Congressional Record, Volume 150 Issue 35 (Thursday, March 18, 2004)

[Congressional Record Volume 150, Number 35 (Thursday, March 18, 2004)]
[House]
[Pages H1234-H1241]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PROVIDING FOR CONSIDERATION OF H.R. 1375, FINANCIAL SERVICES REGULATORY
RELIEF ACT OF 2003

Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 566 and ask for its immediate consideration.
The Clerk read the resolution, as follows:

H. Res. 566

Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 2(b) of rule
XVIII, declare the House resolved into the Committee of the
Whole House on the state of the Union for consideration of
the bill (H.R. 1375) to provide regulatory relief and improve
productivity for insured depository institutions, and for
other purposes. The first reading of the bill shall be
dispensed with. All points of order against consideration of
the bill (except those arising under provisions of the
Congressional Budget Act of 1974 other than section 302(f))
are waived. General debate shall be confined to the bill and
shall not exceed one hour equally divided and controlled by
the chairman and ranking minority member of the Committee on
Financial Services. After general debate the bill shall be
considered for amendment under the five-minute rule. It shall
be in order to consider as an original bill for the purpose
of amendment under the five-minute rule the amendment in the
nature of a substitute recommended by the Committee on
Financial Services and the Committee on the Judiciary now
printed in the bill. The committee amendment in the nature of
a substitute shall be considered as read. All points of order
against the committee amendment in the nature of a substitute
(except those arising under provisions of the Congressional
Budget Act of 1974 other than section 302(f)) are waived. No
amendment to the committee amendment in the nature of a
substitute shall be in order except those printed in the
report of the Committee on Rules accompanying this
resolution. Each such amendment may be offered only in the
order printed in the report, may be offered only by a Member
designated in the report, shall be considered as read, shall
be debatable for the time specified in the report equally
divided and controlled by the proponent and an opponent,
shall not be subject to amendment, and shall not be subject
to the demand for division of the question in the House or in
the Committee of the Whole. All points of order against such
amendments are waived. At the conclusion of consideration of
the bill for amendment the Committee shall rise and report
the bill to the House with such amendments as may have been
adopted. Any Member may demand a separate vote in the House
on any amendment adopted in the Committee of the Whole to the
bill or to the committee amendment in the nature of a
substitute. The previous question shall be considered as
ordered on the bill and amendments thereto to final passage
without intervening motion except one motion to recommit with
or without instructions.

The SPEAKER pro tempore (Mr. LaHood). The gentleman from Texas (Mr.
Sessions) is recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield
the customary 30 minutes to the gentleman from Massachusetts (Mr.
McGovern), my friend, pending which I yield myself such time as I may
consume. During consideration of this resolution, all time is yielded
for the purposes of debate only.
The resolution before us is a structured rule providing 1 hour of
general debate equally divided and controlled by the chairman and
ranking minority member of the Committee on Financial Services. The
rule waives all points of order against consideration of the bill.
However, the only Budget Act waiver granted in this rule is for section
302(f).
It also provides that the substitute amendment provided by the
Committee on Financial Services and the Committee on the Judiciary is
considered as read as an original bill for the purpose of amendment.

{time} 1030

This rule also waives all points of order against consideration of
the substitute, however, the only Budget Act waiver granted in this
rule is for section 302(f). It makes in order only those amendments
printed in the Committee on Rules report accompanying the resolution.
These amendments shall be considered as read, and may only be
considered in the order printed in the report, may only be offered by
the Member designated in the report, and shall be debatable for the
time specified in the report equally divided and controlled by the
proponent and an opponent; not to be subject to amendment and not to be
subject to a demand for a division of the question in the whole House
or in the Committee of the Whole.
Finally, this rule waives all points of order against the amendments
printed in the report and provides one motion to recommit with or
without instructions.
Mr. Speaker, today, I rise to introduce the rule for H.R. 1375, the
Financial Services Regulatory Relief Act. This bill is commonsense
legislation

[[Page H1235]]

