[Congressional Record (Bound Edition), Volume 145 (1999), Part 6]
[Senate]
[Pages 8189-8201]
[From the U.S. Government Publishing Office, www.gpo.gov]




              FINANCIAL SERVICES MODERNIZATION ACT OF 1999

  The PRESIDING OFFICER. The Senate will continue consideration of S. 
900.
  The Senate continued with the consideration of the bill.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I thank the Chair.
  Mr. President, I will be spending some time on S. 900, but I also, in 
my remarks today, will be focusing on the question of when the Senate 
is going to start dealing with issues that affect ordinary citizens. I 
think that is what people in Minnesota would like to know.
  This is called the Financial Services Modernization Act. I have no 
doubt that the large banks and lending institutions are all for this. 
The question I have is, When are we going to come out here with 
legislation that benefits ordinary citizens?--which I mean in a 
positive way. I will come back to this later on.
  The Minnesota Farm Services Administration has now had to lay off 
close to 60 employees. That is where we are heading. This is an agency, 
the Farm Services Administration, that is a grassroots organization. 
They are out there trying to serve farmers. They are out in the field. 
They pick up on what is happening in rural Minnesota.
  Right now the message we are sending here from the Congress is, we 
can't even pass a supplemental appropriations bill that we started 
working on several months ago to provide spring planting operating 
money for family farmers. Prices are way down. Income is way down. 
People are being foreclosed on. It is not just where they work, it is 
where they live. They are losing their farms, and we can't even get to 
them some disaster relief money, some loan money, so they can continue 
to go on until we go back and change this ``Freedom to Fail'' bill that 
we passed several years ago.
  I am not telling you that some of the large conglomerates and some of 
the large grain companies and some of the large packers aren't making 
record profits. They are. They have muscled their way to the dinner 
table. They exercise raw political control over family farmers.
  Meanwhile, this bill, the Financial Services Modernization Act, is 
all about consolidation and letting large financial institutions have 
unchecked power. But what we should be talking about is these family 
farmers going under.
  I talked with Tracy Beckman today, director of the Minnesota FSA 
office. He told me that right now we have 340 loan requests, totaling 
$44.9 million, that are approved but are unfunded due to a lack of 
funding. Right now there is the possibility, unless we get this 
funding, that we are going to have 800 farm families in Minnesota that 
aren't going to get any financing. They need that financing if they are 
going to be able to go on.
  Yesterday Tracy Beckman told me the story of a family farmer who 
found

[[Page 8190]]

out he couldn't get any loan money and he doesn't have any cash flow. 
You can work 24 hours a day and be the best manager in the world, and 
you will not make it as a family farmer right now. He said to one of 
our FSA officers out in the field, out in the countryside, when he 
found out that FSA can't help him because we are not able to pass a 
supplemental emergency assistance program, this farmer said, ``I'm just 
going to go home and shoot myself and my family.''
  This is someone who is desperate. There is a lot of desperation in 
the countryside. We can't even pass a supplemental appropriations bill 
that will get some loan money out to family farmers, which we should 
have done a month ago or 6 weeks ago. Instead, we are out here on the 
floor talking about the Financial Services Modernization Act of 1999, 
the big bank act, the large conglomerate act, the large financial 
institution act. When are we going to be out here talking about 
affordable child care, or about raising the minimum wage? When are we 
going to make sure people get decent health coverage? When are we going 
to talk about providing more funding for the Head Start Program? When 
are we going to be out here talking about how to reduce violence in 
homes, and in schools, and in our communities? When are we going to be 
out here talking about something that makes a difference to ordinary 
people?
  Now, Mr. President, I understand that all of the trade groups support 
this legislation--that is to say, all of the financial services groups. 
But I rise in strong opposition to this legislation called the 
Financial Services Modernization Act of 1999.
  This bill, S. 900, would aggravate a trend toward economic 
concentration that endangers not only our economy, but, I think, more 
importantly, it endangers our democracy. S. 900 would make it easier 
for banks, securities firms, insurance companies, and, in some cases, 
commercial firms, to merge into gigantic new conglomerates that would 
dominate the financial industry.
  Mr. President, this is the wrong kind of modernization at the wrong 
time. Modernization of the existing, confusing patchwork of laws, 
regulations, and regulatory authorities would be a good thing; but that 
is not what this legislation is really about. S. 900 is really about 
accelerating the trend toward massive consolidation in the financial 
sector.
  This is the wrong kind of modernization because it fails to put in 
place adequate regulatory safeguards for these new financial giants 
whose failure could jeopardize the entire economy. It is the wrong kind 
of modernization because taxpayers could be stuck with the bill if 
these conglomerates become ``too big to fail.'' We have heard that 
before--``too big to fail.''
  This is the wrong kind of modernization because it fails to protect 
consumers. In too many instances, S. 900 would lead to less competition 
in the financial industry, not more. It would result in higher fees for 
many customers, and it would squeeze credit for small businesses and 
rural America. Most importantly, Mr. President, this is the wrong kind 
of modernization because it encourages the concentration of more and 
more economic power in the hands of fewer and fewer people. The 
regulatory structure of S. 900, as well as the concentration it 
promotes, would wall off enormous areas of economic decisionmaking from 
democratic accountability.
  Mr. President, this is the wrong time to be promoting concentration 
in the financial sector. S. 900 purports to update obsolete financial 
regulations, but the bill itself is already obsolete. This idea has 
been around for over a decade. But economic circumstances have changed 
drastically in the intervening years. Today, much of the global economy 
is in crisis, and this is no time to be promoting a potentially 
destabilizing concentration of economic power.
  The banking industry has become more and more concentrated over the 
last 18 years, and especially during the 1990s. There have been 7,000 
bank mergers since 1980. In the last year or so, we have seen 
megamergers that are the largest in the history of American banking. 
The merger of NationsBank and BankAmerica would have assets of $525 
billion, and the BancOne and First Chicago/NBD merger would have assets 
of $233 billion. In 1980, by comparison, there were no mergers or 
acquisitions of commercial banks with a total of more than $1 billion 
in assets.
  What is new and different about the situation today is that banks are 
beginning to merge with insurance and securities firms. The merger 
between one of America's largest banks, Citibank, and the largest of 
insurance groups and brokerage groups, Travelers, is probably the best 
example. This new conglomerate will control over $700 billion in 
assets.
  Supporters of S. 900 argue that whether we like it or not, the lines 
between banking and securities--and the lines between banking and 
insurance--have already been breached. Regulators and courts have 
already let banks dabble more and more into securities and insurance, 
and they have let brokerages invade banking. The battle over Glass-
Steagall has already been lost, they say.
  Well, Mr. President, I am not so convinced. If S. 900 didn't 
encourage more and bigger mergers, I don't think so many big banks, big 
insurance companies, and securities firms would be so enthusiastic 
about it.
  In fact, passage of S. 900 would set in motion a tidal wave of big 
money mergers. It would prompt other banks to start courting insurance 
and securities firms. And it would put increasing pressure on the banks 
of every size to find new partners. It may be true that we have already 
come a long way down this road. It may be true that the protections of 
Glass-Steagall and the Bank Holding Company Act have already been 
eroded. It is certainly true that we cannot turn back the clock.
  But it does not necessarily follow that we are doomed to continue 
down this perilous path wherever it may take us. Yes, regulators have 
already given banks an inch, but it doesn't mean we have to give them a 
mile. If the old laws and regulations are inadequate to deal with the 
changing world of finance, then we need better regulations, not weaker 
ones. We should not be supplying the wrecking ball that tears down all 
remaining walls between banking and other risky activities, without 
first putting into place adequate safeguards.
  Passing this bill would be an act of monumental hubris. It would 
reflect a smugness and complacency about our economic policy that I 
believe is unhealthy and unwarranted. We have heard the argument that 
America has entered the new age, a ``new paradigm,'' a so-called ``new 
economy.'' Depression and deflation are relics of a distant past. The 
old laws of ``boom and bust'' no longer apply. Our superior technology, 
so the argument goes, will allow us to sustain this economic recovery 
for another 20 or 30 years, and maybe more. This is the beginning of a 
long boom. Some have dared to imagine that we have arrived at the end 
of history.
  There is a dangerous moral to this story: that we no longer have to 
prepare for emergencies or guard against disaster; that the safeguards 
put in place years ago to stabilize the economy can now be safely 
withdrawn; that a safety net that will never again be tested by 
adversity can now be safely shredded; that we no longer need to worry 
about inadequate oversight of markets because the markets can and will 
police themselves; that bigger is better, antitrust is obsolete, and 
regulation is passe.
  I think we are flirting with disaster. We are strolling casually 
along the upper decks of the Titanic, oblivious to the dangers ahead of 
us. Remember, the Titanic in its day symbolized the ultimate triumph of 
technology and progress. Just like these new financial conglomerates, 
it was considered ``too big to fail.'' Because everybody assumed this 
flagship of Western technology was unsinkable, they saw no need to take 
ordinary precautions. They disregarded the usual rules of speed and 
safety, as Congress is now doing with S. 900. And they failed to store 
enough lifeboats for all the passengers, which reminds me of nothing

