[Congressional Record Volume 163, Number 201 (Monday, December 11, 2017)]
[House]
[Pages H9770-H9773]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         FINANCIAL INSTITUTION CUSTOMER PROTECTION ACT OF 2017

  Mr. LUETKEMEYER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 2706) to provide requirements for the appropriate 
Federal banking agencies when requesting or ordering a depository 
institution to terminate a specific customer account, to provide for 
additional requirements related to subpoenas issued under the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989, and for 
other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2706

       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 ``Financial Institution 
     Customer Protection Act of 2017''.

     SEC. 2. REQUIREMENTS FOR DEPOSIT ACCOUNT TERMINATION REQUESTS 
                   AND ORDERS.

       (a) Termination Requests or Orders Must Be Valid.--

[[Page H9771]]

       (1) In general.--An appropriate Federal banking agency may 
     not formally or informally request or order a depository 
     institution to terminate a specific customer account or group 
     of customer accounts or to otherwise restrict or discourage a 
     depository institution from entering into or maintaining a 
     banking relationship with a specific customer or group of 
     customers unless--
       (A) the agency has a valid reason for such request or 
     order; and
       (B) such reason is not based solely on reputation risk.
       (2) Treatment of national security threats.--If an 
     appropriate Federal banking agency believes a specific 
     customer or group of customers is, or is acting as a conduit 
     for, an entity which--
       (A) poses a threat to national security;
       (B) is involved in terrorist financing;
       (C) is an agency of the Government of Iran, North Korea, 
     Syria, or any country listed from time to time on the State 
     Sponsors of Terrorism list;
       (D) is located in, or is subject to the jurisdiction of, 
     any country specified in subparagraph (C); or
       (E) does business with any entity described in subparagraph 
     (C) or (D), unless the appropriate Federal banking agency 
     determines that the customer or group of customers has used 
     due diligence to avoid doing business with any entity 
     described in subparagraph (C) or (D),
     such belief shall satisfy the requirement under paragraph 
     (1).
       (b) Notice Requirement.--
       (1) In general.--If an appropriate Federal banking agency 
     formally or informally requests or orders a depository 
     institution to terminate a specific customer account or a 
     group of customer accounts, the agency shall--
       (A) provide such request or order to the institution in 
     writing; and
       (B) accompany such request or order with a written 
     justification for why such termination is needed, including 
     any specific laws or regulations the agency believes are 
     being violated by the customer or group of customers, if any.
       (2) Justification requirement.--A justification described 
     under paragraph (1)(B) may not be based solely on the 
     reputation risk to the depository institution.
       (c) Customer Notice.--
       (1) Notice required.--Except as provided under paragraph 
     (2) or as otherwise prohibited from being disclosed by law, 
     if an appropriate Federal banking agency orders a depository 
     institution to terminate a specific customer account or a 
     group of customer accounts, the depository institution shall 
     inform the specific customer or group of customers of the 
     justification for the customer's account termination 
     described under subsection (b).
       (2) Notice prohibited.--
       (A) Notice prohibited in cases of national security.--If an 
     appropriate Federal banking agency requests or orders a 
     depository institution to terminate a specific customer 
     account or a group of customer accounts based on a belief 
     that the customer or customers pose a threat to national 
     security, or are otherwise described under subsection (a)(2), 
     neither the depository institution nor the appropriate 
     Federal banking agency may inform the customer or customers 
     of the justification for the customer's account termination.
       (B) Notice prohibited in other cases.--If an appropriate 
     Federal banking agency determines that the notice required 
     under paragraph (1) may interfere with an authorized criminal 
     investigation, neither the depository institution nor the 
     appropriate Federal banking agency may inform the specific 
     customer or group of customers of the justification for the 
     customer's account termination.
       (d) Reporting Requirement.--Each appropriate Federal 
     banking agency shall issue an annual report to the Congress 
     stating--
       (1) the aggregate number of specific customer accounts that 
     the agency requested or ordered a depository institution to 
     terminate during the previous year; and
       (2) the legal authority on which the agency relied in 
     making such requests and orders and the frequency on which 
     the agency relied on each such authority.
       (e) Definitions.--For purposes of this section:
       (1) Appropriate federal banking agency.--The term 
     ``appropriate Federal banking agency'' means--
       (A) the appropriate Federal banking agency, as defined 
     under section 3 of the Federal Deposit Insurance Act (12 
     U.S.C. 1813); and
       (B) the National Credit Union Administration, in the case 
     of an insured credit union.
       (2) Depository institution.--The term ``depository 
     institution'' means--
       (A) a depository institution, as defined under section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813); and
       (B) an insured credit union.

