
Brown (CA)
Fossella
Ganske
Green (TX)
Lipinski
Pelosi
{time} 2025
Messrs. DAVIS of Illinois, NUSSLE, OBERSTAR, RILEY, DEUTSCH, and
TIAHRT changed their vote from ``aye'' to ``no.''
Mrs. THURMAN, Ms. EDDIE BERNICE JOHNSON of Texas, and Messrs.
ABERCROMBIE, SHADEGG, HILLIARD, DIXON, UDALL of Colorado, and LAZIO
changed their vote from ``no'' to ``aye.''
So the amendment was agreed to.
The result of the vote was announced as above recorded.
Announcement By The Chairman
The CHAIRMAN. Pursuant to House Resolution 235, the Chair announces
that it will reduce to a minimum of 5 minutes the period of time within
which a vote by electronic device will be taken on each amendment on
which the Chair has postponed further proceedings.
Amendment No. 4 Offered by Mr. Barr of Georgia
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment No. 4 offered by the gentleman from Georgia (Mr. Barr)
on which further proceedings were postponed and on which the noes
prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 129,
noes 299, not voting 6, as follows:
[Roll No. 269]
AYES--129
Aderholt
Archer
Armey
Barcia
Barr
Bartlett
Barton
Blunt
Boehner
Bonilla
Bono
Brady (TX)
Burr
Buyer
Callahan
Camp
Campbell
Chabot
Chenoweth
Clement
Coble
Coburn
Collins
Combest
Cook
Crane
Cubin
Deal
DeMint
Doolittle
Dreier
Duncan
Ehrlich
English
Everett
Fletcher
Gallegly
Gekas
Gibbons
Gillmor
Goode
Goodlatte
Goodling
Goss
Graham
Green (WI)
Gutknecht
Hall (TX)
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hoekstra
Hostettler
Hulshof
Hunter
Istook
Jenkins
Johnson, Sam
Jones (NC)
Kingston
Largent
LaTourette
Lewis (CA)
Lewis (KY)
Linder
Lucas (OK)
Manzullo
McInnis
McIntyre
McKeon
Metcalf
Miller, Gary
Miller, George
Mink
Moran (KS)
Myrick
Nethercutt
Ney
Norwood
Ose
Packard
Paul
Pease
Peterson (MN)
Pickering
Pickett
Pitts
Pombo
Radanovich
Reynolds
Riley
Rivers
Rohrabacher
Royce
Ryan (WI)
Ryun (KS)
Sanford
Scarborough
Schaffer
Sensenbrenner
Sessions
Sherwood
Shuster
Skeen
Smith (MI)
Smith (NJ)
Spence
Stearns
Stump
Sununu
Tancredo
Taylor (MS)
Taylor (NC)
Thornberry
Tiahrt
Toomey
Walden
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weller
Wicker
Woolsey
Young (AK)
NOES--299
Abercrombie
Ackerman
Allen
Andrews
Bachus
Baird
Baker
Baldacci
Baldwin
Ballenger
Barrett (NE)
Barrett (WI)
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Boehlert
Bonior
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Bryant
Burton
Calvert
Canady
Cannon
Capps
Capuano
Cardin
Carson
Castle
Chambliss
Clay
Clayton
Clyburn
Condit
Conyers
Cooksey
Costello
Cox
Coyne
Cramer
Crowley
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
DeFazio
DeGette
Delahunt
DeLauro
DeLay
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doyle
Dunn
Edwards
Ehlers
Emerson
Engel
Eshoo
Etheridge
Evans
Ewing
Farr
Fattah
Filner
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Ganske
Gejdenson
Gephardt
Gilchrest
Gilman
Gonzalez
Gordon
Granger
Greenwood
Gutierrez
Hall (OH)
Hansen
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hobson
Hoeffel
Holden
Holt
Hooley
Horn
Houghton
Hoyer
Hutchinson
Hyde
Inslee
Isakson
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson (CT)
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
Kuykendall
LaFalce
LaHood
Lampson
Lantos
Larson
Latham
Lazio
Leach
Lee
Levin
Lewis (GA)
LoBiondo
Lofgren
Lowey
Lucas (KY)
Luther
Maloney (CT)
Maloney (NY)
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McHugh
McIntosh
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Mica
Millender-McDonald
Miller (FL)
Minge
Moakley
Mollohan
Moore
Moran (VA)
Morella
Murtha
Nadler
Napolitano
Neal
Northup
Nussle
Oberstar
Obey
Olver
Ortiz
Owens
Oxley
Pallone
Pascrell
Pastor
Payne
Peterson (PA)
Petri
Phelps
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Rahall
Ramstad
Rangel
Regula
Reyes
Rodriguez
Roemer
Rogan
Rogers
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Rush
Sabo
Salmon
Sanchez
Sanders
Sandlin
Sawyer
Saxton
Schakowsky
Scott
Serrano
Shadegg
Shaw
Shays
Sherman
Shimkus
Shows
Simpson
Sisisky
Skelton
Slaughter
Smith (TX)
Smith (WA)
Snyder
Souder
Spratt
Stabenow
Stark
Stenholm
Strickland
Stupak
Sweeney
Talent
Tanner
Tauscher
Tauzin
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thune
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Vitter
Walsh
Waters
Watt (NC)
Waxman
Weiner
Weldon (PA)
Wexler
Weygand
Whitfield
Wilson
Wise
Wolf
Wu
Wynn
Young (FL)
NOT VOTING--6
Borski
Brown (CA)
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2033
Mr. NADLER changed his vote from ``aye'' to ``no.''
Mr. TAYLOR of Mississippi changed his vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Amendment No. 7 Offered by Mr. Cook
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment No. 7 offered by the gentleman from Utah (Mr. Cook) on
which further proceedings were postponed and on which the noes
prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 114,
noes 313, not voting 7, as follows:
[Roll No. 270]
AYES--114
Aderholt
Archer
Armey
Bachus
Baker
Barr
Bartlett
Bentsen
Biggert
Blunt
Boehner
Bonilla
Boswell
Burton
Buyer
Callahan
Cannon
Chambliss
Coburn
Collins
Cook
Cramer
Crane
Cubin
Cunningham
Davis (VA)
DeLay
DeMint
Diaz-Balart
Dreier
Duncan
Dunn
Engel
English
Everett
Fletcher
Gibbons
Gilchrest
Goodling
Goss
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hoekstra
Horn
Hostettler
Hutchinson
Isakson
Jenkins
Kingston
Kuykendall
Latham
Leach
Lewis (KY)
Linder
Maloney (NY)
McCollum
McCrery
McGovern
McInnis
McIntosh
McKeon
McNulty
Metcalf
[[Page H5302]]
Miller, Gary
Morella
Myrick
Nadler
Nethercutt
Norwood
Nussle
Ose
Packard
Paul
Peterson (MN)
Riley
Rogers
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sanford
Scarborough
Sessions
Shadegg
Shuster
Simpson
Slaughter
Smith (MI)
Spence
Stearns
Stump
Sununu
Sweeney
Tancredo
Taylor (NC)
Terry
Thornberry
Thune
Tiahrt
Toomey
Upton
Walden
Weldon (FL)
Weller
Wicker
NOES--313
Abercrombie
Ackerman
Allen
Andrews
Baird
Baldacci
Baldwin
Ballenger
Barcia
Barrett (NE)
Barrett (WI)
Barton
Bass
Bateman
Becerra
Bereuter
Berkley
Berman
Berry
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Boehlert
Bonior
Bono
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burr
Calvert
Camp
Campbell
Canady
Capps
Capuano
Cardin
Carson
Castle
Chabot
Clay
Clayton
Clement
Clyburn
Coble
Combest
Condit
Conyers
Cooksey
Costello
Cox
Coyne
Crowley
Cummings
Danner
Davis (FL)
Davis (IL)
Deal
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doolittle
Doyle
Edwards
Ehlers
Ehrlich
Emerson
Eshoo
Etheridge
Evans
Ewing
Farr
Fattah
Filner
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gephardt
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Gordon
Graham
Granger
Green (WI)
Gutierrez
Hall (OH)
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hobson
Hoeffel
Holden
Holt
Hooley
Houghton
Hoyer
Hulshof
Hunter
Hyde
Inslee
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
LaFalce
LaHood
Lampson
Lantos
Largent
Larson
LaTourette
Lazio
Lee
Levin
Lewis (CA)
Lewis (GA)
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Luther
Maloney (CT)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McHugh
McIntyre
McKinney
Meehan
Meek (FL)
Meeks (NY)
Menendez
Mica
Millender-McDonald
Miller (FL)
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Murtha
Napolitano
Neal
Ney
Northup
Oberstar
Obey
Olver
Ortiz
Owens
Oxley
Pallone
Pascrell
Pastor
Payne
Pease
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Rivers
Rodriguez
Roemer
Rogan
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Saxton
Schaffer
Schakowsky
Scott
Sensenbrenner
Serrano
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Sisisky
Skeen
Skelton
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spratt
Stabenow
Stark
Stenholm
Strickland
Stupak
Talent
Tanner
Tauscher
Tauzin
Taylor (MS)
Thomas
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Velazquez
Vento
Visclosky
Vitter
Walsh
Wamp
Waters
Watkins
Watt (NC)
Watts (OK)
Waxman
Weiner
Weldon (PA)
Wexler
Weygand
Whitfield
Wilson
Wise
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)
NOT VOTING--7
Borski
Brown (CA)
Chenoweth
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2040
So the amendment was rejected.
The result of the vote was announced as above recorded.
Amendment No. 8 Offered by Mrs. Roukema
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment No. 8 offered by the gentlewoman from New Jersey (Mrs.
Roukema) on which further proceedings were postponed and on which the
noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 407,
noes 20, not voting 7, as follows:
[Roll No. 271]
AYES--407
Abercrombie
Ackerman
Aderholt
Allen
Andrews
Archer
Armey
Bachus
Baird
Baker
Baldacci
Baldwin
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bonior
Bono
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Capuano
Cardin
Carson
Castle
Chabot
Chambliss
Chenoweth
Clay
Clayton
Clement
Clyburn
Coble
Coburn
Collins
Combest
Condit
Conyers
Cook
Cooksey
Costello
Cox
Coyne
Cramer
Crane
Crowley
Cubin
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeFazio
Delahunt
DeLauro
DeLay
DeMint
Dickey
Dicks
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Edwards
Ehlers
Ehrlich
Emerson
English
Eshoo
Etheridge
Evans
Everett
Ewing
Farr
Fattah
Filner
Fletcher
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hilleary
Hilliard
Hinchey
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
Kuykendall
LaFalce
LaHood
Lampson
Lantos
Largent
Latham
LaTourette
Lazio
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Maloney (CT)
Maloney (NY)
Manzullo
Mascara
Matsui
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McHugh
McInnis
McIntosh
McIntyre
McKeon
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Metcalf
Mica
Millender-McDonald
Miller (FL)
Miller, Gary
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Nadler
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Obey
Olver
Ortiz
Ose
Owens
Oxley
Packard
Pascrell
Paul
Payne
Pease
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Regula
Reyes
Reynolds
Riley
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Royce
Ryan (WI)
Ryun (KS)
Sabo
Salmon
Sanders
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaffer
Schakowsky
Scott
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Tierney
Toomey
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Vitter
Walden
Walsh
Wamp
Waters
Watkins
Watt (NC)
Watts (OK)
Waxman
Weiner
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
Whitfield
Wicker
[[Page H5303]]
Wilson
Wise
Wolf
Woolsey
Wu
Young (AK)
Young (FL)
NOES--20
DeGette
Deutsch
Dingell
Engel
Hill (MT)
Larson
Luther
Markey
Martinez
McCarthy (MO)
McKinney
Pallone
Pastor
Rangel
Rivers
Rush
Sanchez
Stark
Towns
Wynn
NOT VOTING--7
Borski
Brown (CA)
Diaz-Balart
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2048
Mr. LUTHER changed his vote from ``aye'' to ``no.''
So the amendment was agreed to.
The result of the vote was announced as above recorded.
The CHAIRMAN. It is now in order to consider Amendment No. 9 printed
in House Report 106-214.
Amendment No. 9 Offered by Mr. Watt of North Carolina
Mr. WATT of North Carolina. Madam Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 9 offered by Mr. Watt of North Carolina:
Page 325, line 25, strike the ``or'' after the semicolon.
Page 326, line 4, strike the period and insert ``; or''.
Page 326, after line 4, insert the following new
subparagraph:
``(C) in the case of an institution or subsidiary at which
insurance products are sold or offered for sale, the fact
that--
``(i) the approval of an extension of credit to a customer
by the institution or subsidiary may not be conditioned on
the purchase of an insurance product by such customer from
the institution or subsidiary; and
``(ii) the customer is free to purchase the insurance
product from another source.''.
The CHAIRMAN. Pursuant to House Resolution 235, the gentleman from
North Carolina (Mr. Watt) and a Member opposed each will control 5
minutes.
Mr. HILL of Montana. Madam Chairman, I claim the time on the other
side.
The CHAIRMAN. Is the gentleman in opposition?
Mr. HILL of Montana. I am momentarily leaning against this amendment,
however I am persuadable.
The CHAIRMAN. The gentleman from Montana will be recognized for 5
minutes.
Mr. WATT of North Carolina. Madam Chairman, I yield myself 3 minutes.
Madam Chairman, this amendment is noncontroversial, I believe, and I
hope that there is no opposition to it.
In this day in which we are moving toward allowing banks and
insurance companies and securities companies to come together into one
corporation, the concern that I hear more often than any other concern
as I talk to constituents is a concern that when they go to borrow
money from a bank, that bank will require them as a condition of
getting the loan to use other services that are being brought into this
umbrella such as requiring them to purchase insurance from a subsidiary
of the bank or an affiliate of the bank, and of course that would be
extremely unfair and put the customer at a disadvantage and would put
the financial institution at a substantial advantage if they could
require as a condition of getting a loan that insurance be bought from
one of the affiliated companies.
So in the Committee on Banking and Financial Services I offered this
amendment. It passed overwhelmingly in the Committee on Banking and
Financial Services, and for some reason when the bill was re-printed,
it was not there. So I offered the amendment before the Committee on
Rules to get this reinstated.
Let me be clear that this does not prohibit a bank from requiring
insurance to be purchased in connection with a loan, because many loans
are securitized with life insurance or other kinds of insurance, title
insurance. What it says is that that lender cannot require that the
customer obtain that insurance from one of its affiliates, and it
should be clear that the customer is free to go to an unaffiliated
company to obtain insurance if in fact that insurance is required as a
condition of the loan.
Let me make one other quick point. This amendment becomes even more
important in light of all of the discussions about privacy because if
there is to be a sharing of information among affiliates, one of the
things that will be able to be shared is the expiration dates on
insurance policies, and that in and of itself is likely to put a
subsidiary insurance company at an advantage because they may know when
an insurance policy is expiring. All the more reason we need to make it
absolutely explicitly clear that no customer can be required to
purchase insurance from a subsidiary or affiliate of the lending
company as a condition for getting the loan.
Madam Chairman, I reserve the balance of my time.
Mr. HILL of Montana. Madam Chairman, I yield myself 3 minutes.
(Mr. HILL of Montana asked and was given permission to revise and
extend his remarks.)
Mr. HILL of Montana. Madam Chairman, I first want to join with the
chairman to state that I do support the amendment and compliment the
gentleman from North Carolina (Mr. Watt) for bringing it forward. This
bill is going to create new financial institutions, allow them to
provide new services which will hopefully lower the cost to consumers
and create greater competition, and in the end the consumers are going
to benefit that.
But there is a serious concern, and that has to do with lending
institutions who have the ability to exert undue influence, some would
say even potentially coercive influence over their customers.
H.R. 10, this bill, substantially erodes the States' supervision over
insurance sales. In fact, it defers to the Comptroller of the Currency
with regard to the sale of insurance by national banks. And there is
great concern on my part and others about this bill for that reason,
and it is my hope that we will go beyond this amendment in conference
to deal with this.
But it is extremely important, I think, that the House tonight assert
the concept that lenders cannot exert this influence, tying sales of
other services in order to influence a loan. Today in every State in
the union that conduct is assured through the actions of insurance
commissioners and state legislators. Unfortunately this law, H.R. 10 if
it passes, will preempt that making that authority void.
I think it is important for Members in the Chamber then tonight to
say that no consumer who is applying for a loan or any form of credit
should mistakenly believe that their purchase of insurance, or any
other service for that matter, from that lender will enhance their
ability to get that loan and that credit.
I have a similar provision in this bill with regard to the conduct of
the activity of title insurance, however it goes substantially further.
It reasserts the State authority over the conduct of title insurance
sales activity.
Again, I hope that the conferees will find a better solution than
just this amendment, but I think it is essential tonight that the House
make clear that we want these protections for consumers in its place.
I would like to just speak briefly to the bill. I hope tonight that
we will have an overwhelming support for this bill. I have some
concerns about the State regulation of insurance and the structure of
these new financial institutions, but it is essential that we modernize
our financial institutions.
We have a trade surplus in services and substantially a consequence
of our competitiveness in financial services, and if we want to
maintain the jobs and the opportunities, the investment in our economy
and the growth, then we need to have institutions that are competitive
internationally.
Madam Chairman, I would urge all my colleagues to support this bill
and to support this amendment.
Madam Chairman, I reserve the balance of my time.
Mr. WATT of North Carolina. Madam Chairman, I yield 1 minute to the
gentleman from New York (Mr. LaFalce).
Mr. LaFALCE. Madam Chairman, I rise in support of the amendment, and
I thank the gentleman from North Carolina for offering it.
This provision was included within the product produced by the
Committee on Banking and Financial Services as were a number of other
important consumer protection provisions. The Committee on Rules
permitted
[[Page H5304]]
this amendment to be offered; that is good. They could have permitted
the other consumer protection provisions that were included in the
banking bill to come before the floor also; most importantly, the one
prohibiting redlining by insurance companies that would affiliate with
banks. They should not have permitted an amendment on an insurance
provision on which there was never a hearing allowing the
redomestication of mutual insurance companies in order to rip off the
policyholders in order to satisfy the greed of the officers and
directors of those mutual insurance companies.
Support the Watt amendment. Strongly oppose the Bliley amendment.
Mr. HILL of Montana. Madam Chairman, I yield 1 minute to the
gentleman from Iowa (Mr. Leach), chairman of the Committee on Banking
and Financial Services.
Mr. LEACH. Madam Chairman, I thank the gentleman for yielding this
time to me, and I would like to address briefly the Watt amendment.
This is an extraordinarily thoughtful amendment brought by one of the
most thoughtful Members of our body. Indeed, as chairman of the
committee, I would like to say as strongly as I can I know of no more
constructively involved member of the Committee on Banking and
Financial Services or of this Congress than the gentleman from North
Carolina (Mr. Watt), and I would urge support of this amendment. It
makes good common sense.