[[Page 8191]]

so much as the repeal of the welfare entitlement.
  Mr. President, that is another thing that maybe we should be talking 
about on the floor of the Senate--what is happening with welfare 
reform. Later in my remarks, when I am talking about the real issues 
that affect real people, and in particular poor people, I will return 
to that.
  Some of the passengers in first class may be oblivious, but the world 
economy is still in a precarious state. Most of Asia is still in a 
depression. The Japanese economy is slugging through the 9th year of an 
unshakable slump. Russia has been mired in a depression for 8 years, 
its economy shrunk to half its former size. Brazil is entering into 
recession, with serious implications for all of its Latin American 
neighbors. European economies are showing signs of weakness.
  In the face of these sobering developments, the solution offered by 
this legislation is simply more of the same--more deregulation, more 
mergers, more concentration. At precisely the moment when, for the 
first time in 50 years, we face some of the hazards that Glass-Steagall 
was designed to contain, Congress wants to tear down the remaining 
firewalls once and for all.
  We seem determined to unlearn the lessons of history. Scores of banks 
failed in the Great Depression as a result of unsound banking 
practices, and their failure only deepened the crisis. Glass-Steagall 
was intended to protect our financial system by insulating commercial 
banking from other forms of risk. It was designed to prevent a handful 
of powerful financial conglomerates from holding the rest of the 
economy hostage. Glass-Steagall was one of several stabilizers designed 
to keep that from ever happening again, and until very recently it was 
very successful. But now S. 900 openly breaches the wall between 
banking and commerce.
  And what about the lessons of the savings and loan crisis? The Garn-
St Germain Act of 1982 allowed thrifts to expand their services--people 
in the country will remember this--beyond basic home loans, and only 
seven years later taxpayers were tapped for a multibillion-dollar 
bailout. I'm afraid we're running the same kind of risks with this 
legislation. S. 900 would lead to the formation of a wide array of 
``too big to fail'' conglomerates that might have to be bailed out with 
taxpayer money. These financial holding companies may well be tempted 
to run greater risks, knowing that taxpayers will come to their rescue 
if things go bad.
  S. 900 does set up firewalls to protect banks for failures of their 
insurance and securities affiliates. But even Alan Greenspan has 
admitted that these firewalls would be weak. And as the Chairwoman of 
the FDIC has testified, ``In times of stress, firewalls tend to 
weaken.'' The economists Robert Auerbach and James Galbraith warn that 
``the firewalls may be little more than placing potted plants between 
the desks of huge holding companies.''
  Regulators will have little desire to stop violations of these 
firewalls if they think a holding company is ``too big to fail.'' After 
the stock market crash of 1987, for example, Continental Illinois 
breached its internal firewalls to prop up a securities subsidiary. 
Regulators reprimanded Continental with a slap on the wrist.
  And even if there is no taxpayer bailout, the Treasury Department has 
expressed its concerns about unmet expectations. Investors and 
depositors may assume protection is indeed much greater for these 
holding companies than it actually is. And they may panic when they 
realize they were mistaken.
  And what about the lessons of the Asian crisis? Just recently, the 
financial press was crowing about the inadequacies of Asian banking 
systems. Now we are considering a bill that would make out banking 
system more like theirs. The much maligned cozy relationships between 
Asian banks, brokers, insurance companies and commercial firms are 
precisely the kind of crony capitalism S. 900 would promote.
  The economists James Galbraith and Robert Auerbach warn against 
repeating the mistakes of the Asian economies: ``There is already 
evidence of monopolistic practices in the banking industry that would 
be heightened by [S. 900]. There is now devastating experience from the 
recent problems experienced by huge banking-finance conglomerates in 
Asia. There is little justification to follow these examples, as would 
be allowed by [S. 900]. It could happen here if we build the same 
unwieldy structures to dominate our banking system.''
  To be accurate, if we want to locate the real causes of the Asian 
crisis, we have to look at the reckless liberalization of capital 
markets that led to unbalanced development and made these economies so 
vulnerable to investor panic in the first place. The IMF and other 
multilateral institutions failed to understand how dangerous and 
destabilizing financial deregulation can be without first putting 
appropriate safeguards in place.
  World Bank Chief Economist Joseph Stiglitz wrote last year about the 
Asian crisis:

       The rapid growth and large influx of foreign investment 
     created economic strain. In addition, heavy foreign 
     investment combined with weak financial regulation to allow 
     lenders in many Southeast Asian countries to rapidly expand 
     credit, often to risky borrowers, making the financial system 
     more vulnerable. Inadequate oversight, not over-regulation, 
     caused these problems. Consequently, our emphasis should not 
     be on deregulation, but on finding the right regulatory 
     regime to reestablish stability and confidence.

  That is World Bank chief economist Joseph Stiglitz. We claim to have 
learned our lessons from the crisis in Asia. But I am not sure we have.
  Tell me why on Earth are we doing this, besides the fact that these 
large financial institutions have so much political power? Why now?
  The backers of S. 900 claim that the Glass-Steagall Act of 1933 and 
the Bank Holding Act of 1956 are obsolete and financial regulation must 
be modernized. Well, I'm all for modernization. But the question is: 
what kind of modernization?
  I think most of us agree that the existing patchwork of confusing and 
inconsistent regulations needs to be simplified and rationalized. GAO 
has testified that the piecemeal approach to deregulation taken by the 
Fed and Treasury has resulted in ``overlaps, anomalies, and even some 
gaps'' in oversight.
  The problem is that S. 900 doesn't really fix that problem. It 
maintains a patchwork of regulators. Who knows how they would 
coordinate their efforts when holding companies run into trouble?
  But most importantly, the reach of S. 900's regulatory safeguards 
does not match the size of these new conglomerates. A central feature 
of S. 900 is the transfer of regulatory authority for the newly created 
holding companies to the Federal Reserve. This seems a lot more like 
deregulation than modernization.
  Let me repeat that. A central feature of S. 900 is the transfer of 
regulatory authority for the newly created holding companies to the 
Federal Reserve. This sounds a lot more like deregulation than 
modernization.
  How much confidence can we have in the Fed's oversight? The case of 
Long Term Capital Management last year does not exactly inspire 
confidence. Only one week before that $3.5 billion bailout, Alan 
Greenspan testified before Congress that the risk of hedge funds was 
well under control and that bankers policing them knew exactly what 
they were doing. Well, in this case at least, they didn't know what 
they were doing. And apparently neither did the Fed.
  What concerns me more is that this massive transfer of power is anti-
democratic. The Federal Reserve Board is not an elective body, and it's 
not democratically accountable. To the extent Congress pries into the 
Fed's business--which is not very much--we focus on monetary policy, 
not bank oversight. Why should we hand over so much power to an 
institution that is essentially accountable to the financial industry 
and nobody else?
  I repeat that. Why should we hand over so much power to an 
institution that is essentially accountable to the financial industry 
and nobody else?
  James Galbraith and Robert Auerbach write:


[[Page 8192]]

       The Federal Reserve's decision-making is contingent to a 
     great extent on the banking industry which it regulates. 
     Bankers elect two-thirds of its 108 directors on the boards 
     directors of its 12 regional Federal Reserve Banks. This 
     25,000 employee bureaucracy with its own budget that is not 
     authorized or approved by the Congress is not independent of 
     the bankers and finance companies that it would regulate.

