[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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