[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Extensions of Remarks]
[Page 29065]
[From the U.S. Government Publishing Office, www.gpo.gov]



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

                                 ______
                                 

                               speech of

                       HON. CAROLYN C. KILPATRICK

                              of michigan

                    in the house of representatives

                       Thursday, November 4, 1999

  Ms. KILPATRICK. Madam Speaker, I rise today in support of S. 900, the 
Financial Services Modernization Act. This conference report is the 
culmination of years of efforts on the part of Congress, several 
Administrations, and federal financial regulators to create a rational 
and balanced structure to sustain the continued global leadership of 
our nation's financial service sector. This is not a perfect bill. I 
would like for the Community Reinvestment Act (CRA) provisions and the 
privacy provisions of the bill to be strengthened, but I understand the 
political process involves compromise, and this legislation represents 
just that. As a former member of the Banking Committee, I know that the 
agreement reached by the members of the Conference Committee and the 
Administration is built on the consensus that exists among the banking, 
securities and insurance firms regarding the need for this legislation. 
This act will benefit consumers, businesses and the economy by finally 
reforming our antiquated banking and finance laws. Consumers and 
businesses will benefit from a wider array of products and services 
offered in a more competitive marketplace that result directly from 
enactment of this law.
  The Act will permit the creation of new financial holding companies, 
which can offer banking, insurance, securities and other financial 
products. These new structures will allow American financial firms to 
take advantage of greater operating efficiencies. For financial 
institutions, increased efficiency will mean increased competitiveness 
in the global marketplace. For consumers, increased competition will 
mean greater choice, more innovative services, and lower prices for 
financial products. For the economy, this will mean better access to 
capital to spur growth.
  Since the beginning of my service in the United States Congress, I 
have been committed to the vitality of the Community Reinvestment Act 
(CRA). I am encouraged that this Act, for the first time, will apply 
CRA to banks and their holding companies as they expand into newly 
authorized non-banking activities. Until now, the law has permitted 
banking organizations to make very large acquisitions of securities 
firms and to engage in other non-bank activities without any CRA 
performance requirements at all. Under this bill, no banking 
organization can become involved in these new activities if any of its 
insured depository affiliates has a less than satisfactory CRA rating. 
This is a flat prohibition, and I believe a move in the right direction 
toward the expansion of CRA from current law. Like many of my 
colleagues, I stringently support the expansion of CRA. However, as a 
veteran legislator, I recognize that the legislative process, by 
definition, produces compromises by all parties. I believe that the CRA 
provisions in S. 900 are a good compromise toward ensuring that the 
modernization of our financial system works for all Americans.
  For the first time, financial institutions must clearly state their 
privacy policies to customers up front, allowing customers to make 
informed choices about privacy protection. The Act will require 
financial institutions to notify customers when they intend to share 
financial information with third parties, and to allow customers to 
``opt-out'' of any such information sharing. Under existing law, 
information on everything from account balances to credit card 
transactions can be shared by a financial institution without a 
customer's knowledge. This can include selling information to non-bank 
firms such as telemarketers. This Act provides the most extensive 
safeguards yet enacted to protect the privacy of consumer financial 
information. The Act also provides other important consumer 
protections, including mandatory disclosures and prohibitions on 
coercive sales practices, protection of a wide variety of state 
consumer protection laws governing insurance sales, strengthening 
protections when banks sell securities products, and making full 
disclosures of fees at ATM machines.
  Madam Speaker, this Act is a step forward in improving our nation's 
financial service system for the benefit of consumers, community 
groups, businesses of all sizes, financial service providers, and 
investors in our nation's economy. Financial services modernization 
legislation has taken a long road to final passage. I remain committed 
to expanding access to the economic mainstream for all Americans. While 
not perfect, S. 900 will finally bring financial services law in step 
with the marketplace.

                          ____________________