[Congressional Record Volume 153, Number 83 (Monday, May 21, 2007)]
[House]
[Pages H5477-H5483]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INDUSTRIAL BANK HOLDING COMPANY ACT OF 2007

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 698) to amend the Federal Deposit Insurance Act 
to establish industrial bank holding company regulation, and for other 
purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 698

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Industrial Bank Holding 
     Company Act of 2007''.

     SEC. 2. INDUSTRIAL BANK HOLDING COMPANY REGULATION.

       (a) Definitions.--
       (1) Industrial bank.--Section 3(a) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(a)) is amended by adding at the 
     end the following new paragraph:
       ``(4) Industrial bank.--The term `industrial bank' means 
     any insured State bank that is an industrial bank, industrial 
     loan company, or other institution that is excluded, pursuant 
     to section 2(c)(2)(H) of the Bank Holding Company Act of 
     1956, from the definition of the term `bank' for purposes of 
     such Act.''.
       (2) Industrial bank holding company.--Section 3(w) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813(w)) is amended 
     by adding at the end the following new paragraphs:
       ``(8) Industrial bank holding company.--The term 
     `industrial bank holding company' means any company that--
       ``(A) controls (as determined by the Corporation pursuant 
     to section 2(a) of the Bank Holding Company Act of 1956), 
     directly or indirectly, any industrial bank; and
       ``(B) is not--
       ``(i) 1 or more of the following: a bank holding company, a 
     savings and loan holding company, a company that is subject 
     to the Bank Holding Company Act of 1956 pursuant to section 
     8(a) of the International Banking Act of 1978, or a holding 
     company regulated by the Securities and Exchange Commission 
     pursuant to section 240.15c3-1(a)(7) of title 17 of the Code 
     of Federal Regulations (as in effect on January 29, 2007); or
       ``(ii) controlled by a company described in clause (i).
       ``(9) Capital terms relating to industrial bank holding 
     companies.--
       ``(A) Adequately capitalized.--With respect to an 
     industrial bank holding company, the term `adequately 
     capitalized' means a level of capitalization which meets or 
     exceeds all applicable Federal regulatory capital standards.
       ``(B) Well capitalized.--With respect to an industrial bank 
     holding company, the term `well capitalized' means a level of 
     capitalization which meets or exceeds the required capital 
     levels for well capitalized industrial bank holding companies 
     established by the Corporation.''.
       (3) Technical and conforming amendments to other 
     definitions.--
       (A) Appropriate federal banking agency.--Section 3(q)(3) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(3)) is 
     amended--
       (i) by striking ``or a foreign'' and inserting ``, any 
     foreign''; and

[[Page H5478]]

       (ii) by inserting ``, and any industrial bank holding 
     company and any subsidiary of an industrial bank holding 
     company (other than a bank)'' after ``insured branch''.
       (B) Depository institution holding company.--Section 
     3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
     1813(w)(1)) is amended--
       (i) by striking ``or a savings'' and inserting ``, any 
     savings''; and
       (ii) by inserting ``, and any industrial bank holding 
     company'' before the period at the end.
       (b) Industrial Bank Holding Company Registration and 
     Ownership.--The Federal Deposit Insurance Act (12 U.S.C. 1811 
     et seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 51. INDUSTRIAL BANK HOLDING COMPANY REGULATION.