  Several commentators have expressed open delight that this transfer 
of power to the Fed will insulate financial regulation from ``partisan 
politics.'' The Christian Science Monitor endorsed H.R. 10 last year 
because ``it would make financial regulation more remote from 
politics.''
  But is this really something we should welcome? Another term for 
``partisan politics'' in this case is ``democracy.'' Democracy may be 
messy sometimes. It would be vastly improved by real and meaningful 
campaign finance reform. But it also happens to be the basis of our 
form of government.
  Why should such an important area of public life be ``insulated'' 
from democratic accountability? Why should the people making the most 
important economic decisions in our country be accountable only to Wall 
Street and not to voters?
  Why are we transferring this kind of authority?
  We've already walled off most economic decisionmaking from any kind 
of democratic input. Former Labor Secretary Robert Reich has argued 
that we no longer have any fiscal policy to speak of, and Congress has 
delegated monetary policy to the Federal Reserve. ``The Fed, the IMF, 
and the Treasury are staffed by skilled economists,'' he wrote, ``but 
can we be sure that the choices they make are the right ones in the 
eyes of most of the people whose lives are being altered by them?'' He 
has noted that ``One reason governments exist is to insure that 
economies function for the benefit of the people, and not the other way 
around.'' Already, decisions about interest rates and desirable rates 
of unemployment--decisions that will decisively impact the lives of 
millions of Americans--are beyond the reach of democracy. They are 
reserved to the exclusive jurisdiction of unelected bankers.
  What does it mean, as a practical matter, for supervision of the 
financial sector to be protected from democratic accountability? The 
contents of S. 900 itself should give us a pretty good idea. For whose 
benefit is this legislation being passed? In the long debate over this 
legislation, there has been a lot of talk about the conflicting 
interests of bankers, insurance companies, and brokers, but very little 
discussion of the public interest.
  Financial services firms argue that consolidation is necessary for 
their survival. They claim they need to be as large and as diversified 
as foreign firms in order to compete in the global marketplace. But the 
U.S. financial industry is already dominant across the globe and in 
recent years has been quite profitable. I see no crisis of 
competitiveness.
  Financial firms also argue that consolidation will produce 
efficiencies that can be passed on to consumers. But there is little 
evidence that big mergers translate into more efficiency or better 
service. In fact, studies by the Federal Reserve indicate just the 
opposite. There is no convincing evidence that mergers produce greater 
economic efficiencies. On the contrary, they often lead to higher 
banking fees and charges for small businesses, farmers, and other 
customers. Bigger bankers offer fewer loans for small businesses. And 
other Fed studies have shown that the concentration of banking squeezes 
out the smaller community banks.
  S. 900 reflects the same priority of interest promoted by financial 
consolidation itself. A provision designed to ensure that people with 
lower incomes can have access to basic banking services has been 
stripped out. Let me repeat that. A provision designed to ensure that 
people with lower incomes can have access to basic banking services has 
been stripped out. This provision was to address the growing problem 
that banking services are beyond the reach of millions of Americans. 
According to U.S. PIRG, the average cost of a checking account is $264 
per year, a major obstacle to opening a checking account for low-income 
families. These families have to rely instead on usurious check-cashing 
operations and money order services.
  I don't see much protection for consumers in S. 900 either. Banks 
that have always offered safe, federally insured deposits will have 
every incentive to lure their customers into riskier investments. Last 
year, for example, NationsBank paid $7 million to settle charges that 
it misled bank customers into investing in risky bonds through a 
securities affiliate it set up with Morgan Stanley Dean Witter.
  S. 900 makes nominal attempts to address these and other problems. 
But in the end, I am afraid this bill is an invitation to fraud and it 
is an invitation to abuse.
  Finally, the impact of S. 900 on the Community Reinvestment Act is a 
cause of real concern. I thank my colleague, Senator Sarbanes, for his 
tremendous leadership in making sure that we protect community 
reinvestment as a part of his substitute legislation. CRA has been an 
effective financial tool for the empowerment and growth of our 
communities for over 20 years. Despite this success, CRA is now in 
great danger. Why? Because S. 900 is a legislative package of deals and 
favors aimed to please Wall Street, certainly not Main Street. It is 
not good for small business, not good for low-income families, not good 
for rural America, not good for our neighbors or our communities.
  Within this bill are three substantial provisions intended to 
``modernize'' financial services by rolling back the Community 
Reinvestment Act. But that will only encourage discrimination and 
promote economic despair.
  We need to ask ourselves a very important question: Are we willing to 
turn the clock back and abandon the Community Reinvestment Act? Are we 
willing to return to the days before 1977 when banks could freely 
discriminate against neighbors, farms, small towns, and other 
underserved populations, just because they were viewed as less 
profitable customers?
  We need to keep the doors open for families, seniors, farmers, small 
businesses, for consumers to access credit so they can realize their 
dream to own a home or start a business. We need to keep the doors open 
for community groups, for cities and towns to access credit to 
revitalize impoverished neighborhoods or to restore once abandoned 
buildings. We need to keep CRA strong because we all benefit from 
community reinvestment.
  CRA establishes a simple rule--that depository institutions must 
serve the needs of the communities in which they are chartered. In a 
safe and sound manner, they form partnerships with groups and consumers 
to provide lending to those denied credit. In a safe and sound manner, 
banks work with families looking to achieve their dream of owning a 
home. In a safe and sound manner, banks lend to small businesses to 
help them grow. In a safe and sound manner, banks lend to farmers who 
fall on hard times and need some extra help to survive falling 
commodity prices.
  For many consumers, CRA has been a lifesaver. To deny the positive 
impact CRA has made in improving the economic health of our country is 
simply to deny the facts. The CRA has delivered an estimated $1 
trillion or more for affordable homeownership and community 
development. The role of CRA is not just to benefit the most 
impoverished neighborhoods in our States; rather, CRA cuts across class 
lines, race lines, gender lines, practically every hurdle to 
discrimination, to promote economic stability for families, small 
farmers, and communities. This legislation in its present form begins 
to take all that away.
  What is my proof? According to the statistics collected by the Local 
Initiative Support Corporation, or LISC, in 1997 the Home Mortgage 
Disclosure Act data showed that lending to minority and low-income 
borrowers is on the rise. For example, since 1993 the number of home 
mortgage loans to African Americans increased by 58 percent; to 
Hispanics, by 62 percent; and to low- and moderate-income borrowers by 
38

[[Page 8193]]

percent--well above the overall market.
  In 1997, large commercial banks made $18.6 billion in community 
development investments. In 1997, banks and thrifts subject to CRA's 
reporting requirements made two-thirds of all the small business loans 
made that year. More than one-fifth of those loans were made to small 
businesses and low- and moderate-income communities.
  Each time I return to Minnesota, I am convinced that CRA is working. 
Early this year, I had a chance to present an award to a family who had 
achieved their dream of becoming homeowners. Rene and Gloreen Cabrarra 
were the 750th family to purchase their home through an innovative 
partnership between the community group ACORN and a local bank. Rene 
and Gloreen had to move out of their apartment when it was condemned 
for repair problems. As a result, they moved in with other family 
members. The Cabrarras began working with the community group ACORN in 
the Twin Cities and were soon able to obtain a special low-income loan 
to buy their home, thanks to a CRA agreement between that community 
group and that bank in that metro area. There is no doubt that CRA has 
benefited Rene and Gloreen. As a result, they are now proud homeowners 
living in the Phillips neighborhood.
  From the nearly 170 mayors who have signed their name in support of 
the progress CRA has made in their communities, there is tremendous 
support. From family farm and rural organizations who see access to 
credit as being essential tools for their small communities, there is 
tremendous support. A story of empowerment can be shared by every group 
working for the advancement of their rights.
  Despite this undeniable success, the CRA is under attack. S. 900 
would begin to dismantle its effectiveness in the communities where it 
has been most beneficial. Specifically, I will speak to two anti-CRA 
provisions in S. 900.
  First, S. 900 creates a safe harbor for banks that have maintained a 
satisfactory CRA rating for 3 consecutive years. This provision would 
practically eliminate the opportunity for public comment on the CRA 
performance of a bank at the time of a merger application. Banks that 
have received a satisfactory or better CRA rating for 3 years 
consecutively would be deemed in compliance and therefore freed from 
the requirement of public comment on their application.
  Public comment on a proposed merger is an especially useful tool in 
the case of large banks serving a variety of markets. In such cases, 
regulators examine only a portion of these markets to evaluate a bank's 
CRA rating. Since performance in small communities is weighted less 
than in larger areas, public comment sometimes provides the only means 
to truly examine the commitments of a bank to all of its community 
members. Simply put, public comment is a chance for community groups 
and consumers to bring to light important information and facts that 
may have been overlooked during the review process.
  However, this avenue for public involvement in the merger process is 
seriously undercut by S. 900's safe harbor provision. The only way a 
citizen could exercise his or her democratic rights would be to find 
``substantial verifiable information'' of noncompliance since the 
merging bank's last CRA examination. This is a very high burden. An 
estimated 95 percent of all banks are deemed CRA compliant. As a 
result, the vast majority of mergers would be exempted from public 
comment.
  Some have justified this undemocratic safe harbor as a way to prevent 
extortion by community groups during the merger review process. Mr. 
President, in August 1998, I wrote a letter to the Federal Reserve 
requesting a public hearing on the proposed merger between Norwest 
Corporation, based in Minnesota, and Wells Fargo Company. I 
specifically requested that special attention be paid to the possible 
effects that this merger would have on the people and the communities 
who rely on Norwest's services and community participation across the 
State. I ask my colleagues, Was this extortion?
  I was not the only elected official to request such a hearing. A 
Congressman, a State representative, and various community groups did 
as well. Were they guilty of extortion?
  The 2-day hearing opened the doors for 70 different groups and 
individuals to publicly comment on the strengths and weaknesses of both 
Norwest and Wells Fargo with regard to community involvement. 
Representatives from the Navajo Nation, statewide nonprofit housing 
organizations, and microcredit lending organizations that provide a 
lifeline to small businesses, all had their chance to be heard. They 
had their chance to publicly challenge these merging entities to remain 
involved in their communities. Did this constitute extortion?
  No one was practicing extortion by requesting a public hearing on the 
merger between these two financial giants. No elected officials or 
nonprofits were doing anything improper when they publicly commented on 
the lending practices of these two banks. What these 70-plus groups and 
individuals were practicing was democracy.
  Using S. 900, citizens would be deprived of these democratic rights 
unless they could ``substantially verify'' a merging bank's 
noncompliance. That is not just undemocratic, it is unjust. At least 
the Daschle-Sarbanes amendment would retain the consumers' democratic 
right to participate in the process.
  The second anti-CRA provision in S. 900 is the small bank exemption. 
This provision would exempt banks in rural communities with assets of 
less than $100 million from CRA requirements. In fact, it would exempt 
63 percent of all banks from the requirements of CRA. It would send a 
clear message to farmers, to small businesses, and to consumers in 
small towns that they do not have the same rights to access credit as 
consumers who live in urban areas.
  Some of my colleagues would argue that small banks in rural 
communities do not need CRA. Why? They claim that small banks by their 
nature serve the credit needs of local communities. But CRA compliance 
records will tell you a different story.
  More importantly, rural America is facing an economic crisis. Family 
farms are disappearing one by one from this country's rural landscape. 
Many rural communities are in great need of access to credit before 
their economies collapse. This anti-CRA provision completely ignores 
the realities and needs of rural America.
  According to a recent SBA (Small Business Administration) report, 
June 1998 data show a 4.6-percent decline in the number of small farm 
loans. That June 1998 data also reveals that the value of very large 
farm loans, over 1 million, has increased by 25 percent, while small 
farm loans under $250,000 increased by only 3.9 percent. As family farm 
and rural community organizations have concluded, larger loans are 
going to fewer farmers.
  According to a similar study conducted by the State of Wisconsin, 
farming operations were more likely to obtain a loan if they were under 
contract with an agribusiness. Small and independent farmers faced 
greater difficulty accessing the necessary credit to remain in 
operation.
  To quote an April 29 letter signed by 19 organizations representing 
the interests of farmers in rural communities:

       Rural areas continue to suffer from a serious shortage of 
     affordable housing. Farmers are facing the worst financial 
     conditions in more than a decade due to declining commodity 
     prices. Rural Americans continue to need the tools of the CRA 
     to ensure accountability of their local lending institutions. 
     CRA helps to meet the credit demand of millions of family 
     farmers, rural residents, and local businesses.