{time} 2100
Mr. WATT of North Carolina. Madam Chairman, I yield 1 minute to the
gentlewoman from Ohio (Mrs. Jones).
Mrs. JONES of Ohio. Madam Chairman, I would say to the gentleman from
Iowa (Mr. Leach) and the gentleman from North Carolina (Mr. Watt), the
sponsor of this amendment, I stood here, having been a freshman member
of the Committee on Banking and Financial Services, going through H.R.
10, and wondered what was in it for the consumer.
Under financial modernization, a bank can become an insurance
company; an insurance company could become a bank? What would happen to
the consumer?
Thank God, thanks to the leadership of our ranking member and the
gentleman from North Carolina (Mr. Watt) and other members of the
committee, there were consumer protection provisions like this one that
said that even if I get a loan from bank A, I do not have to get my
insurance from bank A.
So all the little old women walking into banks could say, someone is
looking out for me.
I am pleased to stand here in favor, Madam Chairman, of this
amendment. I stand here in support of this amendment believing it will
help H.R. 10 get closer to the bill that came out of the Committee on
Banking and Financial Services.
Mr. HILL of Montana. Madam Chairman, I yield myself such time as I
may consume.
Madam Chairman, I think what is important for all the Members in the
Chamber to understand is that, without this amendment, H.R. 10, in
essence, creates a void with regard to the regulation of insurance with
regard to this activity, the potential course of sale of insurance or
other services to loan customers of lending institutions.
So I would urge all of my colleagues to support this amendment.
Madam Chairman, I yield back the balance of my time.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from North Carolina (Mr. Watt).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider amendment No. 10 printed
in House Report 106-214.
Amendment No. 10 Offered by Mr. Bliley
Mr. BLILEY. Madam Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 10 offered by Mr. Bliley:
Page 327, after line 16, insert the following subsection
(and redesignate subsequent subsections accordingly):
``(e) Domestic Violence Discrimination Prohibition.--
``(1) In general.--In the case of an applicant for, or an
insured under, any insurance product described in paragraph
(2), the status of the applicant or insured as a victim of
domestic violence, or as a provider of services to victims of
domestic violence, shall not be considered as a criterion in
any decision with regard to insurance underwriting, pricing,
renewal, or scope of coverage of insurance policies, or
payment of insurance claims, except as required or expressly
permitted under State law.
``(2) Scope of application.--The prohibition contained in
paragraph (1) shall apply to any insurance product which is
sold or offered for sale, as principal, agent, or broker, by
any insured depository institution or wholesale financial
institution or any person who is engaged in such activities
at an office of the institution or on behalf of the
institution.
``(3) Sense of the congress.--It is the sense of the
Congress that, by the end of the 30-month period beginning on
the date of the enactment of this Act, the States should
enact prohibitions against discrimination with respect to
insurance products that are at least as strict as the
prohibitions contained in paragraph (1).
``(4) Domestic violence defined.--For purposes of this
subsection, the term `domestic violence' means the occurrence
of 1 or more of the following acts by a current or former
family member, household member, intimate partner, or
caretaker:
``(A) Attempting to cause or causing or threatening another
person physical harm, severe emotional distress,
psychological trauma, rape, or sexual assault.
``(B) Engaging in a course of conduct or repeatedly
committing acts toward another person, including following
the person without proper authority, under circumstances that
place the person in reasonable fear of bodily injury or
physical harm.
``(C) Subjecting another person to false imprisonment.
``(D) Attempting to cause or cause damage to property so as
to intimidate or attempt to control the behavior of another
person.
Page 336, after line 13, insert the following new subtitle
(and redesignate subsequent subtitles and amend the table of
contents accordingly):
Subtitle B--Redomestication of Mutual Insurers
SEC. 311. GENERAL APPLICATION.
This subtitle shall only apply to a mutual insurance
company in a State which has not enacted a law which
expressly establishes reasonable terms and conditions for a
mutual insurance company domiciled in such State to
reorganize into a mutual holding company.
SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.
(a) Redomestication.--A mutual insurer organized under the
laws of any State may transfer its domicile to a transferee
domicile as a step in a reorganization in which, pursuant to
the laws of the transferee domicile and consistent with the
standards in subsection (f), the mutual insurer becomes a
stock insurer that is a direct or indirect subsidiary of a
mutual holding company.
(b) Resulting Domicile.--Upon complying with the applicable
law of the transferee domicile governing transfers of
domicile and completion of a transfer pursuant to this
section, the mutual insurer shall cease to be a domestic
insurer in the transferor domicile and, as a continuation of
its corporate existence, shall be a domestic insurer of the
transferee domicile.
(c) Licenses Preserved.--The certificate of authority,
agents' appointments and licenses, rates, approvals and other
items that a licensed State allows and that are in existence
immediately prior to the date that a redomesticating insurer
transfers its domicile pursuant to this subtitle shall
continue in full force and effect upon transfer, if the
insurer remains duly qualified to transact the business of
insurance in such licensed State.
(d) Effectiveness of Outstanding Policies and Contracts.--
(1) In general.--All outstanding insurance policies and
annuities contracts of a redomesticating insurer shall remain
in full force and effect and need not be endorsed as to the
new domicile of the insurer, unless so ordered by the State
insurance regulator of a licensed State, and then only in the
case of outstanding policies and contracts whose owners
reside in such licensed State.
(2) Forms.--
(A) Applicable State law may require a redomesticating
insurer to file new policy forms with the State insurance
regulator of a licensed State on or before the effective date
of the transfer.
(B) Notwithstanding subparagraph (A), a redomesticating
insurer may use existing policy forms with appropriate
endorsements to reflect the new domicile of the
redomesticating insurer until the new policy forms are
approved for use by the State insurance regulator of such
licensed State.
(e) Notice.--A redomesticating insurer shall give notice of
the proposed transfer to the State insurance regulator of
each licensed State and shall file promptly any resulting
amendments to corporate documents required to be filed by a
foreign licensed mutual insurer with the insurance regulator
of each such licensed State.
(f) Procedural Requirements.--No mutual insurer may
redomesticate to another State and reorganize into a mutual
holding company pursuant to this section unless the State
insurance regulator of the transferee domicile determines
that the plan of reorganization of the insurer includes the
following requirements:
[[Page H5305]]
(1) Approval by board of directors and policyholders.--The
reorganization is approved by at least a majority of the
board of directors of the mutual insurer and at least a
majority of the policyholders who vote after notice,
disclosure of the reorganization and the effects of the
transaction on policyholder contractual rights, and
reasonable opportunity to vote, in accordance with such
notice, disclosure, and voting procedures as are approved by
the State insurance regulator of the transferee domicile.
(2) Continued voting control by policyholders; review of
public stock offering.--After the consummation of a
reorganization, the policyholders of the reorganized insurer
shall have the same voting rights with respect to the mutual
holding company as they had before the reorganization with
respect to the mutual insurer. With respect to an initial
public offering of stock, the offering shall be conducted in
compliance with applicable securities laws and in a manner
approved by the State insurance regulator of the transferee
domicile.
(3) Award of stock or grant of options to officers and
directors.--For a period of 6 months after completion of an
initial public offering, neither a stock holding company nor
the converted insurer shall award any stock options or stock
grants to persons who are elected officers or directors of
the mutual holding company, the stock holding company, or the
converted insurer, except with respect to any such awards or
options to which a person is entitled as a policyholder and
as approved by the State insurance regulator of the
transferee domicile.
(4) Contractual rights.--Upon reorganization into a mutual
holding company, the contractual rights of the policyholders
are preserved.
(5) Fair and equitable treatment of policyholders.--The
reorganization is approved as fair and equitable to the
policyholders by the insurance regulator of the transferee
domicile.
SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.
(a) In General.--Unless otherwise permitted by this
subtitle, State laws of any transferor domicile that conflict
with the purposes and intent of this subtitle are preempted,
including but not limited to--
(1) any law that has the purpose or effect of impeding the
activities of, taking any action against, or applying any
provision of law or regulation to, any insurer or an
affiliate of such insurer because that insurer or any
affiliate plans to redomesticate, or has redomesticated,
pursuant to this subtitle;
(2) any law that has the purpose or effect of impeding the
activities of, taking action against, or applying any
provision of law or regulation to, any insured or any
insurance licensee or other intermediary because such person
has procured insurance from or placed insurance with any
insurer or affiliate of such insurer that plans to
redomesticate, or has redomesticated, pursuant to this
subtitle, but only to the extent that such law would treat
such insured licensee or other intermediary differently than
if the person procured insurance from, or placed insurance
with, an insured licensee or other intermediary which had not
redomesticated;
(3) any law that has the purpose or effect of terminating,
because of the redomestication of a mutual insurer pursuant
to this subtitle, any certificate of authority, agent
appointment or license, rate approval, or other approval, of
any State insurance regulator or other State authority in
existence immediately prior to the redomestication in any
State other than the transferee domicile.
(b) Differential Treatment Prohibited.--No State law,
regulation, interpretation, or functional equivalent thereof,
of a State other than a transferee domicile may treat a
redomesticating or redomesticated insurer or any affiliate
thereof any differently than an insurer operating in that
State that is not a redomesticating or redomesticated
insurer.
(c) Laws Prohibiting Operations.--If any licensed State
fails to issue, delays the issuance of, or seeks to revoke an
original or renewal certificate of authority of a
redomesticated insurer immediately following redomestication,
except on grounds and in a manner consistent with its past
practices regarding the issuance of certificates of authority
to foreign insurers that are not redomesticating, then the
redomesticating insurer shall be exempt from any State law of
the licensed State to the extent that such State law or the
operation of such State law would make unlawful, or regulate,
directly or indirectly, the operation of the redomesticated
insurer, except that such licensed State may require the
redomesticated insurer to--
(1) comply with the unfair claim settlement practices law
of the licensed State;
(2) pay, on a nondiscriminatory basis, applicable premium
and other taxes which are levied on licensed insurers or
policyholders under the laws of the licensed State;
(3) register with and designate the State insurance
regulator as its agent solely for the purpose of receiving
service of legal documents or process;
(4) submit to an examination by the State insurance
regulator in any licensed state in which the redomesticated
insurer is doing business to determine the insurer's
financial condition, if--
(A) the State insurance regulator of the transferee
domicile has not begun an examination of the redomesticated
insurer and has not scheduled such an examination to begin
before the end of the 1-year period beginning on the date of
the redomestication; and
(B) any such examination is coordinated to avoid
unjustified duplication and repetition;
(5) comply with a lawful order issued in--
(A) a delinquency proceeding commenced by the State
insurance regulator of any licensed State if there has been a
judicial finding of financial impairment under paragraph (7);
or
(B) a voluntary dissolution proceeding;
(6) comply with any State law regarding deceptive, false,
or fraudulent acts or practices, except that if the licensed
State seeks an injunction regarding the conduct described in
this paragraph, such injunction must be obtained from a court
of competent jurisdiction as provided in section 314(a);
(7) comply with an injunction issued by a court of
competent jurisdiction, upon a petition by the State
insurance regulator alleging that the redomesticating insurer
is in hazardous financial condition or is financially
impaired;
(8) participate in any insurance insolvency guaranty
association on the same basis as any other insurer licensed
in the licensed State; and
(9) require a person acting, or offering to act, as an
insurance licensee for a redomesticated insurer in the
licensed State to obtain a license from that State, except
that such State may not impose any qualification or
requirement that discriminates against a nonresident
insurance licensee.
SEC. 314. OTHER PROVISIONS.
(a) Judicial Review.--The appropriate United States
district court shall have exclusive jurisdiction over
litigation arising under this section involving any
redomesticating or redomesticated insurer.
(b) Severability.--If any provision of this section, or the
application thereof to any person or circumstances, is held
invalid, the remainder of the section, and the application of
such provision to other persons or circumstances, shall not
be affected thereby.
SEC. 315. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) Court of competent jurisdiction.--The term ``court of
competent jurisdiction'' means a court authorized pursuant to
section 314(a) to adjudicate litigation arising under this
subtitle.
(2) Domicile.--The term ``domicile'' means the State in
which an insurer is incorporated, chartered, or organized.
(3) Insurance licensee.--The term ``insurance licensee''
means any person holding a license under State law to act as
insurance agent, subagent, broker, or consultant.
(4) Institution.--The term ``institution'' means a
corporation, joint stock company, limited liability company,
limited liability partnership, association, trust,
partnership, or any similar entity.
(5) Licensed state.--The term ``licensed State'' means any
State, the District of Columbia, American Samoa, Guam, Puerto
Rico, or the United States Virgin Islands in which the
redomesticating insurer has a certificate of authority in
effect immediately prior to the redomestication.
(6) Mutual insurer.--The term ``mutual insurer'' means a
mutual insurer organized under the laws of any State.
(7) Person.--The term ``person'' means an individual,
institution, government or governmental agency, State or
political subdivision of a State, public corporation, board,
association, estate, trustee, or fiduciary, or other similar
entity.
(8) Policyholder.--The term ``policyholder'' means the
owner of a policy issued by a mutual insurer, except that,
with respect to voting rights, the term means a member of a
mutual insurer or mutual holding company granted the right to
vote, as determined under applicable State law.
(9) Redomesticated insurer.--The term ``redomesticated
insurer'' means a mutual insurer that has redomesticated
pursuant to this subtitle.
(10) Redomesticating insurer.--The term ``redomesticating
insurer'' means a mutual insurer that is redomesticating
pursuant to this subtitle.
(11) Redomestication or transfer.--The terms
``redomestication'' and ``transfer'' mean the transfer of the
domicile of a mutual insurer from one State to another State
pursuant to this subtitle.
(12) State insurance regulator.--The term ``State insurance
regulator'' means the principal insurance regulatory
authority of a State, the District of Columbia, American
Samoa, Guam, Puerto Rico, or the United States Virgin
Islands.
(13) State law.--The term ``State law'' means the statutes
of any State, the District of Columbia, American Samoa, Guam,
Puerto Rico, or the United States Virgin Islands and any
regulation, order, or requirement prescribed pursuant to any
such statute.
(14) Transferee domicile.--The term ``transferee domicile''
means the State to which a mutual insurer is redomesticating
pursuant to this subtitle.
(15) Transferor domicile.--The term ``transferor domicile''
means the State from which a mutual insurer is
redomesticating pursuant to this subtitle.
SEC. 316. EFFECTIVE DATE.
This subtitle shall take effect on the date of the
enactment of this Act.
Parliamentary Inquiry
Mr. VENTO. Madam Chairman, parliamentary inquiry.
[[Page H5306]]
Madam Chairman, is it possible to have this amendment divided by
unanimous consent?
The CHAIRMAN. Under the rule, the amendment is not divisible; and the
Committee cannot alter that feature of the rule.
Mr. VENTO. Even though these are separate topics, completely separate
topics, in the amendment?
The CHAIRMAN. It is not in order under the rule, even by unanimous
consent.
Mr. LaFALCE. Even though it is not in order under the rule that we
oppose, could we not divide it if there were unanimous consent?
The CHAIRMAN. The Committee of the Whole cannot change the rule.
Mr. LaFALCE. Could we have unanimous consent to rise and then ask
unanimous consent to go into the full House and then request a division
of this amendment into two parts?
Mr. BLILEY. I object.
The CHAIRMAN. No request has been made.
Motion Offered by Mr. LaFalce
Mr. LaFALCE. Madam Chairman, I move that the Committee do now rise
for the purpose aforestated.
The CHAIRMAN. The question is on the motion offered by the gentleman
from New York (Mr. LaFalce).
The question was taken, and the Chairman announced that the noes
appeared to have it.
Recorded Vote
Mr. LaFALCE. Madam Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 179,
noes 232, not voting 23, as follows:
[Roll No. 272]
AYES--179
Abercrombie
Ackerman
Allen
Andrews
Baird
Baldwin
Barcia
Barrett (WI)
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson
Clayton
Clement
Clyburn
Condit
Conyers
Coyne
Cramer
Crowley
Cummings
Danner
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dixon
Doggett
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank (MA)
Frost
Gejdenson
Gephardt
Gonzalez
Gordon
Hall (OH)
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holt
Hooley
Hoyer
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy
Kildee
Kilpatrick
Kind (WI)
Klink
Kucinich
LaFalce
Lampson
Lantos
Larson
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Lucas (KY)
Luther
Maloney (CT)
Maloney (NY)
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Millender-McDonald
Mink
Moakley
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Payne
Peterson (MN)
Pomeroy
Price (NC)
Rangel
Reyes
Rivers
Rodriguez
Roemer
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Schakowsky
Scott
Serrano
Sherman
Shows
Slaughter
Smith (WA)
Snyder
Spratt
Stabenow
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Weygand
Woolsey
Wu
NOES--232
Aderholt
Archer
Armey
Bachus
Baker
Ballenger
Barr
Barrett (NE)
Bartlett
Bass
Bateman
Bereuter
Biggert
Bilbray
Bilirakis
Bliley
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Castle
Chabot
Chambliss
Chenoweth
Coble
Coburn
Collins
Cook
Cooksey
Costello
Cox
Crane
Cubin
Cunningham
Davis (VA)
Deal
DeLay
DeMint
Diaz-Balart
Dickey
Dingell
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ewing
Fletcher
Foley
Forbes
Ford
Fowler
Franks (NJ)
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Istook
Jenkins
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
King (NY)
Kingston
Kleczka
Knollenberg
Kolbe
Kuykendall
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCollum
McCrery
McHugh
McInnis
McIntosh
McKeon
Metcalf
Mica
Miller (FL)
Miller, George
Minge
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Ose
Oxley
Packard
Pastor
Paul
Pease
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Portman
Pryce (OH)
Quinn
Rahall
Ramstad
Regula
Reynolds
Riley
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sanford
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simpson
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Spence
Stearns
Stump
Sununu
Sweeney
Talent
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wise
Wolf
Wynn
Young (AK)
Young (FL)
NOT VOTING--23
Baldacci
Barton
Borski
Brown (CA)
Clay
Combest
Dicks
Dooley
Doyle
Fossella
Green (TX)
Gutierrez
Holden
Lipinski
Menendez
Miller, Gary
Nussle
Pelosi
Pombo
Porter
Radanovich
Rogan
Sawyer
{time} 2124
Mrs. MYRICK, Mr. GUTKNECHT, Mr. GREENWOOD, and Mrs. MORELLA changed
their vote from ``aye'' to ``no.''
Mr. HOEFFEL, Mr. DAVIS of Illinois, Ms. SANCHEZ, and Ms. McKINNEY
changed their vote from ``no'' to ``aye.''
So the motion to rise was rejected.
The result of the vote was announced as above recorded.
The CHAIRMAN. Pursuant to House Resolution 235, the gentleman from
Virginia (Mr. Bliley) and a Member opposed each will control 5 minutes.
Mr. LaFALCE. Madam Chairman, I am opposed to the amendment.