       ``(a) Acquisition of Industrial Bank Shares or Assets.--
     Section 3 of the Bank Holding Company Act of 1956 (other than 
     section 3(c)(3)(B) of that Act) shall apply to any company 
     that is or would become an industrial bank holding company in 
     the same manner as such section applies to a company that is 
     or would become a bank holding company, except that for 
     purposes of applying this subsection--
       ``(1) any reference to a `bank holding company' in such 
     section 3 shall be deemed to be a reference to an `industrial 
     bank holding company';
       ``(2) any reference to a `bank' in such section 3 shall be 
     deemed to be a reference to an `industrial bank';
       ``(3) any reference to the `Board' in such section 3 shall 
     be deemed to be a reference to the Corporation;
       ``(4) any reference to the `Bank Holding Company Act 
     Amendments of 1970' in such section 3 shall be deemed to be a 
     reference to the `Industrial Bank Holding Company Act of 
     2007';
       ``(5) any reference to a `home State' in such section 3 
     shall be deemed to be a reference to--
       ``(A) with respect to an industrial bank holding company, 
     the State in which the total deposits of all banking 
     subsidiaries of such company were the largest on the later 
     of--
       ``(i) January 28, 2007; or
       ``(ii) the date on which the company becomes an industrial 
     bank holding company under this section; and
       ``(B) with respect to an industrial bank, the home State of 
     the bank as determined under section 44(g);
       ``(6) any reference to a `host State' in such section 3 
     shall be deemed to be a reference to--
       ``(A) with respect to an industrial bank holding company, a 
     State, other than the home State of the company, in which the 
     company controls, or seeks to control, an industrial bank 
     subsidiary; and
       ``(B) with respect to an industrial bank, the host State of 
     the bank as determined under section 44(g);
       ``(7) any reference to an `out-of-State bank holding 
     company' in such section 3 shall be deemed to be a reference 
     to, with respect to any State, an industrial bank holding 
     company whose home State is another State; and
       ``(8) any reference to an `out-of-State bank' in such 
     section 3 shall be deemed to be a reference to, with respect 
     to any State, an industrial bank whose home State is another 
     State.
       ``(b) Application Process.--An application filed under 
     subsection (a) to acquire control of an industrial bank shall 
     be treated as an application for a deposit facility for 
     purposes of this Act and any other Federal law.
       ``(c) Registration.--
       ``(1) In general.--Each industrial bank holding company 
     shall register with the Corporation on forms prescribed by 
     the Corporation before the end of the 180-day period 
     beginning on the later of--
       ``(A) the date the company becomes an industrial bank 
     holding company; or
       ``(B) the date of the enactment of the Industrial Bank 
     Holding Company Act of 2007.
       ``(2) Information to be included.--Each registration 
     submitted under paragraph (1) shall include such information, 
     under oath, with respect to the financial condition, 
     ownership, operations, management, and intercompany 
     relationships of the industrial bank holding company and 
     subsidiaries of such holding company, and other factors 
     (including information described in subsection (d)(1)(C)), as 
     the Corporation may determine to be appropriate to carry out 
     the purposes of this section.
       ``(3) Extension of time for submitting complete 
     information.--Upon application by an industrial bank holding 
     company and subject to such requirements, factors, and 
     evidence as the Corporation may require, the Corporation may 
     extend the period described in paragraph (1) within which 
     such company shall register and file the requisite 
     information.
       ``(d) Reports and Examinations.--
       ``(1) Reports.--
       ``(A) Reports required.--Each industrial bank holding 
     company and each subsidiary of an industrial bank holding 
     company, other than an industrial bank, shall file with the 
     Corporation such reports as may be required by the 
     Corporation.
       ``(B) Form and manner.--Reports filed under subparagraph 
     (A) shall be made under oath and shall be in such form and 
     for such periods, as the Corporation may prescribe.
       ``(C) Information.--Each report filed under subparagraph 
     (A) shall contain such information as the Corporation may 
     require concerning--
       ``(i) the operations of the industrial bank holding company 
     and the holding company's subsidiaries;
       ``(ii) the financial condition of the industrial bank 
     holding company and such subsidiaries, together with 
     information on systems maintained within the holding company 
     or within any such subsidiary for monitoring and controlling 
     financial and operating risks, and transactions with insured 
     depository institution subsidiaries of the holding company;
       ``(iii) compliance by the industrial bank holding company 
     and the holding company's subsidiaries with all applicable 
     Federal and State law; and
       ``(iv) such other information as the Corporation may 
     require.
       ``(D) Acceptance of existing reports.--For purposes of this 
     paragraph, the Corporation may accept reports that an 
     industrial bank holding company or any subsidiary of such 
     company has provided or has been required to provide to any 
     other Federal or State supervisor or to any appropriate self-
     regulatory organization.
       ``(2) Examinations.--
       ``(A) In general.--Each industrial bank holding company and 
     each subsidiary of each such holding company (other than an 
     industrial bank) shall be subject to such examinations by the 
     Corporation as the Corporation may prescribe for purposes of 
     this section.
       ``(B) Furnishing reports to other agencies.--Examination 
     and other reports made or received under this section may be 
     furnished by the Corporation to any other appropriate Federal 
     agency or any appropriate State bank supervisor or other 
     State financial supervisory agency.
       ``(C) Use of reports from other agencies.--The Corporation 
     may use, for the purposes of this subsection, reports of 
     examination made by any other appropriate Federal agency, any 
     appropriate State bank supervisor, or any other State 
     financial supervisory authority with respect to any 
     industrial bank holding company or subsidiary of any such 
     holding company, to the extent the Corporation may determine 
     such use to be feasible for such purposes.
       ``(3) Capital.--
       ``(A) In general.-- The Corporation may not, by regulation, 
     guideline, order, or otherwise, prescribe or impose any 
     capital or capital adequacy rules, guidelines, standards, or 
     requirements on any functionally regulated affiliate (as 
     defined in section 45) of any depository institution that is 
     controlled by an industrial bank holding company that--
       ``(i) is not a depository institution; and
       ``(ii) is--

       ``(I) in compliance with the applicable capital 
     requirements of the appropriate Federal supervisory agency of 
     the affiliate (including the Securities and Exchange 
     Commission or State insurance authority);
       ``(II) properly registered as an investment adviser under 
     the Investment Advisers Act of 1940, or with any State; or
       ``(III) is licensed as an insurance agent with the 
     appropriate State insurance authority.

       ``(B) Rule of construction.--Subparagraph (A) shall not be 
     construed as preventing the Corporation from imposing capital 
     or capital adequacy rules, guidelines, standards, or 
     requirements with respect to--
       ``(i) activities of a registered investment adviser other 
     than with respect to investment advisory activities or 
     activities incidental to investment advisory activities; or
       ``(ii) activities of a licensed insurance agent other than 
     insurance agency activities or activities incidental to 
     insurance agency activities.
       ``(e) Access to Information.--
       ``(1) Information provided by corporation.--Any 
     confidential supervisory information, including examination 
     or other reports, pertaining to an industrial bank furnished 
     by the Corporation to any other Federal agency or any 
     appropriate State supervisory agency shall remain 
     confidential unless the Corporation, in writing, otherwise 
     consents.
       ``(2) Deference to depository institution examinations.--
     Any appropriate Federal supervisory agency of a holding 
     company of an industrial bank shall, to the fullest extent 
     possible, forego any examination of any depository 
     institution subsidiary of the holding company and use the 
     reports of examinations of the institution made by the 
     appropriate Federal banking agency and the appropriate State 
     bank supervisor in lieu of a direct examination.
       ``(3) Information to be provided to corporation.--
       ``(A) Request to agency.--Upon request by the Corporation, 
     an appropriate Federal supervisory agency may provide to the 
     Corporation information regarding the condition of an 
     industrial bank, any holding company that controls such 
     industrial bank, or any other affiliate of any such holding 
     company that is necessary to assess risk to the industrial 
     bank.
       ``(B) Availability from holding company directly.--
     Notwithstanding section 45, section 115 of the Gramm-Leach-
     Bliley Act, or any other provision of law (including any 
     regulation), if the information requested under subparagraph 
     (A) is not provided to the Corporation, and the information 
     is necessary to assess risk to the industrial bank, the 
     Corporation may require the holding company or affiliate 
     referred to in such subparagraph with respect to such bank to 
     provide such information to the Corporation.
       ``(4) Examinations by corporation.--

[[Page H5479]]