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


                             General Leave

  Mr. LUETKEMEYER. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks, and 
include extraneous material on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. LUETKEMEYER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, today the House will consider an amended version of H.R. 
2706, the Financial Institution Customer Protection Act, legislation I 
introduced in an effort to provide greater transparency and 
accountability among banking regulators.
  Over the past few years, members of the Financial Services Committee 
and others in the House have expressed bipartisan concern surrounding 
Operation Choke Point, the Department of Justice and FDIC-led 
initiative that sought to separate legal businesses from financial 
services they need to survive.
  People may think Operation Choke Point is limited to payday lenders 
or the banks serving them, but it is not. This initiative has spread to 
many industries, including tobacco shops, pawn brokers, ATM operators, 
even amusement gaming companies, to name just a few. Even attorneys and 
third parties that serve these industries have been impacted.
  The underlying problem here is significant. The Federal Government 
should not be able to intimidate financial institutions into dropping 
entire sectors of the economy as customers, based not on risk or 
evidence of wrongdoing, but purely on personal and political 
motivations.
  This type of program sets an incredibly dangerous precedent that 
shouldn't be permitted under any Presidential administration. There 
needs to be a process in place to ensure that the banking regulators 
have the ability to pursue bad actors, but not to punitively target 
specific businesses or products that operate and are offered within the 
confines of the law.
  This legislation offers a straightforward approach to a complicated 
problem. It simply dictates that Federal banking regulators cannot 
suggest, request, or order a financial institution to terminate a 
banking relationship unless the regulator has material reason beyond 
reputational risk. It also puts in place the requirement that agency 
management sign off on any account termination request or order.
  The provisions contained in H.R. 2706 are so reasonable, in fact, 
that the FDIC has already used its authority to put them in place. 
Effective 2015, agency policy now requires supervisory staff to track 
and document account termination recommendations. Such recommendations 
must now be made in writing and not through informal suggestion. FDIC 
regional leadership must be made aware of any such recommendation, and 
the basis for such recommendation cannot rely solely on reputational 
risk.
  The original bill would have also struck the word ``affecting'' in 
FIRREA and replaced it with ``by'' or ``against.'' I maintain that this 
modest change would have helped to ensure that broad interpretations of 
the law are limited and that the original intent of the statute, 
helping to penalize fraud against or by financial institutions, is 
restored.
  Attorney General Sessions announced the end of Operation Choke Point 
earlier this year, and we have noticed a dramatic decline in FIRREA 
subpoenas resembling those seen during the height of the initiative. 
The issues with FIRREA still need to be addressed, and while H.R. 2706 
is not the opportunity to do that, I will continue to press for 
reasonable reforms and clarifications of the law.
  Within the banking agencies, these account termination requests are 
still a significant problem. Just last week, I had a meeting with an 
industry that has seen a rash of account terminations in Missouri, 
Massachusetts, Rhode Island, California, Texas, and Wisconsin, to just 
name a few of the States that have been affected. We have to restore 
order, Mr. Speaker. Our goal should be to have more individuals and 
businesses in banks, not forced from them.
  Mr. Speaker, I remind my colleagues that the House has passed by a 
voice vote two appropriations amendments prohibiting funding for 
Operation Choke Point. Members from both sides of the aisle have 
written letters and