The CHAIRMAN. The gentleman from New York (Mr. LaFalce) will be
recognized to control the time in opposition.
The Chair recognizes the gentleman from Virginia (Mr. Bliley).
Mr. BLILEY. Madam Chairman, I yield myself 1\1/2\ minutes.
Madam Chairman, this amendment is simple and straightforward. It does
only two things. First, it prohibits banks from discriminating against
victims of domestic violence and insurance sales.
The majority of States already have laws preventing discrimination
against victims of domestic violence. However, H.R. 10 would allow
Federal banking regulators to preempt a number of State consumer
protection laws, and in addition, a few States have not yet acted on
this issue.
This amendment would not preempt State laws, but ensures where no
protections for domestic violence victims existed or where the banking
regulators were trying to preempt such laws, the domestic violence
victims will be protected.
Second, the bill would allow mutual insurance companies to
redomesticate and reorganize into a mutual holding company or into a
stock company. Without the redomestication provision, mutual insurance
companies will be placed at a severe disadvantage in raising capital
and competing with other financial holding companies.
It only takes effect in States that have not enacted laws governing
mutual holding companies, and it requires approval from the insurance
regulator that the company has met numerous specific consumer
protections.
Madam Chairman, I yield 1\1/2\ minutes to the gentlewoman from
Colorado (Ms. DeGette).
Ms. DeGETTE. Madam Chairman, I rise in reluctant support of the
Bliley amendment. I guess I am pleased, if a
[[Page H5307]]
little bit puzzled, that this amendment has been coupled, the domestic
violence amendment has been coupled with redomestication of mutual
insurers. I think the only two things that are the same in these
concepts are the word ``domestic.''
{time} 2130
But the reason I support this amendment is because it is extremely
important to millions of domestic violence victims around this country,
many of them women who have been discriminated against, unbelievably,
in insurance company underwriting and in claims processing and in
rates.
We have a woman in Colorado, for example, whose husband tried to
murder her by burning down their house. She was almost killed, but she
survived. When the insurance company got the claim, they only paid 50
percent because they said she was 50 percent responsible for the house
burning down because she was a domestic violence victim.
I am disappointed, frankly, that the Committee on Rules did not make
in order my amendment with the gentleman from Ohio (Mr. Oxley), a stand
alone amendment, which was unanimously supported in the Committee on
Commerce, which passed this House last year as part of the House bill,
and went on to the Senate. I am saddened that that was not done in its
own right. But, frankly, it was not. So, to me, it is important for the
millions of domestic violence victims to pass this amendment.
Mr. LaFALCE. Madam Chairman, I yield myself 2 minutes.
Madam Chairman, this amendment is a travesty and should be opposed.
It is absolutely outrageous that the Committee on Rules has permitted
the combination of prohibitions against discrimination because of
domestic violence with redomestication of mutual insurance companies.
My colleagues would get 100 percent of this body to vote for the
prohibition with respect to domestic violence, and they know that. No
one should vote for the redomestication of mutual insurance company,
and that is the only reason the gentleman from Virginia (Mr. Bliley)
has combined them, because no one would vote for his amendment if it
were standing by itself.
Why? Because greed is involved. Greed on the part of the officers and
directors of the mutual insurance companies.
Why? Because theft is involved. Theft is involved of the ownership
right of, not millions, but tens of millions of policy holders, women
and men and children, et cetera. One is stealing their rights by this
Federal law.
Why? Because this is an anti-States rights amendment. That is why the
National Conference of State Legislatures have said, do not pass this
amendment. We recognize the provisions of domestic violence. We love
those. But we do not want you to infringe on our rights.
The gentleman from Virginia said, well, if the State has got a mutual
holding company provision, it does not apply. Well, New York does not.
Massachusetts does not. Countless other States do not. The gentleman
would override theirs.
The gentleman said, well, the State insurance regulator has to
approve. Not of the host States, just of the States they want to go to.
They will pick the worst State in the Union, they will go to that
State, and, of course, the insurance regulator will permit it. They
will do anything to get a domestic, a mutual insurance company to
relocate so long as they can satisfy the officers and directors.
There is no good reason for it. There has been no hearing on it. It
has absolutely no relationship to financial services modernization. It
has absolutely no relationship to affiliation. What is this? It is a
pay off to the mutual insurance industry. No more. No less.
Mr. BLILEY. Madam Chairman, I yield 1 minute to the gentlewoman from
New York (Mrs. Kelly).
Mrs. KELLY. Madam Chairman, I rise today in support of the amendment
of the gentleman from Virginia (Mr. Bliley) to put this redomestication
provision back in this legislation. This is a technical issue, and I
think I want to try to clarify what this amendment seeks to do.
Mutual insurance companies are essentially cooperatives and they have
no stockholders, only policy holders. A mutual company may own the
stock of the subsidiary, but, having no shareholders, it is confined to
lower subsidiaries if they want to diversify.
This structure imposes serious limitations on the ability of a mutual
company to make significant acquisitions in order to stay competitive.
In addition, a mutual insurer cannot sell stock, thereby limiting its
ability to raise capital to diversify.
Taken together, these factors place mutual insurers at a substantial
disadvantage in an affiliated environment such as H.R. 10 allows for.
While State laws generally permit insurers to move their base, States
are capable of imposing significant practical barriers to
redomestication. I do not believe that a mutual insurer's ability to
participate fully in an affiliated financial services environment
should depend solely on the State where they are based.
It is for these reasons I believe we should support this amendment.
Mr. LaFALCE. Madam Chairman, I yield 1 minute to the gentleman from
Massachusetts (Mr. Frank).
Mr. FRANK of Massachusetts. Madam Chairman, this is the most shameful
abuse of the democratic process I have ever seen. My colleagues have an
effort not to stop the insurance company from demutualizing, but simply
to require them to abide by the State law where they were chartered and
their contract with their policy holders.
The gentleman from Virginia is not saying they should be able to
demutualize, he is saying they should be able to do it without sharing
with the policyholders what they pledged to the policyholders they
would do when they sold them the policy. That is so hard to defend that
he is literally hiding behind battered women.
Why are these together? Domestic violence and redomestication? I am
surprised the gentleman does not have in there housebreaking one's dog
for domestic animals because that is all it has got in common.
The gentleman has something so bad it cannot stand on its own. He is
asking to give permission to the mutual insurance companies. What the
gentlewoman from New York (Mrs. Kelly) said is completely irrelevant.
No one is trying to stop them from demutualizing.
They now have to, in certain States, demutualize in accordance with
the rules of that State where they were chartered and in accordance
with what they promise the policyholders. This is a license for them to
avoid States rights, break the rules that they have for policyholders,
and the gentleman shamefully does it by hiding behind the victims of
domestic violence.
Mr. BLILEY. Madam Chairman, I yield the balance of my time to the
gentleman from New York (Mr. Towns).
(Mr. TOWNS asked and was given permission to revise and extend his
remarks.)
Mr. TOWNS. Madam Chairman, let me say that, first of all, the
argument is the Committee on Rules. My colleagues point to the fact
that the Committee on Rules did it again. That is what they are really
saying. But I do not think that my colleagues should forget about what
we are dealing with here. We are talking about two things, domestic
violence and redomestication. I think that these issues are very, very
important.
Also, I want to talk about the fact that insurance, the last time I
heard, was under the jurisdiction of the Committee on Commerce. I mean,
unless something changed over the last 24 hours, the Committee on
Commerce had jurisdiction over insurance. So, therefore, I think that
the Committee on Commerce here really has a lot to say about this
issue.
I think that the other thing that I would like to just sort of talk
about, mutual insurance companies would be placed at a severe
disadvantage in terms of raising capital. I think that capital is very,
very important. This amendment corrects that. I think that we need to
make certain that that is done. I think that is important that we do
that.
Let me say to my colleagues that I think this is a good amendment,
and I urge support of it.
Mr. LaFALCE. Madam Chairman, I yield 1 minute to the gentleman from
North Carolina (Mr. Watt).
[[Page H5308]]
Mr. WATT of North Carolina. Madam Chairman, I rise in opposition to
particularly the last part of this amendment. It really is a real
disservice to mutual policyholders, who are owners of the insurance
company. To allow an insurance company to take the assets and convert
to a stock company puts those policyholders at a real disadvantage.
Now, I had some experience with this. The last case that I ever
handled in the practice of law was one of these cases where a mutual
company, without the authorization of the insureds, tried to do this
very thing. They ended up understating the value of the assets. They
were not going to give the insurance policyholders one dime until we
got involved, and they ended up paying them millions of dollars.
I think this is a bad idea, and we should vote against this
amendment.
Mr. LaFALCE. Madam Chairman, I yield 1 minute to the gentleman from
Wisconsin (Mr. Barrett) for closure.
Mr. BARRETT of Wisconsin. Madam Chairman, the States rights, States
rights, States rights. Where are they? Where are the States rights?
We have got all these elected officials at the State level, and we do
not trust them. Because if they refuse to pass a law that the mutual
insurance companies like, we are going to just allow them to pack up
and move out of State.
This is the most hypocritical amendment for advocates of States
rights that I have seen in this Chamber. How anybody can vote for this
amendment and claim they are in favor of States rights defies logic.
It is a rip-off. It is a rip-off to shareholders and for stockholders
and mutual insurance policyholders who bought those policies because
they would be owners of that company. It rips them off. It is wrong,
wrong, wrong.
It is unfortunate that it is being hidden behind battered women. That
is disgusting. This amendment should be voted down. We should do it
right, provide protection for the battered women, and not allow this
dangerous rip-off.
The CHAIRMAN. All time for debate on this amendment has expired.
The question is on the amendment offered by the gentleman from
Virginia (Mr. Bliley).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Mr. BLILEY. Madam Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 235, further proceedings
on the amendment offered by the gentleman from Virginia will be
postponed.
It is now in order to consider amendment No. 11 printed in House
Report 106-214.
Amendment No. 11 Offered by Mr. Oxley
Mr. OXLEY. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 11 offered by Mr. Oxley:
Page 378, beginning on line 16, strike subtitle A of title
V and insert the following (and conform the table of contents
accordingly):
Subtitle A--Disclosure of Nonpublic Personal Information
SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.
(a) Privacy Obligation Policy.--It is the policy of the
Congress that each financial institution has an affirmative
and continuing obligation to respect the privacy of its
customers and to protect the security and confidentiality of
those customers' nonpublic personal information.
(b) Financial Institutions Safeguards.--In furtherance of
the policy in subsection (a), each agency or authority
described in section 505(a) shall establish appropriate
standards for the financial institutions subject to their
jurisdiction relating to administrative, technical, and
physical safeguards--
(1) to insure the security and confidentiality of customer
records and information;
(2) to protect against any anticipated threats or hazards
to the security or integrity of such records; and
(3) to protect against unauthorized access to or use of
such records or information which could result in substantial
harm or inconvenience to any customer.
SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PERSONAL
INFORMATION.
(a) Notice Requirements.--Except as otherwise provided in
this subtitle, a financial institution may not, directly or
through any affiliate, disclose to a nonaffiliated third
party any nonpublic personal information, unless such
financial institution provides or has provided to the
consumer a notice that complies with section 503(b).
(b) Opt Out.--
(1) In general.--A financial institution may not disclose
nonpublic personal information to nonaffiliated third parties
unless--
(A) such financial institution clearly and conspicuously
discloses to the consumer, in writing or in electronic form
(or other form permitted by the regulations prescribed under
section 504), that such information may be disclosed to such
third parties;
(B) the consumer is given the opportunity, before the time
that such information is initially disclosed, to direct that
such information not be disclosed to such third parties; and
(C) the consumer is given an explanation of how the
consumer can exercise that nondisclosure option.
(2) Exception.--This subsection shall not prevent a
financial institution from providing nonpublic personal
information to a nonaffiliated third party to perform
services or functions on behalf of the financial institution,
including marketing of the financial institution's own
products or services or financial products or services
offered pursuant to joint agreements between two or more
financial institutions that comply with the requirements
imposed by the regulations prescribed under section 504, if
the financial institution fully discloses the providing of
such information and enters into a contractual agreement with
the third party that requires the third party to maintain the
confidentiality of such information.
(c) Limits on Reuse of Information.--Except as otherwise
provided in this subtitle, a nonaffiliated third party that
receives from a financial institution nonpublic personal
information under this section shall not, directly or through
an affiliate of such receiving third party, disclose such
information to any other person that is a nonaffiliated third
party of both the financial institution and such receiving
third party, unless such disclosure would be lawful if made
directly to such other person by the financial institution.
(d) Limitations on the Sharing of Account Number
Information for Marketing Purposes.--A financial institution
shall not disclose an account number or similar form of
access number or access code for a credit card account,
deposit account, or transaction account of a consumer to any
nonaffiliated third party for use in telemarketing, direct
mail marketing, or other marketing through electronic mail to
the consumer.
(e) General Exceptions.--Subsections (a) and (b) shall not
prohibit the disclosure of nonpublic personal information--
(1) as necessary to effect, administer, or enforce a
transaction requested or authorized by the consumer, or in
connection with--
(A) servicing or processing a financial product or service
requested or authorized by the consumer;
(B) maintaining or servicing the consumer's account with
the financial institution; or
(C) a proposed or actual securitization, secondary market
sale (including sales of servicing rights), or similar
transaction related to a transaction of the consumer;
(2) with the consent or at the direction of the consumer;
(3) to protect the confidentiality or security of its
records pertaining to the consumer, the service or product,
or the transaction therein, or to protect against or prevent
actual or potential fraud, unauthorized transactions, claims,
or other liability, for required institutional risk control,
or for resolving customer disputes or inquiries, or to
persons holding a beneficial interest relating to the
consumer, or to persons acting in a fiduciary capacity on
behalf of the consumer;
(4) to provide information to insurance rate advisory
organizations, guaranty funds or agencies, applicable rating
agencies of the financial institution, persons assessing the
institution's compliance with industry standards, and the
institution's attorneys, accountants, and auditors;
(5) to the extent specifically permitted or required under
other provisions of law and in accordance with the Right to
Financial Privacy Act of 1978, to law enforcement agencies
(including a Federal functional regulator, a State insurance
authority, or the Federal Trade Commission), self-regulatory
organizations, or for an investigation on a matter related to
public safety;
(6) to a consumer reporting agency in accordance with the
Fair Credit Reporting Act, or in accordance with
interpretations of such Act by the Board of Governors of the
Federal Reserve System or the Federal Trade Commission,
including interpretations published as commentary (16 C.F.R.
601-622);
(7) in connection with a proposed or actual sale, merger,
transfer, or exchange of all or a portion of a business or
operating unit if the disclosure of nonpublic personal
information concerns solely consumers of such business or
unit; or
(8) to comply with Federal, State, or local laws, rules,
and other applicable legal requirements; to comply with a
properly authorized civil, criminal, or regulatory
investigation or subpoena by Federal, State, or local
authorities; or to respond to judicial
[[Page H5309]]
process or government regulatory authorities having
jurisdiction over the financial institution for examination,
compliance, or other purposes as authorized by law.
SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.
(a) Disclosure Required.--A financial institution shall
clearly and conspicuously disclose to each consumer, at the
time of establishing the customer relationship with the
consumer and not less than annually, in writing or in
electronic form (or other form permitted by the regulations
prescribed under section 504), its policies and practices
with respect to protecting the nonpublic personal information
of consumers in accordance with the rules prescribed under
section 504.
(b) Information to be Included.--The disclosure required by
subsection (a) shall include--
(1) the policy and practices of the institution with
respect to disclosing nonpublic personal information to
nonaffiliated third parties, other than agents of the
institution, consistent with section 502 of this subtitle,
and including--
(A) the categories of persons to whom the information is or
may be disclosed, other than the persons to whom the
information may be provided pursuant to section 502(e); and
(B) the practices and policies of the institution with
respect to disclosing of nonpublic personal information of
persons who have ceased to be customers of the financial
institution;
(2) the categories of nonpublic personal information that
are collected by the financial institution;
(3) the policies that the institution maintains to protect
the confidentiality and security of nonpublic personal
information in accordance with section 501; and
(4) the disclosures required, if any, under section
603(d)(2)(A)(iii) of the Fair Credit Reporting Act.
SEC. 504. RULEMAKING.
(a) Regulatory Authority.--The Federal banking agencies,
the National Credit Union Association, the Secretary of the
Treasury, and the Securities and Exchange Commission, shall
jointly prescribe, after consultation with the Federal Trade
Commission, and representatives of State insurance
authorities designated by the National Association of
Insurance Commissioners, such regulations as may be necessary
to carry out the purposes of this subtitle. Such regulations
shall be prescribed in accordance with applicable
requirements of the title 5, United States Code, and shall be
issued in final form within 6 months after the date of
enactment of this Act.
(b) Authority To Grant Exceptions.--The regulations
prescribed under subsection (a) may include such additional
exceptions to subsections (a) and (b) of section 502 as are
deemed consistent with the purposes of this subtitle.
SEC. 505. ENFORCEMENT.
(a) In General.--This subtitle and the rules prescribed
thereunder shall be enforced by the Federal functional
regulators, the State insurance authorities, and the Federal
Trade Commission with respect to financial institutions
subject to their jurisdiction under applicable law, as
follows:
(1) Under section 8 of the Federal Deposit Insurance Act,
in the case of--
(A) national banks, Federal branches and Federal agencies
of foreign banks, and any subsidiaries of such entities, by
the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than
national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending
companies owned or controlled by foreign banks, organizations
operating under section 25 or 25A of the Federal Reserve Act,
bank holding companies and their nonbank subsidiaries or
affiliates (except broker-dealers, affiliates providing
insurance, investment companies, and investment advisers), by
the Board of Governors of the Federal Reserve System;
(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System), insured State branches of foreign banks, and any
subsidiaries of such entities, by the Board of Directors of
the Federal Deposit Insurance Corporation; and
(D) savings association the deposits of which are insured
by the Federal Deposit Insurance Corporation, and any
subsidiaries of such a savings association, by the Director
of the Office of Thrift Supervision.
(2) Under the Federal Credit Union Act, by the
Administrator of the National Credit Union Administration
with respect to any Federal or state chartered credit union,
and any subsidiaries of such an entity.
(3) Under the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to the Federal Agricultural
Mortgage Corporation, any Federal land bank, Federal land
bank association, Federal intermediate credit bank, or
production credit association.
(4) Under the Securities Exchange Act of 1934, by the
Securities and Exchange Commission with respect to any
broker-dealer.
(5) Under the Investment Company Act of 1940, by the
Securities and Exchange Commission with respect to investment
companies.
(6) Under the Investment Advisers Act of 1940, by the
Securities and Exchange Commission with respect to investment
advisers registered with the Commission under such Act.
(7) Under Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U. S. C. 4501 et seq.), by the
Office of Federal Housing Enterprise Oversight with respect
to the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.
