[Congressional Record Volume 153, Number 185 (Wednesday, December 5, 2007)]
[House]
[Pages H14172-H14174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INCLUDING ALL BANKING AGENCIES WITHIN THE EXISTING REGULATORY AUTHORITY 
                 UNDER THE FEDERAL TRADE COMMISSION ACT

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 3526) to include all banking agencies within 
the existing regulatory authority under the Federal Trade Commission 
Act with respect to depository institutions, and for other purposes, as 
amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3526

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

     SECTION 1. INCLUSION OF ALL BANKING AGENCIES.

       (a) In General.--The second sentence of section 18(f)(1) of 
     the Federal Trade Commission Act (15 U.S.C. 57a(f)(1)) is 
     amended--
       (1) by striking ``The Board of Governors of the Federal 
     Reserve System (with respect to banks) and the Federal Home 
     Loan Bank Board (with respect to savings and loan 
     institutions described in paragraph (3))'' and inserting 
     ``Each Federal banking agency (with respect to the depository 
     institutions each such agency supervises)''; and
       (2) by inserting ``in consultation with the Commission'' 
     after ``shall prescribe regulations''.
       (b) FTC Concurrent Rulemaking.--Section 18(f)(1) of such 
     Act is further amended by inserting after the second sentence 
     the following: ``Such regulations shall be prescribed jointly 
     by such agencies to the extent practicable. Notwithstanding 
     any other provision of this section, whenever such agencies 
     commence such a rulemaking proceeding, the Commission, with 
     respect to the entities within its jurisdiction under this 
     Act, may commence a rulemaking proceeding and prescribe 
     regulations in accordance with section 553 of title 5, United 
     States Code. If the Commission commences such a rulemaking 
     proceeding, the Commission, the Federal banking agencies, and 
     the National Credit Union Administration Board shall consult 
     and coordinate with each other so that the regulations 
     prescribed by each such agency are consistent with and 
     comparable to the regulations prescribed by each other such 
     agency to the extent practicable.''.
       (c) GAO Study and Report.--Not later than 18 months after 
     the date of enactment of this Act, the Comptroller General 
     shall transmit to Congress a report on the status of 
     regulations of the Federal banking agencies and the National 
     Credit Union Administration regarding unfair and deceptive 
     acts or practices by the depository institutions.

[[Page H14173]]

       (d) Technical and Conforming Amendments.--Section 18(f) of 
     the Federal Trade Commission Act (15 U.S.C. 57a(f)) is 
     amended--
       (1) in the first sentence of paragraph (1)--
       (A) by striking ``banks or savings and loan institutions 
     described in paragraph (3), each agency specified in 
     paragraph (2) or (3) of this subsection shall establish'' and 
     inserting ``depository institutions and Federal credit 
     unions, the Federal banking agencies and the National Credit 
     Union Administration Board shall each establish''; and
       (B) by striking ``banks or savings and loan institutions 
     described in paragraph (3), subject to its jurisdiction'' 
     before the period and inserting ``depository institutions or 
     Federal credit unions subject to the jurisdiction of such 
     agency or Board''
       (2) in the sixth sentence of paragraph (1) (as amended by 
     subsection (b))--
       (A) by striking ``each such Board'' and inserting ``each 
     such banking agency and the National Credit Union 
     Administration Board'';
       (B) by striking ``banks or savings and loan institutions 
     described in paragraph (3)'' each place such term appears and 
     inserting ``depository institutions subject to the 
     jurisdiction of such agency'';
       (C) by striking ``(A) any such Board'' and inserting ``(A) 
     any such Federal banking agency or the National Credit Union 
     Administration Board''; and
       (D) by striking ``with respect to banks, savings and loan 
     institutions'' and inserting ``with respect to depository 
     institutions'';
       (3) by adding at the end of paragraph (1) the following new 
     sentence: ``For purposes of this subsection, the terms 
     `Federal banking agency' and `depository institution' have 
     the same meaning as in section 3 of the Federal Deposit 
     Insurance Act.'';
       (4) in paragraph (2)(C), by inserting ``than'' after 
     ``(other'';
       (5) in paragraph (3), by inserting ``by the Director of the 
     Office of Thrift Supervision'' before the period at the end;
       (6) in paragraph (4), by inserting ``by the National Credit 
     Union Administration'' before the period at the end; and
       (7) in paragraph (6), by striking ``the Board of Governors 
     of the Federal Reserve System'' and inserting ``any Federal 
     banking agency or the National Credit Union Administration 
     Board''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Frank) and the gentlewoman from West Virginia (Mrs. 
Capito) each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Speaker, this is a bill that was 
broadly supported in our committee that we believe will enhance the 
ability of the Federal bank authorities to provide consumer protection. 
It's a little bit of a complicated story.
  Congress passed an amendment to the Federal Trade Act that gave the 
Federal Reserve System the right to promulgate rules which defined what 
were unfair or deceptive practices engaged in by banks. The Federal 
Reserve has, for many years, declined to exercise that authority.
  The issue was first brought to my attention when I was ranking member 
of the committee by a very distinguished public official who, sadly, 
died earlier this year, Ned Gramlich, who was the Federal Reserve Board 
Governor in charge of, among other things, consumer protection. And 
here's how it played out.
  The Comptroller of the Currency and the Director of the Office of 
Thrift Supervision a few years ago promulgated very strict rules 
preempting State rules and State laws and regulations regarding the 
activities of national banks. As a result of that ruling, which was 
challenged but upheld by the courts, States have virtually no authority 
over the banking practices of national banks. Only the national bank 
regulators may regulate.
  The problem is that there were, in many, many States, most of the 
States from which we here come, consumer protection laws which were 
invalidated by that. In fact, the preemption said even when there were 
rules of general application that were covering the banks, the ability 
of the States to enforce them was limited. They had to go through the 
Federal regulators. So we then went to the Federal regulators, but many 
of us were opposed to that. We were critical. And on a bipartisan basis 
there was criticism of it on the Financial Services Committee. Our 
former colleague, the gentlewoman from New York, Mrs. Kelly, who was 
chairman of the Oversight Committee, was a very strong critic of what 
she believed to be excessive overregulation. But that has been upheld, 
and there is no realistic chance of undoing it.
  So the second best for us was to have the Federal bank regulators 
able to provide the consumer protections that were lost when the State 
rules were invalidated. I spoke with the Comptroller of the Currency, 
and his response was, Well, here's the problem. Under the Federal Trade 
Act, the Federal Reserve has the right to promulgate the code of unfair 
deceptive practices. He indicated to me that he would like to do that, 
in fact, two Comptrollers said we would like to do this, but we don't 
have the authority to promulgate the rules. The Office of Thrift 
Supervision, which preempted, interestingly, does have the authority to 
promulgate the rules.
  Now, what motivated our colleagues of an earlier era to give the 
Federal Reserve the right to make the rules for the Comptroller of the 
Currency and to give the Office of Thrift Supervision the right to make 
the rules only for themselves? I do not know. I can't speculate. Based 
on most recent experience, it was probably the Senate's fault, because 
almost everything that goes wrong these days is. But I don't know that 
for sure. On the other hand, it's our job to try to correct it.
  What this bill does is to say to two of the Federal bank agencies, 
the Office of the Comptroller of the Currency and the Federal Deposit 
Insurance Corporation, which the Federal Deposit Insurance Corporation 
through its depository institutions has some authority over both 
national and State banks since it insures the deposits in both, we take 
away in this bill from the Federal Reserve System the power they have 
refused to use to promulgate a code of unfair and deceptive practices 
and give it, instead, over to the Comptroller of the Currency and the 
FDIC, either jointly or concurrently, and it comes with their support.