  In a March 24 letter to Senators, the National Farmers Union also 
sent the message that rural America needs the CRA just as much as our 
urban centers. To quote the letter from President Leland Swenson:

       The Community Reinvestment Act prohibits redlining, and 
     encourages banks to make affordable mortgage, small farm, and 
     small business loans. Under the impetus of CRA, banks and 
     thrifts made $11 billion in farm loans in 1997. CRA loans 
     assisted small farmers in obtaining credit for operating 
     expenses, livestock and real estate purchases. Low- and 
     moderate-income residents in rural communities also benefited 
     from $2.8 billion in small business loans in 1997.


[[Page 8194]]


  In 1999, access to credit is tighter than usual, making it critical 
to maintain the CRA.
  For many consumers living in rural communities, having access to 
credit is having access to a future. Our rural communities need CRA 
because they can depend on little else in today's agricultural markets.
  I am strongly opposed to the small bank exemption in S. 900 because I 
have witnessed firsthand the important role CRA plays in rural 
communities in Minnesota. At least the Sarbanes-Daschle amendment would 
remove this harmful provision from the bill.
  We need to ask ourselves, do we really intend to return to the old 
banking practices of red lining? Do we want to leave our cities, small 
towns, and families without a means to become economically stable and 
strong? Do we intend to draw a clear line between the haves and have-
nots?
  It has been nearly 3 years since the passage of welfare reform. Since 
then, urban and rural America has seen a dramatic rise in the numbers 
and needs of the desperately poor.
  Mr. President, that is right. Since then, we have seen a dramatic 
rise in the number and needs of the desperately poor. Why are we not 
talking about other issues on the floor of the Senate? I will get back 
to this in a little while.
  What does that have to do with CRA? Everything. Because of CRA, 
nonprofit organizations that assist the homeless are able to establish 
partnerships with banks to access credit and build affordable and 
emergency long-term housing. CRA loans that develop dilapidated 
neighborhoods and bring more jobs to our urban centers benefit former 
welfare recipients. Over $1 trillion has been invested with innovative 
ways of providing housing, jobs, and community revitalization to 
stabilize these economically troubled areas.
  CRA has been a mainstream banking practice for over 20 years. It has 
evolved over the years to better serve banks and their communities, and 
it has been streamlined to reduce the regulatory burden on small banks. 
This is a law that has been improved and has grown to better serve 
banks and consumers.
  A lot of big banks don't like the CRA. They feel it is an imposition. 
They denounce it as big government and overregulation. But for most 
people I ask, Which is the greatest danger here, concentration of 
political power in government or concentration of economic power? I 
don't think it is a close call.
  I think our goal should be to help ordinary people make sure they 
have some say over the economic decisions that affect their lives. 
Repealing CRA is not going to do that. No amount of antigovernment 
rhetoric is going to do that. But enforcing some meaningful consumer 
protections would do that. So would prohibiting mergers that threaten 
to crowd out community banking, squeeze credit for small businesses, 
and open the door to higher fees and ever more fraud and abuse.
  This is the fundamental problem with deregulation and economic 
concentration generally. It allows the Nation's economic power to be 
held in the hands of fewer and fewer people. The same thing is 
happening in many of our other major industries, including airlines, 
electric utilities, and communications.
  Ben Bagdikian has noted that 20 corporations and multinationals own 
most of the major media in the entire country--newspapers, magazines, 
radio, television and publishing companies. In the 2 years since the 
Congress eased restrictions on ownership of radio, 4,000 stations have 
been sold--in the last 2 years--and more than half of all big-city 
stations are in the hands of just five companies.
  The electric utility industry is already consolidating in expectation 
that the States and Congress will soon mandate retail competition. And 
4,500 corporate mergers were announced in the first 6 months of last 
year, with the combined value of $1.7 trillion. These include SBC and 
Ameritech, Chrysler and Daimler Benz, Enron and PGE, Monsanto and 
American Home Products, Worldcom and MCI, and Columbia and HCA 
Healthcare. Now we hear about mergers between BP and Amoco, Mobil and 
Exxon, and on and on.
  Pretty soon we are going to have three financial service firms in the 
country, four airlines, two media conglomerates, and five energy 
giants.
  Mr. President, this is absolutely amazing to me, which is why I have 
spent some time making the case. We see more consolidations here. We 
see a dangerous concentration of power in telecommunications--that is 
the flow of information in democracy--and the same thing in energy, the 
same thing with health insurance companies.
  In agriculture it is absolutely unbelievable--absolutely 
unbelievable. Everywhere family farmers look you have these 
conglomerates that have muscled their way to the dinner table, 
exercising their raw economic and political power over family farmers, 
over consumers, and I might add, over taxpayers as well.
  Joel Klein came out to Minnesota, along with Mike Dunn, who heads the 
Packers and Stockyard Administration in the USDA, for a very dramatic 
public hearing in our State just a couple of Sundays ago. Let me tell 
you, you have these hog producers that are facing extinction, and then 
you have these packers that are in hog heaven. You have your grain 
farmers going under; and you have Cargill making a 52-percent profit in 
this past year.
  The farmers are saying, ``What is going on here? Consumers aren't 
getting a break. And we're not getting the prices that enable us to 
even keep going on with our farming. Who is making the money?'' 
Everywhere you see this concentration of power. I will have an 
amendment on this bill later on that will talk about antitrust action.
  Antitrust action has been taken off the table. Antitrust action has 
been taken off the table. This is a classic example of why we need 
reform. Because when it comes to antitrust action, and having the 
Senate say we are on the side of consumers, we are on the side of 
family farmers, we are on the side of community people, and we are 
willing to take on these huge companies, we dare not do that. These 
monopolies are the campaign givers. These are the heavy hitters. These 
are the investors.
  We have been through this before, Mr. President. At the end of the 
last century, industrial concentration accelerated at an alarming pace. 
Lots of people, including the columnist and author E.J. Dionne, former 
House Speaker Newt Gingrich, and the philosopher, Michael Sandel, have 
noted the similarities between that era and our own.
  American democracy suffered as a result of that concentration of 
economic power. The two parties became dominated by similar corporate 
interests. Their platforms started to sound an awful lot alike, and 
voter participation declined dramatically. Why? Because people realized 
that they had little to say in the economic decisions that most 
affected their lives.
  I think that aptly describes the situation today. I tell you, when I 
travel in Minnesota or travel in the country, one of the things that 
people say to me is that they think both parties are controlled by the 
same investors. They do not think there is any real opportunity for 
them to have any say anymore in this political process.
  And once again, we are about to pass a piece of legislation --I hope 
we do not, but if we do--a piece of legislation that will lead to the 
rapid consolidation in the financial services industry, to the 
detriment of rural America, to the detriment of small towns, to the 
detriment of low- and moderate-income people, and to the detriment of 
working families. But there is an awful lot of economic and political 
clout behind this bill.
  And what is in store for us if we allow this trend to continue? Huge 
financial conglomerates the size of Citigroup will truly be ``too big 
to fail.'' Government officials and Members of Congress will be prone 
to confuse Citigroup's interests with the public interest, if they do 
not already. I think they do already.
  What happens when one of these colossal conglomerates decides, for 
example, it might like to turn a profit by privatizing Social Security? 
Who is going to stand in their way? That is a

