[Congressional Record Volume 145, Number 97 (Monday, July 12, 1999)]
[Extensions of Remarks]
[Pages E1517-E1518]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     FINANCIAL SERVICES ACT OF 1999

                                 ______
                                 

                               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 services 
     providers, and for other purposes:

  Ms. JACKSON-LEE of Texas. Madam Chairman, today I rise to voice my 
opposition to the structured rule to House Resolution 10, the Financial 
Services Competition Act of 1999. This rule stifles debate on critical 
issues from the modernization of the financial services industry. Forty 
Amendments offered by the Democrats, including my own, which addressed 
issues of redlining, stronger financial and medical record privacy 
safeguards and community lending were not made in order by the Rules 
Committee.
  I support the idea of updating the rules that our nation's financial 
service institutions operate under to bring their activity in line with 
the realities of life in today's America. With that said, I believe 
that in our rush to modernize financial services, we are overlooking 
critical issues that the Democrats sought to address through the 
amendment process.
  The Republicans failed to make in order Representative Barbara Lee's 
anti-redlining amendment. Currently, CRA applies to only banks and 
thrifts. Representative Lee's proposed amendment would have required 
insurance companies and their affiliates to remain in compliance with 
the Fair Housing Act. Interestingly enough, this provision was included 
in the Banking Committee version of H.R. 10.
  H.R. 10 allows virtually unlimited access by organizations such as 
insurance companies, employment agencies and credit bureaus of a 
patient's medical records. Under these provisions, patient information 
could be disclosed or even sold to the highest bidder for reasons that 
have nothing to do with the health of the patient. This will threaten 
the confidential relationship between a doctor and the patient--an 
essential component of high quality health care.
  Similarly, the rule prohibited a discussion on creating parity 
between large and community banks with respect to sharing protected 
information. Large banks rely on sharing customer information with 
affiliates and subsidiaries, while smaller banks rely on the transfer 
of information between third parties.
  The amendment offered by Representative Markey would have preserved 
the meaningful consumer financial privacy protections adopted on a 
bipartisan basis in the Commerce Committee. H.R. 10 will greatly 
accelerate mergers, creating huge money centers with access to once-
confidential information about millions of customers.
  The Commerce Committee, in a bipartisan manner, adopted a compromise 
approach to financial privacy by giving consumers an across-the-board 
``opt-out''--the ability to stop information from being disclosed to 
third parties and affiliates. H.R. 10 only permits consumers to opt-out 
of third party information sharing. Financial institutions are still 
free to share consumer information with their affiliates and 
subsidiaries.
  Madam Chairman, the structured rule prohibits discussion of the lack 
of sufficient protections for the privacy of an individual's medical 
records. This bill allows virtually unlimited access by organizations 
such as insurance companies, employment agencies and credit bureaus of 
a patient's medical records without the patient's consent or knowledge. 
Under these provisions, patient information could be disclosed or even 
sold to the highest bidder for reasons that have nothing to do with the 
health of the patient. This will threaten the confidential relationship 
between a doctor and patient--an essential component of high quality 
health care.
  Under the bill, Madam Chairman, health insurers could compel 
individuals to allow their medical records to be sold or disclosed to 
employers, direct marketing firms and others. While the bill 
technically requires individuals to consent to such disclosures, the 
consent process can and will be coercive. Insurers could refuse to 
provide health insurance to individuals who fail to provide blanket 
authorization for disclosure. Faced with such a choice, individuals 
will have no option but to sign away their privacy rights.
  The amendment offered by Representative Condit and others would have 
stripped Section 351 from the bill in order to prevent this erosion of 
medical privacy. Section 351 of H.R. 10 purports to protect the privacy 
of medical records. In fact, it would do just the opposite by allowing 
a major invasion of consumer privacy.

  Among other things, Section 351 would allow health insurers to sell 
health records, would preempt state privacy laws and would allow 
insurers to effectively coerce disclosure ``consent'' from consumers. 
This would have prevented by the adoption of the Condit Amendment.
  I also oppose the rule, because it failed to contain my amendment 
which would have directed the Comptroller General of the United States 
to conduct a study of the extent to which the lack of availability of a 
full-range of financial services in low- and moderate-income 
neighborhoods has resulted in an undue reliance in such neighborhoods 
on check cashing services which impose a fee equal to 1 percent or more 
of the amount of a transaction.
  This report would have also assessed to what extent check cashing 
services are regulated and audited by Federal, State, or local 
governments to prevent unscrupulous practices and fraud. This amendment 
would have also reviewed to what extent owners and employees of check 
cashing services are licensed or regulatory screened to prevent the 
inflitaration of elements of organized crime.
  According to the National Association of Check Cashers, the industry 
cashes about 200 million checks a year, totaling $60 billion, and 
earned more than $1 billion last year. The number of check cashing 
outlets in the United States has nearly tripled about 6,000 compared to 
about 2,150 in the mid-1980s.

[[Page E1518]]

  Banks are hard to find in the inner city, and I am sure that this 
fact has contributed to the presence of check cashers in the inner 
city. In the City of Houston 23 establishments are listed as offering 
check cashing services to poor or moderate income Houstonians.
  It is estimated that 12% of the population in this country does not 
have a checking account. Resulting in one in every 13 U.S. households 
not having a bank account. This percentage is growing with the 
escalation of banking fees and the closing of full service bank 
branches.
  In the state of Texas a low-income family may spend more than $200 a 
year in checks cashing fees.
  Currently, no national law guarantees access to banking services for 
all Americans. Illinois, Massachusetts, New Jersey, New York and 
Minnesota require banks operating with their boarders to offer basic 
checking accounts with minimal fees for consumers making a limited 
number of transactions.
  Some check cashing services offer short term credit called a payday 
loan to customers who are in need of cash. A customer writes a check 
for one amount and receives a lower amount in return. The check casher 
in turn agrees to hold off cashing the check until payday. A customer 
can choose to ``roll'' the check over by paying another fee to extend 
the loan, a process that can become extremely costly over time.
  A class-action lawsuit in Tennessee describes a borrower who renewed 
cash advance loans 20 to 29 times. One plaintiff ``rolled over` loans 
24 time in 15 months, borrowing a total of $400 and paying $1,364 while 
still owing $248. The allowance of this amendment would have made sure 
that the reform of our nation's financial service industry includes 
benefits to all Americana.
  Madam Chairman, H.R. 10, the Financial Services Act of 1999, 
represents a historic moment for America. I am supportive of a bill 
that would update our Depression era banking laws. Indeed, according to 
the Treasury Department, financial services modernization could provide 
as much as $15 billion annually in savings to consumers. Modernization 
will create a streamlined, one stop shopping with comprehensive choices 
for consumers.
  I must state in no uncertain terms that notwithstanding the potential 
benefits that H.R. 10 represents for consumers, the structured rule 
prohibited dialogue on the key issues of redlining, financial and 
medical record privacy and community lending. Accordingly, I strongly 
oppose the rule. It is my desire that these important issues will be 
revisited in conference.

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