       ``(A) In general.--Subject to subparagraph (B) and 
     notwithstanding section 45, section 115 of the Gramm-Leach-
     Bliley Act, or any other provision of law (including any 
     regulation), no law shall be construed as preventing the 
     Corporation from examining an affiliate of an industrial bank 
     pursuant to paragraph (2), (3), or (4) of section 10(b), as 
     may be necessary to disclose fully the relationship between 
     the industrial bank and the affiliate, and the effect of such 
     relationship on the industrial bank, if the Corporation finds 
     such examination necessary to determine the condition of an 
     industrial bank.
       ``(B) Functionally regulated affiliates.-- Before the 
     Corporation may examine any affiliate of an industrial bank 
     that is--
       ``(i) a broker, a dealer, an investment company, or an 
     investment advisor, or
       ``(ii) an entity that is subject to consolidated 
     supervision by the Securities and Exchange Commission, other 
     than a depository institution,

     the Corporation shall request the Commission to provide the 
     information that the Corporation is seeking to obtain through 
     examination and may proceed with the examination only if the 
     requested information is not provided by the Commission in a 
     timely manner.
       ``(f) Limitation on Control.--
       ``(1) In general.--Except as provided in paragraph (3) or 
     (4), no industrial bank may be controlled, directly or 
     indirectly, by a commercial firm.
       ``(2) Commercial firm defined.--For purposes of this 
     section, the term `commercial firm' means any entity at least 
     15 percent of the annual gross revenues of which on a 
     consolidated basis, including all affiliates of the entity, 
     were derived from engaging, on an on-going basis, in 
     activities that are not financial in nature or incidental to 
     a financial activity during at least 3 of the prior 4 
     calendar quarters, as determined by the Corporation in 
     accordance with regulations which the Corporation shall 
     prescribe.
       ``(3) Pre-2003 exclusions.--
       ``(A) Grandfathered institutions.--Paragraph (1) shall not 
     apply with respect to any industrial bank--
       ``(i) which became an insured depository institution before 
     October 1, 2003, or pursuant to an application for deposit 
     insurance which was approved by the Corporation before such 
     date; and
       ``(ii) with respect to which there is no change in control, 
     directly or indirectly, of the bank after September 30, 2003, 
     that requires a registration under this section or an 
     application under section 7(j) or 18(c), section 3 of the 
     Bank Holding Company Act of 1956, or section 10 of the Home 
     Owners' Loan Act, except a direct or indirect change of 
     control in which--

       ``(I) immediately prior to such change in control neither 
     the ultimate acquiring holding company nor the ultimate 
     acquired holding company is a commercial firm;
       ``(II) immediately after such change of control the 
     resulting ultimate holding company is not a commercial firm; 
     and
       ``(III) the resulting ultimate holding company is subject 
     to consolidated supervision by the Office of Thrift 
     Supervision or a holding company regulated by the Securities 
     and Exchange Commission pursuant to section 240.15c3-1(a)(7) 
     of title 17 of the Code of Federal Regulations (as in effect 
     on January 29, 2007).

       ``(B) Corporate reorganizations permitted.--The acquisition 
     of direct or indirect control of the industrial bank referred 
     to in subparagraph (A)(ii) shall not be treated as a `change 
     in control' for purposes of such subparagraph if--
       ``(i) the company acquiring control is itself directly or 
     indirectly controlled by a company that was an affiliate of 
     such bank on the date referred to in such subparagraph, and 
     remains an affiliate at all times after such date; and
       ``(ii) the transaction through which the company acquired 
     control of the industrial bank constituted solely a corporate 
     reorganization of a company that controlled the industrial 
     bank on the date referred to in such subparagraph.
       ``(4) Pre-2007 exclusions.--
       ``(A) Grandfathered commercial firms.--Paragraph (1) shall 
     not apply to any commercial firm--
       ``(i) which became a holding company of an industrial bank 
     by virtue of acquiring control of an industrial bank on or 
     after October 1, 2003, and before January 29, 2007;
       ``(ii) which does not acquire control of any other 
     depository institution after January 28, 2007;
       ``(iii) with respect to which there is no change in 
     control, directly or indirectly, of any depository 
     institution subsidiary after January 28, 2007, that requires 
     a registration under this section or an application under 
     section 7(j) or 18(c), section 3 of the Bank Holding Company 
     Act of 1956, or section 10 of the Home Owners' Loan Act; and
       ``(iv) each industrial bank subsidiary of which remains in 
     compliance with the limitations contained in subparagraph 
     (B).
       ``(B) Activity and branching limitations.--An industrial 
     bank subsidiary of a commercial firm described in clauses 
     (i), (ii) and (iii) of subparagraph (A) is in compliance with 
     the requirements of this subparagraph for purposes of 
     subparagraph (A)(iv) so long as the industrial bank--
       ``(i) engages only in activities in which the industrial 
     bank was engaged on January 28, 2007; and
       ``(ii) does not acquire, establish, or operate any branch, 
     deposit production office, loan production office, automated 
     teller machine, or remote service unit in any State other 
     than the home State of the bank or any host State in which 
     such bank operated branches on January 28, 2007.
       ``(C) Corporate reorganizations permitted.--The acquisition 
     of direct or indirect control of a depository institution 
     subsidiary referred to in subparagraph (A)(iii) shall not be 
     treated as a `change in control' for purposes of such 
     subparagraph if--
       ``(i) the company acquiring control is itself directly or 
     indirectly controlled by a company that was an affiliate of 
     such subsidiary on the date referred to in such subparagraph, 
     and remains an affiliate at all times after such date; and
       ``(ii) the transaction through which the company acquired 
     control of the depository institution constituted solely a 
     corporate reorganization of a company that controlled the 
     depository institution on the date referred to in such 
     subparagraph.
       ``(g) Procedures and Timing for Termination of Activities 
     or Divestiture.--
       ``(1) Transition provision.--
       ``(A) In general.--Any company that fails to comply with 
     the provisions of subsection (f) shall divest its ownership 
     or control of each industrial bank subsidiary of the company 
     not later than the end of the 2-year period beginning on the 
     first date that the company ceased to comply with subsection 
     (f).
       ``(B) Extension of time period.--
       ``(i) In general.--Upon application by a holding company 
     that controls an industrial bank, the appropriate Federal 
     supervisory agency of such holding company may extend the 2-
     year period referred to in subparagraph (A) with respect to 
     such company for not more than 1 year if, in such agency's 
     judgment, such an extension would not be detrimental to the 
     public interest.
       ``(ii) Factors.--In making any decision to grant an 
     extension under clause (i) to a holding company of an 
     industrial bank, the appropriate Federal supervisory agent of 
     such holding company shall consider whether--

       ``(I) the company has made a good faith effort to divest 
     such interests; and
       ``(II) such extension is necessary to avert substantial 
     loss to the company.