(8) Under the Federal Home Loan Bank Act, by the Federal
Housing Finance Board with respect to Federal home loan
banks.
(9) Under State insurance law, in the case of any person
engaged in providing insurance, by the State insurance
authority of the State in which the person is domiciled,
subject to section 104 of this Act.
(10) Under the Federal Trade Commission Act, by the Federal
Trade Commission for any other financial institution that is
not subject to the jurisdiction of any agency or authority
under paragraphs (1) through (9) of this subsection.
(b) Enforcement of Section 501.--
(1) In general.--Except as provided in paragraph (2), the
agencies and authorities described in subsection (a) shall
implement the standards prescribed under section 501(b) in
the same manner, to the extent practicable, as standards
prescribed pursuant to subsection (a) of section 39 of the
Federal Deposit Insurance Act are implemented pursuant to
such section.
(2) Exception.--The agencies and authorities described in
paragraphs (4), (5), (6), (9), and (10) of subsection (a)
shall implement the standards prescribed under section 501(b)
by rule with respect to the financial institutions subject to
their respective jurisdictions under subsection (a).
(c) Definitions.--The terms used in subsection (a)(1) that
are not defined in this subtitle or otherwise defined in
section 3(s) of the Federal Deposit Insurance Act shall have
the meaning given to them in section 1(b) of the
International Banking Act of 1978.
SEC. 506. FAIR CREDIT REPORTING ACT AMENDMENT.
(a) Amendment.--Section 621 of the Fair Credit Reporting
Act (15 U.S.C. 1681s) is amended--
(1) in subsection (d), by striking everything following the
end of the second sentence; and
(2) by striking subsection ``(e)'' and inserting in lieu
thereof the following:
``(e) Regulatory Authority.--
``(1) The Federal banking agencies referred to in
paragraphs (1) and (2) of subsection (b) shall jointly
prescribe such regulations as necessary to carry out the
purposes of this Act with respect to any persons identified
under paragraphs (1) and (2) of subsection (b), or to the
holding companies and affiliates of such persons.
``(2) The Administrator of the National Credit Union
Administration shall prescribe such regulations as necessary
to carry out the purposes of this Act with respect to any
persons identified under paragraph (3) of subsection (b).''.
(b) Conforming Amendment.--Section 621(a) of the Fair
Credit Reporting Act (15 U.S.C. 1681s(a)) is amended by
striking paragraph (4).
SEC. 507. RELATION TO OTHER PROVISIONS.
This subtitle shall not apply to any information to which
subtitle D of title III applies.
SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL
AFFILIATES.
(a) In General.--The Secretary of the Treasury, in
conjunction with the Federal functional regulators and the
Federal Trade Commission, shall conduct a study of
information sharing practices among financial institutions
and their affiliates. Such study shall include--
(1) the purposes for the sharing of confidential customer
information with affiliates or with nonaffiliated third
parties;
(2) the extent and adequacy of security protections for
such information;
(3) the potential risks for customer privacy of such
sharing of information;
(4) the potential benefits for financial institutions and
affiliates of such sharing of information;
(5) the potential benefits for customers of such sharing of
information;
(6) the adequacy of existing laws to protect customer
privacy;
(7) the adequacy of financial institution privacy policy
and privacy rights disclosure under existing law;
(8) the feasibility of different approaches, including opt-
out and opt-in, to permit customers to direct that
confidential information not be shared with affiliates and
nonaffiliated third parties; and
(9) the feasibility of restricting sharing of information
for specific uses or of permitting customers to direct the
uses for which information may be shared.
(b) Consultation.--The Secretary shall consult with
representatives of State insurance authorities designated by
the National Association of Insurance Commissioners, and also
with financial services industry, consumer organizations and
privacy groups, and other representatives of the general
public, in formulating and conducting the study required by
subsection (a).
(c) Report.--Before the end of the 6-month period beginning
on the date of the enactment of this Act, the Secretary shall
submit a report to the Congress containing the findings and
conclusions of the study required under subsection (a),
together with such recommendations for legislative or
administrative action as may be appropriate.
[[Page H5310]]
SEC. 509. DEFINITIONS.
As used in this subtitle:
(1) Federal banking agency.--The term ``Federal banking
agency'' has the meanings given to such terms in section 3 of
the Federal Deposit Insurance Act.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' means--
(A) the Board of Governors of the Federal Reserve System;
(B) the Office of the Comptroller of the Currency;
(C) the Board of Directors of the Federal Deposit Insurance
Corporation;
(D) the Director of the Office of Thrift Supervision;
(E) the National Credit Union Administration Board;
(F) the Farm Credit Administration; and
(G) the Securities and Exchange Commission.
(3) Financial institution.--The term ``financial
institution'' means any institution the business of which is
engaging in financial activities or activities that are
incidental to financial activities, as described in section
6(c) of the Bank Holding Company Act of 1956.
(4) Nonpublic personal information.--
(A) The term ``nonpublic personal information'' means
personally identifiable financial information--
(i) provided by a consumer to a financial institution;
(ii) resulting from any transaction with the consumer or
the service performed for the consumer; or
(iii) otherwise obtained by the financial institution.
(B) Such term does not include publicly available
information, as such term is defined by the regulations
prescribed under section 504.
(C) Notwithstanding subparagraph (B), such term shall
include any list, description, or other grouping of consumers
(and publicly available information pertaining to them) that
is derived using any personally identifiable information
other than publicly available information.
(5) Nonaffiliated third parties.--The term ``nonaffiliated
third parties'' means any entity that is not an affiliate of,
or related by common ownership or affiliated by corporate
control with, the financial institution, but does not include
a joint employee of such institution.
(6) Affiliate.--The term ``affiliate'' means any company
that controls, is controlled by, or is under common control
with another company.
(7) Necessary to effect, administer, or enforce.--The term
``as necessary to effect, administer or enforce the
transaction'' means--
(A) the disclosure is required, or is a usual, appropriate
or acceptable method, to carry out the transaction or the
product or service business of which the transaction is a
part, and record or service or maintain the consumer's
account in the ordinary course of providing the financial
service or financial product, or to administer or service
benefits or claims relating to the transaction or the product
or service business of which it is a part, and includes--
(i) providing the consumer or the consumer's agent or
broker with a confirmation, statement, or other record of the
transaction, or information on the status or value of the
financial service or financial product; and
(ii) the accrual or recognition of incentives or bonuses
associated with the transaction that are provided by the
financial institution or any other party;
(B) the disclosure is required, or is one of the lawful or
appropriate methods, to enforce the rights of the financial
institution or of other persons engaged in carrying out the
financial transaction, or providing the product or service;
(C) the disclosure is required, or is a usual, appropriate,
or acceptable method, for insurance underwriting at the
consumer's request or for reinsurance purposes, or for any of
the following purposes as they relate to a consumer's
insurance: account administration, reporting, investigating,
or preventing fraud or material misrepresentation, processing
premium payments, processing insurance claims, administering
insurance benefits (including utilization review activities),
participating in research projects, or as otherwise required
or specifically permitted by Federal or State law; or
(D) the disclosure is required, or is a usual, appropriate
or acceptable method, in connection with--
(i) the authorization, settlement, billing, processing,
clearing, transferring, reconciling, or collection of amounts
charged, debited, or otherwise paid using a debit, credit or
other payment card, check, or account number, or by other
payment means;
(ii) the transfer of receivables, accounts or interests
therein; or
(iii) the audit of debit, credit or other payment
information.
(8) State insurance authority.--The term ``State insurance
authority'' means, in the case of any person engaged in
providing insurance, the State insurance authority of the
State in which the person is domiciled.
(9) Consumer.--The term ``consumer'' means an individual
who obtains, from a financial institution, financial products
or services which are to be used primarily for personal,
family, or household purposes, and also means the legal
representative of such an individual.
(10) Joint agreement.--The term ``joint agreement'' means a
formal written contract pursuant to which two or more
financial institutions jointly offer, endorse, or sponsor a
financial product or service, and any payments between the
parties are based on business or profit generated.
SEC. 510. EFFECTIVE DATE.
This subtitle shall take effect 6 months after the date on
which the rules under section 503 are promulgated, except--
(1) to the extent that a later date is specified in such
rules; and
(2) that section 506 shall be effective upon enactment.
The CHAIRMAN. Pursuant to House Resolution 235, the gentleman from
Ohio (Mr. Oxley) and a Member opposed each will control 15 minutes.
Mr. MARKEY. Madam Chairman, I rise to request control of the time in
opposition to the amendment.
The CHAIRMAN. Is the gentleman opposed to the amendment?
Mr. MARKEY. I am in momentary opposition to the amendment.
The CHAIRMAN. The gentleman from Ohio (Mr. Oxley) and the gentleman
from Massachusetts (Mr. Markey) each will control 15 minutes.
The Chair recognizes the gentleman from Ohio (Mr. Oxley).
Mr. OXLEY. Madam Chairman, I yield myself 3 minutes.
Madam Chairman, I want to talk about what the brave new world of
financial services marketplace is going to look like and what it is
going to look like realistically as opposed to some of the scare
stories my colleagues are going to hear from the gentleman from
Massachusetts (Mr. Markey).
Basically, it means more choice of services and products, varied for
the consumer, the joint ventures and, yes, the responsible sharing of
consumer information taking place in the market today.
The reality is, the integrated products and services today's consumer
expects from his or her financial institutions require information
sharing, especially among affiliates. After all, in the eyes of the
consumer, what are affiliates other than different departments of the
same company that they are dealing with.
One can bet, for example, that if a consumer in Ohio, for example,
has a relationship with bank one and is applying for a preapproved
mortgage loan, he expects them to know when he calls that he has a
savings account, a checking account, a car loan, and a CD with them.
The last thing he wants is more government regulation and more forms to
fill out when he is dealing with his own company.
The amendment I offer today with the gentlewoman from Ohio (Ms.
Pryce) and the gentlewoman from New Jersey (Mrs. Roukema) takes a more
realistic, more free market, more consumer friendly approach to the
issue of privacy.
The amendment, I want to make this very clear, requires mandatory
disclosure for the first time of financial institutions' privacy policy
in clear and conspicuous language. The amendment provides an opt-out
provision, enabling consumers who so choose not to have their
confidential financial information disclosed to unaffiliated third
parties.
It includes a prohibition on the sharing of consumer account numbers
to third parties in connection with the marketing of products, thus
addressing concerns regarding third-party telemarketing.
The amendment requires the financial institution regulators to set
and enforce standards for the security of confidential information. An
amendment requires the Secretary of Treasury to do a comprehensive
study on privacy issues as it relates to affiliate structure.
I would point out to the Members this issue of information sharing
within affiliates has had no hearing whatsoever, the Committee on
Banking and Financial Services or in the Committee on Commerce. This
would require a study by the Treasury Department to find out exactly
where the pressure points are.
Madam Chairman, these are strong, new protections for consumer
privacy, unheard of before. It takes a huge step in providing the kind
of privacy for consumers and, at the same time, at the same time,
allowing the efficiencies of the marketplace to work so effectively.
We trust consumers to make those kinds of choices when they are
dealing
[[Page H5311]]
with their financial services company. If they do not like that privacy
policy or they think that they are having their information passed on,
they can simply change companies and vote with their feet.
{time} 2145
That is what this amendment does. We trust the consumer. We think
this is the best approach to privacy. I would ask support of the Oxley
amendment.
Madam Chairman, I reserve the balance of my time.
Mr. MARKEY. Madam Chairman, I yield myself such time as I may
consume.
Madam Chairman, maybe there are Members in this institution and maybe
there are Americans who do not share the same concerns I have about my
financial privacy. When I go to the ATM machine in this building, I go
over and I punch in my four numbers, and then, as the machine spits out
the hundred dollars, I pocket that and out spits a receipt. The receipt
tells me what my balance is.
Now, I do not know about the other people in this Chamber, but I hide
that sheet from the intern or the page who is standing right behind me,
because I do not want them to know what my balance is.
Now, maybe I am different from other people in this room. As a matter
of fact, I do not even throw away that slip in the bucket that is right
there. I walk 10 buckets away, or I pocket it because I do not want
anyone to know what my balance is.
Now, the Oxley amendment makes some progress because it gives an
opportunity for a consumer to block the sale of that information to an
unaffiliated company. That is progress. However, it does not stop
within a bank holding company, if our checking records or any of our
banking records are now affiliated with a new brokerage or a new
insurance or a new telemarketing firm, because in fact the bank holding
company can now be affiliated with a telemarketer. Or, looking earlier
at the Burr amendment, perhaps television stations. Perhaps it will be
CNBC. Perhaps it will be the Drudge Report. They can be affiliated with
anything, anything, potentially. Well, we do not get any protection
because they can share the information with anyone they affiliate with.
So the Oxley amendment does take a step forward, yes. Yes, indeed.
But only when we reach, only when we reach the recommittal motion,
which is coming up in about 15 or 20 minutes, will we get a chance to
close the big loophole. The big loophole. And all I ask of my
colleagues is that while, in fact, the Oxley amendment shuts down sale
to robbers, that is burglars, those outside the bank holding company,
it does not do anything about electronic embezzlers inside the bank
holding company marketing it, not just to its affiliates, but they can
market it because they are affiliates to anyone else in the world. That
is the loophole. We have no privacy.
So the Oxley amendment is a good step forward but with a big loophole
left that the recommittal motion is going to give every Member out here
a chance to vote in a substantive way for, as they will for the health
care provision that the gentleman from California (Mr. Condit) wants
and the redlining provision that the gentlewoman from Texas (Ms.
Jackson-Lee) wants.
But the key here is to understand that at least on this Oxley
amendment, while it is a good step forward, there is another big vote
coming up in about 15 minutes after that, and this is just a preview of
coming attractions that we are going to try to give our colleagues
during the course of this debate on Oxley.
Madam Chairman, I reserve the balance of my time.
Mr. OXLEY. Madam Chairman, I yield 2 minutes to the gentleman from
Louisiana (Mr. Baker), a member of the Committee on Banking and
Financial Services and a subcommittee chair.
Mr. BAKER. Madam Chairman, I thank the gentleman for yielding me this
time.
Madam Chairman, if we listened to the previous speaker's concerns
about security and privacy in today's world, with computers on
everyone's desk at home, computers across this Nation in business at
this moment exchanging billions of pieces of information, we should be
extremely concerned about privacy. I would merely point out, if Al Gore
had not invented the Internet to begin with, we would not be having
this problem tonight.
But let us get to the current state of law. The fact is, if we do not
adopt this amendment and approve this bill there is no privacy
constraints not only on financial institutions but on free enterprise
institutions outside the financial marketplace.
Let us talk about the amendment. What does it do? It says, if someone
is outside the bank, we can no longer give them proprietary private
information of those customers, which does not belong to them. We
cannot sell it to them, we cannot give it to them, we cannot do
anything with it because that is prohibited by this law. First time
ever. Federal law prohibits the use of proprietary financial
institution information to third parties. This is a major step forward.
This kind of reminds me like my first experience in one of those big
grocery stores. As I walked down the aisle I saw jeans for 12 bucks.
First time in my life. That was a big deal. I walked around the corner,
and I saw tires for four-wheelers. My goodness, how did they get here?
I went around the next corner, and I ran into one of these nice ladies,
and she had these little bitty wieners they only give out one at a
time. But they were selling those little wieners in the store, along
with the tires, along with the jeans, along with everything else. I
thought this is amazing. What convenience. And great prices, too.
If we adopt this bill tonight, without the extreme provisions that
the gentleman from Massachusetts (Mr. Markey) proposes, we can have the
same thing in financial services. We can go to one location and we can
buy insurance, we can invest in stocks, we can manage our retirement
fund, all with the ease of dealing with one person and one institution.
What about the small town bank? The guy who runs the small town bank,
he is the loan officer, he is the chief executive officer. He opens up
in the morning; he closes at night. He sells insurance. If we took the
Markey position with technology, that guy would have to have some type
of surgery to split his head because he could not talk to the customer
about two products. It would be prohibited because he would be sharing
information improperly.
Please, this is a good product. It is the right approach. It is the
right time.
Mr. MARKEY. Madam Chairman, I yield 3 minutes to the gentleman from
New York (Mr. LaFalce), the ranking member of the Committee on Banking
and Financial Services.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Madam Chairman, I rise in support of this amendment.
And, first of all, I want to give special thanks to two members from my
staff, Dean Sagar and Tricia Hasten, who worked so hard on this;
Kirsten Johnson from the staff of the gentleman from Minnesota (Mr.
Vento); Kristi from the staff of the gentleman from Texas (Mr. Frost);
and so many other people, the gentlewoman from Ohio (Ms. Pryce) and her
staff, et cetera; the gentleman from Iowa (Mr. Leach) and his staff.
This is a significant advancement with respect to privacy. There is
no question about it. The gentleman from Massachusetts (Mr. Markey) had
two options, to offer an amendment as a substitute for this, and I
think this would have been preferable if we had to choose between the
two; or to offer an amendment that would augment this. In his motion to
recommit he will offer an amendment that will augment this; and,
therefore, we could have the best of both worlds. So I advise my
colleagues of that.
Now, what is good about this? What is excellent about this? Well,
first of all, it creates for the very first time an affirmative and
continuing obligation, a duty on the part of financial institutions to
protect customer information. That does not exist under current law.
I introduced this bill in the last Congress. We were unable to get
it. We did not even get it in the Committee on Banking and Financial
Services' product. We have it in this amendment. This is terrific.
[[Page H5312]]
Further, not only do we create an obligation, we give the financial
regulators the ability to articulate standards that the financial
institutions must meet in order to fulfill that obligation. This, too,
is terrific. I thank my staff. We have opt-out language that was
contained in the amendment of the gentleman from Ohio (Mr. Gillmor).
I introduced a bill to fulfill the challenge that the Comptroller of
the Currency gave when he gave his speech talking about seamy financial
institution practices. To fulfill the challenge of the lawsuit brought
by the Attorney General from Minnesota, the bill would have been not
just an opt-out or an opt-in but an actual prohibition. We have that in
this amendment.
We have a prohibition on the disclosure of account numbers. We
prohibit financial institutions from sharing with unaffiliated parties
any credit card savings and transaction account numbers or other means
of access to such accounts for purposes of marketing to the consumer,
including telemarketing, including direct mail, and including E-mail
marketing.
We have a prohibition on third party resale of private information.
We prohibit unaffiliated third parties that receive confidential
customer information from a financial institution from reselling or
sharing this information with any other unaffiliated parties.
Let us not look a gift horse in the mouth. This is a terrific
amendment. We would not have gotten here without the gentleman from
Washington (Mr. Inslee), we would not have gotten here without the
gentleman from Massachusetts (Mr. Markey), and I thank them for that.
Let us accept this and then let us go forward.
Mr. OXLEY. Madam Chairman, I yield 3 minutes to the gentlewoman from
Ohio (Ms. Pryce), who has done such a wonderful job in leading us in
this effort on privacy.