that will diminish or eliminate outdated statutory banking provisions
to reduce the regulatory compliance burden faced by our Nation's
financial institutions to improve their productivity, as well as to
make necessary technical correction to current statutes.
America's banking laws are full of outdated and burdensome
regulations, some dating back to the Great Depression, that have long
outlived their usefulness. To address the problem of outdated rules and
the rapidly advancing and highly competitive financial services
industry, in 2001, Committee on Financial Services chairman, the
gentleman from Ohio (Mr. Oxley), asked the State and Federal regulators
of our Nation's financial institutions to provide him with a list of
regulations that they believed have outlived their usefulness.
The regulators answered the chairman's call, along with the rest of
the financial services community, providing the chairman with a number
of suggestions that, when enacted, will benefit consumers and
regulators alike by lowering the cost of transacting financial
services.
This wide-ranging list of proposals affecting banks, savings
associations, and credit unions was first passed by the committee as
H.R. 3951, but unfortunately the 107th Congress expired before it could
be considered on the House floor. The bill that is being considered on
the floor today is a new and updated version of that original
legislation and remains true to the original vision of providing
regulatory relief in financial services that the gentleman from Ohio
(Mr. Oxley) and the bill's chief sponsor, the gentlewoman from West
Virginia (Mrs. Capito) had when they began this process more than 3
years ago.
This legislation accomplishes a number of important things, and in
the interest of time I will only mention a few. For instance, for
banks, H.R. 1375 removes the prohibition on national and State banks
from expanding across State lines by opening branches. It eliminates
unnecessary and costly reporting requirements on banks regarding
lending to bank officials; and it streamlines bank merger application
regulatory requirements.
For savings associations, the bill removes lending limits on small
business and auto loans, and increases the limit on their business
loans. It gives these institutions parity with banks with respect to
broker-dealer and investment adviser SEC registration requirements; and
it gives thrifts the same authority as national and State banks to make
investments primarily designated to promote community development.
For credit unions, the bill expands the investment authority of
Federal credit unions. It increases the general limit on the term of
Federal credit union loans from 12 to 15 years, and it eases
restrictions on voluntary mergers between healthy credit unions.
Finally, for the Federal financial regulatory agencies, the bill
provides agencies with the discretion to adjust the examination cycle
for insured depository institutions to use agency resources in the most
efficient manner. It modernizes agency recordkeeping requirements to
allow the use of optically-imaged or computer-scanned images. It
clarifies that agencies may suspend or prohibit individuals charged
with certain crimes from participation in the affairs of any depository
institution and not only institutions for which that individual is
associated.
By fixing these and many other technical and outdated problems, H.R.
1375 will allow financial institutions to devote more resources to the
business of lending to consumers and less to the compliance with
outdated and unneeded regulations. Reducing these regulatory burdens
will lower the cost of credit for consumers and help our economy to
grow and to provide more jobs even more quickly.
And while there are a number of things that Congress still needs to
accomplish, like creating a uniform and cutting-edge national privacy
standard for consumers, this legislation is a great step in the right
direction. It will make all of our country's financial institutions
more efficient, while balancing the additional regulatory burden they
face each day as a result of the USA PATRIOT Act, and it will help our
banks, savings associations, and credit unions to focus their
compliance efforts on combating money laundering and terrorist
financing, not on wasteful and duplicative regulations.
I strongly support this rule and the underlying legislation, and I
urge my colleagues to do so. I would like to congratulate the members
of the Committee on Financial Services who have made great
contributions to this bill, including the chairman, the gentleman from
Ohio (Mr. Oxley), the gentlewoman from West Virginia (Mrs. Capito), the
ranking member, the gentleman from Massachusetts (Mr. Frank), the
gentleman from Pennsylvania (Mr. Toomey), and the gentleman from
Alabama (Mr. Bachus). These are the people who have helped to bring
this bill to the floor today. I am proud of what they have done.
Mr. Speaker, I reserve the balance of my time.
Mr. McGOVERN. Mr. Speaker, I thank the gentleman from Texas (Mr.
Sessions) for yielding me the customary 30 minutes, and I yield myself
such time as I may consume.
(Mr. McGOVERN asked and was given permission to revise and extend his
remarks.)
Mr. McGOVERN. Mr. Speaker, the Committee on Financial Services and
the Committee on the Judiciary referred an imperfect bill to the full
House. However, in a rare bipartisan move, the chairman, the gentleman
from Ohio (Mr. Oxley), the ranking member, the gentleman from
Massachusetts (Mr. Frank), and the gentleman from Ohio (Mr. Gillmor)
joined together to try to fix what is one of the more controversial
elements of this bill. And they deserve credit for trying to work in a
bipartisan way and to build consensus and to bring something to this
floor that a majority of this House will be able to support.
Unfortunately, last night, the Committee on Rules failed to follow
the lead set by our three distinguished colleagues. In what has become
a very disturbing standard of operating procedure in the people's
House, the Committee on Rules once again issued a restrictive rule.
Now, this is the 12th rule considered by this body this year so far,
and only one of them has been open. Mr. Speaker, a restrictive rule on
a noncontroversial bill, and I think it is fair to say if the manager's
amendment gets approved, this is a fairly uncontroversial bill, is
simply undemocratic.
Every day, the people I talk to grow more and more outraged with the
way this Republican leadership shuts down the democratic process in
this House. This restrictive rule I think is also an insult to the
former chairman of the Committee on Financial Services, the gentleman
from Iowa (Mr. Leach), who I have great admiration for. The major
controversy with the underlying bill is the regulation of industrial
loan companies, or ILCs. The manager's amendment includes the
compromise that I mentioned, worked out among the chairman, the ranking
member (Mr. Frank), and the gentleman from Ohio (Mr. Gillmor).
The gentleman from Iowa (Mr. Leach), as he testified last night in
the Committee on Rules, was not satisfied with the compromise language
on ILCs. And as is his right, he came to the Committee on Rules last
night to offer an amendment regulating these businesses. Now, during
their testimony, I asked the chairman and I asked the ranking member if
they supported the right of the gentleman from Iowa (Mr. Leach) to
offer his amendment on the floor today. And while they said that they
had some issues with the substance of his amendment, and they would not
be able to support it, they both agreed that the former chairman of the
Committee on Financial Services deserves the right to offer his
amendment before the full House, an amendment that deals with a very
important aspect of this bill.
Now, if the chairman of the Committee on Financial Services and if
the ranking Democrat on the Committee on Financial Services do not have
a problem with the offering of the gentleman's amendment, why in the
world does the Committee on Rules have a problem with the gentleman
from Iowa being able to offer his amendment?
The amendment that was brought before the Committee on Rules was
completely in accordance with the rules of this House. There were no
waivers that were required in order for it to be considered on the
floor today. In fact, if