       ``(2) Conditions before divestiture.--During the 2-year 
     period referred to in paragraph (1)(A) with respect to any 
     company and any extension of such period, the appropriate 
     Federal supervisory agency may impose any conditions or 
     restrictions on the company or any subsidiary of the company 
     (other than a bank), including restricting or prohibiting 
     transactions between the company or subsidiary and any 
     depository institution subsidiary of the company, as are 
     appropriate under the circumstances.
       ``(3) Termination of activities or divestiture of nonbank 
     subsidiaries constituting serious risk.--
       ``(A) In general.--Notwithstanding any other provision of 
     this section, the appropriate Federal supervisory agency may, 
     whenever such agency has reasonable cause to believe that the 
     continuation by a holding company of an industrial bank of 
     any activity or of ownership or control of any nonbank 
     subsidiary of such holding company, other than a nonbank 
     subsidiary of a depository institution, constitutes a serious 
     risk to the financial safety, soundness, or stability of a 
     depository institution subsidiary of the holding company and 
     is inconsistent with sound banking principles or with the 
     purposes of this section, at the election of the holding 
     company--
       ``(i) order such holding company or any such nonbank 
     subsidiary, after due notice and opportunity for hearing, and 
     after considering the views of the appropriate Federal 
     banking agency and, if applicable, appropriate State bank 
     supervisor, to terminate such activities or to terminate 
     (within 120 days or such longer period as the appropriate 
     Federal supervisory agency may direct in unusual 
     circumstances) the ownership or control by such holding 
     company or nonbank subsidiary of any such depository 
     institution subsidiary either by sale or by distribution of 
     the shares of the depository institution subsidiary, in 
     accordance with subparagraph (B), to the shareholders of the 
     holding company of the industrial bank; or
       ``(ii) order the holding company of the industrial bank, 
     after due notice and opportunity for hearing, and after 
     consultation with the appropriate State bank supervisor for 
     the industrial bank, to terminate (within 120 days or such 
     longer period as the appropriate Federal supervisory agency 
     may direct) the ownership or control of any such industrial 
     bank by such company.
       ``(B) Pro rata distribution.--Any distribution to 
     shareholders referred to in clause (i) shall be pro rata with 
     respect to all of the shareholders of the distributing 
     company, and such company shall not make any charge to any 
     shareholder in connection with such distribution.
       ``(4) Foreign bank ownership.--
       ``(A) Industrial banks.--After January 28, 2007, no foreign 
     bank may acquire, directly or indirectly, control of an 
     industrial bank unless the Board of Governors of the Federal 
     Reserve System has determined by order, or in the case of a 
     foreign bank that is a savings and loan holding company the 
     Board of Governors of the Federal Reserve System and the 
     Director of Office of Thrift Supervision have jointly 
     determined by order, in connection with the change in control 
     or acquisition of the industrial bank and after consultation 
     with the Corporation, that the

[[Page H5480]]

     foreign bank is subject to comprehensive supervision or 
     regulation on a consolidated basis by the appropriate 
     authorities in the bank's home country in accordance with the 
     standard in section 3(c)(3)(B) of the Bank Holding Company 
     Act of 1956.
       ``(B) Conforming amendment.--Notwithstanding any other 
     provision of law, after the date of enactment of the 
     Industrial Bank Holding Company Act of 2007, the Director of 
     the Office of Thrift Supervision shall not approve any 
     acquisition of a savings association under section 10(e)(2) 
     of the Home Owners' Loan Act by a foreign bank that is 
     subject to the Bank Holding Company Act of 1956 pursuant to 
     section 8(a) of the International Banking Act of 1978 and 
     that is not a bank holding company unless the Director of the 
     Office of Thrift Supervision and the Board of Governors of 
     the Federal Reserve System have jointly determined, by order, 
     in connection with the acquisition of the savings association 
     that the foreign bank is subject to comprehensive supervision 
     or regulation on a consolidated basis by the appropriate 
     authorities in the bank's home country in accordance with the 
     standard in section 3(c)(3)(B) of the Bank Holding Company 
     Act of 1956.
       ``(5) Holding company responsibility.--
       ``(A) Source of strength.--Notwithstanding section 45, a 
     holding company of an industrial bank--
       ``(i) shall serve as a source of financial and managerial 
     strength to the subsidiary banks of such holding company; and
       ``(ii) shall not conduct the operations of the holding 
     company in an unsafe or unsound manner.
       ``(B) Implementation.--The appropriate Federal supervisory 
     agency of the holding company of an industrial bank shall 
     implement the requirements under subparagraph (A).
       ``(h) Administrative Provisions.--
       ``(1) Agent for service of process.--The Corporation may 
     require any industrial bank holding company, or persons 
     connected with such holding company if it is not a 
     corporation, to execute and file a prescribed form of 
     irrevocable appointment of agent for service of process.
       ``(2) Release from registration.--The Corporation may at 
     any time, upon the Corporation's own motion or upon 
     application, release a registered industrial bank holding 
     company from any registration previously made by such 
     company, if the Corporation determines that such company no 
     longer controls any industrial bank.
       ``(i) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Appropriate federal supervisory agency.--The term 
     `appropriate Federal supervisory agency' means, with respect 
     to a company that controls an industrial bank--
       ``(A) the Corporation, in the case of a company that is an 
     industrial bank holding company;
       ``(B) the Board of Governors of the Federal Reserve System, 
     in the case of a company that is a bank holding company or 
     that is subject to the Bank Holding Company Act of 1956 
     pursuant to section 8(a) of the International Banking Act of 
     1978;
       ``(C) the Office of Thrift Supervision, in the case of a 
     company that is a savings and loan holding company; and
       ``(D) the Securities and Exchange Commission, in the case 
     of a company that is regulated by the Commission pursuant to 
     section 240.15c3-1(a)(7) of title 17 of the Code of Federal 
     Regulations (as in effect on January 29, 2007).
       ``(2) Rule of construction.--Under the definition of the 
     term `appropriate Federal supervisory agency' in paragraph 
     (1), more than 1 agency may be an appropriate Federal 
     supervisory agency with respect to any given company that 
     controls an industrial bank.''.
       (c) Enforcement.--
       (1) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by adding at the end the following 
     new paragraph:
       ``(11) Industrial bank holding companies.--This subsection 
     and subsections (c) through (s) and subsection (u) of this 
     section shall apply to any industrial bank holding company, 
     and to any subsidiary (other than a bank) of an industrial 
     bank holding company in the same manner as such subsections 
     apply to State nonmember insured banks.''.
       (2) Section 8(h)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1818(h)(2)) is amended by striking ``(2) Any party 
     to'' and inserting ``(2) Any party aggrieved by an order of 
     any appropriate Federal supervisory agency under section 51 
     or any party to''.
       (3) Section 8(i) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(i)) is amended by striking ``or 39'' each place 
     such term appears and inserting ``, 39, or 51''.
       (d) Prompt Corrective Action.--Section 38(f)(2)(H) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1831o(f)(2)(H)) is 
     amended by--
       (1) by striking ``bank holding company.--Prohibiting any 
     bank'' and inserting ``holding company.--
       ``(i) Bank holding company.--Prohibiting any bank''; and
       (2) by adding at the end the following new clause:
       ``(ii) Industrial bank holding company.--Prohibiting any 
     industrial bank holding company having control of the insured 
     depository institution from making any capital distribution 
     without the prior approval of the Corporation.''.
       (e) Technical and Conforming Amendments.--
       (1) Section 10(e)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1820(e)(2)) is amended by inserting ``or section 
     51'' after ``subsection (b)(4)''.
       (2) Section 1101(6) of the Right to Financial Privacy Act 
     of 1978 (12 U.S.C. 3401(6)) is amended--
       (A) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by inserting ``and'' after the 
     semicolon; and
       (C) by inserting after paragraph (C) the following new 
     paragraph:
       ``(D) any industrial bank holding company (as defined in 
     section 3(w)(8) of the Federal Deposit Insurance Act);''.
       (3) Section 115 of the Gramm-Leach-Bliley Act (12 U.S.C. 
     1820a) is amended--
       (A) in subsection (a), by striking ``or'' after ``bank 
     holding company'' and inserting ``, industrial bank holding 
     company, or'';
       (B) in subsection (d)--
       (i) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (6), (7), and (8), respectively; and
       (ii) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) Industrial bank holding company.--The term 
     `industrial bank holding company' has the same meaning as in 
     section 3(w)(8) of the Federal Deposit Insurance Act.''.
       (4) Section 304(g)(1) of the Home Mortgage Disclosure Act 
     of 1975 (12 U.S.C. 2803(g)(1)) is amended by inserting ``, 
     industrial bank holding company,'' after ``bank holding 
     company''.