[[Page 8195]]

trick question, of course, because we already face that dilemma today. 
But I contend that the economic concentration resulting from passage of 
S. 900 would only make that problem worse.
  In a sense, then, campaign finance is only a symptom of a larger 
problem. By all means, we should drive money out of politics. 
Absolutely, we should. But even if we succeed, the trend towards 
economic concentration will diminish the value of democratic 
decisionmaking. If few or none of the most important economic decisions 
are made democratically, or are even subject to democratic 
accountability, what is the point of voting? Indeed, these developments 
raise important and fundamental questions about the role of democracy 
itself.
  It used to be that these questions were a source of concern for many 
people. And they were a hot topic for political debate. Thomas 
Jefferson and Andrew Jackson warned not only against the concentration 
of political power, but also against the concentration of economic 
power.
  The great Supreme Court Justice Louis Brandeis railed against the 
``Curse of Bigness.'' Brandeis argued that industrial concentration 
coarsened the value of democracy by diminishing the role of individuals 
in economic decisions. We should not let that debate die. It is a vital 
part of our democratic heritage.
  There may be some colleagues who share these concerns but will 
nonetheless vote for S. 900. They say this is the best we can do. They 
say the damage has already been done, and concentration will continue 
with or without this legislation.
  I disagree. I think we need to take a good look at this. Before we 
consider sweeping changes in our financial services laws, we had better 
understand the effects of the latest wave of mergers. The true test of 
these new combinations will be the impact of the next recession. We 
need to see how these megamergers hold up before proceeding any 
further.
  There is simply no justification or excuse for this kind of 
invitation to bigness before a solid, updated regulatory system can be 
put in place. I believe this legislation is an enormous mistake. It is 
not necessary. And it could do real harm to the economy. It should be 
soundly defeated. It should be soundly rejected.
  Mr. President, with due respect to my colleagues, while I have the 
floor I want to argue one other case. And I say to both the Senator 
from Texas and the Senator from Utah, I will not dominate the whole 
afternoon, but I do want to make one other argument. And it is this: I 
do not understand why we are on the floor dealing with this 
legislation. I do not really understand why we are dealing with--what 
is it called--the Financial Services Modernization Act.
  When I talk to people in cafes in Minnesota, they do not talk to me 
about the Financial Services Modernization Act at all. As a matter of 
fact, I will tell you something. If you spend a little bit of time with 
people, most people will say--and both of my colleagues, the Senator 
from Texas and the Senator from Utah will be happy to hear the first 
part of what they say, and maybe not as happy to hear the second part. 
If you do a poll and ask them, ``Are you a liberal or a conservative,'' 
at the Town Talk Cafe in Willmar, which is my focus group--and that is 
the name of the cafe--I would say 75 percent of the people say they are 
conservative. They do.
  But you know what? If you stick around and talk to people for a 
while, they do not like the way in which these big banks have taken 
over financial services and have driven out the community banks. And 
they do not like these big insurance companies that are dominating 
health insurance. And they do not like how these conglomerates are 
driving family farmers out. And they do not like the concentration in 
telecommunications. And they do not like to see the merger of the 
energy companies. And they are not all that happy with Northwest 
Airlines that basically dominates about 75 percent of the flights in 
the State of Minnesota.
  Those people in the cafes of Minnesota have a healthy skepticism 
about bigness. They have a healthy skepticism about a piece of 
legislation that leads to dangerous consolidation, and basically leaves 
the economic decisionmaking, that can make or break the lives of 
families and communities and neighbors, in a few hands. They are right. 
More importantly, one more time, I just want to sound this alarm, which 
is why I am going to talk a little bit more here. We have a situation 
in my State of Minnesota right now which I can only define as 
desperate.
  I have spoken at enough farm gatherings. I spoke first, it was a farm 
gathering in northwest Minnesota, Crookston. Then there was a farm 
gathering that I spoke at in Worthington. Then there was a farm 
gathering in Sioux Falls, SD. Then there was a farm gathering in Sioux 
City, IA. Every time I spoke at those gatherings--and there were 500, 
600, 700, several thousand farmers--I looked out there and I saw the 
pain in the faces of family farmers.
  I see the pain in the faces of those family farmers as I am in this 
Chamber for two reasons: First of all, on the long-term front, these 
family farmers can't make it without a decent price. They want to know 
what we are going to do about getting farm income up. Why aren't we 
talking about farm income today? Why aren't we doing something about 
agriculture?
  They want to talk about when there is going to be antitrust action. 
They want to talk about who is going to be on their side, not on 
Cargill's side or IBP's side or Monsanto's side. They want to talk 
about whether or not there is going to be some protection for them so 
they have a chance to make it.
  These family farmers also want to know why in the world we can't get 
emergency assistance to them as a part of the emergency supplemental 
bill. They thought 2 months ago we were going to do it, but we didn't. 
We left and went home for spring break. Now we are back. I say to the 
majority party, get that supplemental bill out here on the floor and 
pass it. How can we hold this bill up? There was supposed to be a 
separate ag supplemental bill. But I think it was tied to Central 
American assistance. I think they went together.
  It should be passed out of here, because, one more time, the 
Minnesota FSA is laying off its employees. You might say, so what, a 
bunch of bureaucrats. Not so. This is a grassroots organization, with 
people out in the farmland providing people with credit, as a lender of 
last resort, with more and more demand as farm prices are down, farmers 
are facing foreclosure, trying to get out there and plant, and they do 
not have the loan money. This is a demoralized agency, and they are 
letting people go.
  As I said earlier, we are going to have, on the present course, at 
least 800 farmers who aren't going to get any financing at all. They 
are going to go under. That is a real emergency supplemental bill.
  I am tempted, while I have the floor, to speak for a while about 
this, because it seems to me that we ought to be doing something about 
this and we ought to be doing something about it right now. The 
Financial Services Modernization Act--I have to write this down--the 
Financial Services Modernization Act does not mean a thing to them. The 
Financial Services Modernization Act does not mean a thing to these 
family farmers. They want this Congress to pass that supplemental bill 
because for them time is not neutral. Time marches on. If they do not 
get any assistance, they are going to go under. These are hard-working 
people. I think it is just simply unconscionable. I am not just talking 
about the Financial Services Modernization Act. I think it is 
unconscionable that any piece of legislation go forward on the floor of 
the Senate until we do something about this.
  It is absolutely unbelievable; it really is.
  I mentioned a story earlier. I see there are people in the Chamber 
who are watching the debate--or at least watching one person speak. I 
have a hard time giving people a feel for the gloom that is out there. 
Again, I talked to Tracy Beckman, not using any names, who is director 
of the Minnesota FSA.

[[Page 8196]]

  He said, I think it was this morning, that one of the farmers who was 
denied a loan because there was no money, because we haven't done 
anything--we are supposed to pass this emergency supplemental bill and 
get the funding out there--one farmer today said, ``Well, I'm just 
going to shoot myself and my family.'' That is horrifying. That is what 
he said.
  There is tremendous economic pain, tremendous desperation. People are 
going under. We have the Financial Services Modernization Act, this 
piece of legislation. Frankly, it doesn't mean anything to these 
farmers. They want to get some help. They would like to get spring 
planting loan money. That is what they would like to have done for 
them. That is not what we are doing.
  When are we going to get serious? It is clear what this piece of 
legislation does. We have the Community Reinvestment Act, which has 
been tremendously important to lots of people in small communities. It 
has ended redlining. I used to do community organizing against 
redlining. It has worked well. It has made a huge difference. It's a 
source of capital, and lots of communities have overcome 
discrimination. This piece of legislation takes all that away. Wipes it 
out, wipes it out through the two provisions that I talked about.
  My question is, what does it do for ordinary citizens? What does it 
do for ordinary people? That is the question. Why aren't Senators 
talking about issues that matter to working people, that matter to 
ordinary citizens in our country? Why aren't we talking about the Town 
Talk Cafe?
  I see my colleagues on the floor.
  Mr. GRAMM. Will the Senator yield for one moment?
  Mr. WELLSTONE. As long as I continue to have the floor, I will be 
pleased to yield.
  Mr. GRAMM. I have to accommodate our dear colleague from Minnesota. 
Let me say, I wish he could go on forever, because I am always 
enlightened listening to him. But to accommodate him, I asked unanimous 
consent that he might have 40 minutes when we came back in at 2:15. It 
is now 3:15. The Senator has spoken an hour.
  I asked other people to come over to speak based on that agreement. I 
do not intend to try to enforce the 40 minutes, but if the Senator 
could take that into account, because I asked Senator Bennett, who, as 
are all of us, is busy, to come over based on that agreement. He has 
been sitting here now for 25 minutes or so. If the Senator could sort 
of begin to bring it to a close, it would be much appreciated.
  Mr. WELLSTONE. Mr. President, let me say to my colleague that 
initially--and I appreciate what he is saying and because of that, I 
will try to bring it to a close--I said I thought it would take 40 
minutes. My colleague was gracious enough to say, take the time you 
need, take an hour and a half, whatever you need. I think that is 
actually part of the Record.
  And when he said that--I usually take direction from my colleague 
from Texas--I thought to myself, well, if I have an hour and a half to 
talk about the issues that I think we really ought to be talking about, 
I will take that. So I am about ready to finish up on that hour and a 
half.
  Mr. BENNETT. Mr. President, will the Senator yield for a question?
  Mr. WELLSTONE. I am pleased to, although I want to make sure that I 
focus on some of these other issues. Let me yield for a question.
  Mr. BENNETT. I want to answer some of the things the Senator has been 
saying here and ask him a question in that context.
  The Senator has asked the question, why we are taking this up, and 
why does it matter, and is there any urgency. My question to the 
Senator is, is he aware of the fact that Robert Rubin, the Secretary of 
the Treasury, and Alan Greenspan, Chairman of the Federal Reserve 
system, both testified before the Senate Banking Committee that this 
legislation was of the highest urgency and that if it did not pass as 
quickly as possible, the entire banking system of the United States 
would be adversely affected by virtue of foreign competition? Is the 
Senator aware of that testimony from the administration and the Federal 
Reserve Board?
  Mr. WELLSTONE. Mr. President, it is a fair enough question. In 
answering the question, let me say that I actually just did have an 
opportunity to be in a session with Secretary Rubin in which several of 
us expressed the very concerns that I have taken an hour to express. He 
said they are very valid concerns. ``On balance, I think it is better 
that we do this'' was what he said.
  And then when we had a discussion about CRA--and I have devoted a 
good deal of my time talking about that--the Secretary was very clear 
about the President's veto letter and very clear that it was important 
that we maintain these CRA provisions.
  Of course, the Secretary is interested in this legislation, though it 
wasn't quite the same report I heard that my colleague heard. I say one 
more time--I am coming to the end of my remarks--that in deference to 
all my colleagues out here, I know this Financial Services 
Modernization Act has the support of the industry groups and has the 
support of the financial institutions. Of course, because it is going 
to lead to more concentration of power and give them more say.
  I am sure Alan Greenspan would like it. The Federal Reserve Board is 
going to have even more power--an unelected body with yet even more 
decisionmaking power over decisions that vitally affect people's lives. 
But I have to tell you, in all due respect to one of my favorite 
colleagues, the Senator from Utah, one more time, besides believing 
this piece of legislation is a huge mistake, I won't support this 
legislation in its present form.
  I won't support the alternative, the substitute, either. Besides 
thinking it is a huge mistake, for reasons I have argued over the last 
hour--and my colleague from Texas was gracious enough to give me that 
opportunity--I also want to say one more time to family farmers in the 
State of Minnesota right now that this Financial Modernization Services 
Act doesn't mean anything. It doesn't mean a thing. They want to know 
why we are not getting some loan money out to them right now because 
they are in such desperate shape. They are trying to live to be able to 
farm another day.
  To the people who are going to be laid off in Minnesota FSA, who are 
doing the good work of trying to process loans and help people, but 
have no money to work with, I think it is absolutely outrageous. To all 
the farmers in economic pain because we are not doing a darn thing 
about getting farm income up, or about getting price up, or a darn 
thing to take on some of these big grain companies and packers so 
family farmers can get a fair shake in the marketplace, I am for 
putting more free enterprise back into the food industry. It is the big 
monopolies I don't care for. These farmers have every reason to wonder 
what we are doing here.
  I will tell you one more time that the people in the cafes I have 
been in are not talking about this particular legislation; they don't 
see this as a crisis. Alan Greenspan may see the world in a very 
different way than people in the cafes in Minnesota, and so might the 
Secretary. Certainly these financial institutions do. Certainly Wall 
Street does.
  But people in Minnesota are not particularly interested in mergers, 
acquisitions, and all this consolidation of power. They are interested 
in a good job at a good wage. Why aren't we out here talking about 
raising the minimum wage?
  They are interested in not falling between the cracks when it comes 
to health care coverage. Why aren't Senators talking about decent 
health care coverage for people? They are interested in how they can 
afford prescription drugs. Why aren't Senators talking about affordable 
prescription drug coverage for seniors, and, for that matter, for all 
of us? They are interested in how there can be a decent education for 
their children. Why aren't Senators having a major debate about 
education or getting resources to communities so we can do a better job 
of educating our children? They are interested in how we can reduce 
violence in homes, in

