[Congressional Record Volume 145, Number 97 (Monday, July 12, 1999)]
[Extensions of Remarks]
[Pages E1515-E1516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FINANCIAL SERVICES ACT OF 1999
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speech of
HON. SHEILA JACKSON-LEE
of texas
in the house of representatives
Thursday, July 1, 1999
The House in Committee of the Whole House on the State of
the Union 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;
Ms. JACKSON-LEE of Texas. Mr. Chairman, Today I rise in support of
H.R. 10, the Financial Services Competition Act of 1999. I would be
remiss if I did not acknowledge the hard work of the Banking and
Commerce Committees in crafting this legislation.
I support the idea of updating the rules that our Nation's financial
institutions operate under to bring their activity in line with the
realities of life in today's America.
Today's vote represents groundbreaking financial services legislation
that would dismantle many of the depression era laws currently
hindering the financial services industry from engaging in a modern
global marketplace.
In Congress, we have spent more than twenty years debating how to
update the Nation's antiquated banking laws that prohibit banks,
securities firms and insurance companies from entering into another's
businesses. H.R. 10 would permit streamlining of the financial service
industry thereby creating one-stop shopping with comprehensive services
choices for consumers. The streamlining of financial services will not
only mean increased consumer confidence, it would also mean increased
savings for consumers. The Treasury Department estimates that financial
services modernization could mean as much as $15 billion annually in
savings to consumers.
I am heartened that many provisions of the Community reinvestment Act
(CRA) remain in H.R. 10. The CRA, enacted in 1977 to combat
discrimination in lending practices, encourages federally-insured
financial institutions to help meet the credit needs of their entire
communities by providing credit and deposit services in the communities
they serve.
Indeed, in many respects, H.R. 10 strengthens the CRA. Under the
bill, CRA would be extended to the newly created wholesale financial
institutions, which are institutions that could only accept deposits
above $100,000 and are not FDIC-insured. Additionally, H.R. 10,
provides consumer protection provisions that require institutions to
ensure that consumers are not confused about new financial products
along with strong anti-tying and anti-coercion provisions governing the
marketing of financial products. Further, the bill requires that all of
a holding company's subsidiary depository institutions have at least a
``satisfactory'' CRA rating in order to affiliate as a financial
holding company and in order to maintain that affiliation.
CRA is a success story. Between 1993 and 1997, the number of home
purchase loans to African Americans soared 62 percent; Hispanics saw an
increase of 58 percent, Asian Americans nearly 30 percent; and loans to
Native Americans increased by 25 percent. Since 1993, the number of
home mortgages extended to low- and moderate-income borrowers has risen
by 38 percent.
Indeed, in my district, Hispanic students from the east end district
of Houston historically have had a high dropout rate. Using funds made
available by the CRA, the Tejano Center for Community Concerns built
the Raul Yzaguirre School for Success to meet the special needs of
students from low-income families in this inner-city neighborhood. This
school has performed outstandingly in its three years in existence. In
fact, over the past two years, the school's students' average Texas
assessment of academic skills scores increased 18 to 20 percent.
In addition to the school, funding made available by the CRA has
helped the Tejano Center for Community Concerns build and sell 15 homes
to new home buyers, with nine additional homes planned, as well as a
health clinic that serves approximately 1,500 patients per year.
Examples such as this speak volumes on the CRA's ability to positively
impact people's lives.
This is why I am concerned that H.R. 10 does not extend the CRA to
non-banking financial companies that affiliate with banks.
Specifically, H.R. 10 does not require securities companies, insurance
companies, real estate companies and commercial and industrial
affiliates engaing in lending or offering banking products to meet the
credit, investment and consumer needs of the local communities they
serve.
The exclusion of nonbank affiliates' banking and lending products
from the CRA is significant because increasingly, businesses such as
car makers and credit card companies, securities firms and insurers are
behaving like banks by offering products such as FDIC-insured
depository services, consumer loans, as well as debit and commercial
loans. Additionally, private investment capital is decreasingly covered
by CRA requirements, making it more difficult for underserved rural and
urban communities to access badly-needed capital for housing, economic
development and infrastructure.
Madam Chairman, I am also troubled by the fact that rules committee
did not make in order several key amendments offered by the democrats
including my own to address issues such as redlinging, stronger
financial and medical record privacy safeguards and community
[[Page E1516]]
lending. I hope that during the course of our debate we can address
these concerns.
Both our financial service laws and consumer protection laws need to
be modernized. On balance, H.R. 10, is a positive step in the right
direction to achieve this goal. I urge my colleagues to join with me in
supporting this bill.
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