     SEC. 3. REGULATIONS.

       The Corporation shall prescribe such regulations as the 
     Corporation determines to be appropriate to carry out the 
     amendments made by this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Frank) and the gentleman from Ohio (Mr. Gillmor) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.


                             General Leave

  Mr. FRANK of Massachusetts. Mr. Speaker, at the outset, I ask that 
all Members have 5 legislative days to revise and extend their remarks 
on this legislation and to include in the Record extraneous material 
thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. FRANK of Massachusetts. Mr. Speaker, the House today revisits the 
subject of the industrial loan corporation.
  Industrial loan corporations were created early in the last century 
as a kind of a niche at a time when it was felt that banks did not 
adequately serve working people, people of lower incomes.
  When Congress dealt with the situation of banking reform in the 
1980s, Congress decided to limit this form to six States, which now 
have the right to issue industrial loan charters, and recognize that 
the general business of banking was now being carried out in a way that 
did not require these niche banks, which Congress did not want to at 
that time wipe out banks that had been appropriately established under 
existing law.
  But it's clear that they were regarded as a somewhat nonconforming 
use. There are people today who talk about what a good thing the 
industrial loan corporations are. None of them, however, seem to me to 
have shown the courage of their convictions, because those who believe 
that the industrial loan corporation should continue to flourish and 
grow, as will happen if we don't pass the bill, ought to be abolishing 
that restriction that says only six States can issue those charters.
  I cannot think of any other financial instrument of which we have 
general approval where only six States are allowed to charter them. 
People who genuinely believe in the ILCs are the ones who ought to be 
pushing legislation. They do not. They implicitly accept the fact that 
they are an exception to a general principle.
  The particular general principle to which they are an exception is 
the one which we have affirmed recently when we did the Gramm-Leach-
Bliley bill, namely that banking and commerce should be separate.
  Now, let me be very clear. If an entity that is in the manufacturing 
business or the retail business or any other business wants to get into 
financing its purchases, or even wants to lend money to people, they 
wouldn't be affected by this as long as they were willing to forgo 
deposit insurance.
  We are here because if you become an official bank, as ILCs can be to 
this extent, you get various benefits from the Federal Government, 
including deposit insurance. So this is not the Federal

[[Page H5481]]