[[Page H1236]]

this was an open rule, he would be able to offer the amendment. There
would be no problem. The gentleman from Iowa (Mr. Leach) is a
distinguished Member of this House who drafted this amendment in a
thoughtful way, and I believe that the former chairman of the Committee
on Financial Services deserves more than he is getting here today.
There are other amendments that were brought before the Committee on
Rules last night that were not made in order. In addition, the
Committee on Rules set a deadline for submitting amendments to the
committee of 10 a.m. yesterday morning. By the time the Committee on
Rules convened to report the rule last night, the Republican leadership
knew full well that only 10 amendments would be offered today. Instead
of granting an open rule so that all 10 amendments could be considered
under regular order, the Committee on Rules granted this rule which
provides for 1 hour of general debate and 70 minutes for consideration
of the amendments.
With this restrictive rule, the Republican leadership not only shuts
out one of their more distinguished Members but other Members who would
like to offer amendments to this bill. Again, during the hearing last
night in the Committee on Rules, both the gentleman from Massachusetts
(Mr. Frank) and the gentleman from Ohio (Mr. Oxley) made mention of the
fact that all these amendments could be dealt with in a relatively
short period of time; that there was no reason why some of these
amendments needed to be shut out of the process.
For the life of me, I cannot figure out why the Committee on Rules
and the Republican leadership continues to insist on shutting down
democracy in this House of Representatives. Sometimes, like today, it
seems as though they stifle debate just because they can. It is like a
bad habit they cannot break. Mr. Speaker, the Republican leadership is
addicted to their own power, and I urge them to take the first step
toward recovery by admitting that they have a problem, a big problem.
And it is not too late. Democrats stand ready to help you, there are
thoughtful Members on the Republican side who stand ready to help you.
There is no reason why this bill needs to come to the floor today
under this restrictive process. This should be an open process. This
should be a relatively noncontroversial process, but you have made it
more controversial than it needs to be. So I hope the Republican
leadership at some time comes to their senses and does the right thing,
but I am not holding my breath. But we are going to continue to insist
that this process be more open and be more democratic.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume,
and I would stand to be corrected, Mr. Speaker, but as I recall the
testimony last night in the Committee on Rules, it was that the
chairman of the Committee on Financial Services said that he had no
problem making the amendment of the gentleman from Iowa in order, but
would defer to the Committee on Rules to make that decision. And, in
fact, we did.
Mr. McGOVERN. Mr. Speaker, will the gentleman yield?
Mr. SESSIONS. I yield to the gentleman from Massachusetts.
Mr. McGOVERN. Mr. Speaker, maybe we need to go get the text of the
hearing last night. I asked specifically whether or not either the
gentleman from Massachusetts (Mr. Frank) or the gentleman from Ohio
(Mr. Oxley) had a problem with the gentleman from Iowa (Mr. Leach)
offering his amendment, and the answer was no. There was no
qualification.
So that is why I asked the question. And I repeated it several times
during the hearing to make the point that even though they had some
problems with the substance of the gentleman's amendment, they had no
problem with him offering his amendment.
Mr. SESSIONS. Reclaiming my time, Mr. Speaker, I thank the gentleman
for his comments, and as part of that same openness to the gentleman
from Davenport, Iowa, I yield 8 minutes to the gentleman from Iowa (Mr.
Leach), the former chairman of the Committee on Financial Services, or
perhaps it was the Committee on Banking and Financial Services at that
time.
Mr. LEACH. Mr. Speaker, I thank the gentleman for yielding me this
time, and let me just say that it is with the greatest sadness and
discomfort that I rise in opposition to the rule, and because of the
rule, I am also obligated to oppose, with every degree of intensity I
can, the underlying bill.

{time} 1045

Let me explain what is happening before this House. The underlying
bill is a bill that is a deregulatory bill. It is good in many ways for
virtually every sector of the financial community in parts. It is not
necessarily good in all parts for the public interest. Some of this
bill I very much support. Other parts of it I very much object to. But
embedded in the bill is a new empowerment, an empowerment that goes to
a charter that virtually nobody in the public has ever heard of called
industrial loan companies. Industrial loan companies will now be able
to offer virtually every feature and service of a commercial bank, but
they will be able to offer it without the protections to the public
comparable to that authorized for commercial banks.
What this implies is that we have a breach of what is called commerce
and banking; that is, industrial loan companies can be owned by
commercial entities. We also have a breach of standards of regulation
that have come to be commonplace in the United States and now in
Europe, what is called consolidated regulation. In America, we do this
in the Federal banking statutes in which the Federal Reserve Board is
the consolidated regulator of holding companies.
What we have here is an exception to that rule. What it means, and I
think this Congress should understand this, is that there are a number
of problems that occur in banking now and again, or financial services.
One relates to incompetence, and so you have regulatory authority. In
this case, the FDIC will be a partial regulator of these institutions.
Then you have a problem that relates to very sophisticated new
instruments of finance, particularly those described as derivatives
kinds of products. Historically these are the province of larger
institutions. Now they are increasingly used by smaller institutions.
Industrial loan companies used to be very small, mom-and-pop in the
financial services industry kinds of institutions. None up to 1987 was
as large as $400 million in assets. Most were under $50 million. Now we
have one that is $60 billion and we have eight that are over $1 billion
in size. It is becoming the obvious charter of choice to a lot of
companies.
But then let me also mention that you have a problem of criminality
and criminalities of many kinds. It can be American-derived; it can be
foreign-derived. One of the roles of the Federal Reserve of the United
States is the gatekeeper to access to the American financial system,
which is the Federal Reserve system, and what this statute will say is
that the Federal Reserve system can be tapped by institutions, foreign
or domestic, which the Federal Reserve will not have the power to
regulate. And so if you take a Latin American bank, a Russian bank, if
they get chartered by one of the five States allowed to authorize
industrial loan companies, they will be able to tap into the payment
system and to Federal deposit insurance and without Federal Reserve
oversight.
I will tell you, this is a scandal. It is nothing less. It is an
embarrassment to the committee of jurisdiction; it is an embarrassment
to the Committee on Rules. Because all I asked the Committee on Rules
to do was allow a single, short amendment that simply said if the new
powers under this act come to be applied, an institution would have to
come under the Federal banking statutes, meaning Federal Reserve
oversight of the holding company. But the fix was in. The power
groupings did not want this to happen. I will say to you in my time in
the United States Congress, this is the greatest microcosm evidence of
special interest reasoning that does not even allow debate on this
subject in an amendment on the House floor.
I happen to be the senior member of the committee of jurisdiction, a
former chairman. I consider it not particularly uncivil to me that I am
not allowed to offer this amendment, but I consider it an embarrassment
to the House that