Ms. PRYCE of Ohio. Madam Chairman, I thank my friend for yielding
this time.
Madam Chairman, let me ask my colleagues if they are tired of their
phone ringing in the middle of dinner only to be solicited for lawn
care service. Are they tired of getting so much junk mail that they
have to empty their trash twice as often as they used to? Are they
tired of their teenagers being solicited for a new credit card every
other week? Are they tired of wondering who in the world is giving out
their addresses and phone numbers to these strangers? Well, I am, and I
am mad as heck about it.
So today I am taking the floor to issue a public service warning to
all of our constituents: ``Mr. and Mrs. America, your personal
financial information may be disclosed by your bank to any Tom, Dick
and Harry without your knowledge and without your consent.''
That is right, America, in all the years of banking law in this
country there are no laws on the book to protect your privacy. Can you
imagine that? That is wrong. It is un-American, it is anti-consumer,
and it has to stop. The privacy amendment being offered here tonight is
a historic precedent to put an end to that.
Now, many of my friends on the other side of the aisle say it is not
perfect or complete enough, but, Madam Chairman, for the first time
ever we will be saying that each financial institution has a legal
obligation to protect the privacy and confidentiality of its customers.
And for the first time ever we will be saying that every financial
institution must adhere to strict standards to ensure the security and
confidentiality of customer records. And for the first time ever we
will require every institution to fully disclose to a customer up front
what their privacy policy is. And perhaps most importantly, for the
first time ever we will require that financial institutions give their
customers a right to just say no to the sharing of what most Americans
hold very, very dear: private information about themselves and their
families.
Madam Chairman, make no mistake, this is a landmark privacy
legislation which was drafted in a bipartisan fashion. And given that
current law gives our constituents no protection whatsoever, and given
that our colleagues in the other body have no privacy protection in
their banking bill whatsoever, and given that last year's version of
this very bill had no privacy protections whatsoever, while customers
are growing more and more troubled by random telemarketing and junk
mail, it is critical we adopt this amendment.
Privacy is a very personal thing. Americans feel very strongly about
protecting it. Let us heed the voice of America. I urge adoption of the
amendment.
Mr. MARKEY. Madam Chairman, I yield 3 minutes to the gentleman from
Washington (Mr. Inslee).
Mr. INSLEE. Madam Chairman, the previous speaker, the gentlewoman
from Ohio (Ms. Pryce), is entirely correct. Americans are sick and
tired of having their personal financial information, their credit
cards, their savings account information given away to telemarketers
and getting those obnoxious calls during dinner time.
{time} 2200
She is right. But they are just as tired of getting those calls from
the affiliates of banks as they are from third parties of banks.
That is why it is imperative to augment the Oxley amendment by the
motion to recommit to make sure that Americans have the right to stop
not only third parties but affiliates from making those calls and
violating their privacy.
Now, if I can share with Members something I learned yesterday and I
think it is important in this debate. The members of the industry have
objected to affiliate coverage of this vital protection, and they have
said that if we do this, the financial system would collapse, there is
simply no way that the banking system could accommodate this reasonable
consumer protection.
Well, guess what? In Minnesota yesterday, a major U.S. bank got
caught with its hand in the cookie jar. They were, in fact, giving away
consumer private financial information. It was being used to telemarket
to consumers. And when they were caught by the Minnesota attorney
general, they said, mea culpa, you got us. We give up. But do my
colleagues know what they agreed to? They agreed to a Minnesota consent
decree, to a judicial order prohibiting sharing with their affiliate
and their third parties because they knew that this could be done.
I am here to say, if it is good enough for the good folks in
Minnesota, it is good enough for everybody across America and the U.S.
Congress ought to be just as progressive and just as effective as the
Minnesota attorney general and we ought to make sure that affiliates
are covered just as well. That is why we have got to pass this motion
to recommit.
Before I sit, we have talked a lot about privacy. I want to commend
the work of the gentleman from Iowa (Chairman Leach) and the gentleman
from New York (Mr. LaFalce) on this program. We have made some
advancement. But we will be sorely, sorely feeling bad when our
consumers look back to tonight and say to me and the gentleman from
Massachusetts (Mr. Markey) and the rest of us, why did we not take care
of the affiliates at the same time we took care of the third parties?
It is our chance to do it tonight. Pass the motion to recommit and
finish the job.
Mr. OXLEY. Madam Chairman, I am pleased to yield 2 minutes to the
gentlewoman from New Jersey (Mrs. Roukema) who has taken great
leadership on this issue and who is the Subcommittee Chair on Financial
Institutions and Consumer Credit.
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Madam Chairman, I thank my colleague the gentleman from
Ohio (Mr. Oxley) for yielding me the time.
Madam Chairman, I have got to say that I am really very pleased by
this debate thus far. I appreciate everything that the gentleman from
New York (Mr. LaFalce) has said. I think that is very constructive. And
certainly I want to commend the gentleman from Ohio (Mr. Oxley) and the
gentlewoman from Ohio (Ms. Pryce) and I think she and the gentleman
from New York (Mr. LaFalce) have greatly strengthened the whole
argument for this by saying this gives us more privacy than under any
law that we have ever had.
This is a giant step in the right direction. But I must also say that
it is
[[Page H5313]]
more than just a start. It is not the whole thing, but it is much more
than just a start. It is literally a foundation for whatever we might
do in the future. But it is a wonderful foundation, a strong
foundation.
I want to say that, as the Chairwoman of the Subcommittee on
Financial Institutions and Consumer Credit, some weeks ago before this
privacy thing erupted, really I had set privacy hearings for July 21
and 22 with the recognition that there are some complexities that are
here that we will have to deal with.
The gentleman from Ohio (Mr. Oxley) pointed out that there is a
report that we are going to be looking for as part of this amendment.
But I want to point out to my colleagues that there are complexities to
privacy and accountability here that have not been completely thought
through.
For example, some may be concerned about the exceptions included in
this bill. But, in my opinion, these exceptions are included to ensure
that everyday transactions like mortgage servicing, securitization of
mortgages, printing of checks can continue under our new financial
system. But there are also exceptions that allow our law enforcement
officials to conduct important investigations relating to public
safety.
This is just another way of saying that this is a wonderful
foundation, more than a small step, in the right direction. It is a
giant step. But we have more to do, and this puts us on the right
direction.
Mr. MARKEY. Madam Chairman, could the Chair tell me how much time is
remaining.
The CHAIRMAN. The gentleman from Massachusetts (Mr. Markey) has 5\1/
2\ minutes remaining. The gentleman from Ohio (Mr. Oxley) has 5 minutes
remaining.
Mr. MARKEY. Madam Chairman, I yield 2 minutes to the gentleman from
Texas (Mr. Barton).
(Mr. BARTON of Texas asked and was given permission to revise and
extend his remarks.)
Mr. BARTON of Texas. Madam Chairman, I want to rise to commend the
distinguished subcommittee chairman for what he has done but to condemn
him for not going as far as he should.
The bill as reported out of the Committee on Banking and Financial
Services had no privacy protection at all. The bill that was reported
out of the Committee on Commerce had privacy provisions that the
gentleman from Massachusetts (Mr. Markey) offered that some people
thought was too inflexible.
I supported the gentleman from Massachusetts (Mr. Markey). I worked
with him and his staff to come up with a modified Markey-Barton-
Dingell-Inslee-Eshoo et al. amendment that we offered to the Committee
on Rules that was not ruled in order.
I remember the old days when we thought that banks should be banks
and insurance companies should be insurance companies and brokers
should be brokers. That was the good ol' days of the 1980s, not the
1940s or 1950s.
Well, tonight we have before us a mega-financial service reform bill
that, according to those that support it, is going to allow companies
to operate through hundreds of subsidiaries and affiliates, hundreds.
The question that I ask this body and the country is: If we are
concerned about the selling and sharing of information to third
parties, should we not be just as concerned about the selling, sharing,
transmitting, or accessing that information inside of these affiliates
if there are going to be dozens or hundreds of these affiliates?
I think that what the gentleman from Ohio (Mr. Oxley) and the
gentlewoman from Ohio (Ms. Pryce) have done is a step in the right
direction. But it is only a step. Until we solve the riddle of handling
information within the affiliates structure, we do not have privacy. We
do not have privacy.
So I will vote for the amendment because it is a step in the right
direction, but I will vote against final passage until we get this
issue settled. It is not going to go away. We need to address it.
The debate this evening on the floor is good. I commend the gentleman
from Massachusetts (Mr. Markey) and the gentleman from New York (Mr.
LaFalce) and the gentleman from Ohio (Mr. Leach) and the gentleman from
Ohio (Mr. Oxley) and the gentlewoman from Ohio (Ms. Pryce) and others
for bringing the debate to the country. But the ultimate solution is
not Oxley-Pryce. We need to go further.
Mr. OXLEY. Madam Chairman, I am pleased to yield 1 minute to the
gentleman from Ohio (Mr. Gillmor) who has been one of the leaders on
the Committee on Commerce on the banking provisions, as well as the
privacy provisions.
(Mr. GILLMOR asked and was given permission to revise and extend his
remarks.)
Mr. GILLMOR. Madam Chairman, I want to commend the chairman for his
leadership on the privacy issue. This amendment is an important step in
protecting individual privacy. It protects it by regulating the
disclosure and the sharing of consumer information by financial
institutions.
It contains a number of the elements that were in an amendment that I
offered in the Committee on Commerce, and the Committee on Commerce did
adopt those provisions but it is not in the version before us.
Consumers feel they have lost control over how their financial
information is being collected, how it is being distributed by
institutions having nothing to do with the financial relations they
have with those providers.
Personal information is much more accessible now, even without the
person whose privacy is invaded knowing it is being invaded. The sale
and transfer of that information is both widespread and it is growing.
And the simple reason is the astonishing growth in technology today and
information gathering and the human benefits the tremendous benefits we
get from that also carry with them unprecedented threats to personal
privacy and personal privacy need protection because it is an important
part of individual freedom.
I urge support of the amendment.
Mr. MARKEY. Madam Chairman, I yield such time as he may consume to
the gentleman from Texas (Mr. Frost).
(Mr. FROST asked and was given permission to revise and extend his
remarks.)
Mr. FROST. Madam Chairman, I rise in support of the Oxley amendment.
Mr. MARKEY. Madam Chairman, I yield such time as he may consume to
the gentleman from Minnesota (Mr. Vento).
(Mr. VENTO asked and was given permission to revise and extend his
remarks.)
Madam Chairman, I rise in support of the comprehensive privacy
amendment. I believe that this amendment improves the bill by providing
consumers with new important safeguards for their financial privacy.
Public concerns about personal information privacy are growing.
Seemingly each week, there are new reports of stolen identities,
selling of consumer financial data, ``cookies'' on Internet sites,
hijacked ATM cards and numbers. Both the Banking Committee and the
Commerce Committee, for the first time, addressed consumer privacy in
H.R. 10. During the Banking Committee debate on this issue, I stated
that the issue of privacy is even bigger than the financial services
modernization bill. While it is appropriate to insure that adequate
privacy safeguards are in place to protect consumer privacy in the new
financial marketplace, this legislation is not the vehicle to address
an all embracing comprehensive privacy legislation. This bill will not
stop identity theft. It will not stop the stealing of Social Security
numbers nor the filing of false tax returns. H.R. 10 will not stop the
selling of driver's license information or the selling of its lists or
attaching cookies to visitors to web sites. Nor will this bill stop the
diversion of an individual's mail nor the stealing of credit card and
ATM numbers. Those issues are left for another day and future action.
H.R. 10 should contain a privacy protection component as it relates
to financial institutions. That component should not just be a
rhetorical statement, it must be a workable safeguard for consumers.
The financial privacy protection amendment pending before the Committee
is better than the Banking and Commerce Committee alternatives. It is a
good, workable product that will serve our constituents well. The
Financial Privacy Protection amendment reinforces the opt-out for third
party information sharing--a key consumer concern. More importantly,
the amendment puts in place strong affirmative provisions of law that
provide absolute protections and benefits for consumers.
Those provisions include:
Affirmative privacy responsibility and policy.--Banks, insurance
companies, credit unions, security firms, mutual funds, thrifts and
[[Page H5314]]
other financial institutions will be required by law to be respect for
consumer's financial privacy and to have a privacy policy that meets
federal standards to protect the security and confidentiality of the
customers personal information.
Prohibition on sharing account numbers.--Consumer account numbers
cannot be shared for the purposes of third party marketing. This
protection applies to all consumers and requires no action on their
part.
Workable ``Opt-Out'' on third party information sharing.--Consumers
can ``opt-out'' of sharing of information with third parties in a
workable fashion that protects consumers' privacy while allowing the
processing of services they request.
Effective regulatory authority.--Regulatory and enforcement authority
is provided to the specific regulators of each type of financial
institutions. These regulators can best do the job instead of the
alternative single regulator who is understaffed and supports privacy
``self-regulation'' for the industry it is currently charged to
regulate.
Prohibits repackaging of consumer information.--Consumer information
remains protected. It cannot be resold or shared by third parties or
profiled or repackaged to avoid privacy protections.
Consumer disclosure.--Consumers must be notified of the financial
institutions' privacy policy at the time that they open an account and
at least annually thereafter.
These common sense, workable provisions will be added to the
substantial protections already included in H.R. 10 that prohibit
obtaining customer information through false pretenses and disclosing a
consumer's health and medical information.
In addition, the legislation clearly defines what is ``publicly
available information''. This definition is designed to insure that
non-public information is not disseminated through a public information
loophole. Under the amendment, which I helped to draft, publicly
available information is intended to include information such as:
Public records from country or municipal sources, such as tax
assessors' offices, recorders of deeds, tax collectors, planning
departments and court systems;
Public records from state sources, such as planning agencies,
secretaries of state, revenue agencies, departments of motor vehicles,
state courts, departments of education, departments of forestry,
environmental reporting agencies and employment security agencies;
Public records from federal sources, such as federal courts, the IRS,
FEMA, the USGS, FCC, FAA, U.S. Post Office and Census Bureau; and
Public information from Journals, newspapers and other publications.
I do not take a back seat to any Member when it comes to consumer
rights and consumer privacy. I have worked to protect consumer privacy
through laws like Truth in Lending, Fair Credit Reporting Act and the
Electronic Fund Transfer Act. I also introduced one of the first
proposals to protect a consumer's privacy on the Internet, the Consumer
Internet Privacy Protection Act.
During the Banking Committee mark-up, I introduced an amendment that
would have provided an annual opt-out on affiliate sharing. I withdrew
that amendment because I realized that it was unworkable. Other
advocates of the opt-out are to date not dissuaded by the problems.
Consumer privacy is not insured and consumer services are reduced.
Unified statements cannot be issued and something as simple as calling
to get an account balance will become a bureaucratic nightmare. The
only thing that an affiliate opt-out amendment accomplishes is to
require financial institutions to restructure themselves to conform to
the cookie cutter mold developed by Congress.
A law that requires consumer action is appropriate but third party
and affiliate ``opt-out'' is hardly the last word in consumer rights.
The fact is that a number of consumers have such a right today under
FCRA or institution policies. Even with that authority, only a small
fraction of individuals, less than 1 percent, exercise that option.
Consumer choice is nice but what does it really accomplish--what is the
bottom line.
Another deficiency of the alternative proposal is the regulator. That
approach gives enforcement authority to the Federal Trade Commission as
opposed to the appropriate regulator for each financial institution.
This is the same regulator who testified last year before the House
Commerce Subcommittee on Telecommunications on Internet privacy. At
that time, FTC Chairman Pitofsky testified that: ``The Commission
believes that self-regulation is preferred to a detailed legislative
mandate . . .'' We should not turn over such an important enforcement
authority to such a reluctant regulator.
Madam Chairman, I urge my Colleagues to support the pending
amendment. If we are to pass financial modernization, strong consumer
privacy protection must be a cornerstone of that proposal. The pending
amendment helps us to achieve that goal.
Mr. MARKEY. Madam Chairman, I yield myself the balance of the time.
Madam Chairman, the Oxley amendment is a good step forward. We will
concede that. But it has huge loopholes in the law that it does not
close.
As soon as we finish this debate on the Oxley amendment, we are going
to have an opportunity to vote on a recommital motion. Within that
recommital motion, each Member out here on the floor will have a
straight shot to vote on the provisions that the Committee on Rules did
not give the Members a chance to vote on.
They will have a chance to vote on the Condit amendment. The
gentleman from California (Mr. Condit) and the gentleman from
California (Mr. Waxman) have a proposal that will close all the medical
loopholes. It will ensure that your medical information cannot be given
away. It will guarantee that the exceptions that are inside of this
bill that swallow the rule do not allow for families across this
country to have their medical information sold and bought as though it
was just an ordinary commodity.
Every Member on the floor in the recommital motion will also be put
on substantive record on the issue of financial privacy within the
holding company. That is, if they have all of their checks inside of a
bank right now and they do not want them to give it over to a
telemarketing affiliate, they do not want them to give it over to the
brokerage affiliate, they do not want them to hand it over to the
insurance affiliate, they cannot say no. They have no right to say no
under the Republican bill.
In the recommital motion, each Member is going to be given an
opportunity to say to every American, I think you should have the right
to say no. I do not want any of my children's privacy compromised. I do
not want my family's privacy compromised. I do not want the medical
secret of my family out on the street just because it happens to be a
bank holding company that owns the insurance policy, the checks, or the
brokerage account and they have a marketing affiliate that sells my
privacy like it is a commodity to hundreds of companies that are dying
to find out everything that is going on within my State.
So we are going to give everyone an opportunity in that recommital
motion, and we are going to throw in the Lee redlining as well as the
third little provision. That is only going to be a 5-minute debate
altogether. But when my colleagues vote on it, they are going on record
on those issues. Because if it is successful, it goes into the bill
immediately, and we are voting final passage. And if my colleagues vote
no, this bill is leaving here with every one on record against medical
privacy and against the financial privacy provision that ensures that
the bank holding company and its telemarketing subsidiary, its
affiliate, cannot just take all their secrets and sell them to the rest
of the world and make millions of dollars.
Yes, they call it a synergy, by the way, a synergy. But we are trying
to take the sin out of the synergy. We are trying to make sure that
they get the benefits of all these products, they can say yes if they
want them, but they can say no as well. That is what this is all about.
It does not stop any bank from trying to get them to buy these
products. What it says is they have a right to say, no, I do not want
this. I want the checking account, that is it. Please do not sell the
rest of the material to anyone else.
So the Oxley amendment is something that should be supported. I think
we will all support it unanimously on this side. But the big vote is
coming up in about 10 more minutes.
Mr. OXLEY. Madam Chairman, I am pleased to yield 1 minute to the
gentlewoman from Oregon (Ms. Hooley).
Ms. HOOLEY of Oregon. Madam Chairman, I thank the gentleman for
yielding me the time.