Government intruding on purely private business decisions, it is the 
Federal Government saying, look, we have set up the system of deposit 
insurance. We have set up other things that apply to banks. We want to 
restrict those services to entities which are only in the banking 
business. We do not want people who have as their primary business a 
manufacturer or wholesale or retail sales also dealing with banking. We 
think that is an unwise mixture. We think that the decisions that are 
made that we want to insure through the depository insurance system 
ought to be made purely on the banking aspects of this and not because 
the bank will make money on the side from where the purchase goes.
  Now, people have asked, why this legislation now? The answer is that 
for a variety of reasons, I am not fully aware of why, this situation 
changed drastically in the last few years.
  ILCs, as they exist today, are not a problem. No one is talking about 
abolishing them. In the State of Utah, where they are most important, 
and where there continues to be strong support for them, there is 
opposition to them even in some of the other States that have the right 
to charter them, the estimate we received from the Utah bank supervisor 
was that 93 percent of the assets of ILCs meet the test that we would 
apply here in this bill to everybody.
  That test, by the way, is the one that we took out of Gramm-Leach-
Bliley; namely, that to be in the banking business, you have to be at 
least 85 percent a financial institution, though we do recognize there 
will be some incidentals. Ninety-three percent of the Utah ILCs meet 
this.
  The problem is over the last few years, a number of large 
manufacturing and commercial entities have decided that they would like 
to get into the ILC business. So people have said to us, why are you 
upsetting the status quo? We are not. Here, to be honest, we are 
preserving, we think, the status quo, which is the principle of the 
separation of banking, commerce, a banking system which exists under 
that rubric and a small niche for some banks which, for historical 
reasons, were allowed not necessarily to follow this.
  What's changing the status quo is the application from a number of 
large entities, Wal-Mart, Home Depot, many others, to get into the ILC 
business. We believe that does not really reflect what Congress 
intended in the 1980s. It's not illegal under current law, but we think 
that Congress did not anticipate then that large commercial and 
manufacturing entities would seek substantially to broaden the ILC 
approach.
  There were people who disagreed with us that we should preserve the 
distinction between banking and commerce. I asked them, where is that 
bill?
  Again, those who would support by not changing the law a broad 
expansion of the ILCs are the ones who are seeking drastic change in 
our banking laws. They are, in effect, saying, you know, this 
distinction between banking and commerce you make is arbitrary, it has 
been outdated, let's get rid of it.
  Well, the way to get rid of that is for people to bring forward a 
bill. I can promise them as chairman of the Financial Services 
Committee, we will have a hearing, we will consider it. But let them 
bring forward a bill, and let's do that as a conscious decision of the 
Congress of the United States.
  I will oppose it, I think most Members will, which is probably why 
they don't want to bring it forward. But let's not do it in a kind of a 
back-door way by the expansion of what had been intended to be a 
residual niche kind of banking. This bill today would say that going 
forward, it doesn't wipe out existing entities, but going forward, ILC 
charters will only be granted to those that are at least 85 percent 
financial.
  I want to give my thanks to the Chair of the Federal Deposit 
Insurance Commission, Chairman Bair. They have been put in a tough 
situation, because the law theoretically allows them to create an 
infinite number of new ILCs with no respect whatsoever for the banking 
and commerce distinction. Once this House passed a bill on the subject, 
although it did not pass the Senate, a phrase one often hears, the FDIC 
at our request has imposed a moratorium on new ILC charters.
  But the FDIC is a law-abiding organization. Chairwoman Bair has an 
appropriate understanding of the role of the regulatory body in a 
democratic system. She will not forever maintain a moratorium, nor 
should she. What she did was, quite appropriately, give Congress the 
chance to legislate. We are beginning that process today.
  I hope that we will pass the bill, that it will go to the Senate and 
they will pass something, and we will be able to work out legislation 
which will essentially preserve the distinction between banking and 
commerce. The necessity for us to act now is that if we do not act, the 
status quo will be greatly transformed, and the distinction we have 
long maintained in our law between banking and commerce, instead of 
admitting a fairly small exception where six States can do it, and 
where even in the State where it is most prominent only 7 percent of 
the assets under this form are the exception, we will then see a 
general erosion. Erosion may understate it; a general abolition of the 
line between banking and commerce. We do not think that is appropriate, 
and passing this bill is the way to stop it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GILLMOR. I want to thank Chairman Frank for all his leadership on 
this issue, not just in this session, but in previous sessions, and 
also thank Ranking Member Spencer Bachus for his consistent support of 
the principles embodied in this legislation.
  Chairman Frank and I have cosponsored meaningful reform of the ILC 
charter option for a number of years now. We have gotten a bill, passed 
the House twice, it died in the Senate. I think this year, though, the 
third time may be the charm. I think we have substantially more support 
for this legislation in the Senate than in the past.
  While it's available in only a handful of States, the ILC charter is 
the last loophole remaining for commercial firms wishing to engage in 
full-service banking.
  While a majority of current commercial owners of industrial banks 
refrain from using all the banking powers available to them, the broad 
ILC charter does allow for a complete mixing of banking and commerce, 
which I and other objective observers, such as Alan Greenspan, Chairman 
Ben Bernanke and others, consider to be financially unwise.
  The trend in Congress over the past several decades has been one of 
removing loopholes and exceptions in the bank law. We did it most 
recently in 1987 and in 1999, and the trend is clear: If you want to 
engage in full-service banking, you must become a bank or a thrift 
holding company.
  Chartering an ILC in Utah is really your only option to make an end 
run around our bank laws, and the secret is out. ILC assets have grown 
more than 3,500 percent over the past decade. Applications for new ILCs 
look nothing like they did 80 years ago when this charter was created. 
States such as California, Maryland and others have taken notice of 
this alarming trend in ILC applications and have installed roadblocks 
to an extension of the charter.
  State action alone is insufficient, however. It's time that Congress 
address this policy concern, using the time which was wisely given to 
us by the FDIC-imposed moratorium. I also want to commend Chairman Bair 
and the FDIC for listening to the concerns of Congress and imposing 
that moratorium.
  Should Congress fail to send H.R. 698 to the President, we will be 
increasingly in danger of creating a parallel banking system to that 
which we have now and which has served the country very well. Both 
financial and commercial firms will look to this industrial bank option 
as a way to escape the rules that apply to everybody else. The banking 
system is well served by the different charter options available to 
them, but the universe in which an industrial bank can operate is more 
expansive than any other.
  This is poor public policy. Simply saying that since no ILC has yet 
taken full advantage, that Congress shouldn't act, is wrong.
  We are currently in a time of banking stability. Up until recently 
the FDIC had gone a record 952 days without a bank failure. But I don't 
like to think about the type of hit that the deposit insurance fund 
would have taken,

[[Page H5482]]

and the hit that taxpayers would have taken, if Enron had had an 
industrial bank prior to their collapse.