[[Page H1237]]

this issue cannot be debated on the most important banking bill that is
going to be before this Congress this year. Just so that no one is
under any disillusionment, I am not on a hare. Chairman Greenspan and
the Federal Reserve could not feel stronger about an amendment.
Mr. Speaker, we have seen in finance over the last decade some
difficulties that have arisen. They have arisen because we have
empowered the big without appropriate oversight. A legislative body
really has a great deal of difficulty of understanding the subtleties
of modern day finance. That is why we establish institutions in America
that are designed to be the experts in this area. Most particularly we
look in finance at very large levels, for example, in derivatives
products, in money laundering, to holding company oversight to the
Federal Reserve of the United States.
This Congress is saying that we do not want to see that oversight.
This Congress is saying in this bill that we want to loosen things up.
Here let me go to the structure of the bill because we have an
interesting grandfather provision. We will say some will have these
powers. Others after given dates of incorporation will not. Part of
this is derived from a desire among some to stem a particular
institution to get certain powers. I am not against any single
institution. I am for everyone coming under the same law of the United
States. This puts inequality under the law between financial
institutions, ILC versus others, and then between types of ILCs. It is
really preposterous.
All I am suggesting to this body is let us have evenness of law, let
us have credible law to protect the public, and let us also recognize
that when you make it easier for people to tie into the payment system
that are foreign, you are inviting money laundering, among other
things. You are inviting criminality. You are making it easier for the
national security of the United States to be jeopardized. It is in that
context that I would say to the committee of jurisdiction, I am deeply
disappointed that this simple amendment could not be offered on this
floor and, therefore, I must oppose this rule. I hesitate to oppose
rules of my political party, but I have no option except to do so. I
have to oppose the underlying bill even though there are a number of
provisions in it that I strongly support. But this jeopardizes the
United States public and the United States national security and I am
deeply appalled.
Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
I just want to commend the gentleman from Iowa for his comments.
Again, I wish that he had the opportunity to offer his amendment
because I think there were a lot of Members who share his concerns.
Maybe before this debate is over with, we can get an explanation from
someone on the Committee on Rules as to why his amendment which was
perfectly in order, required no budgetary waivers, was not allowed
here, which I think is really unfortunate. We certainly have the time
to be able to debate it and every Member should have the right to vote
up or down on it.
Mr. Speaker, I yield 8 minutes to the gentleman from Massachusetts
(Mr. Frank), the ranking Democrat on the Committee on Financial
Services who most recently David Broder in a Washington Post article
referred to as one bold thinker among Democrats, one of the most
effective Members of this House.
Mr. FRANK of Massachusetts. Mr. Speaker, I deeply appreciate my
colleague and neighbor's generous remarks and I am abashed that I bring
nothing bold to this debate. I apologize, but sometimes boldness is not
appropriate. I think this legislation is a very well balanced one and I
will be, when we get into the substantive debate, arguing for it. There
are a couple of amendments that will be offered. The gentlewoman from
California has a good one that I believe will prove noncontroversial.
The gentleman from New York has one that I think is a good consumer
protection amendment that we will have some controversy about.
What this bill tries to do is to continue what I believe has been the
pattern in the committee which we dealt with last year with regard to
the extension of the rules governing credit. That is, recognize the
importance of market forces while at the same time providing those
consumer protections and those public interest protections that the
market is not designed to do. That is, I think our posture ought to be
that the market works, the market is a great mechanism for creating
wealth and providing services and creating goods but that you cannot
leave it entirely alone, and our job is to try and do such regulation
as vindicates important public interests but not to the point where you
might become a burden on the market. This is a bill that tries to fine-
tune that sum, that cuts back in some areas in regulation in ways that
I do not think cause trouble.
Let me just address the gentleman from Iowa for whom everyone in this
House has a great deal of respect both for his own commitment to the
legislative process as a very serious effort and from his own expertise
on the committee. I differ with him substantively on this and we will
get into it more when we get into the manager's amendment. I did, as my
friend from Massachusetts said, agree that the amendment ought to be
offered. I would have voted against it. We debated it fully in the
committee.
I do want to just respond briefly. One of our differences, I think,
between myself and the gentleman from Iowa is that I think he equates
not regulation by the Federal Reserve to not regulation by anybody
else. There is, after all, under the existing law regulation, for
example, by the Federal Deposit Insurance Corporation. It is not simply
in this area, but there have been other areas where I think the notion
of the Federal Reserve being the only regulator is a problem.
Mr. LEACH. Mr. Speaker, will the gentleman yield?
Mr. FRANK of Massachusetts. I yield to the gentleman from Iowa.
Mr. LEACH. The gentleman is correct. The FDIC will regulate the
depository institution but it cannot regulate the holding company. And
what the Federal Reserve would do is regulate the holding company and
would leave the FDIC as the primary regulator of the institution as it
would be under the current law.
Mr. FRANK of Massachusetts. I understand that. But I believe that in
this case, the entity that has a claim on the deposit insurance, that
gets into the payment system, will be the entity that is regulated by
the FDIC. Let us be clear in this bill, we are not creating ILCs. ILCs
have been in existence for a considerable period of time. They are
especially important in the States of California and Utah. I believe we
will hear from some of our colleagues from California and Utah who
think we are being unduly restrictive toward institutions which they
say, experience has shown, play a useful role and do not interfere.
Mr. LEACH. If the gentleman will yield on that point, I think the
Congress ought to be made aware that under law only five States can
have ILCs. One is Utah, one is California, with Utah being the dominant
one. But to vote for this approach means that people from 45 other
States are going to see their institutions disadvantaged and devalued
based upon our empowering institutions that can only operate in five
States. It is really a quirk in the law that ought to be thought
through.
Mr. FRANK of Massachusetts. Yes, I understand that. But I would
differ that they were disempowered. I must tell the gentleman, here we
may have some difference. I do not think our function here ought to be
to worry about institutions. Our job is to worry about the economic
function that institutions perform and what they offer consumers.
I understand that institutions will say this puts them at a
disadvantage. I have been dealing with businesses in America for my 24
years here, in the Committee on the Judiciary with one set of
businesses, in the Committee on Financial Services with another.
Economists have downward sloping curves and upward sloping curves. We
have a downward sloping metaphor. I am convinced from listening to
testimony all this time that every single business in America is at a
competitive disadvantage versus every other business. It is like in
Lake Wobegon where everybody is above average. Here everybody is below
in competitive advantage. Everyone argues that they have got a
competitive disadvantage.