Madam Chairman, I am pleased to support this amendment. It has a
strong bipartisan protection for consumers. I know there is some honest
disagreement between my colleagues on this very important issue of
privacy. But what I would like to do is urge my colleagues to look at
what is in this amendment, not what is missing.
My constituents of my district have told me time and time again that
they
[[Page H5315]]
do not want their names and permanent information sold to companies
they have never heard of. If we pass this Oxley amendment, consumers
will be able to tell their banks; no, I do not want my name sold; no, I
do not want you to share information with third parties.
Madam Chairman, this amendment takes us much further than I ever
dreamt that we would go in strengthening current laws creating new and
effective protections for consumers on privacy. Most of all, it has
meaningful enforcement language. I urge its passage.
{time} 2215
Mr. OXLEY. Madam Chairman, I yield 2 minutes to the gentleman from
California (Mr. Dreier), the chairman of the Committee on Rules.
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Madam Chairman, I rise in strong support of this
amendment. I would like to begin by not only congratulating the
gentleman from Ohio (Mr. Oxley) but, of course, my colleague on the
second row here who worked long and hard as a member of the Committee
on Rules and, yes, I want to even congratulate, we have once again made
this a bipartisan effort, when I heard the word ``terrific'' used three
times by my friend the gentleman from New York (Mr. LaFalce), and I
know that we will see very broad bipartisan support for what is I think
a very important measure.
We are all appalled at the thought of telemarketers getting access to
information. We all want to do everything that we can to stop that. In
fact, the base text of this bill has the strongest consumer privacy
protection we have ever had. But guess what? This amendment, that we
are all going to be, I hope, overwhelmingly supporting based on the
statements that I have been hearing, will be even tougher. The fact of
the matter is this is a very balanced compromise. Why? Because privacy
is a first priority. That is what it is that the American people want.
But there are some other demands that they have. They also demand low
cost and integrated financial products and services, they demand on-
line banking and brokerage services, and they demand protection against
financial fraud. Quite frankly to meet these demands, all of these
demands, affiliates have to be able to share some information. That is
why I am convinced that this now bipartisan effort which has seen many
Members involved is in fact the balance that is needed for us to deal
with the issue of privacy as well as meeting consumer demands.
I encourage my colleagues to support it.
Mr. OXLEY. Madam Chairman, I yield myself the balance of my time.
The CHAIRMAN. The gentleman from Ohio is recognized for 1 minute.
Mr. OXLEY. Madam Chairman, let me reiterate to the Members. Under the
Oxley amendment, for the first time we are requiring financial services
organizations to actually have a privacy policy. It has to be printed,
it has to be explained to the customer, the customer has an opportunity
to understand exactly what that privacy policy is. It never happened
before until this amendment becomes law.
Secondly, now that the consumer who is working with this affiliate
company understands that policy, he may or may not decide to continue
to do business with that company. If he is so concerned that the
company he is dealing with is going to be selling that information or
leaking that information to other parts of the affiliate, he is going
to vote with his feet, he is going to act like an educated consumer, to
quote a famous line from Sy Syms. He is going to be an educated
consumer, and he is going to go someplace else where his privacy is
going to be protected. That is the marketplace working very
effectively, I would say to my friend from Massachusetts, not some
statute that ties up these financial institutions, costs them millions
and millions of dollars which is going to be passed on to the consumer
ultimately and is going to be less and less efficient.
This is the product that was worked on in a bipartisan way. I ask the
Members to support the amendment.
Ms. JACKSON-LEE of Texas. Madam Chairman, I rise in support of the
Oxley/Pryce/Roukema amendment because it requires financial
institutions to respect the privacy of its customers. This is a basic
consumer protection and I urge my colleagues to support this amendment.
The provisions of this amendment include basic consumer privacy
protections. It requires an ``affirmative and continuing obligation''
to protect customer's personal information.
This amendment requires regulatory standards to insure security and
confidentiality of customer records to protect against unauthorized
access and use. With recent advances in technology, there is the
possibility that a computer hacker can break into a bank's computer
system and access personal account information.
This amendment requires that consumers be given the opportunity to
opt-out of the disclosure of their private information with
unaffiliated third parties. It also prohibits unaffiliated third
parties that receive confidential customer information from sharing
that information with any other unaffiliated parties.
Another important provision in this amendment requires that all
financial institutions disclose their policies and practices for
collecting customer information. All customers should have notice of
these policies in advance.
Customers should also have advance knowledge of policies that protect
their confidential information and the policies that prevent that
information from being shared with unaffiliated parties. Advance
knowledge of these policies not only protect the consumer, but it also
protects the financial institution.
This amendment prohibits financial institutions from sharing credit
card, savings and transaction account numbers for purposes of marketing
to the consumer. This account information is especially sensitive and
should be kept as confidential as possible.
These are common sense provisions that protect Americans who are
sincerely concerned about privacy. These days, many companies have
access to information about our spending and saving habits because of
lax privacy laws that only make consumers vulnerable. However, I am
looking forward to ensuring greater consumer protection as it relates
to privacy issues--including medical records privacy--as this
legislation moves to conference.
I am concerned that this amendment will allow financial institutions
to share consumer information through their affiliates without
restriction. However, this amendment is an important first step to
ensuring a marginal level of privacy for consumers.I support the
provisions in this amendment and I urge my colleagues to vote for its
passage.
Mrs. MALONEY of New York. Madam Chairman, last year H.R. 10 passed
this Chamber by one vote. In that version of Financial Modernization,
there were no privacy provisions. This year things have changed. There
are privacy provisions in the base text and there is this amendment
which, if adopted, will make this one of the strongest privacy bills to
involve the financial services industry.
I would like to thank all of the members who have worked on crafting
this amendment, including Representatives Frost, LaFalce, Pryce, and
Oxley. A few days ago I submitted to this informal privacy working
group a suggested amendment. My proposal would make certain that if an
affiliate in a holding company were sold to another entity, only the
information about their own customers could be transferred. No
information about customers in the original holding company are allowed
to be shared with the sold entity's new affiliates unless they were
already a customer. This is an important privacy protection and I was
pleased that the authors agreed to add it into this amendment.
Perhaps the most important part of this amendment are the strong
disclosure provisions. This bill requires financial institutions to
annually disclose to their customers their policies practices for
collecting and protecting the customer's private information. Financial
Modernization means more choices for consumers, and part of that choice
should include the privacy policies of the firm which is trying to
attract their business. If a customer is unsatisfied with a privacy
policy of a firm, they can choose another. But this form of competition
only works with strong disclosure requirements.
This amendment will also prohibit financial institutions from
reselling a consumer's private information to a third party and will
prohibit them also from sharing a customer's account numbers in order
to market to that customer. This should prevent many of those unwanted
telemarketing calls resulting from a relationship with a bank or other
financial firm.
There are still some problems with the base text, including the
problems with the privacy of medical information. But I am pleased with
the colloquy between Mr. Ganske and Mr. LaFalce and I am confident that
these issues will be worked out in conference.
These are the best privacy provisions to ever appear in a draft of
H.R. 10 and I am supportive of this effort. To be sure, during this
debate many good issues have been raised about these privacy issues.
Chairman
[[Page H5316]]
Leach has announced hearings on privacy for the end of July and I am
sure the Banking Committee will continue to examine the issue and
consider appropriate legislation.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Ohio (Mr. Oxley).
The question was taken; and the Chairman announced that the ayes
appeared to have it.
Mr. OXLEY. Madam Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 235, further proceedings
on the amendment offered by the gentleman from Ohio (Mr. Oxley) will be
postponed.
Sequential Votes Postponed in Committee of the Whole
The CHAIRMAN. Pursuant to House Resolution 235, proceedings will now
resume on those amendments on which further proceedings were postponed
in the following order: Amendment No. 10 offered by the gentleman from
Virginia (Mr. Bliley); amendment No. 11 offered by the gentleman from
Ohio (Mr. Oxley).
The Chair will reduce to 5 minutes the time for the second electronic
vote in this series.
Amendment No. 10 Offered by Mr. Bliley
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment offered by the gentleman from Virginia (Mr. Bliley) on
which further proceedings were postponed and on which the noes
prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 226,
noes 203, not voting 5, as follows:
[Roll No. 273]
AYES--226
Aderholt
Archer
Armey
Bachus
Baker
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bilbray
Bilirakis
Bliley
Blunt
Boehner
Bonilla
Bono
Boucher
Brady (TX)
Brown (OH)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Castle
Chabot
Chambliss
Coble
Coburn
Collins
Combest
Cook
Cooksey
Cox
Cramer
Crane
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeGette
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dingell
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ewing
Fletcher
Forbes
Fowler
Franks (NJ)
Frelinghuysen
Gallegly
Ganske
Gekas
Gillmor
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jenkins
John
Johnson (CT)
Johnson, Sam
Kasich
Kelly
Kildee
King (NY)
Kingston
Knollenberg
Kuykendall
LaHood
Largent
Latham
LaTourette
Lazio
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
McCollum
McCrery
McInnis
McIntosh
McIntyre
McKeon
Metcalf
Miller (FL)
Miller, Gary
Moran (KS)
Myrick
Nethercutt
Ney
Northup
Norwood
Ose
Oxley
Packard
Pallone
Pease
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Reynolds
Riley
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Salmon
Sanford
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Spence
Stearns
Strickland
Stump
Sununu
Talent
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Toomey
Towns
Traficant
Upton
Vitter
Walden
Wamp
Watkins
Watts (OK)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)
NOES--203
Abercrombie
Ackerman
Allen
Andrews
Baird
Baldacci
Baldwin
Barcia
Barrett (WI)
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bishop
Blagojevich
Blumenauer
Boehlert
Bonior
Borski
Boswell
Boyd
Brady (PA)
Brown (FL)
Capuano
Cardin
Carson
Chenoweth
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (IL)
DeFazio
Delahunt
DeLauro
Dicks
Dixon
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Foley
Ford
Frank (MA)
Frost
Gejdenson
Gephardt
Gibbons
Gilchrest
Gilman
Gonzalez
Gordon
Gutierrez
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Hooley
Hoyer
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kennedy
Kilpatrick
Kind (WI)
Kleczka
Klink
Kolbe
Kucinich
LaFalce
Lampson
Lantos
Larson
Leach
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Luther
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McHugh
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Mica
Millender-McDonald
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (VA)
Morella
Murtha
Nadler
Napolitano
Neal
Nussle
Oberstar
Obey
Olver
Ortiz
Owens
Pascrell
Pastor
Paul
Payne
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Rothman
Roybal-Allard
Rush
Ryun (KS)
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Scott
Serrano
Skelton
Slaughter
Smith (WA)
Snyder
Spratt
Stabenow
Stark
Stenholm
Stupak
Sweeney
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Turner
Udall (CO)
Udall (NM)
Velazquez
Vento
Visclosky
Walsh
Waters
Watt (NC)
Waxman
Weiner
Weldon (FL)
Wexler
Weygand
Wise
Woolsey
Wu
Wynn
NOT VOTING--5
Brown (CA)
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2240
Messrs. MOAKLEY, McHUGH and JONES of North Carolina changed their
vote from ``aye'' to ``no.''
Messrs. DAVIS of Florida, VITTER, BROWN of Ohio and DEUTSCH changed
their vote from ``no'' to ``aye.''
So the amendment was agreed to.
The result of the vote was announced as above recorded.
Announcement By The Chairman
The CHAIRMAN. Pursuant to House Resolution 235, the Chair announces
that she will reduce to a minimum of 5 minutes the period of time
within which a vote by electronic device will be taken on the
additional amendment on which the Chair has postponed further
proceedings.
Amendment No. 11 Offered By Mr. Oxley
The CHAIRMAN. The pending business is the demand for a recorded vote
on Amendment No. 11 offered by the gentleman from Ohio (Mr. Oxley) on
which further proceedings were postponed and on which the ayes
prevailed by voice vote.
The Clerk will designate the amendment.
The Clerk designated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 427,
noes 1, not voting 6, as follows:
[Roll No. 274]
AYES--427
Abercrombie
Ackerman
Aderholt
Allen
Andrews
Archer
Armey
Bachus
Baird
Baker
Baldacci
Baldwin
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bonior
Bono
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Capuano
Cardin
Carson
Castle
[[Page H5317]]
Chabot
Chambliss
Chenoweth
Clay
Clayton
Clement
Clyburn
Coble
Coburn
Collins
Combest
Condit
Conyers
Cook
Cooksey
Costello
Cox
Coyne
Cramer
Crane
Crowley
Cubin
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeFazio
DeGette
Delahunt
DeLauro
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Edwards
Ehlers
Ehrlich
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Ewing
Farr
Fattah
Filner
Fletcher
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hilliard
Hinchey
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
Kuykendall
LaFalce
LaHood
Lampson
Lantos
Largent
Larson
Latham
LaTourette
Lazio
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Luther
Maloney (CT)
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McHugh
McInnis
McIntosh
McIntyre
McKeon
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Metcalf
Mica
Millender-McDonald
Miller (FL)
Miller, Gary
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Nadler
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Obey
Olver
Ortiz
Ose
Owens
Oxley
Packard
Pallone
Pascrell
Pastor
Payne
Pease
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Rivers
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Royce
Rush
Ryan (WI)
Ryun (KS)
Sabo
Salmon
Sanchez
Sanders
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaffer
Schakowsky
Scott
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stark
Stearns
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Tierney
Toomey
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Vitter
Walden
Wamp
Waters
Watkins
Watt (NC)
Watts (OK)
Waxman
Weiner
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
Whitfield
Wicker
Wilson
Wise
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)
NOES--1
Paul
NOT VOTING--6
Brown (CA)
Fossella
Green (TX)
Lipinski
Pelosi
Walsh
{time} 2249
So the amendment was agreed to.
The result of the vote was announced as above recorded.
The CHAIRMAN. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker having resumed the
chair, Mrs. Emerson, Chairman of the Committee of the Whole House on
the State of the Union, reported that that Committee, having had under
consideration the bill (H.R. 10) to enhance competition in the
financial services industry by providing a prudential framework for the
affiliation of banks, securities firms, and other financial service
providers, and for other purposes, pursuant to House Resolution 235,
she reported the bill back to the House with an amendment adopted by
the Committee of the Whole.
The SPEAKER. Under the rule, the previous question is ordered.
Is a separate vote demanded on any amendment to the amendment in the
nature of a substitute adopted by the Committee of the Whole? If not,
the question is on the amendment.
The amendment was agreed to.
The SPEAKER. The question is on the engrossment and the third reading
of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. Markey
Mr. MARKEY. Mr. Speaker, I offer a motion to recommit with
instructions.
The SPEAKER. Is the gentleman from Massachusetts opposed to the bill?
Mr. MARKEY. Yes, I am opposed to the bill in its current form, Mr.
Speaker.
The SPEAKER. The Clerk will report the motion to recommit.
The Clerk read as follows:
Mr. Markey of Massachusetts moves to recommit the bill H.R.
10 to the Committee on Banking and Financial Services with
instructions to report the same to the House forthwith with
the following amendments:
Page 9, after line 19, insert the following new
subparagraph (and redesignate the subsequent subparagraph
accordingly):
``(D) In the case of any bank holding company which
underwrites or sells, or any affiliate of which underwrites
or sells, annuities contracts or contracts insuring,
guaranteeing, or indemnifying against loss, harm, damage,
illness, disability, or death--
``(i) the company or affiliate has not been adjudicated in
any Federal court, and has not entered into a consent decree
filed in a Federal court or into a settlement agreement,
premised upon a violation of the Fair Housing Act for the
activities described in this subparagraph;
``(ii) if such company or affiliate has entered into any
such consent decree or settlement agreement, the company or
the affiliate is not in violation of the decree or settlement
agreement as determined by a court of competent jurisdiction
or the agency with which the decree or agreement was entered
into; or
``(iii) the company has been exempted from the requirements
of clauses (i) and (ii) by the Board under paragraph (4).
Page 9, line 24, strike ``and (C)'' and insert ``(C), and
(D)''.
Page 10, line 15, strike ``(1)(D)'' and insert ``(1)(E)''.
Page 11, after line 4, insert the following new paragraph:
``(4) Violations of the fair housing act.--The Board may,
on a case-by-case basis, exempt a bank holding company from
meeting the requirements of clauses (i) and (ii) of paragraph
(1)(D).
Page 25, line 2, strike ``or (C)'' and insert ``(C), or
(D)''.
Page 26, line 18, strike ``(B) or (C)'' and insert ``(B),
(C), or (D)''.
Page 84, line 18, strike ``(1)(D)'' and insert ``(1)(E)''.
Page 184, line 17, strike ``(1)(D)'' and insert ``(1)(E)''.
Page 370, beginning on line 20, strike subtitle D of title
III through page 373, line 17 (and conform the table of
contents accordingly).
Strike title V and insert the following (and conform the
table of contents accordingly):
TITLE V--PRIVACY OF CONSUMER INFORMATION
Subtitle A--Disclosure of Nonpublic Personal Information
SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.
(a) Privacy Obligation Policy.--It is the policy of the
Congress that each financial institution has an affirmative
and continuing obligation to respect the privacy of its
customers and to protect the security and confidentiality of
those customers' nonpublic personal information.
(b) Financial Institutions Safeguards.--In furtherance of
the policy in subsection (a), each Federal functional
regulator shall establish appropriate standards for the
financial institutions subject to their jurisdiction, and the
Commission shall establish such standards for any financial
institutions not subject to such jurisdiction, relating to
administrative, technical, and physical safeguards--
(1) to insure the security and confidentiality of customer
records and information;
(2) to protect against any anticipated threats or hazards
to the security or integrity of such records; and
(3) to protect against unauthorized access to or use of
such records or information which could result in substantial
harm or inconvenience to any customer.
SEC. 502. OBLIGATIONS WITH RESPECT TO PERSONAL INFORMATION.
(a) General Requirements.--Except as otherwise provided in
this subtitle, a financial institution may not, directly or
through
[[Page H5318]]
any affiliate, disclose or make an unrelated use of any
nonpublic personal information collected by the financial
institution in connection with any transaction with a
consumer in any financial product or any financial service,
unless--
(1) such financial institution provides or has provided to
the consumer a notice that complies with section 503 and the
rules thereunder; and
(2) such financial institution maintains procedures to
protect the confidentiality and security of nonpublic
personal information.
(b) Opt-Out Required for Information Transfers.--
(1) Opportunity to object required.--The Commission shall
by rule prohibit a financial institution from making
available any nonpublic personal information to any affiliate
of the institution, or to any other person that is not an
affiliate of the institution, unless the consumer to whom the
information pertains--
(A) is given the opportunity in accordance with such rule
to object to the transfer of such information; and
(B) does not object, or withdraws the objection.