[[Page 8197]]

schools, and end the violence in our communities. Why aren't Senators 
out here with legislation that deals with that? They are interested in 
how to earn a decent living and how to give their children what they 
need and deserve. They are interested in making sure that every child, 
by kindergarten, comes to school ready to learn. Why aren't we 
investing in good, developmental affordable child care?
  That is what they are interested in.
  We are not dealing with any of those issues. I want to know when 
Senators are going to come out on the floor and deal with pieces of 
legislation that dramatically affect ordinary people, working families 
in my State and working families around the country.
  I yield the floor.
  Mr. BENNETT addressed the Chair.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from Utah is 
recognized.
  Mr. BENNETT. Mr. President, I have enjoyed the presentation by my 
friend from Minnesota. I return his friendship, and he is my friend. We 
disagree on just about everything, and we disagree about most of the 
things he said here today. I want to make a few comments about some of 
the positions he has taken before I talk about the bill.
  As I listened to the Senator run down the litany of things he thinks 
we ought to solve with legislation--we ought to solve farm prices with 
legislation; we ought to solve preparation for school with legislation; 
we ought to solve education, generally, with legislation; we ought to 
solve the amount of money people earn with legislation, and on down the 
list--he reminds me of a comment that I found very insightful that was 
made by a head of state in another country as I was visiting there. 
This man said to me, ``Politicians think that money comes from the 
budget.'' Money does not come from the budget. Money comes from the 
economy. If the economy doesn't work, there is no money in the budget. 
And if I may, Mr. President, I think that discussing financial 
modernization has a great deal to do with all of the issues that the 
Senator from Minnesota was discussing because it has to do with the 
health of the economy.
  If the banking system, the financial system, and the economy does not 
work efficiently, if it does not work carefully and properly, the 
economy as a whole will suffer, the amount of tax revenue coming into 
the Government will suffer, and we can have all of the discussions we 
want about solving all of the social problems with legislation, and 
then we will turn around and find that the cupboard is bare.
  It is very important that we recognize the impact of this legislation 
on the Nation's economy. As I said in my question to my friend from 
Minnesota, we heard testimony in the Banking Committee from the member 
of the administration most charged with focusing on this area of the 
economy, the Secretary of the Treasury, and with the head of the 
independent agency most charged with keeping the economy strong and 
vital, the Chairman of the Federal Reserve Board, that it was essential 
that we modernize our financial legislative structure in this country.
  Why? They told us that foreign banks are coming to the United States, 
and as the American banks go overseas, they are competing in a 
different regulatory framework. They said that the American framework 
is outdated, it is outmoded, it is expensive, and that it gets in the 
way of America's ability to compete.
  The big banks that my friend from Minnesota attacks so vigorously, 
the last time I checked, all paid taxes on the revenues they received. 
The best way to make sure that we do not get those tax revenues is to 
say, let us hobble those banks in their competitive structure with 
foreign banks. Let's see to it that they cannot compete in the same 
kind of atmosphere as their foreign competitors, in the name of 
preventing them from concentrating power, and then see how much taxes 
we get from those big banks. Taxes are a percentage of profits; if 
there are no profits, there are no taxes and there is no money in the 
budget to pay for all of the programs that the Senator from Minnesota 
wants to fund.
  Now, he made another comment that I found fascinating, from a 
personal point of view. He said that, of course, the big banks don't 
like CRA because it forces them to do what they should be doing. He 
stands up for the little banks that he wants to protect from the big 
banks that, in his view, want to gobble them up. In my experience with 
this legislation, it has been exactly the reverse. The big banks have 
said to me: We don't much care about the CRA provisions. We have 
learned to live with CRA. We have learned to handle our banking 
practices in such a way that gets us appropriate CRA ratings. And some 
of the big banks have said: Don't pay any attention to the CRA 
amendments in this bill because we can live with them just fine. No. 
The protest about CRA has come, ironically, given the position of the 
Senator from Minnesota, from the small banks, the little bank.
  Let me give you an example that I have heard of, secondhand, but I 
think summarizes what we are dealing with here. I have heard of a bank 
in California that was opened by a group of Chinese Americans. What do 
you do in the marketplace when you are trying to find a niche that will 
allow you to survive, whether you are in the banking business, or the 
clothing business, or the automobile business, or whatever kind of a 
business? You do look around for some community that is not being 
served properly, and say to yourself, ``I can fill that niche.'' The 
oldest business advice in the world is find a need and fill it. Here 
were a group of Chinese Americans who decided that other Chinese 
Americans for some reason or another were not getting access to the 
credit they needed. They found this need and they hoped they could fill 
it. They did. They were successful. They prospered.
  Then comes the CRA regulators, and they said, ``Let us see your 
books. Let us look at your loans.'' They came back and said, ``You are 
only making loans to Chinese Americans. That is, you are not complying 
with the Community Reinvestment Act that requires you to make loans to 
Hispanics or African Americans or other minorities that we, the 
regulators, will identify and determine.'' The people at this bank 
said, ``Of course we are only making loans to Chinese Americans. That 
is what we set up to do. That is the market we set up to serve.'' 
``Well, you will accept the penalties and strictures of CRA regulation 
if you do not go out and find statistically enough African Americans 
and Hispanics to meet our requirements.''
  This was a community that these Chinese Americans did not understand 
instinctively. This was the community that they were not set up to 
serve. Maybe you can say that it was a good kind of thing for them to 
reach out beyond their natural business area and start serving these 
other sectors, but it created a burden on this small bank, and it was a 
very small bank that the managers of the bank objected to.
  In my own State of Utah, I get the same reaction. The big banks don't 
much care about CRA. They don't like it. They find it burdensome. But 
they have learned to live with it. Banks that have written in that are 
complaining are the little banks, and they are complaining for the same 
reason in the example that I have given. They feel they are serving 
their communities and they are being forced to try to reach beyond 
their natural communities to try to find somebody who can statistically 
qualify under CRA.
  This is from a very small bank in Utah. The President of the bank 
says, ``We have and will continue to lend to all segments of our 
community because it has been defined by regulation. The time spent 
documenting our community lending efforts for regulatory purposes is in 
itself counterproductive, as we could instead redirect our energies 
toward additional lending and community development activities.''
  In other words, they are spending more time filling out forms for CRA 
than they are investing in their community.
  Another one from a very small town in Utah, and it is surrounded by 
the family farmers that the Senator from