[[Page H1238]]

We are not here to protect institutions or to listen, I believe, to
complaints that, gee, this one is a little unfair compared to the other
in the way it ought to function. We also should note that in this bill
which would allow them to extend to other States, there is a new
restriction and that is the one that the gentleman referred to with the
grandfathering, the institutions, any new ones would have to meet a
certain test, others will have been in existence.
The other thing I would mention, though, is this. To the extent that
we are talking about institutions that are not regulated by the Federal
Reserve but have access to various advantages that we give banks, there
is nothing unique about the ILCs in that regard. There are other banks
in this country of various sorts that are regulated. As the gentleman
knows, we have the Office of the Comptroller of the Currency, we have
the FDIC, we have the Office of Thrift Supervision, we have State
bankers. There are other banks that do not have Federal Reserve
supervision. There is a difference between us. I understand there is a
view, and the gentleman from his own long years of study and I differ,
for example, with regard to the Basle Accords internationally. Many of
us found an overreach by the Federal Reserve. There is a view that says
the Federal Reserve is the kind of lead regulator and the others are
relegated. I disagree with that.
Mr. LEACH. If the gentleman will yield further, what is being
established by this law is the notion that comparable institutions in
45 States will come under Federal law and in five States will not in a
very significant area of Federal law and, that is, holding company
regulation.

{time} 1100

That is really bizarre. We are saying five States will not operate
under Federal law; 45 States will.
Mr. FRANK of Massachusetts. Mr. Speaker, reclaiming my time, I would
differ with the gentleman. There is this problem we have here, which
is, certainly, the notion of grandfathering is not unique. If one is
doing something that might pollute the air in California, they are
subject to different laws than if they are doing it in Iowa. We do not
have this absolute uniformity. And part of the problem we have is this:
when we decide to change laws in any area, banking, pollution, other
cases, we sometimes find that there are existing patterns in particular
States, and we have this dilemma. We do not want to necessarily
nationalize them, but we do not want to disrupt existing arrangements.
So the notion in this very diverse country that we will sometimes have
a lack of uniformity is inevitable if we are going to be able to
legislate sensibly; otherwise every time we try to do something new, we
will be faced with the notion that we have to uproot what exists. I do
not think that is a problem, but I do want to stress again the fact
that there will be financial institutions that are not regulated by the
Federal Reserve, which is nothing new; and leaving aside ILCs, there
are other financial institutions not regulated by the Federal Reserve.
I know we will debate this later because my understanding is when we
get to the manager's amendment, which is to restrict ILCs to vis-a-vis
the bill, we will have some opposition from people who think we are
being too restrictive.
But I just wanted to get back to my central theme, and I just would
add one other thing to my friend from Iowa. As my friend from
Massachusetts said, when I was asked, I said I thought his amendment
ought to be in order, and the gentleman from the Committee on Rules
said that I defer to the Committee on Rules. That is the wrong verb.
Being a man of some awareness of my surroundings, I often find that I
submit to the Committee on Rules. There is not anything voluntary about
it. That is a fact of life. But I would say to my friend from Iowa I
appreciate the feeling he has now. I hope the next time a rule comes up
in which significant Democratic amendments are restricted that his
indignation might carry over a little bit and that he will not
necessarily vote for such rules.
What this bill does in summary is to say that we understand the need
both to have regulation and to keep it updated so that it meets its
public interest requirements and does not become excessive.
Mr. SESSIONS. Mr. Speaker, I yield such time as he may consume to the
gentleman from Duluth, Georgia (Mr. Linder), from the Committee on
Rules.
Mr. LINDER. Mr. Speaker, I thank the gentleman from Texas (Mr.
Sessions), my friend and colleague, for yielding me this time. I rise
in support of the rule and urge my colleagues to join me in approving
it.
H. Res. 566 is a structured rule that makes in order a total of six
amendments. Of that total, three are sponsored by Democrats and three
by Republicans. This is a fair and balanced rule that will allow the
House to work its will on a number of different issues, and this rule
should be overwhelmingly approved by the House.
With respect to the underlying legislation, H.R. 1375, it would
streamline the regulatory compliance process for banks, thrifts, and
credit unions and would eliminate or alter outdated, ineffective, and
duplicative regulations. Removing existing burdens on depository
institutions has become even more necessary since the enactment of the
2001 USA PATRIOT Act which mandates that depository institutions, in
addition to other functions, focus compliance efforts on combating
money-laundering and terrorist financing.
Some highlights of H.R. 1375's provisions relating to credit unions
include streamlining procedural requirements and voluntary mergers
between healthy credit unions, providing an exemption to existing law
to allow private insured state-chartered credit unions to join a
Federal Home Loan Bank, and increasing the general limit on the term of
Federal credit union loans from 12 to 15 years.
H.R. 1375 would also remove ineffective regulations governing banks
and thrifts. Under the legislation, the prohibition on national and
State banks expanding across State lines to open branches would be
eliminated, bank merger application requirements would be simplified,
limits on thrifts for small business and auto loans would be removed,
and thrifts would be given the same authority as national and State
banks to make investments primarily designed to promote community
development.
In conclusion, H.R. 1375, sponsored by the gentlewoman from West
Virginia (Mrs. Capito), streamlines some of the outdated and
ineffective regulations that have been hindering the financial and
business activity of depository institutions. Removing these burdensome
regulations will not only encourage productivity but will also save
depository institutions valuable time and money.
Mr. Speaker, I urge my colleagues to support the rule so that we may
proceed to debate the underlying legislation.
Mr. McGOVERN. Mr. Speaker, I yield 5 minutes to the distinguished
gentleman from New York (Mr. Weiner), one of the more thoughtful
Members of this House and a member of the Committee on the Judiciary.
Mr. WEINER. Mr. Speaker, I want to express my gratitude to the
Committee on Rules for making my amendment in order and to the sponsors
of the Financial Services Regulatory Relief Act, which seems to be an
excellent piece of legislation, although somewhat complex for those of
us who are not familiar with banking law.
My amendment is both very simple, very easy for average consumers and
businesses to understand. In fact, I believe when many of my colleagues
are confronted with my amendment, they are going to be shocked that
what I proposed to ban is even permitted in the first place.
We all know that when someone writes a check to someone, let us say
they are buying an air conditioner at a local appliance store, they
write a check. If they do not have sufficient funds to cover that, very
often in addition to having to make up the funds for the bounced check,
they get a fee from the bank. I think many of us can quibble about
whether that fee is too high or not, whether it is fair. However, that
is reasonable. They have violated the essential rules of the
transaction by not having enough money in the account.
What many Americans do not realize is that small business who is
selling them that air conditioner, also when they have the check
bounce, they are