(2) Flexibility of form.--A financial institution may, in
complying with paragraph (1), present the opportunity to
object in a manner that permits the consumer to object--
(A)(i) with respect to both affiliates and nonaffiliated
persons;
(ii) separately with respect to affiliates generally and
nonaffiliated persons generally; or
(iii) separately with respect to specified affiliates and
nonaffiliated persons; and
(B) separately with respect to specified financial and
nonfinancial products and services that may be offered to the
consumer.
(c) Access to and Correction of Information Vended to Third
Parties.--
(1) Rule required.--The Commission shall by rule require a
financial institution that, for any consideration, makes
available nonpublic personal information collected by the
financial institution in connection with any transaction with
a consumer in any financial product or any financial service
to any person or entity other than an employee or agent of
such institution, an affiliate of such institution, or an
employee or agent of such affiliate, to afford that
consumer--
(A) the opportunity to examine, upon request, the nonpublic
personal information that was so made available; and
(B) the opportunity to dispute the accuracy of any of such
information, and to present evidence thereon.
(2) Exception for proprietary information.--The rule
required by paragraph (1) shall not require a financial
institution to afford a customer who requests access to the
nonpublic personal information that was made available the
opportunity to examine or dispute any data obtained by any
analysis or evaluation performed using such information, or
to examine or dispute the methodology of such analysis or
evaluation.
(d) Limitations on the Sharing of Account Number
Information for Marketing Purposes.--A financial institution
shall not disclose an account number or similar form of
access number or access code for a credit card account,
deposit account, or transaction account of a consumer to any
nonaffiliated third party for use in telemarketing, direct
mail marketing, or other marketing through electronic mail to
the consumer.
(e) General Exceptions.--Subsections (a) and (b) shall not
prohibit the disclosing of nonpublic personal information,
the making of an unrelated use of such information, or the
making available of such information to affiliates or other
persons by the financial institution--
(1) as necessary to effect, administer, or enforce the
transaction or a related transaction;
(2) with the consent or at the direction of the consumer;
(3) as necessary to protect the confidentiality or security
of its records pertaining to the consumer, the financial
service or financial product, or the transaction therein;
(4) as necessary to take precautions against liability or
to protect against or prevent actual or potential fraud,
unauthorized transactions, claims, or other liability;
(5) as necessary to respond to judicial process;
(6) to the extent permitted or required under other
provisions of law and in accordance with the Right to
Financial Privacy Act of 1974, to provide information to law
enforcement agencies (including a functional regulator, a
State insurance authority, or the Commission) or for an
investigation on a matter related to public safety;
(7) to a consumer reporting agency in accordance with title
VI of the Consumer Credit Protection Act;
(8) in executing a sale or exchange whereby the financial
institution transfers to another financial institution or
other person the business unit or operation, or substantially
all the assets of the business unit or operation, with which
the customer's transactions were effected; or
(9) in connection with a proposed or actual securitization,
secondary market sale or similar commercial transaction;
(10) for reinsurance purposes.
SEC. 503. NOTICE CONCERNING DISCLOSING INFORMATION.
(a) Rule Required.--The Commission shall, after
consultation with the Federal functional regulators and one
or more representatives of State insurance regulators,
prescribe rules in accordance with this section to prohibit
unfair and deceptive acts and practices in connection with
the disclosing of nonpublic personal information or with
making unrelated uses of such information. Such rules shall
require any financial institution, through the use of a form
that complies with the rules prescribed under subsection (b),
to clearly and conspicuously disclose to the consumer--
(1) the categories of nonpublic personal information that
are collected by the financial institution;
(2) the practices and policies of the financial institution
with respect to disclosing nonpublic personal information, or
making unrelated uses of such information, including--
(A) the categories of persons to whom the information is or
may be disclosed or who may be permitted to make unrelated
uses of such information, other than the persons to whom the
information must be provided to effect, administer, or
enforce the transaction; and
(B) the practices and policies of the institution with
respect to disclosing or making unrelated uses of nonpublic
personal information of persons who have ceased to be
customers of the financial institution; and
(3) the policies that the institution maintains to protect
the confidentiality and security of nonpublic personal
information.
(b) Design of Notice Requirements.--In prescribing the form
of a notice for purposes of subsection (a), the Commission
shall ensure that consumers are readily able to compare
differences in the measures that the financial institution
takes, and the policies that the institution has established,
to protect the consumer's privacy as compared to the measures
taken and the policies established by other financial
institutions. Such form shall specifically identify the
rights the institution affords consumers to grant or deny
consent to (1) the disclosing of nonpublic personal
information for any purpose other than as required in order
to effect, administer, or enforce the consumer's transaction,
or (2) the making of an unrelated use of such information.
(c) Additional Contents of Rules; Exemptive Rules.--The
Commission shall, by rule after consultation with the
functional regulators, and may by order--
(1) specify the disclosures and uses of information which,
for purposes of this subtitle and the rules prescribed
thereunder, may be treated as necessary to effect,
administer, or enforce a consumer's transaction with respect
to a variety of financial services and financial products;
(2) specify timing requirements with respect to notices to
new and existing customers, which shall not require notices
more frequently than annually unless there has been a change
in the information required to be disclosed pursuant to
subsection (a); and
(3) provide, consistent with the purposes of this subtitle,
exemptions or temporary waivers to, or delayed effective
dates for, any requirement of this subtitle or the rules
prescribed thereunder.
(d) Exemptive Rules To Permit Efficient Data Storage and
Retrieval.--The exemptive rules prescribed by the Commission
pursuant to subsection (c)(3) shall include such rules as may
be necessary to permit financial institutions and their
affiliates to establish and maintain efficient systems to
collect and access nonpublic personal information in shared
or networked data storage and retrieval facilities that are
implemented in a manner consistent with the requirements of
sections 501 and 502.
(e) Rulemaking Deadline.--The Commission shall initially
prescribe the rules required by this section within one year
after the date of enactment of this Act. Such rules, and any
revisions of such rules, shall be prescribed in accordance
with section 553 of title 5, United States Code.
SEC. 504. ENFORCEMENT.
(a) In general.--Except as provided in subsection (d), this
subtitle and the rules prescribed thereunder shall be
enforced by the Federal Trade Commission under the Federal
Trade Commission Act (15 U.S.C. 41 et seq.).
(b) Actions by the Commission.--The Federal Trade
Commission shall prevent any person from violating this
subtitle and the rules prescribed thereunder in the same
manner, by the same means, and with the same jurisdiction,
powers, and duties as though all applicable terms and
provisions of the Federal Trade Commission Act (15 U.S.C. 41
et seq.) were incorporated into and made a part of this
subtitle, except that notwithstanding section 5(a)(2) of such
Act (15 U.S.C. 45(a)(2)) the Commission shall, for purposes
of this title, have jurisdiction with respect to banks,
savings and loan institutions, and Federal credit unions. Any
person who violates this subtitle or the rules prescribed
thereunder shall be subject to the penalties and entitled to
the privileges and immunities provided in the Federal Trade
Commission Act in the same manner, by the same means, and
with the same jurisdiction, power, and duties as though all
applicable terms and provisions of the Federal Trade
Commission Act were incorporated into and made a part of this
subtitle.
(c) Treatment of Rules.--A rule issued by the Commission
under this title shall be treated as a rule issued under
section 18(a)(1)(B) of the Federal Trade Commission Act (15
U.S.C. 57a(a)(1)(B)).
(d) Regulations Prescribed Under Section501.--The
regulations prescribed under
[[Page H5319]]
section 501 by the Federal functional regulators shall be
enforced by the Federal functional regulators with respect to
financial institutions subject to their jurisdiction under
applicable law, as follows:
(1) Under section 8 of the Federal Deposit Insurance Act,
in the case of--
(A) national banks, Federal branches and Federal agencies
of foreign banks, and any subsidiaries of such entities, by
the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than
national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending
companies owned or controlled by foreign banks, organizations
operating under section 25 or 25A of the Federal Reserve Act,
bank holding companies and their nonbank subsidiaries or
affiliates (except broker-dealers, affiliates providing
insurance, investment companies, and investment advisers), by
the Board of Governors of the Federal Reserve System;
(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System), insured State branches of foreign banks, and any
subsidiaries of such entities, by the Board of Directors of
the Federal Deposit Insurance Corporation; and
(D) savings association the deposits of which are insured
by the Federal Deposit Insurance Corporation, and any
subsidiaries of such a savings association, by the Director
of the Office of Thrift Supervision.
(2) Under the Federal Credit Union Act, by the
Administrator of the National Credit Union Administration
with respect to any Federal or state chartered credit union,
and any subsidiaries of such an entity.
(3) Under the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to the Federal Agricultural
Mortgage Corporation, any Federal land bank, Federal land
bank association, Federal intermediate credit bank, or
production credit association.
(4) Under the Securities Exchange Act of 1934, by the
Securities and Exchange Commission with respect to any
broker-dealer.
(5) Under the Investment Company Act of 1940, by the
Securities and Exchange Commission with respect to investment
companies.
(6) Under the Investment Advisers Act of 1940, by the
Securities and Exchange Commission with respect to investment
advisers registered with the Commission under such Act.
(7) Under Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U. S. C. 4501 et seq.), by the
Office of Federal Housing Enterprise Oversight with respect
to the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.
(8) Under the Federal Home Loan Bank Act, by the Federal
Housing Finance Board with respect to Federal home loan
banks.
SEC. 505. FAIR CREDIT REPORTING ACT AMENDMENT.
(a) Amendment.--Section 621 of the Fair Credit Reporting
Act (15 U.S.C. 1681s) is amended--
(1) in subsection (d), by striking everything following the
end of the second sentence; and
(2) by striking subsection ``(e)'' and inserting in lieu
thereof the following:
``(e) Regulatory Authority.--
``(1) The Federal banking agencies referred to in
paragraphs (1) and (2) of subsection (b) shall jointly
prescribe such regulations as necessary to carry out the
purposes of this Act with respect to any persons identified
under paragraphs (1) and (2) of subsection (b).
``(2) The Administrator of the National Credit Union
Administration shall prescribe such regulations as necessary
to carry out the purposes of this Act with respect to any
persons identified under paragraph (3) of subsection (b).''.
(b) Conforming Amendments.--Section 621 of the Fair Credit
Reporting Act (15 U.S.C. 1681s) is further amended--
(1) by striking paragraph (4) of subsection (a); and
(2) in subsection (b)--
(A) by inserting ``and bank holding companies, and
subsidiaries of bank holding companies other than depository
institutions,'' after ``Federal Reserve Act,'' in paragraph
(1)(B); and
(B) by inserting ``, and savings and loan holding companies
and subsidiaries of savings and loan holding companies''
after ``Insurance Corporation'' in paragraph (2).
SEC. 506. DEFINITIONS.
As used in this subtitle:
(1) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' means--
(A) the Board of Governors of the Federal Reserve System;
(B) the Office of the Comptroller of the Currency;
(C) the Board of Directors of the Federal Deposit Insurance
Corporation;
(D) the Director of the Office of Thrift Supervision;
(E) the National Credit Union Administration Board;
(F) the Farm Credit Administration; and
(G) the Securities and Exchange Commission.
(3) Financial institution.--The term ``financial
institution'' means any institution the business of which is
engaging in financial activities or activities that are
incidental to financial activities, as determined under
section 6(c) of the Bank Holding Company Act of 1956. Such
term, when used in connection with a transaction for a
consumer, means only the financial institution with which the
consumer expects to conduct such transaction and does not
include any affiliate, subsidiary, or contractually-related
party of that financial institution, even if such affiliate,
subsidiary, or party is also a financial institution and
participates in the effecting, administering, or enforcing
such transaction.
(4) Nonpublic personal information.--
(A) The term ``nonpublic personal information'' means
personally identifiable financial information--
(i) provided by a consumer to a financial institution;
(ii) resulting from any transaction with the consumer or
the service performed for the consumer; or
(iii) otherwise obtained by the financial institution.
(B) Such term does not include publicly available
information, as such term is defined by the regulations
prescribed under section 504.
(C) Notwithstanding subparagraph (B), such term shall
include any list, description, or other grouping of consumers
(and publicly available information pertaining to them) that
is derived using any personally identifiable information
other than publicly available information.
(5) Directory information.--The term ``publicly available
directory information'' means subscriber list information
required to be made available for publication pursuant to
section 222(e) of the Communications Act of 1934 (47 U.S.C.
222(3)).
(6) Unrelated use.--The term ``unrelated use'', when used
with respect to information collected by the financial
institution in connection with any transaction with a
consumer in any financial product or any financial service,
means any use other than a use that is necessary to effect,
administer, or enforce such transaction.
(7) Affiliate.--The term ``affiliate'' means any company
that controls, is controlled by, or is under common control
with another company.
(8) Necessary to effect, administer, or enforce.--The
disclosing or use of nonpublic personal information shall be
treated--
(A) as necessary to effect or administer a transaction with
a consumer if the disclosing or use is required, or is one of
the usual and accepted methods, to carry out the transaction
and record and maintain the customer's account in the
ordinary course of providing the financial service or
financial product, and includes--
(i) providing the consumer with a confirmation, statement,
or other record of the transaction, or information on the
status or value of the financial service or financial
product; and
(ii) the accrual or recognition of incentives or bonuses
associated with the transaction that are provided by the
financial institution or any other party;
(B) as necessary to enforce a transaction with a consumer
if the disclosing or use is required, or is one of the lawful
methods, to enforce the rights of the financial institution
or of other persons engaged in carrying out the financial
transaction, or providing the financial product or financial
service; and
(C) as necessary to effect, administer, or enforce a
transaction with a consumer if the disclosure is made in
connection with--
(i) the authorization, settlement, billing, processing,
clearing, transferring, reconciling, or collection of amounts
charged, debited, or otherwise paid using a debit, credit or
other payment card or account number, or by other payment
means;
(ii) the transfer of receivables, accounts or interests
therein; or
(iii) the audit of debit, credit or other payment
information.
The Commission shall, consistent with the purposes of this
subtitle, prescribe by rule actions that shall, in a variety
of financial services, and with respect to a variety of
financial products, be treated as necessary to effect,
administer, or enforce a financial transaction.
(9) Financial services; financial products; transaction;
related transaction.--The Commission shall, consistent with
the purposes of this subtitle, prescribe by rule definitions
of the terms ``financial services'', ``financial products'',
``transaction'', ``related transaction'', and ``unrelated
third party'' for purposes of this subtitle.
SEC. 507. EFFECTIVE DATE.
This subtitle shall take effect one year after the date on
which the Commission prescribes in final form the rules
required by section 503(a), except to the extent that a later
date is specified in such rules.
Subtitle B--Fraudulent Access to Financial Information
SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF
FINANCIAL INSTITUTIONS.
(a) Prohibition on Obtaining Customer Information by False
Pretenses.--It shall be a violation of this subtitle for any
person to obtain or attempt to obtain, or cause to be
disclosed or attempt to cause to be disclosed to any person,
customer information of a financial institution relating to
another person--
(1) by making a false, fictitious, or fraudulent statement
or representation to an officer, employee, or agent of a
financial institution;
[[Page H5320]]
(2) by making a false, fictitious, or fraudulent statement
or representation to a customer of a financial institution;
or
(3) by providing any document to an officer, employee, or
agent of a financial institution, knowing that the document
is forged, counterfeit, lost, or stolen, was fraudulently
obtained, or contains a false, fictitious, or fraudulent
statement or representation.
(b) Prohibition on Solicitation of a Person To Obtain
Customer Information From Financial Institution Under False
Pretenses.--It shall be a violation of this subtitle to
request a person to obtain customer information of a
financial institution, knowing that the person will obtain,
or attempt to obtain, the information from the institution in
any manner described in subsection (a).
(c) Nonapplicability to Law Enforcement Agencies.--No
provision of this section shall be construed so as to prevent
any action by a law enforcement agency, or any officer,
employee, or agent of such agency, to obtain customer
information of a financial institution in connection with the
performance of the official duties of the agency.
(d) Nonapplicability to Financial Institutions in Certain
Cases.--No provision of this section shall be construed so as
to prevent any financial institution, or any officer,
employee, or agent of a financial institution, from obtaining
customer information of such financial institution in the
course of--
(1) testing the security procedures or systems of such
institution for maintaining the confidentiality of customer
information;
(2) investigating allegations of misconduct or negligence
on the part of any officer, employee, or agent of the
financial institution; or
(3) recovering customer information of the financial
institution which was obtained or received by another person
in any manner described in subsection (a) or (b).
(e) Nonapplicability to Insurance Institutions for
Investigation of Insurance Fraud.--No provision of this
section shall be construed so as to prevent any insurance
institution, or any officer, employee, or agency of an
insurance institution, from obtaining information as part of
an insurance investigation into criminal activity, fraud,
material misrepresentation, or material nondisclosure that is
authorized for such institution under State law, regulation,
interpretation, or order.
(f) Nonapplicability to Certain Types of Customer
Information of Financial Institutions.--No provision of this
section shall be construed so as to prevent any person from
obtaining customer information of a financial institution
that otherwise is available as a public record filed pursuant
to the securities laws (as defined in section 3(a)(47) of the
Securities Exchange Act of 1934).
SEC. 522. ADMINISTRATIVE ENFORCEMENT.
(a) Enforcement by Federal Trade Commission.--Compliance
with this subtitle shall be enforced by the Federal Trade
Commission in the same manner and with the same power and
authority as the Commission has under the title VIII, the
Fair Debt Collection Practices Act, to enforce compliance
with such title.
(b) Notice of Actions.--The Federal Trade Commission
shall--
(1) notify the Securities and Exchange Commission whenever
the Federal Trade Commission initiates an investigation with
respect to a financial institution subject to regulation by
the Securities and Exchange Commission;
(2) notify the Federal banking agency (as defined in
section 3(z) of the Federal Deposit Insurance Act) whenever
the Commission initiates an investigation with respect to a
financial institution subject to regulation by such Federal
banking agency; and
(3) notify the appropriate State insurance regulator
whenever the Commission initiates an investigation with
respect to a financial institution subject to regulation by
such regulator.
SEC. 523. CRIMINAL PENALTY.
(a) In General.--Whoever knowingly and intentionally
violates, or knowingly and intentionally attempts to violate,
section 521 shall be fined in accordance with title 18,
United States Code, or imprisoned for not more than 5 years,
or both.
(b) Enhanced Penalty for Aggravated Cases.--Whoever
violates, or attempts to violate, section 521 while violating
another law of the United States or as part of a pattern of
any illegal activity involving more than $100,000 in a 12-
month period shall be fined twice the amount provided in
subsection (b)(3) or (c)(3) (as the case may be) of section
3571 of title 18, United States Code, imprisoned for not more
than 10 years, or both.
SEC. 524. RELATION TO STATE LAWS.
(a) In General.--This subtitle shall not be construed as
superseding, altering, or affecting the statutes,
regulations, orders, or interpretations in effect in any
State, except to the extent that such statutes, regulations,
orders, or interpretations are inconsistent with the
provisions of this subtitle, and then only to the extent of
the inconsistency.
