[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[House]
[Page 27340]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 27340]]

               FINANCIAL MODERNIZATION CONFERENCE REPORT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.

  Ms. KAPTUR. Mr. Speaker, soon the House will have an opportunity to 
consider S. 900, what is entitled the Financial Modernization 
Conference Report.
  This complicated and controversial legislation seeks to overhaul 
banking laws that have been in existence in our country since the Great 
Depression. These laws were dedicated to safety and soundness in the 
banking system of the United States.
  The laws that have been on the books for this entire century since 
the Great Depression have separated the activities of bankers, of the 
insurance industry, and of the securities and stock brokerage 
industries. Essentially, what this legislation attempts to do is to 
allow them to intermarry and to do business together.
  Now, I recently did a survey in my district, and I asked our 
constituents the following question: How would you describe your 
personal views of bank practices? Two-thirds stated that they disliked 
the changes that have been occurring in the banking system. They say 
the fees are not consistent with the services provided, services are 
declining, and most of our banks are no longer locally owned.
  If we think to the system that has been in place in this country that 
has permitted us to grow and to increase equity for America's families, 
the epitome of this system was the community bank. And in fact, the 
community banker became an active member of the local chamber of 
commerce in every neighborhood, in every city; and banking became 
equated with stability.
  What we have seen happen in the banking system of our country, and it 
has been happening slowly, slowly, slowly, we have watched communities 
like my own, Toledo, OH, become a branch economy of an institution 
located someplace else. And when that happened, community contributions 
to Boy Scouts by those institutions went down, to children's softball 
teams and so forth. The community contributions, the philanthropy of 
that institution and the personal identification of the president of 
the institution with the community as a whole diminished.
  In addition to that, we have seen the idea of safety and soundness 
changed fundamentally to where now most of these institutions have 
turned into high-flying debt pushers trying to get consumers to take on 
more credit than they can afford.
  In fact, last week when I got home from Congress and I opened my 
mail, I got so mad I ripped this letter up. Because this came from an 
institution that does business in Ohio, and what did it have? It had 
one of these $5 checks attached that says that, if you cash this and 
sign up for our program, we will send you $5.
  But what was I to sign up for? Here is a banking institution pushing 
more credit on the commercial side to me, a depositor in that 
institution. They want me to sign up for Shopper's Advantage, over 
250,000 brand items; Traveler's Advantage, again credit to travel; 
concierge's service; Saver's Club discount book. In other words, they 
are pushing debt, pushing debt through the banking system at our 
consumers.
  Now, this is a fundamental change in the way that our country used to 
operate in the field of banking and credit. In some ways, these lending 
institutions, if we can call them that, are not so much interested in 
building communities as in milking communities and in taking money that 
should be placed in those depositors' accounts so that they can end up 
owning a piece of the rock rather than assuming these greater and 
greater debt burdens that are characterizing family accounts across 
this country.
  Here is a recent chart on the rising level of consumer debt in our 
country. The average family cannot survive more than 3 months without 
getting their paycheck in the mail because of the debts that they owe. 
Yet these institutions that are supposed to be dedicated to safety and 
soundness are into pushing more credit, not in the interest of 
community building, but in the interest only of profits of those 
institutions.
  We have seen megafinancial conglomerates and mergers across our 
country, and this bill will only add new hurdles to the already 
difficult task for consumers obtaining basic financial services without 
incurring outlandish and arbitrary fees.
  Further, consumers will be forced to speak with more 1-800 
recordings. How many of us have got lost in those when we try to get an 
answer out of a banking institution in this country and very pricey 
automatic teller machines rather than dealing with human beings? This 
is happening across our country.
  Mr. Speaker, the fundamental precept of any banking laws in this 
country should be safety and soundness, not high-flying credit pushers.
  I rise today to outline my concerns with this conference report. I 
believe America's Fiscal Fitness is in jeopardy as we enter the next 
millennium. Are we really prepared for the challenges that lie ahead?
  I am concerned about the growing trend toward mergers and 
acquisitions throughout America's banking industry. These massive 
consolidations, most recently seen with the merger of Nations Bank and 
Bank of America, will likely result in fewer financial service options 
and fewer alternatives for consumers when it comes to shopping for life 
insurance, checking accounts, and investments transactions.
  The mega-financial conglomerates created by this bill will only add 
new hurdles to the already difficult task of obtaining basic financial 
services without incurring outlandish and arbitrary fees. Further, 
consumers will be forced to speak with 1-800 number recordings and sent 
to pricey automatic teller machines rather than dealing with human 
beings.
  Consumer spending makes up two-thirds of our economy, but increases 
accounted for an astounding 85 percent of the growth in the gross 
domestic product last year. And it's fueled by unsustainable efforts by 
most families.
  Consumer debt, from credit cards to home mortgages, now total about 
85 percent of personal income--with installment loans accounting for 
$1.4 trillion. The 55 to 60 million households that carry a credit card 
balance from month-to-month have an average balance of $7,000 and pay 
more than $1,000 per year in interest and fees.
  As consumer debt has increased net family worth has declined. Federal 
Reserve reports that the median net worth of all U.S. families, in 
constant 1995 dollars has dropped from $57,000 in 1989 to $55,600 in 
1995.
  A report released by the Consumer Federation of America found that 
half of U.S. households do not have $1,000 in assets available for an 
emergency. Should the economy take a dramatic downturn, these families 
are not prepared.
  As a percentage of the gross domestic product, consumer debt has 
increased from 13.74 percent in 1990 to 15.41 percent this year. One 
family in six below $25,000 in annual income spends more than 40 
percent of its income on debt service.
  American families have kept their heads above water by working more 
hours--middle-income couples with children are putting in an average of 
6 full-time weeks more each year than a decade ago.
  The burden of today's consumer debt coupled with an increase in 
interest rates, a new wave of downsizing, or a cutback in overtime 
hours would force families to curtail spending and push many into 
bankruptcy.
  Today, over 12 million American families can't afford bank accounts. 
And for those who do have accounts, the average annual cost of 
maintaining a regular checking account has risen to more than $217 in 
1999--according to U.S. Public Interest Research Group. Meanwhile, in 
1998 banks recorded nearly $62 million in profits, an eighth straight 
record year.
  The Financial Modernization Conference bill does little to discourage 
the growth of bigger, higher fee banks, leading to less consumer choice 
and higher fees for all Americans. There are also privacy concerns that 
are not addressed in this bill.
  The bill allows for sharing between mega-bank affiliates. Which can 
only lead to more of the solicitations like this one that I received 
over the weekend from Key Bank.
  The bill does not allow a customer to ``opt-out'' if a financial 
institution wishes to distribute the customer's information to 
affiliates within the financial holding company. Is it too much to ask 
for a customer to have the right to ``opt-out'' and inform his or her 
financial institution that it may not distribute his or her personal, 
private financial information to financial institutions?
  Mr. Speaker, I am aware of the tremendous work on the part of the 
Banking Committee Members and staff and appreciate their work on this 
important issue. I remain, however,concerned that the bill falls
short from meeting consumer protection 
needs and reducing bank fees.

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