[[Page H1239]]

out the money. They have lost their air conditioner because they have
already turned it over to the customer. But little known to many
Americans is they also pay a fee. Banks charge the victim of a bounced
check fees in the magnitude of $10 to $25 and in some cases $30.
Seventy-five percent of all banks in the country charge this fee to the
victim. We may hear arguments that, well, it costs us some money for
the transaction. I do not dispute that. In fact, the person who is
bouncing the check is paying a fine. What is unique about this practice
that my amendment seeks to ban is it takes a customer who has done
nothing wrong, they have followed every single rule of their bank,
every single rule of trust, every single rule of good faith, and there
is no way they can avoid this fine. And who is getting it? Average
consumers get it from time to time when someone purchases something
from someone and they accept a check, but more often than not it is
small businesses who are victimized. That is why so many small business
groups are in favor of this amendment. The Consumer Federation of
America representing consumers is supportive of this amendment.
I, frankly, would defy anyone to tell me why the person who received
the check should be penalized or sanctioned. Do not argue to me that
they need to be disincentivized or discouraged from accepting a check.
Believe me, no one intentionally takes a bad check. They are already
harmed in many ways. Do not tell me that there is money that it costs
to process the transaction. That could very well be the case. The only
point I am making is why should the person who has already been harmed
once be harmed again?
And perhaps the worst possible reason is the one that underlies all
of the opposition to this amendment to the extent that there is any.
Banking institutions said, Hey, Congressman Weiner, we make a lot of
money on this. That is not a good enough reason. Frankly, the rules of
the banking system, like any rule, like any law, should provide people
fundamental rules of the road, should provide disincentives to do
something bad, should punish someone who does something bad; and at the
end of day in the final analysis if they are a good citizen, a good
consumer, they should be able to avoid the sanction.
In the case of this fee, there is no way that any of those four
things apply. They cannot avoid the fee. They cannot do anything. They
can ask, I want to see ID, I want to see their driver's license. You
cannot even call up the bank and say, hey, does Mr. Smith have enough
money in his account, because privacy laws now prohibit releasing that
type of information. Simply put, there is no rational reason why the
victim, the small business that is the victim, should have to pay this
fee, and there is no reason why the consumer who is the victim of a
bounced check should have to pay this fee.
I will be offering an amendment that, as I said, I am grateful to the
Committee on Rules for making in order which will say they simply
cannot charge this fee. This is one that is not fair. I do not care if
they disclose it in bold print, it is simply not fair, and anyone who
believes it is have them come to this floor and say during this debate
that we believe it is fair. It has no more connection to the person who
received that check than it is to someone walking by the bank that day,
charging them the fee. There is no connection with what they did
either, other than being in the wrong place at the wrong time.
If the banking community believes that they need additional money to
pay for these transactions, there are plenty of ways that they can deal
with this. They can charge more at the front end. They can have
interbank relationships that say, You have a customer that wrote a bad
check and we want a few dollars from you to help cover it, or they can
spread out the cost throughout if it is that substantial, which I
frankly do not believe it is. Some estimates say it is as low as 62
cents, even when the banks themselves say that they have a case where
someone can test and I want a copy and I want to debate it; even that
only costs them $4 or $5 or $6. The simple fact is this is a way that
victims are victimized again, and I urge support of the Weiner
amendment.
Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume
to close for our side.
Let me just again get back to the issue of the rule. I understand
that there may be occasions for rules to come before the Members of
this House that are not completely open, and the majority does after
all have the responsibility of making sure that this House runs, that
the legislative agenda moves forward. And I would prefer that any rules
that come to the floor that have any kind of restrictions in them be
done in consultation with the chairman and ranking members of the
appropriate committees and subcommittees.
But here we have a situation where the ranking member of the
Committee on Financial Services and the chairman of the Committee on
Financial Services said that they had no problems with the amendments
that were being offered last night; and specifically in response to a
question by me regarding the gentleman from Iowa's (Mr. Leach)
amendment, they said they had absolutely no problem with his offering
that amendment on the floor today. And I do not understand why the
majority of the Committee on Rules decided last night to cut the
gentleman from Iowa (Mr. Leach) out of the process.
There has been a very interesting dialogue between the gentleman from
Iowa (Mr. Leach) and the gentleman from Massachusetts (Mr. Frank). This
is obviously a very important issue. Members have strong feelings on
both sides. This is the kind of amendment that we should have a debate
on on the floor and Members of both sides should be able to vote up or
down on. And it is not like we do not have the time. According to the
schedule that the majority put out today, we are going to be out of
here by three o'clock. I do not think this would take very much time.
They do not want to deal with issues of substance. We cannot deal
with the extension of unemployment benefits. We cannot deal with a
trade bill to stop sanctions against U.S. products. I do not know where
the transportation bill is or health care bills or anything else, but
we do have this bill on the floor. We do have the time. And it just
seems to me to be somewhat puzzling that they could not find it within
their wisdom last night as the majority to allow this amendment to come
to the floor and for Members to vote up or down on it. Maybe it is just
because they are in the habit of restricting things and closing things
down.
But it just seems to me on a bill that is relatively noncontroversial
where the chairman and the ranking member have no problem with the
gentleman from Iowa (Mr. Leach) offering his amendment, I do not
understand why the Committee on Rules has such a big problem. And I
think it is unfortunate, and I think Democrats and Republicans need to
continue to point out the unfairness of this process. We can do much
better. And on bills like this, there is absolutely no reason why this
should not have been a wide-open rule. We could have handled this in a
reasonable period of time, and we could have respected all the Members
of this House, both Republican and Democrat; and I just think it is
unfortunate that this is becoming a trend in the Committee on Rules.
We only had one open rule this year, notwithstanding all the great
speeches those guys give about how they are committed to openness. This
is not how we should be doing this, and I apologize to the gentleman
from Iowa (Mr. Leach) and others who did not have their amendments made
in order last night, but I hope in the future that we do better.
Mr. Speaker, I yield back the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the gentleman from Massachusetts does raise many very
important points including that the distinguished chairman, former
chairman, of the banking committee did appear before the Committee on
Rules last night. The gentleman from Iowa (Mr. Leach) is a very
valuable and important and thoughtful member of our conference. The
fact of the matter is the Committee on Rules has, in our own judgment,
a lot of things which we consider on a regular basis, and some of those
things do deal with whether a

