[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Extensions of Remarks]
[Pages 29062-29063]
[From the U.S. Government Publishing Office, www.gpo.gov]



          CONFERENCE REPORT ON S. 900, GRAMM-LEACH-BLILEY ACT

                                 ______
                                 

                               speech of

                            HON. BARBARA LEE

                             of california

                    in the house of representatives

                       Thursday, November 4, 1999

  Ms. LEE. Madam Speaker, I rise to express my concern as well as that 
of my constituents regarding the Senate version, the Gramm version, of 
the Financial Services Modernization Act.
  The initial report by the media that the conference report met the 
expectations of consumer advocates raised hopes that the Senate would 
meet the House's commitment to two major aspects of this critically 
important bill: the Community Reinvestment Act provisions and the 
necessary protection of the privacy of consumer, customer information, 
and records. I continue to want to vote for a Financial Services 
Modernization bill.
  I want to address the importance of the Community Reinvestment Act 
which is also known as CRA. This act was passed almost 30 years ago to 
say that banks should also lend to low-income customers and 
neighborhoods in their areas of operation. In the 23 years of bank 
practices to meet CRA provisions, an impressive $1 trillion has been 
generated as loans to low-income customers; the clear majority of banks 
recognize the value of CRA as a powerful tool to build community trust 
and respect for the otherwise cold marble and steel of stone-hearted 
bankers.
  Let me share a success story of CRA in my community, affecting my 
constituents in Oakland and adjoining cities. The success story is 
about an old, crumbling, and once-beloved vegetable and meat market 
known as Swan's Marketplace.
  In the last two decades, as residents and businesses flowed out of 
downtown, Swan's found it more and more difficult to survive. It 
finally had to close. Stories were written about its demise. It took 
years, but the city government and the people of Oakland and community 
agencies knowledgeable about CRA, our community heroes, the very same 
people that Senator Gramm so recklessly labels as ``extortionists,'' 
pulled together, in a magnificent civil effort to create a wonderful 
center combining almost every aspect of community development into one 
square city block. The heroes and sheroes who put this together say: 
``We have a market, affordable housing, services to special populations 
and community revitalization. On top of that, we've included use of the 
arts for economic development and restored and preserved a city 
historic landmark.''
  I hardly have to add that the housing is a wonderful plus in an area 
with severe housing shortages, and that jobs have been created, and 
that an essential community success has added to the revitalization of 
a declining downtown not only during the day but also at night.
  Swan's was complex from a banking perspective. ``There's nothing 
commonplace about it'' said a representative from a large local bank 
that provided a $7.8 million construction loan. CRA had encouraged 
banks to look at financing difficult projects that benefit communities. 
Before CRA, banks may have dismissed the project as too difficult, but 
CRA has provided the needed motivation which has prompted banks to 
successfully invest in communities.
  The story of CRA's important role in the reformation of Swan's 
Marketplace is not a rare occurrence. Community after community have 
called on members of the Banking Committee and the Commerce Committee 
to protect, and to include the CRA provisions in any banking 
modernization bill. I have worked since I

[[Page 29063]]

joined Congress over a year ago, to include the basic elements of CRA 
in H.R. 10.
  The House-passed version of the Financial Modernization bill, to my 
mind, had fairly weak CRA provisions by excluding securities and 
insurance functions. But the Gramm version weakens these protections 
even further by requiring banks to report every 5 years.
  Senator Gramm added a wickedly ironical provision that he describes 
as a ``sunshine'' regulation. In California sunshine provisions protect 
citizens by requiring that the legislative bodies act with proper and 
timely notice being given to the public on time of meeting and 
publication of issues to be discussed.
  This sunshine provision in Senator Gramm's bill is a terrible 
perversion of that protection. This provision mandates that community 
organizations working with banks to produce more affordable housing 
have to report on their functions, and their contracts. These reporting 
requirements are not made of financial institutions, only community 
organizations. Instead of treating these groups as heroes for their 
life-saving, community-saving work, they must report like criminals.
  Presently, banks have to meet a satisfactory rating, and then 
maintain it in order to be favorable considered for expansion or 
mergers. S. 900 allows these banks to meet the ``satisfactory'' 
standard only once and frees them from further obligation to maintain 
it. Do it once and you are free of obligations thereafter. This is a 
terrible travesty of present CRA practices.
  The other major weakness in S. 900 has to do with the easy access to 
customer's private information that is available. Presently, each one 
of the three functions: banking, insurance, and securities, cannot 
share their customers' information with each other. With the passage of 
S. 900 the walls are down.
  Insurance companies have records on a customer's health. This record 
will now be available to the bank, or the insurance company that can 
now offer banking services, when you apply for a loan. Is this 
information that should be so easily available. Is this what our 
constituents would allow? I don't think so.
  However, should customers want to know how the bank, or the insurance 
company, or the securities sales office is handling their account and 
ask for a record, and possibly make the necessary corrections, they 
will not be able to do so. We are considering legislation that could 
really produce nightmare situations for our constituents.
  S. 900 only asks that banks report their plan to protect privacy 
without any obligation to any one, or any institution to implement it, 
to modify it, or to improve it. This is a hollow requirement, devoid of 
substance.
  These are two of the major flaws of S. 900. But I have to raise the 
objections that I raised in the Banking Committee about the 
consequences of financial services modernization without appropriate 
safeguards.
  S. 900 will allow for further mergers and conglomeratization. It will 
once again expose us to the congressional, national liability for the 
$500 billion bailout of the savings and loan industry of the 1980's.
  The conglomerates will be too big to regulate and too big to fail and 
the taxpayer will be stuck with the consequences.
  Additionally, along with my colleagues, Representatives Waters, 
Franks, Sanders, Jones of Ohio, and Schakowsky, we have tried to 
introduce the most basic of consumer protections as we give the 
financial services what they want. We have tried to protect fair 
housing by prohibiting insurance companies from discriminating, and we 
have tried to establish limited basic banking accounts for low-income 
customers, but without success.
  This financial modernization bill, S. 900, or H.R. 10, is the product 
of 20 years of effort. It saddens me to see 20 years of work dissolve 
into this miserable bill. I ask my colleagues to vote against it.

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