[[Page H9772]]

talked to regulators about the dangers of such a program. This is a 
very real issue and one that must be addressed.
  Again, I want to emphasize that it is essential that DOJ and 
financial regulators maintain the ability to pursue bad actors or 
anyone they think could be a bad actor. This amended version includes 
language offered by Ranking Member Waters to ensure that customer 
account termination notices don't interfere with ongoing criminal 
investigations. The checks and balances in this legislation would help 
to ensure accountability among the regulators and would in no way 
hinder the ability of any executive branch agency from going after 
individuals or businesses suspected of fraudulent activity.
  This legislation offers a responsible approach to curbing the 
malpractice we have seen in Operation Choke Point. I want to thank the 
many colleagues who worked with me on this legislation, in particular, 
the gentleman from Washington (Mr. Heck), Chairman Hensarling, and 
Ranking Member Waters for helping to get this considered on the 
suspension calendar today.
  Mr. Speaker, I urge my colleagues to support this bill, and I reserve 
the balance of my time.
  Mr. CAPUANO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to thank the gentleman from Missouri (Mr. 
Luetkemeyer), who has been a wonderful person to work with, and the 
many members of the committee on our side of the aisle, particularly 
Ranking Member Waters and Mr. Heck from Washington.

  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Washington (Mr. Heck).
  Mr. HECK. Mr. Speaker, I thank the gentleman for yielding. Most 
importantly, I want to express and extend my gratitude to the gentleman 
from Missouri. This has been a three-year journey for this particular 
legislation; not uncommon in this environment. But it was a difficult 
journey at times. At no step along the way did the gentleman from 
Missouri ever waiver from his commitment to working as collaboratively 
as possible, in a willingness to work to find a solution, and he did 
just that, and I thank him for that.
  Mr. Speaker, I also want to thank Ranking Member Waters for her 
efforts, without which this bill would never even have made it to the 
floor. I do believe that this bill is stronger as a consequence of the 
amendments that we have made, the changes that we have made to it; most 
importantly, those changes that will ensure that we do not interfere 
with the important work of law enforcement.
  I have been very up-front about this. From my perspective, my 
interest in this bill grows out of my work on helping my State find 
ways to make sure our State-regulated marijuana businesses have access 
to banking services so that we can avoid the public safety risks that 
arise from huge cash stockpiles building up at these businesses.
  Sadly, we have already seen these risks materialize. Before, on this 
floor, I had mentioned the name of Travis Mason, 23 years old, a Marine 
veteran, working as a security officer at a retail establishment for 
marijuana in Colorado, studying to become a law enforcement officer, 
who was, a year ago last summer, shot dead by perpetrators who believed 
that there was a stockpile of cash behind those doors.