                              {time}  1515

  This bill is a combination of significant bipartisan effort 
undertaken by myself and Chairman Frank to strike a balance between 
protecting those ILCs already in existence and preventing any further 
widening of this loophole by commercial firms.
  The list of supporters for this reform measure is long and growing. 
We have 145 cosponsors of this measure to date, and the other body has 
already begun its deliberations of an identical bill.
  So I want to sincerely thank Chairman Frank, Ranking Member Bachus, 
and their staff for the hard work on this bill, and urge my colleagues 
to support this bipartisan legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I now yield as much time as 
he may consume to the gentleman from Utah (Mr. Matheson), a former 
member of our committee with whom many of us disagree but who, 
representing the State of Utah, has been a very staunch and articulate 
defender of a form of banking which is very important in his State.
  Mr. MATHESON. I thank Chairman Frank for his good work. I have great 
respect for Chairman Frank, and I have great respect for my colleague 
Mr. Gillmor. On this particular issue, I respectfully have a different 
point of view, but I do understand the time and effort that has gone 
into looking at this issue.
  I think it is important to note that when we look at legislation, we 
often are trying to solve problems and achieve progress. That is what 
Congress does, and my concern here is this is legislation that is a 
solution in search of the problem.
  We already have a number of banks that have been chartered with 
commercial parents, and we have a track record of regulation of this 
type of institution that is a stellar track record. Quite frankly, I 
think the Federal Deposit Insurance Corporation, the FDIC, and the 
State of Utah, which regulates these particular banks, has a great 
track record. So I fear that we have moved down a path where we said, 
``Oh, gee, these things could happen; therefore, let's stop this 
industry from moving in the direction that it has been moving.''
  I think it is important for us to show concern and make sure we don't 
go down a path that could have negative implications, but in this case 
where we have already had a number of banks chartered and a track 
record that is so solid and none of these potential problems have 
manifested themselves, I question whether Congress should be moving in 
this direction.
  As this debate has moved along, we have also said, well, what about 
the auto companies? Maybe we should carve out an exemption for them. 
What about the ones that already exist? Like Target already has one. We 
need to cut out an exemption for them.
  As you start to slice and dice this industry and allow certain 
exemptions here and there, that calls into question the basic premise 
of if there really is a problem to have commercial ownership of this 
industry.
  I will close with just one other point of fact. I noted in the 
hearing before the Financial Services Committee a couple weeks ago a 
comment by one of the witnesses was made that I have heard periodically 
throughout this debate. They said: My gosh, what if Enron and WorldCom 
had one of these? Where would we be then?
  And my answer is: Based on the track record of this industry, I would 
like to think that, while those parent companies had their financial 
difficulties, the subsidiary bank would have been fine. We have 
examples right now where the parent company, like Conseco, went into 
bankruptcy, and their industrial loan company based in Utah was 
shielded from all those financial problems and, quite frankly, sold at 
a premium.
  So that shows that the style of regulation, which is different, it is 
a different style of regulation called ``bottom up'' or ``bank 
centric'' regulation, it shows that type of regulation has worked, it 
has protected against transgressions, and I think that track record is 
something we need to keep in mind.
  So as this issue percolates along, it is clear this bill is going to 
pass the House today. I suspect the Senate may have a different type of 
bill as well. And as this issue perks along, I just encourage everyone 
to keep an open mind about looking at the actual track record, 
understanding the magnitude of the potential problems, but also keeping 
in mind that more choices for consumers, greater efficiency for our 
economy, those are good things, too, and they ought to be balanced in 
this overall debate.
  Again, I really thank the chairman for giving me some time when I am 
speaking out. Quite frankly, I am going to vote against the bill, but I 
appreciate him giving me time to speak today.
  Again, I respect all my colleagues that worked on this, and I look 
forward to continuing to work with them on the adjusted loan bank issue 
in the future.
  Mr. GILLMOR. Mr. Speaker, let me commend the gentleman from Utah for 
an articulate presentation. He is protecting the hometown industry, and 
there is nothing wrong with that.
  I think this bill, though, involves something much broader than that; 
and it involves a very important financial principle that has been 
recognized for decades, which is a separation of banking and commerce.
  Really, the fact that some of these ILCs have not utilized all the 
powers they could have isn't really an argument against this bill. 
Because the business plan of some of the new industrial companies 
trying to take over ILCs, Home Depot is a great example, is totally 
different than what the history in the past has been. So that history I 
don't think is really relevant to what this bill is aimed at.
  But that having been said, I am very pleased to yield as much time as 
he may consume to the ranking member, the gentleman from Alabama (Mr. 
Bachus).
  Mr. BACHUS. Mr. Speaker, I rise in support of this legislation. I 
really believe that we do need enhanced regulatory supervisions over 
the ILCs, and this legislation does that. The Federal Reserve and other 
Federal regulators have urged us to enhance the regulation, and that is 
what this does.
  It also does two things; and every year that we wait to pass this, it 
becomes a bigger problem. But we grandfather the existing ILCs. If we 
had done this bill 2 or 3 years ago, we would have had much fewer of 
these and we wouldn't have the problems that we have today, talking 
about, well, this commercial firm has one, this commercial doesn't.
  But it was through no fault of the chairman of the full committee. 
Mr. Frank, when he was ranking member, pushed this very hard as a 
solution to this problem, as did the subcommittee chairman, Mr. 
Gillmor, and I want to commend both of them for their hard work over 
the past several years.
  I also want to particularly commend the chairman of the committee, 
Mr. Frank. He has really made this a collaborative effort. It has been 
a bipartisan effort; and I hope the bill, because of that, is a better 
bill.
  I think we are going to have a good vote here. I do think, because it 
is a bipartisan effort and it is a compromise, that we will have, 
hopefully, better success in not only passing this bill out of the 
House but seeing it ultimately enacted into law.
  These ILCs, and they are ILCs, industrial loan companies, now they 
are industrial bank holding. This is the Industrial Bank Holding 
Company Act, because they really have evolved into bank holding 
companies; and what these started out primarily as is just a small loan 
company where industrial employees were able to borrow money. It is 
very similar to a credit union. The only difference is they didn't join 
as members. They just borrowed money, because they really didn't have 
access to a commercial bank at that time, and that was the whole reason 
for these.
  As the chairman said and as the subcommittee Chair said, all of these 
exist in six States. The vast majority of the assets of ILCs are 
chartered in Utah; California and Nevada being the other States that 
have significant numbers of them.
  As the subcommittee Chair has said, these things have grown 3,500 
percent just since we started focusing on this.