[[Page H1240]]

person chose to have a vote in the committee of jurisdiction or not.
The fact of the matter is that the gentleman did not request a vote in
the committee of jurisdiction that he came from.

{time} 1115

And we felt like that in the interests of us moving things on the
floor, that it would be best in this circumstance to let the committee
of jurisdiction speak on that matter. They chose not to; the gentleman
chose not to. We do not always feel that bringing it to the floor is
the correct place.
Mr. McGOVERN. Mr. Speaker, will the gentleman yield?
Mr. SESSIONS. I yield to the gentleman from Massachusetts.
Mr. McGOVERN. Mr. Speaker, I am just trying to figure all of this out
because, in the past, the Committee on Rules has used the excuse that
Members have brought amendments up in their relevant committees of
jurisdiction and they have not passed, so therefore we should make them
in order. Now you are saying that because he did not, the gentleman
from Iowa did not bring his amendment up in his committee of
jurisdiction, that it should be made in order. So I do not understand.
Mr. SESSIONS. Mr. Speaker, reclaiming my time, as a matter of fact,
the gentleman is correct. But there are circumstances many times
related to how close a vote is, whether it is controversial; there are
a number of things which identify that as what we might call or term a
jump ball. It is important at various times for the Committee on Rules
to look at and to weigh those things which we believe are important to
the efficiency of the use of this time on the floor.
In this case, we made a determination as to what we were going to do.
We have made 3 Democrat amendments in order, we have made 2 Republican
amendments and a manager's amendment in order. I believe that the time
which we took yesterday in the Committee on Rules was appropriately
done by the young chairman of the Committee on Rules, the gentleman
from California (Mr. Dreier), and I am very proud of what we have done.
Mr. Speaker, I urge my colleagues to join me in supporting this rule
and the underlying legislation.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of the rule
as reported out of the Committee for H.R. 1375. While portions of this
bill that fall under the jurisdiction of the Judiciary Committee came
for review and analysis, I generally supported the version of H.R. 1375
as reported out of the Committee; however, I shared one reservation
about a provision that was not addressed at the Committee markup.
Section 609 of H.R. 1375 amends section 11(b) of the Bank Holding
Company Act of 1956, 12 U.S.C. 1849(b), and section 18(c)(6) of the
Federal Deposit Insurance Act, 12 U.S.C. 1828(c)(6), by reducing the
minimum waiting period from 15 calendar days to 5 calendar days for
banks and bank holding companies to merge with or acquire other banks
or bank holding companies. Although no amendment was offered at the
Committee, we feel that this provision should be struck from the bill.
Community organizations have raised concerns about this provision,
which reduces to five days the pre-merger, mandatory 15-day waiting
period with the Attorney General's approval. During the course of a
bank merger process, both the Federal financial supervisory agency and
the Department of justice review the merger proposal for competitive
concerns. After a Federal Banking agency approves a merger, DOJ has 30
days to decide whether to challenge the merger approval on antitrust
grounds. At a minimum, the merging banks must now wait 15 days before
completing their merger. Currently, banking law allows third parties,
other than Federal banking agencies or DOJ, to file suit during the
post-approval waiting period. As proposed, section 609 would reduce the
minimum 15-day waiting period to 5 days when DOJ indicates it will not
file suit challenging the merger approval order.
This provision is anti-Community Reinvestment Act, CRA, and strips
the organizations' right to seek judicial review of Federal bank merger
approval orders. Without such review, community organizations will be
deprived of impartial means and mechanisms for ensuring that CRA
performance obligations are taken into account when considering merger
approvals. Community-based organizations use such suits to obtain
information about the merger and ensure that the merger will not result
in disproportionate branch closures in low-income or minority
communities. These organizations play an important role in the public
interest. The mandatory 15-day waiting period should remain intact and
section 609 should be removed from the bill, if passed today.