                              {time}  1715

  Travis left behind a widow and, yes, three small children. He had a 
set of twins. So part of what this bill will help is that there be no 
more Travis Masons--no more Travis Masons. We are passing this bill, in 
fact, in part to prevent another tragedy like that.
  Now, Mr. Luetkemeyer and I worked together with the FDIC to provide 
clarity to their banks, and I think the FDIC's financial institutions 
letter of January 2015 was a key breakthrough for banks in Washington 
State and others. It simply said for banks worried about customer 
risks, like the Bank Secrecy Act and antimoney laundering--which is the 
main concern, frankly, around marijuana businesses--the FDIC does not 
expect them to avoid entire industries, but rather to make 
determinations on a customer-by-customer basis.
  This was assurance that Washington banks needed to begin providing 
banking services to well-regulated, good-actor marijuana businesses. So 
now a handful of Washington banks and credit unions are serving 
marijuana businesses. Our State banking regulator is working closely 
with the State marijuana regulator. Scores of Washington marijuana 
businesses have set up bank accounts. We are getting cash out of those 
businesses and into the financial system, where it can be monitored. We 
draw down that cash stockpile. We reduced the public safety risk that I 
talked about earlier. We have an improved public safety condition. It 
is a model that needs to be spread to other States who have adopted, as 
it were, expanded marijuana legislation.
  I view this bill as codifying the FDIC's financial institutions 
letter and expanding it to other bank regulators so that all lenders 
can operate under this same principle: that we judge consumers 
individually rather than by the industry they are in.
  Let me repeat that: that we judge consumers individually rather than 
by the industry that they are in.
  Mr. Luetkemeyer has been dedicated to that principle for years. I 
have been honored to work with him in this endeavor and I am pleased to 
be at this point where we have broad bipartisan support for this 
legislation.
  Again, my hat is off to Mr. Luetkemeyer. To all of my colleagues, I 
urge a vote in favor of this underlying bill, in favor of a more 
balanced regulatory scheme, and a bill in favor of increased public 
safety.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 5 minutes to the gentleman from 
Indiana (Mr. Hollingsworth), who is a distinguished member of the 
Financial Services Committee.
  Mr. HOLLINGSWORTH. Mr. Speaker, I appreciate the opportunity to lend 
my voice to an important piece of legislation. First, like others, I 
want to thank everybody who has worked very hard on this legislation. I 
know it is a matter of passion for many Members on both sides of the 
aisle in solving this problem for consumers.
  One thing I am constantly asked about in the district is: In a 
democracy, why does it seem that the bureaucracy is in charge?
  We keep coming back to this very same question with many pieces of 
legislation here in the House. I am excited that we are going to 
resolve some of that with this piece of legislation.
  As was talked about earlier, what has been going on is that someone 
can be excluded from the U.S. Federal banking system simply because 
they are in an industry that might not have the best reputation. They 
can be excluded from the Federal banking system. This is not something 
that we take lightly. It is something that is very serious that we talk 
about in terms of sanctioning North Korea, sanctioning Iran, and now we 
are excluding U.S. businesses simply because they may be operating in a 
certain industry instead of because of the activities that individual 
business or that individual is actually in.
  So this bill is really about looking, as my friend, Mr. Heck, said, 
to the individual business and to the individual themselves and saying 
whether they pose a national security risk, not painting with a broad 
brush because of the desire of some in bureaucracy to exclude certain 
industries from the banking system.
  What Hoosiers talk about back home is how tired they are of electing 
officials only to see bureaucracy drive their own agenda forward, not 
the people's agenda forward. With this piece of legislation, we are 
rolling some of it back and enabling those bureaucrats to provide an 
annual list to Congress of the accounts that they have closed and why 
they have been closed. It is that level of transparency and 
accountability that a democracy demands.
  I am excited to stand with so many other members of the House 
Financial Services Committee and with so many Members, I hope, later 
today on the House floor and say that we will deliver that 
transparency.
  Mr. CAPUANO. Mr. Speaker, I have no further speakers. Again, I would 
like to repeat what has already been said: this is a classic example of 
how this place is supposed to work. It takes a little time, but it 
works out in a bipartisan manner and in a thoughtful manner and deals 
with an issue that, though not important to some people, is very 
important to a handful of people in this country to simply level the 
playing field.

[[Page H9773]]

  I want to, again, thank all of the people involved in this. It is 
nice to be involved in a piece of legislation that I can be proud of 
and that went through the process the right way and worked out the 
right way.
  Mr. Speaker, I yield back the balance of my time.
  Mr. LUETKEMEYER. Mr. Speaker, I just want to reiterate that this bill 
is about greater transparency and accountability among the banking 
regulators.
  The Federal Government should not be able to intimidate financial 
institutions into dropping entire sectors of the economy's customers 
based on personal and political motivations. It should be based on risk 
and evidence of wrongdoing.
  Our new AG has stopped this practice, and the FDIC has incorporated 
many of the principles in this bill already into their standard 
operating procedures. But the importance of this bill is to codify in 
law for the regulators the guardrails that are necessary to keep this 
from happening to protect our citizens from this and many other 
activities by an overreach of the bureaucracy.
  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 Missouri (Mr. Luetkemeyer) that the House suspend the 
rules and pass the bill, H.R. 2706, 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. LUETKEMEYER. 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, further 
proceedings on this motion will be postponed.

                          ____________________