[[Page 8198]]

Minnesota was talking about: ``Exempting our institution from CRA 
requirements would allow bank personnel to spend more time with our 
customers and developing new products rather than gathering information 
to satisfy CRA documentation requirements.''
  We will have a great deal more to say about the CRA issue, I am sure, 
when it comes up. I simply wanted to make those points in response to 
the points that were made by my friend from Minnesota, because he is 
very clearly talking to different people than I am talking to. He is 
talking to the people in the crossroads cafes. And I think that is 
fine. But I think when it gets to the issue of banking regulation, he 
might spend some time talking to people who run banks and talking to 
people who borrow from banks.
  He made another point that I will talk about and then get 
specifically to the bill.
  He talked about the concentration of power, and he railed at great 
length against corporations that he felt were destroying our democracy. 
``Fewer and fewer people,'' he said--I wrote that phrase down--are 
controlling our economic power.
  I want to share a statistic that I saw in the paper last week that 
has an interesting slant on this.
  Back in, say, 1950--my memory is not sharp enough to give you the 
exact year, but it was sometime in the 1950s--the percentages of 
Americans who owned stock in corporations was 4 percent. Today it is 
over 50 percent.
  I would say to those who, like my colleague from Minnesota, are 
concerned about the concentration of power in the hands of a few 
people, who does he think owns Citibank? Who does he think owns these 
corporations that he says are so terrible? They are owned by Americans. 
They are owned by individuals. Fifty percent of Americans now own 
stock, and the number is going up all the time.
  This is one of the reasons that the class warfare arguments that we 
have heard around this Chamber for so long are beginning to wear 
thinner and thinner, because the people who own the corporations are 
ordinary, everyday, hard-working Americans. The days of J.P. Morgan 
being the controller of these institutions are over. J.P. Morgan is 
dead, his heirs scattered, and the controlling shareholder ownership of 
these corporations is in the hands of the teachers' pension fund--in 
the hands of ordinary people who have invested their savings in these 
corporations and have a stake in seeing to it that these corporations 
survive. That is why the class warfare arguments get thinner and 
thinner with each passing year.
  We are in a sense, Mr. President, turning Karl Marx on his head. He 
wanted the people to own all of the means of production. That was tried 
in the Soviet Union in the name of the government as they attacked the 
terrible capitalists in the United States, and ironically it is the 
capitalists that are seeing to it that the people ultimately own the 
means of production, but they own the means of production in their own 
name with shares held in their own name, which they can control and 
which they can vote and which they can sell if they don't like what the 
corporation is doing. And we are getting the people's ownership of the 
means of production through capitalism rather than through the forced 
distribution of wealth that Karl Marx and his followers practiced in 
modern communism.
  Having given that reaction to the political science lecture from my 
friend, who was once a professor of political science--I was never a 
professor, but I was once a student of political science, and I like to 
engage in these kinds of debate--I would like to say just a few words 
about the bill.
  The fact that it is just a few words is a testament to the expertise 
of our chairman who has worked harder and more personally on a piece of 
legislation than any chairman I have ever seen. We have resolved the 
controversies in this legislation to the point where there are only a 
few left. The Senator from Texas has led the fight in doing that.
  When we first started this, when I first came to the Banking 
Committee, the number of issues was huge and the gap between those 
issues was very wide. I would go out and people would ask me where we 
were on financial modernization. Unlike my friend from Minnesota, I did 
get those questions. I would go out in places where people were 
interested. And I would say repeatedly through my first term of service 
in the Senate that we were nowhere and we were not going to have 
financial modernization legislation, because the issues were so 
contentious and the gap between the two sides was so great that we were 
simply not going to get it done, and, quite frankly, I was not paying 
any attention to it for that reason. I didn't want to waste my time 
becoming cognizant of all of the ins and outs of these arguments when 
the arguments were going nowhere, and the legislation was going 
nowhere.
  We made a major step towards resolving these last year when Senator 
D'Amato was the chairman of the committee, and we finally began to 
grapple with some of these issues and tried to bring them closer 
together. But Senator Gramm has brought us even closer together and 
produced a bill on which there are now only relatively few issues in 
contention rather than the great many issues that were in contention 4 
or 5 years ago.
  I think that is an extraordinary achievement, not only on the part of 
the chairman who has led the issue, but, frankly, on the part of the 
committee as a whole. The fact that we are having this debate when we 
should have been having it a few years ago, according to those who are 
following the issue, demonstrates how far we have come.
  This reminds me in some ways of the debate we had in the 
telecommunications bill where we had huge forces on both sides of the 
issue struggling, literally, for survival. We had telephone companies, 
cable companies, long-distance carriers, local carriers, all fighting 
over what would happen to their future.
  We finally came together on a bill that virtually everybody could buy 
off on. They weren't happy with it, but they said they could live with 
it. We made a landmark step forward in telecommunications.
  I think that analogy holds true here. Insurance companies, when I 
first came to the Senate, were bitter in their opposition to any kind 
of change that would affect them; banks were chomping at the bit for 
more competitive opportunities and complaining that laws passed in the 
1930s were freezing them out; testimony which I have referred to from 
Chairman Greenspan and Secretary Rubin indicated we are being savaged 
by foreign competition because our regulatory structure gets in the 
way; the securities industry and all the other folks, everybody agreed 
we needed reform but nobody could agree on the form of that reform.
  Now we have a bill before the Senate that, however reluctantly, the 
insurance companies have said, ``We can live with,'' and the banks have 
said, ``We can live with''--the big banks and the little banks that are 
not usually on the same page on everything; the insurance agents and 
the insurance companies are not necessarily always on the same page.
  We have reconciled these various interests now. The regulators have 
said they can live with this and that. There is only one major 
regulatory argument left, and we will do our best to work our way 
through that one and find a compromise.
  The time to pass the bill is now. The moment has come when all of 
these forces are together. Let us not waste that moment. Let the Senate 
not shatter it all and say we will deal with it later. The forces of 
competition that led Secretary Rubin and Chairman Greenspan to speak of 
the urgency of this are still there and their pressures are still 
there. The passage of time, as we get farther and farther away from the 
1930s when our present regulatory structure was put in place, is not on 
our side in terms of making the financial services in this country 
efficient, more effective, and more competitive.
  We need this bill. We need it now. We should not lose the opportunity 
we have to seize the moment while there

[[Page 8199]]