My amendment, number 9, would amend section 607 of H.R. 1375 as
drafted. The specific language of this amendment reads:

Sense of Congress.--It is the sense of Congress that, when
a requesting agency requires expeditious action on an
application for a merger transaction, consideration should be
made as to the impact the merger transaction will have on
corporate and individual customers in an effort to ensure
that no harmful effects will result from the merger
transaction.

This amendment, while very substantive, is also a less intrusive
attempt to ensure that the emergency expedited application process for
merger transactions called for in section 607 of this legislation will
not allow applicants to harm customers and/or communities with the
increased share of the respective market that will result from the
transaction formed, as compared to my other amendment, Jackson-Lee No.
9. Under this ``sense of Congress'' provision, Congress will make clear
its intent to retain an important degree of oversight over the
expedited process provided for in section 607 as drafted. The import of
this amendment only spells out what should already be inherent in the
operation of our Federal Reserve Board. It is clear, however, that such
a provision is necessary because so many individuals and communities
are suffering from disparate treatment by lending institutions.
When we allow expedited review of a corporate act so substantial as a
merger and of an act that will affect so many consumers, we must be
very careful in conferring latitude to institutions or in curtailing
our own oversight authority. The banking institutions covered under
this legislation play a vital role in the lives of many individuals and
corporations who receive their services.
In the case of the recent JP Morgan and Bank One merger, Bethel New
Life, Inc. expressed on the Federal Reserve Board's record the fact
that this transaction had a tremendous impact on the Chicago area. It
was explained that the loss of a bank headquarters would result in job
loss, less civic interest and commitment, and less detailed knowledge
of the local community. Furthermore, there would be less interaction
between senior bank staff and the variety of people involved in
community development in underserved communities. A bank, merger if the
bank is willing, may give community groups the opportunity to engage in
discussion with the bank(s) about future community reinvestment goals.
The Jackson-Lee Amendment No. 9 seeks to ensure that this kind of
respect for the underserved communities remains intact with sufficient
Congressional oversight.
While this legislation purports to facilitate the work of lending
institutions by allowing them and other depository banks to devote more
of their resources to the business of lending, section 607 makes it
possible for some transactions to escape very important scrutiny.
As we see in the recent merger of J.P. Morgan Chase & Co., JPMCC, and
Bank One Corporation, the capture of large portions of consumer markets
in quick and easy transactions allow many individual and corporate
customers to experience a negative impact of the transaction. The
consolidation of the finance industry so rapidly allows institutions to
exclude large parts of their activities from requirements set forth in
the Community Reinvestment Act, CRA. CRA has been instrumental in
increasing affordable housing, and making sure that banks throughout
this country play a more responsible role in their communities. The CRA
is working extremely well and must not be weakened by provisions such
as those found in section 607. Instead of diminishing the CRA and other
oversight tools that are in place, we must strengthen them. If this
legislation passes as drafted, potentially fewer people will realize
the dream of homeownership, fewer small businesses will get off the
ground, fewer jobs will be created, and fewer neighborhoods will be
rebuilt.
The CRA was enacted in 1977 to address these concerns by requiring
banks to make loans in neighborhoods where they collect deposits.
Section 607 as drafted could allow for the virtual elimination of the
oversight authority conferred through measures such as the Community
Reinvestment Act relative to Houston businesses and individuals, as
most of the authority will be vested in New York and diverted from
Houston. Significant Community Reinvestment dollars are necessary for
home loans for minorities, the development of affordable housing, small
business loans for minorities, procurement opportunities for minority
businesses, community lending for minorities, and community investment
for industrial, commercial and social facilities in minority
communities. It is absolutely essential that you thoroughly examine
this merger in order to ensure that proper conditions are made to
mitigate the imminent adverse affects on Houston's minority community.
The CRA is only enforced in connection with banks' merger and
expansion applications as

[[Page H1241]]

is the subject of section 607. The Federal bank regulatory agencies
periodically evaluate banks for their compliance with CRA and assign
them one of four ratings: Outstanding, Satisfactory, Needs to Improve
or Substantial Non-Compliance. In 1998, the agencies rated over 98
percent of banks as either Outstanding or Satisfactory, despite that
fact that, for example, the banking industry has continued to deny the
mortgage loan applications of African Americans and Latinos twice as
frequently as those of whites. Thanks to databases compiled under the
Home Mortgage Disclosure Act, HMDA, data are made available to show
stark statistics about loan approvals and loan denials that banks are
required to make public each year.
Mr. Chairman, I urge my colleagues to support Jackson-Lee No. 9 and
support the legislation with this amendment and that of Mr. Oxley.
Mr. SESSIONS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.

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