[[Page H5483]]

It is really growing out of control. And what it does, we made a policy 
decision several years ago in this Congress that we would not allow 
commercial firms to operate banks, and this will really enforce that 
policy decision that we made.
  As they have grown in size and nature and complexity, several not 
only regulatory but policy issues have been presented, not only to the 
Congress, but to the regulators. One of the concerns, as the 
subcommittee Chair and the chairman have both referred to, is a concern 
over mixing banking and commerce, which is really not what the American 
financial system is all about. Japan and other systems have allowed a 
mixing of commerce and banking, and we are evolving, but they have run 
into problems. We would like to avoid those problems.
  An exemption in the current law permits any type of company, 
including a commercial firm, to acquire an ILC in six States. We want 
to close that loophole. We want to stop that.
  Let me conclude by saying I do have one concern, and I am going to 
have a colloquy with the chairman in a moment. But I am concerned that 
this bill, and it is not intended and I know the chairman has said 
previously we hope to address this in the Senate or in conference, but 
I am concerned that it may discriminate against our domestic automobile 
manufacturing dealers.
  The reason I say that is most automobile companies today, including 
the large foreign automobile manufacturers, have set up ILCs. General 
Motors has set up an ILC. But Chrysler and Ford do not have ILCs. And, 
as drafted today, the bill would allow the foreign automobile 
manufacturers as well as GM, and I am going to clarify that in the 
colloquy, to continue their ILCs. However, Ford and Chrysler, or 
DaimlerChrysler, which may end up to be Chrysler, does not have an ILC.
  I am concerned not only that that is a disadvantage to the automobile 
companies but to the Nation's dealers that sell Ford and Chrysler 
products. People are going into this every day, they are thinking ILCs 
give them a competitive advantage, and I don't want to see Chrysler and 
Ford shut out of having an opportunity to have this advantage.
  As the process moves forward, I would like to work with both the 
chairman and the ranking member to ensure the legislation does not 
create an unlevel playing field that harms our domestic automobile 
industry.
  At this time, I would like to pose a question to the chairman.
  Under the committee reported bill, Chairman Frank, a number of firms 
that already controlled industrial banks before January 29, 2007, are 
grandfathered from the new prohibition on control of industrial banks 
by commercial firms. The grandfathered firms that control a particular 
industrial bank are subject to a disposition agreement with the FDIC 
that is affected by the outcome of this legislation. Under the 
agreement, the FDIC has the power to waive the disposition requirement, 
depending on the state of the law, in 2008.
  My question is whether it is the committee's intention that the 
decision to grandfather these firms supercedes this particular prior 
agreement and makes a waiver unnecessary, provided the grandfathered 
firms abide by all of the limitations imposed on grandfathered firms 
and operate under the supervision of the appropriate Federal 
supervisory agency.
  Mr. FRANK of Massachusetts. If the gentleman would yield to me, let 
me say, and I want to pay tribute to members of the staffs on both 
sides, Mr. Paese and Mr. Yi on my side here, who did a lot of 
negotiating. There are a lot of regulators involved here, the FDIC as 
the primary regulator, but the Federal Reserve and the Securities and 
Exchange Commission, the Comptroller, and we did the best we could to 
try and not have this be a means of changing existing relationships.
  So I can assure the gentleman from Alabama that he has precisely 
stated our intent. When we grandfathered these firms in this bill, it 
was our purpose and is our purpose to let them continue to operate the 
existing industrial banks under the limitations of the bill and under 
the supervision of each grandfathered firm's appropriate supervisory 
agency.
  So I hope that would respond to the question. It is our intention 
essentially to ratify the existing arrangements by law, which would, of 
course, preclude the need for a waiver if the law is clear about what 
it does.
  Mr. BACHUS. Chairman, your response does indeed clarify the 
situation, and I thank you for doing that. And I again thank you and 
the gentleman from Ohio (Mr. Gillmor) for their work on this important 
bill.
  I would also like to join with you. You have both praised Chairman 
Bair, and I think she has done an exceptional job of trying to sort 
through this difficult situation. And I would also like to commend the 
OTS and the Federal Reserve for working a compromise on some of the 
supervisory questions that were presented by this bill. Late last week, 
they came to an agreement between themselves.
  Mr. FRANK of Massachusetts. If the gentleman would yield. With some 
encouragement.
  Mr. BACHUS. Yes, and I appreciate that encouragement; and I know they 
do, too.
  At this time, I again commend the chairman. I think this is a very 
good bill that deserves the support of all the membership.
  Mr. GILLMOR. Mr. Speaker, I yield back the balance of my time.
  Mr. FRANK of Massachusetts. I just want to respond to my good friend 
from Utah. He made an interesting point which is, well, if these are 
terrible, why don't you abolish them? That, of course, becomes a Catch-
22. I guarantee you that if we had proposed in fact to abolish or 
severely restrict existing ones, he would have been justifiably a lot 
less happy than he is today.

                              {time}  1530

  Congress made a decision. We don't always make the best decisions 
when we look back; we often make good decisions, but not perfect ones. 
We believe it would be unfair to undo what was originally done by law.
  I would note again that even in the State of Utah, which has become 
the primary focal point for the industrial loan corporations, 93 
percent of the entities functioning as industrial loan corporations in 
Utah would be unaffected by this bill. They would be able to expand 
because they meet the 85 percent financial test.
  As to the others, we believe that it is those who have finally 
figured out the potential of the industrial loan corporation going 
forward who are trying to change things. People have said to us, well, 
there's been no problem. Why are you doing this? Well, for once, maybe 
not once, let's not be too self-denigratory, we're doing this to get 
ahead of the problem. Yes, that's precisely the case. The ILCs have not 
caused problems. It is the, I believe, overwhelming view of people here 
and people who have watched the banking business and who believe in the 
separation of banking and commerce that if we don't act, we will see 
some problems. So that is what we are doing here. And I hope that this 
bill passes with a large margin, and we can pretty soon engage with our 
colleagues in the Senate about putting a final product on the desk of 
the President.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Massachusetts (Mr. Frank) that the House suspend the 
rules and pass the bill, H.R. 698, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. FRANK of Massachusetts. Mr. Speaker, on that I demand the yeas 
and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this question will 
be postponed.

                          ____________________