                              {time}  1230

  The Fed said they didn't like it, but they weren't using the power. 
The Comptroller of the Currency, he is, after all, a defender of this 
preemption. He has maintained the preemption. This is not an effort to 
undo the preemption. He acknowledges that in presiding over this 
national set of rules, it would be helpful to him to have this code of 
unfairness and deceptive practice, and what the code does is give some 
notice to the banks as to what are prohibited practices and what 
aren't. So this bill does nothing in terms of substantive promulgation 
of the code, but it gives to the active agencies, the Comptroller of 
the Currency, who promulgated the preemption, and the FDIC, the ability 
to put into effect what we think should have been put into effect 
before. It comes with the support of those agencies, and I think that 
if we get this done, they will proceed to do it.
  I should note that the Office of Thrift Supervision, which already 
has the authority to promulgate such a code, is in the process of doing 
so. No legislation is needed. But they have put out a proposed rule in 
that regard. We have, many of us, encouraged them to go forward with 
it. And as a result of what OTS is doing under its authority and what 
this bill would give the Comptroller of the Currency and the FDIC by 
early next year, we should have in place rules that will tell people 
what are unfair and deceptive practices. And as I said, I would have 
preferred that the preemption would not have been so far reaching, but 
it's a fact of life. This will then empower the Federal bank regulators 
fully to be available to provide consumer protection when it's 
appropriate in lieu of the State laws that were cancelled.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. CAPITO. Mr. Speaker, I yield myself such time as I may consume.
  I rise in support of the bill, H.R. 3526, a bill that is intended to 
provide financial consumers with additional regulatory protections 
against unfair and deceptive trade policies. This measure, which the 
Financial Services Committee approved by voice vote, expands the range 
of financial regulators, as the chairman has just explained, with the 
authority to promulgate regulations that identify and restrict such 
practices under the Federal Trade Commission Act.
  Today only the Board of Governors of the Federal Reserve, the Office 
of Thrift Supervision, and the National Credit Union Administration 
have this authority. This bill expands that list to

[[Page H14174]]

include the other Federal banking regulators, namely the FDIC and the 
Office of the Comptroller of the Currency.
  The legislation also mandates that regulations promulgated under the 
relevant section of the FTC Act be prescribed ``jointly by such 
agencies to the extent practicable,'' in consultation with the FTC. And 
it requires the GAO to report on the status of the regulations of the 
Federal banking agencies and the NCUA regarding unfair and deceptive 
acts.
  In testimony before our committee earlier this year, the Comptroller 
of the Currency and the Chair of the FDIC recommended that the 
committee make these changes, which also are supported by consumer 
advocates. This bill merits our support, and I urge its adoption.
  Mr. Speaker, I yield back the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, the good news is that I have 
no further requests for time, and 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. 3526, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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