[Congressional Record Volume 146, Number 86 (Friday, June 30, 2000)]
[Extensions of Remarks]
[Page E1178]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


           DEPOSIT INSURANCE INCREASE FEASIBILITY ACT OF 2000

                                 ______
                                 

                        HON. CHARLES A. GONZALEZ

                                of texas

                    in the house of representatives

                        Thursday, June 29, 2000

  Mr. GONZALEZ. Mr. Speaker, recently, I introduced H.R. 4603, the 
``Deposit Insurance Increase Feasibility Act of 2000.'' I decided to 
introduce this bill after being contacted by various representatives of 
the financial services community who are interested in researching the 
feasibility of increasing the current deposit insurance coverage limit, 
which has been set at $100,000 since the early 1980s. Several different 
proposals crossed my desk, but I decided to take the more moderate and 
prudent approach for the time being. My bill, H.R. 4603, the ``Deposit 
Insurance Increase Feasibility Act of 2000,'' would, I believe, take 
the proper approach to this question at this time.
  As introduced, H.R. 4603 will require two different studies and 
reports on the feasibility and potential impact of increasing the 
maximum amount of deposit insurance under the Federal Deposit Insurance 
Act and the Federal Credit Union Act from $100,000 to $200,000 per 
depositor and require the noted U.S. financial services regulatory 
agencies to recommend an appropriate deposit insurance level for both 
banks and credit unions but through two separate but equal studies. The 
bill would also require two separate but equal reports to be submitted 
to Congress six months after the date of enactment of the legislation.
  Congress has often been accused of jumping the gun and failing to 
thoroughly research an issue prior to acting. Congress has also been 
accused in the past of failing to move in a timely manner on numerous 
issues. Case in point is the decades Congress spent reviewing the 
potential reform of the Glass-Steagall Act before finally enacting 
financial services reform legislation last year in the form of S. 900, 
which I supported. For these reasons, I decided to introduce this bill 
in the form of a study instead of an immediate increase in deposit 
insurance coverage. The study will hopefully acknowledge that deposit 
insurance has become an indispensable part of the financial services 
landscape while promoting consumer trust and confidence in all U.S. 
financial institutions. More importantly, the two studies will provide 
Congress with the recommendations it will need by both the banks and 
credit union regulatory agencies to thoroughly assess all possible 
ramifications of any change in the level of insurance coverage. In this 
way, few will attempt and virtually none will be able to say that 
Congress acted imprudently. The fact that the studies and reports are 
to be completed and submitted within six months of the date of 
enactment of my bill provides enough time for a thorough review of the 
issue while also permitting Congress to access the studies and reports 
in a timely manner, and hopefully move on the recommendations sooner 
rather than later. Such studies and reports should serve to permit 
those regulatory agencies which have recently expressed concern about 
increasing the deposit insurance limit to $200,000 to participate in 
the review of the coverage limit and to provide a specific coverage 
limit recommendation to Congress. I should stress that this bill does 
not mandate an increase. It calls for two studies and two reports on 
the subject. It provides for parity by including all the financial 
institutions regulatory agencies in the deliberations.
  I have received a letter of strong support for H.R. 4603 from 
America's Community Bankers, which represents the nation's community 
banks of all charter types and sizes, and a letter strongly supporting 
the bill on behalf of the Credit Union National Association and the 78 
million credit union members nationwide. I would ask that both letters 
be inserted in the Congressional Record immediately following this 
statement. I look forward to the bill's enactment and to receiving the 
dual reports in Congress sometime in the near future.

                                                      Credit Union


                                   National Association, Inc.,

                                        Madison, WI, June 9, 2000.
     Hon. Charles Gonzalez,
     Cannon House Office Building,
     Washington, DC.
       Dear Congressman Gonzalez: On behalf of the Credit Union 
     National Association (CUNA) and the 78 million credit union 
     members nationwide, I am writing to express our support for 
     the legislation you introduced yesterday, H.R. 4603.
       CUNA and its member credit unions believe deposit insurance 
     has become an indispensable part of the financial services 
     landscape and has contributed significantly to consumer trust 
     and confidence in all depository institutions. Because of 
     this important role, CUNA strongly urges Congress to 
     thoroughly assess all possible ramifications of any change in 
     the level of insurance coverage, and we are encouraged by 
     your proposed studies.
       CUNA also favors the feature of the legislation that calls 
     for a separate study of the National Credit Union Share 
     Insurance Fund (NCUSIF). Operationally and structurally, the 
     NCUSIF is unique among federal insurance funds and merits an 
     appraisal that considers and evaluates its distinctions.
       We commend you for the prudent and sound approach you have 
     taken to this important and complex issue. CUNA looks forward 
     to playing a helpful role in the enactment of H.R. 4603, and 
     I encourage you to contact me if I can be of further 
     assistance.
           Sincerely,
                                                   Daniel A. Mica,
     President and CEO.
                                  ____



                                  America's Community Bankers,

                                     Washington, DC, May 26, 2000.
     Hon. Charles A. Gonzalez,
     House of Representatives,
     Washington, DC.
       Dear Representative Gonzalez: America's Community Bankers 
     strongly supports your draft bill, the ``Deposit Insurance 
     Feasibility Act of 2000.'' America's Community Bankers 
     represents the nation's community banks of all charter types 
     and sizes. ACB members pursue progressive, entrepreneurial 
     and service-orientated strategies in providing financial 
     services to benefit their customers and communities.
       Bankers would welcome an increase in deposit insurance. ACB 
     cautions, however, that bankers need to know first whether 
     they would incur an increase in premiums or other costs. That 
     is why we are particularly pleased that your bill would help 
     answer this important question.
       Taking inflation into account, the coverage limit today 
     could be increased and indexed to prevent further erosion. 
     But if an increase in insurance coverage merely resulted in a 
     reshuffling of deposits among banks, a redistribution might 
     be particularly damaging for smaller community banks and 
     their customers.
       Again, ACB strongly supports your draft bill, and stands 
     ready to offer any assistance at our disposal.
           Sincerely,

                                              Robert R. Davis,

                                               Managing Director, 
                                             Government Relations.

     

                          ____________________