(b) Greater Protection Under State Law.--For purposes of
this section, a State statute, regulation, order, or
interpretation is not inconsistent with the provisions of
this subtitle if the protection such statute, regulation,
order, or interpretation affords any person is greater than
the protection provided under this subtitle as determined by
the Commission, on its own motion or upon the petition of any
interested party.
SEC. 525. AGENCY GUIDANCE.
In furtherance of the objectives of this subtitle, each
Federal banking agency (as defined in section 3(z) of the
Federal Deposit Insurance Act) and the Securities and
Exchange Commission or self-regulatory organizations, as
appropriate, shall review regulations and guidelines
applicable to financial institutions under their respective
jurisdictions and shall prescribe such revisions to such
regulations and guidelines as may be necessary to ensure that
such financial institutions have policies, procedures, and
controls in place to prevent the unauthorized disclosure of
customer financial information and to deter and detect
activities proscribed under section 521.
SEC. 526. REPORTS.
(a) Report to the Congress.--Before the end of the 18-month
period beginning on the date of the enactment of this Act,
the Comptroller General, in consultation with the Federal
Trade Commission, Federal banking agencies, the Securities
and Exchange Commission, appropriate Federal law enforcement
agencies, and appropriate State insurance regulators, shall
submit to the Congress a report on the following:
(1) The efficacy and adequacy of the remedies provided in
this subtitle in addressing attempts to obtain financial
information by fraudulent means or by false pretenses.
(2) Any recommendations for additional legislative or
regulatory action to address threats to the privacy of
financial information created by attempts to obtain
information by fraudulent means or false pretenses.
(b) Annual Report by Administering Agencies.--The Federal
Trade Commission and the Attorney General shall submit to
Congress an annual report on number and disposition of all
enforcement actions taken pursuant to this subtitle.
SEC. 527. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) Customer.--The term ``customer'' means, with respect to
a financial institution, any person (or authorized
representative of a person) to whom the financial institution
provides a product or service, including that of acting as a
fiduciary.
(2) Customer information of a financial institution.--The
term ``customer information of a financial institution''
means any information maintained by or for a financial
institution which is derived from the relationship between
the financial institution and a customer of the financial
institution and is identified with the customer.
(3) Document.--The term ``document'' means any information
in any form.
(4) Financial institution.--
(A) In general.--The term ``financial institution'' means
any institution engaged in the business of providing
financial services to customers who maintain a credit,
deposit, trust, or other financial account or relationship
with the institution.
(B) Certain financial institutions specifically included.--
The term ``financial institution'' includes any depository
institution (as defined in section 19(b)(1)(A) of the Federal
Reserve Act), any broker or dealer, any investment adviser or
investment company, any insurance company, any loan or
finance company, any credit card issuer or operator of a
credit card system, and any consumer reporting agency that
compiles and maintains files on consumers on a nationwide
basis (as defined in section 603(p)).
(C) Securities institutions.--For purposes of subparagraph
(B)--
(i) the terms ``broker'' and ``dealer'' have the meanings
provided in section 3 of the Securities Exchange Act of 1934
(15 U.S.C. 78c);
(ii) the term ``investment adviser'' has the meaning
provided in section 202(a)(11) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a)); and
(iii) the term ``investment company'' has the meaning
provided in section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a-3).
(D) Further definition by regulation.--The Federal Trade
Commission, after consultation with Federal banking agencies
and the Securities and Exchange Commission, may prescribe
regulations clarifying or describing the types of
institutions which shall be treated as financial institutions
for purposes of this subtitle.
Mr. MARKEY (during the reading). Mr. Speaker, I ask unanimous consent
that the motion to recommit be considered as read and printed in the
Record.
The SPEAKER. Is there objection to the request of the gentleman from
Massachusetts?
There was no objection.
The SPEAKER. The gentleman from Massachusetts (Mr. Markey) is
recognized for 5 minutes.
Mr. MARKEY. Mr. Speaker, the recommittal motion that we are going to
vote upon in 10 minutes will contain three elements. It will contain
the amendment of the gentlewoman from California (Ms. Lee) on insurance
redlining, which she won in the Committee on Banking and Financial
Services, but the Committee on Rules would not put in order. It will
include the amendment of the gentleman from California (Mr. Condit) and
the gentleman from California (Mr. Waxman), which ensures that full
medical privacy
[[Page H5321]]
protections are guaranteed. They are not in this bill; and third, that
the financial privacy amendment, which I won in the Committee on
Commerce, but not put in order out here, is also voted upon.
Remember, in the Oxley amendment, telemarketing is prohibited by
unaffiliated companies of a bank holding company but telemarketing of
the financial data is not stopped inside the bank holding company.
We are going to prohibit that tonight in the recommittal motion.
Mr. Speaker, I yield to the gentleman from New York (Mr. LaFalce).
Mr. LaFALCE. Mr. Speaker, when I appeared before the Committee on
Rules yesterday, I said there were a number of corrections or
amendments that should be offered. First of all, I said please restore
a provision that the Committee on Banking and Financial Services
adopted or at least allow us to offer it as an amendment. That dealt
with a prohibition against redlining against an insurance company when
the insurance company wants to affiliate with a bank. That is in the
Markey motion to recommit.
I also said I was very troubled by the Ganske amendment because
although it is extremely well intentioned, the exceptions to it one
could drive a Mack truck through it right now, and it might be
construed as preempting the ability to articulate through regulation
more broad sweeping privacy protections.
Also, at that time, the Markey amendment would have been a substitute
for the excellent privacy provisions that have been worked out in a
bipartisan fashion. I can support the bill but the bill would be
improved tremendously by the motion to recommit.
Mr. MARKEY. Mr. Speaker, I yield to the gentlewoman from California
(Ms. Lee).
Ms. LEE. Mr. Speaker, I thank my colleague, the gentleman from
Massachusetts (Mr. Markey) for yielding and for his consistent hard
work on behalf of our consumers.
Mr. Speaker, I wanted to support a reasonable financial services
modernization bill and I worked very hard with my colleagues to include
important consumer protections and privacy measures as this bill moved
to the floor. Unfortunately, however, the Republicans refused to accept
these amendments, and made matters worse by wiping out an adopted anti-
redling provision to require the insurance industry to comply with the
Fair Housing Act and not discriminate against the poor, minorities and
people who live in neighborhoods redlined by the insurance industry.
We have not allowed banks to discriminate. Why should we allow the
insurance industry to discriminate?
We did not adopt this amendment to stall this bill as one of my
Republican colleagues accused me of earlier. We adopted this amendment
to provide equal opportunity for all Americans. The Committee on Rules,
by whatever unDemocratic means they used in a blatant, arrogant misuse
of their power, deleted this important, agreed-upon amendment. This
overt violation of the legislative process is outrageous and really
should be illegal. It is an example of governmental lawlessness.
Let us restore some integrity to this process and vote for this
motion to recommit
Mr. MARKEY. Mr. Speaker, I yield to the gentleman from California
(Mr. Condit).
Mr. CONDIT. Mr. Speaker, I rise in support of the recommittal motion
and am opposed to H.R. 10. Let me simply just say the reason that I
oppose H.R. 10 and support the motion to recommit is section 351.
This section of the bill should have been deleted. The privacy part
related to medical records is inadequate. It does not have consumer
consent. The definition of the consent under this section on page 371
is too vague. The health research part of the bill creates loopholes
for drug companies and marketing firms. Patients rights, they simply do
not exist; no access to a person's own health records. A person cannot
even get their own records and have control over them. There is no
redress if a person's privacy is violated; no restrictions on third
party entities from disclosing personal information to marketing firms
or other parties.
We ought to do this right on behalf of the American people.
It is important that we do this bill H.R. 10, but it is not more
important than us protecting people's privacy. That should be our main
thrust in this bill is to make sure that the people of this country can
count on us to protect their privacy.
Mr. MARKEY. Mr. Speaker, this is a pure substance vote. These are the
votes the bankers did not want to be taken. The reason they did not
want them to be taken is because they are so hard. Yes, we are going to
offer full medical privacy protection to all of people's records.
{time} 2300
This is a straight up-or-down substantive vote. Yes, we are going to
give full financial protection. It does not make any difference whether
it is some third party or the bank themselves, we have a right to say
no. If we want all of these services from this new financial structure,
we can take advantage of them, but we might be part of the 10 percent
or 20 percent or 30 percent, in the same way that we have an unlisted
phone number, we just might not want anyone telemarketing to us, even
from our bank, going through all of our checks. Just say no.
Thirdly, the point of the gentlewoman from California (Ms. Lee) on
the insurance industry, why should it be any different on redlining?
Why should not her community and all the poorer communities of the
country have those kinds of protections?
When Members vote for recommital, it goes straight into the bill, it
is part of it, and then we vote final passage. If Members vote no, they
are voting not to put it in the bill right now. Recommital does not go
back to the committee, it just goes right to that desk and into the
bill immediately.
This is a straight substance vote. Please, vote for the recommital
motion, and Members have made this a good financial services
modernization bill for the banks and for the American people.
Mr. LEACH. Mr. Speaker, I rise in opposition to the motion.
The SPEAKER. The gentleman from Iowa (Mr. Leach) is recognized for 5
minutes.
Mr. LEACH. First, Mr. Speaker, let me express my appreciation for the
thoughtfulness of the concerns of the proponents of this motion.
At the risk of presumption, I would stress that the majority and the
minority are not as far apart as the rhetoric might lead a listener to
this debate to expect.
There are two principal aspects to the amendment. One relates to the
Lee amendment on redlining, which some of us on this side differ with,
and others, like myself, find quite reasonable.
The other relates to privacy. Here I would simply note that the bill
before us represents the greatest expansion of privacy rights in modern
day finance. Indeed, it represents, in the words of the gentlewoman
from Oregon (Ms. Hooley), a movement far further than she would have
ever have dreamed.
In the words of the gentleman from Massachusetts (Mr. Markey), it is
a good step forward. Actually, it is not one but a number of steps
forward. Let me mention six.
One, there is a mandatory disclosure by financial institutions of
privacy policies.
Two, there are consumer opt-out choices to prevent the sale of
confidential information to unaffiliated third parties.
Three, there is a medical opt-in choice to prevent the transfer of a
consumer's medical information without the consumer's consent.
Four, there is a prohibition on disclosure of consumer account
numbers to third party telemarketers.
Five, there are new privacy enforcement mechanisms for financial
institution regulators.
Six, there is a prohibition on pretext calling. This is a policy
where individuals can call up an institution and claim they are someone
else and get their information, and now that is outlawed.
To object to this bill on final passage will be to vote against these
privacy protections. Indeed, the biggest privacy vote of all our
careers in the United States Congress will be on final passage of this
bill. Let me repeat, the biggest privacy vote of all our careers in
Congress will be on final passage of this bill.
[[Page H5322]]
Now, what is the amendment before us? Basically, the amendment before
us subtracts one feature of the bill and adds another. What it
subtracts is the provision of the gentleman from Iowa (Mr. Ganske)
which imposes important new protections for health and medical privacy.
I have never known a more misunderstood provision, so let me stress
what the Ganske provision does.
It imposes a broad prohibition on the disclosure by an insurance
company or its affiliates of individually identifiable health, medical,
and genetic information, unless the customer expressly consents to such
disclosure.
If Members strip this provision of H.R. 10 from the bill, they are
leaving customers of financial companies without any medical privacy
protections, thereby leading to precisely the kinds of privacy umbrages
that the opponents of the language claim they want to prevent.
In this regard, I would stress again that there is no intent in this
bill to preempt executive branch actions or jeopardize any confidences
associated with doctor-patient relationships, nor the privacy
protections currently afforded any medical records.
Indeed, the intent is to strengthen these protections. To the degree
that more precision in this area is required, this gentleman is
prepared to work in conference to ensure that that occurs.
What is it that this amendment adds? It adds a restriction on the
ability of financial institutions to share consumer information with
affiliates that are all part of the same financial organization.
Unfortunately, there is some question whether this proposed
restriction on affiliate information-sharing might needlessly and
dramatically increase costs for consumers and financial institutions,
reduce consumer convenience, impair fraud detection and prevention, and
deny consumers new cost-effective products.
It is the intention of the various committees of jurisdiction,
including the Committee on Banking and Financial Services, to hold
hearings on this issue in the near future. This Member has an open
mind. The concerns I raise are questions without definitive answers.
Accordingly, at this time, I would urge caution, and only ask that
Members recognize the historical nature of the extraordinary expansion
of privacy protection contained in this bill.
In conclusion, I urge an enthusiastic yes vote on final passage,
again, final passage on the greatest privacy expansion in the history
of American finance, and a preliminary no vote on the Markey motion to
recommit until the consequences of his approach receive careful
scrutiny in the hearings process.
I thank all, friend and foe, for their courtesies.
The SPEAKER. Without objection, the previous question is ordered on
the motion to recommit.
There was no objection.
The question is on the motion to recommit.
The question was taken; and the Speaker announced that the noes
appeared to have it.
Mr. MARKEY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER. Pursuant to clause 9 of rule XX, the Chair will reduce
to 5 minutes the minimum time for any electronic vote on the question
of passage.
The vote was taken by electronic device, and there were--yeas 198,
nays 232, not voting 5, as follows:
[Roll No. 275]
YEAS--198
Abercrombie
Ackerman
Allen
Andrews
Baird
Baldacci
Baldwin
Barcia
Barrett (WI)
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Danner
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gejdenson
Gephardt
Gonzalez
Gordon
Gutierrez
Hall (OH)
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Hooley
Hoyer
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E.B.
Jones (OH)
Kanjorski
Kaptur
Kennedy
Kildee
Kilpatrick
Kind (WI)
Kleczka
Klink
Kucinich
LaFalce
Lampson
Lantos
Larson
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Luther
Maloney (NY)
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Minge
Mink
Moakley
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Rogan
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Scott
Serrano
Sherman
Shows
Sisisky
Skelton
Slaughter
Smith (WA)
Snyder
Spratt
Stabenow
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Weygand
Woolsey
Wu
Wynn
NAYS--232
Aderholt
Archer
Armey
Bachus
Baker
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Biggert
Bilbray
Bilirakis
Bliley
Blunt
Boehlert
Boehner
Bonilla
Bono
Boucher
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Castle
Chabot
Chambliss
Chenoweth
Coble
Coburn
Collins
Combest
Cook
Cooksey
Cox
Cramer
Crane
Cubin
Cunningham
Davis (VA)
Deal
DeLay
DeMint
Diaz-Balart
Dickey
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ewing
Fletcher
Foley
Forbes
Fowler
Franks (NJ)
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Istook
Jenkins
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
King (NY)
Kingston
Knollenberg
Kolbe
Kuykendall
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Manzullo
McCollum
McCrery
McHugh
McInnis
McIntosh
McKeon
Metcalf
Mica
Miller (FL)
Miller, Gary
Mollohan
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Ose
Oxley
Packard
Paul
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Reynolds
Riley
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sanford
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Spence
Stearns
Stump
Sununu
Sweeney
Talent
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wise
Wolf
Young (AK)
Young (FL)
NOT VOTING--5
Brown (CA)
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2323
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER. The question is on the passage of the bill.
The question was taken; and the Speaker announced that the ayes
appeared to have it.
Recorded Vote
Mr. LEACH. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER. This will be a 5-minute vote.
[[Page H5323]]
The vote was taken by electronic device, and there were--ayes 343,
noes 86, not voting 6, as follows:
[Roll No. 276]
AYES--343
Ackerman
Aderholt
Allen
Andrews
Armey
Bachus
Baird
Baker
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonior
Bono
Borski
Boswell
Boucher
Boyd
Brown (FL)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Cannon
Cardin
Carson
Castle
Chabot
Chambliss
Clayton
Clement
Clyburn
Coble
Collins
Cook
Cooksey
Cox
Cramer
Crane
Crowley
Cubin
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
Engel
English
Etheridge
Everett
Ewing
Fletcher
Foley
Forbes
Ford
Fowler
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Green (WI)
Greenwood
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastert
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Herger
Hill (IN)
Hill (MT)
Hilleary
Hinojosa
Hobson
Hoeffel
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Istook
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kingston
Klink
Knollenberg
Kolbe
Kuykendall
LaFalce
Largent
Larson
Latham
LaTourette
Lazio
Leach
Levin
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lowey
Lucas (KY)
Lucas (OK)
Maloney (CT)
Maloney (NY)
Manzullo
Mascara
Matsui
McCarthy (NY)
McCollum
McCrery
McGovern
McHugh
McInnis
McIntosh
McIntyre
McKeon
McNulty
Meek (FL)
Meeks (NY)
Menendez
Metcalf
Millender-McDonald
Miller (FL)
Miller, Gary
Minge
Moakley
Mollohan
Moore
Moran (VA)
Morella
Murtha
Myrick
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Ose
Owens
Oxley
Packard
Pallone
Pascrell
Pastor
Pease
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Royce
Rush
Ryan (WI)
Ryun (KS)
Sabo
Salmon
Sanchez
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaffer
Scott
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Strickland
Stump
Sununu
Sweeney
Talent
Tanner
Tauscher
Tauzin
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thune
Tiahrt
Toomey
Towns
Traficant
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Visclosky
Vitter
Walden
Walsh
Wamp
Watkins
Watt (NC)
Watts (OK)
Weiner
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
Whitfield
Wicker
Wilson
Wise
Wolf
Wu
Wynn
Young (AK)
Young (FL)
NOES--86
Abercrombie
Baldwin
Barrett (WI)
Barton
Bonilla
Brady (PA)
Brady (TX)
Brown (OH)
Campbell
Capps
Capuano
Chenoweth
Clay
Coburn
Combest
Condit
Conyers
Costello
Coyne
Cummings
DeFazio
DeGette
Delahunt
DeLauro
Dingell
Edwards
Eshoo
Evans
Farr
Fattah
Filner
Frank (MA)
Gejdenson
Granger
Hefley
Hilliard
Hinchey
Hoekstra
Inslee
Jackson (IL)
Kaptur
Kleczka
Kucinich
LaHood
Lampson
Lantos
Lee
Lewis (GA)
Lofgren
Luther
Markey
Martinez
McCarthy (MO)
McDermott
McKinney
Meehan
Mica
Miller, George
Mink
Moran (KS)
Nadler
Obey
Olver
Ortiz
Paul
Payne
Peterson (MN)
Phelps
Rivers
Rodriguez
Roybal-Allard
Sanders
Schakowsky
Serrano
Stark
Stenholm
Stupak
Tancredo
Taylor (MS)
Thornberry
Thurman
Tierney
Turner
Waters
Waxman
Woolsey
NOT VOTING--6
Archer
Brown (CA)
Fossella
Green (TX)
Lipinski
Pelosi
{time} 2332
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________