is a degree of agreement among all of the parties of the bill to get it 
done.
  I salute the chairman for his personal effort in getting us where we 
are. I urge the Senate to pass the bill.
  Mr. GRAMM. Mr. President, let me thank our dear colleague from Utah 
for his very fine comments. Any colleagues who want an opportunity to 
speak on the bill should come to the floor to be afforded that 
opportunity. At some point, if we don't have people over to speak on 
the bill, Senator Sarbanes, under the unanimous consent request, will 
offer his substitute. Members can wait and speak on that substitute, if 
the Senator chooses to offer it, and obviously if you want to speak 
about the bill itself, you can do it on the substitute. Members 
desiring to speak on the bill before the substitute is pending, should 
come on over.
  Mr. President, I will respond very briefly to our dear colleague, 
Senator Wellstone. Senator Wellstone gave an impassioned plea not to 
repeal CRA. Let me say that one of my great frustrations with our 
efforts to reform CRA and curb abuses in CRA is that nobody wants to 
debate the reforms. Even the spokesman for the national association of 
the community groups that form the heart of CRA has said what they call 
``green mail'' exists. They think it is harmful to CRA. Most Americans 
would call that process ``blackmail'' and not ``green mail.''
  I think many people have had at least their eyebrows raised by the 
fact that $9 billion in cash payments have been made or committed under 
CRA. CRA is not about giving people money not to testify against your 
bank merger, or to testify for it; instead, CRA is about giving people 
an opportunity to have input and present evidence as to whether they 
are meeting the requirements of the law.
  I don't know what any judicial process--and this is a quasi-judicial 
process, I guess you could say--how anyone would not be revolted by the 
practice of paying witnesses. In essence, as Members will see when we 
begin the debate on CRA and we show some of the documents with the 
names redacted, that is exactly what is happening all over America 
today.
  The point I make about CRA is no one is talking about repealing CRA. 
This is not a debate about repealing or weakening CRA. This is a debate 
about integrity of banks that have longstanding records of compliance, 
and whether somebody just by calling them a name--by saying they are a 
loan shark, they are a racist, or some other inflammatory name--should 
be able to delay actions that they are guaranteed on an impartial basis 
under the law.
  All our provision in the bill says is that if a bank is going to be 
denied the ability to do something that they would have to be in CRA 
compliance for, and they have a long history of being in compliance on 
CRA, then those people who object--for their objection to be used to 
delay the process--have to present substantial evidence.
  Now, ``substantial evidence'' is defined in law more precisely than 
any other term of art in the American legal system: more than a 
scintilla of evidence; facts that would lead a reasonable person to 
think that something might be true.
  We are talking about the lowest standard of law, not the highest 
standard.
  The second provision in out bill would allow very small banks in 
rural areas that don't have a city to serve, much less an inner city, 
to be exempt from a regulatory burden that costs them between $60,000 
and $80,000 a year, even though these banks generally have only between 
6 and 10 employees. Since 1990, in 16,000 audits of these small, rural 
banks, only three banks have been found to be in substantial 
noncompliance.
  Every word that the Senator said about not repealing CRA I am sure 
resonated, but it doesn't have anything to do with the debate we are 
having. Nobody is proposing we repeal CRA in this bill. We are talking 
about two targeted reforms. I don't want anybody to get confused.
  Senator Dodd has come to the floor. I yield the floor.
  Mr. DODD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I have noticed over the last week every time 
I get up to give a talk, the Senator from Idaho is in the Chair.
  The PRESIDING OFFICER. I love to hear the Senator's speech.
  Mr. DODD. I enjoy the Senator's collegiality and leadership. It is 
nice to have the distinguished Senator from Idaho as a new Member of 
the Senate.
  Let me begin these brief remarks by commending the distinguished 
chairman of the committee, Senator Gramm, and the ranking Democrat, 
Senator Sarbanes, for their efforts on this legislation to date.
  I have been on the Banking Committee, and in fact I sat with my 
colleague from Maryland. I have been in the Congress 24 years, and I 
think for almost all 24 years he has been my seatmate--usually 
depending on where we were, the majority or the minority, to the left 
or right of me--almost all 24 years on one committee or another, 
including service in the House, in the Judiciary Committee, and then 
over these last 18 years in both the Foreign Relations Committee and 
the Banking Committee. I have been fortunate to have his good counsel 
and advice, and admired his leadership and thoughtfulness on so many 
issues. This is one which I constantly feel like the mythological 
figure of Sisyphus, rolling up this rock of financial services 
modernization every Congress. I do not think there is one we have 
missed since my arrival in this Chamber 18 years ago, not one Congress 
in which we have not tried to address the issue of modernization of 
financial services. On numerous occasions, the Senate, this body, 
actually completed its work but, because of bifurcated jurisdictions 
and other matters in the House, we were never able to attain success; 
that is, sending a bill, a broad bill on financial modernization, to a 
President, any of them that I served with--including President Reagan, 
President Bush, and now President Clinton.
  But we are precariously close to achieving a result that has been 
unattainable over the last number of years. The fact that we are 
dealing with this legislation as early as we are in this Congress is 
heartening to me, because it means we have in front of us an 
opportunity to complete action on what I think is a worthwhile 
endeavor.
  Again, let me commend my two colleagues who are making it possible 
for us to arrive at the point where we are on the floor of the Senate. 
Over the next several days we will consider, I assume, a number of 
different amendments that will, I hope, allow us to bring broad-based 
support to this proposal and to enter a conference with the other body 
and send a measure to the President which he can sign.
  That is a lot of steps in front of us. I realize that. But if you 
know the past history of this legislation, they seem like minor steps 
indeed, when you consider we rarely reach the point we are today.
  Let me also, once again, in this forum here, commend my colleague 
from Texas, Senator Gramm. This is his first major legislative effort 
as chairman of the Banking Committee. He has had other major 
legislative efforts but never as the chairman of this committee. He 
deserves all due credit for his contributions to this bill. Few 
committee chairmen have more personally invested themselves in a piece 
of legislation than he has. As I said a moment ago, my colleague and 
friend from Maryland brings a career's worth of experience in dealing 
with financial services issues, both domestic and international. His 
counsel and advice and words of wisdom ought to be heeded.
  The legislation before us does address some very, very important 
issues, outstanding issues. It provides a framework for modernization 
of our Nation's financial services. It allows banks and securities 
firms, as I know you have heard from both the chairman of the committee 
and the Senator from Maryland, and insurance companies, to affiliate. 
It provides a rational process, we think, for these affiliations to 
take place.
  Although it needs to improve, in my view this bill provides some 
significant

[[Page 8200]]

benefits and protections to consumers who would not only benefit from 
these diversified firms but who would also benefit from having 
standardized and comprehensive protections for the sale of securities 
and insurance products.
  Let me add right here, these are arcane subject matters. Sometimes we 
are asked where the consumer protections are in this bill; where is the 
consumer in this legislation? The consumer is all through this bill, in 
a sense. First and foremost, the consumer is there because consumers 
are seeking to handle their financial matters in a more expeditious 
way, knowing they have broad, comprehensive protections.
  In many ways, this legislation is trying to catch up with what 
already is occurring in the marketplace, both at home and abroad. By 
regulation and court decision, much of our modernization is occurring. 
What we are seeking to do here is involve ourselves, as we should have 
been years ago, in setting out the guidelines of modernization from a 
public policy standpoint. So it is very important legislation because 
the courts, and in too many cases the regulators, do not bring to bear 
the kind of consumer issues that only a public policy forum like the 
Senate can do.
  When the issue is raised where is the consumer in this legislation, 
in fact the consumer is all through this bill. It is our goal here to 
see to it that they will be able to conduct their financial matters, 
financial business in a way that conforms to the lives and demands of 
consumers in this country, and that will also better equip them with 
protections in dealing with other matters in securities and insurance 
issues.
  This bill also protects the traditional right of States to regulate 
insurance, something that has been subject to longstanding debate. This 
will codify at the end of the 20th century how we in Congress feel 
about that issue, while at the same time will provide for functional 
regulation of all financial institutions. That has been an ongoing 
debate for years, and one that the adoption of this bill would 
establish firmly as we enter the 21st century.
  But I believe the outstanding issues, such as banking and commerce, 
the operating subsidy of affiliate structure and additional consumer 
protections, can and will be worked out in a reasonable fashion. 
However, I must share my deep frustration, frankly, and great concern 
over the future of financial services modernization legislation. During 
my tenure, as I said a moment ago, in the Senate, I, like many of my 
colleagues, have invested a significant amount of time and effort 
attempting to enact modernization legislation. I am of the belief that 
it is vital to the future of America's financial services industries 
and important to consumers as well.
  This process has not been an easy one. Finding the delicate balance 
of protecting consumers while at the same time creating a regulatory 
framework that fosters market efficiency and industry innovation has 
been a difficult and a long task. I had hoped that by today I would be 
speaking on behalf of the merits of a bipartisan legislative approach. 
I had hoped to speak on behalf of a bill that last year received the 
overwhelming support of the Senate Banking Committee by a vote of 16 to 
2. Just recently, similar legislation passed the House Banking 
Committee by a vote of 51 to 8. Instead, I reluctantly rise to express 
my deep concerns about the legislation before us that attacks what I 
consider to be one of the most important laws in our Federal code, the 
Community Reinvestment Act, CRA, of which you are going to hear a great 
deal in the coming days.
  The attack on CRA contained in this legislation is clear, in my view, 
and unmitigated. It broadly exempts depository institutions from CRA. 
It attempts to address a problem that simply does not exist, and in the 
process, in my view, does great harm to a law that has brought billions 
of dollars in mortgage and small business credit to rural and urban 
Americans, allowing them to participate with equal opportunity to 
expand their financial gains and opportunities in this country.
  As you know, this bill as drafted will be vetoed by the President. We 
usually receive a statement of administration policy written by the 
appropriate department head. Only on rare occasions does the President 
of the United States write a personal letter prior to committee markup, 
stating his concerns and articulating his promise to veto a bill if 
certain provisions are not resolved. Of primary importance to the 
President is the preservation of the Community Reinvestment Act in the 
context of any financial modernization legislation.
  I will say very directly--I say this to my colleagues, whom I know 
have a different point of view. If this bill is not changed to address 
various CRA concerns, the President of the United States will veto this 
bill. And that mythological figure of Sisyphus will, once again, rear 
his head at the close of the 20th century and we will fail in our 
attempts to modernize financial services.
  That would be a great misfortune. But I say as well that to pass a 
piece of legislation as we end the 20th century, about to begin the 
21st, and to disregard the principles and values incorporated in the 
Community Reinvestment Act, also, in my view, would be a tragedy of 
significant proportion.
  The veto of this bill as written is certain, as certain as our 
ability to avoid it. We should understand who supports this attack on 
the CRA provisions contained in this bill. The attack has not been 
sought by the industry, which is normally the case. There is no 
constituency of support for them. The support of this legislation is 
not contingent on the inclusion of CRA provisions. Banks are in the 
midst of their 7th year of record profits with CRA as the law of the 
land.
  Over the years, at the request of industry and appropriate 
regulators, CRA has been simplified and modified to be far less 
invasive to depository institutions. The fact of the matter is that 
banks care little about changing CRA. The attack on CRA is truly 
supported only by a few people. I say again with deep respect to my 
colleague and friend from Texas, who cares deeply about this issue, as 
does the senior Senator from Alabama: I respect their points of view. I 
disagree with them fundamentally. I respect their points of view. But 
there are really no other constituencies that I can find who share 
their point of view on this issue. There are many people who have a 
different point of view, including financial institutions, consumer 
groups, and others about the importance of extending the CRA 
provisions.
  Let me reiterate, if I can. The President of the United States, all 
Federal regulators, industry, 51 of the 60 Democrats and Republicans in 
the House Banking Committee, 16 of the 18 Democrats and Republicans in 
the Senate Banking Committee, all support the preservation of CRA.
  While not perfect--and no one is arguing that it is--CRA, in my view, 
and in the view of many others, has been truly a success story.
  Between 1993 and 1997, the number of conventional home mortgage loans 
extended to African Americans increased by over 70 percent. Let me 
repeat that. Between 1993 and 1997, the number of conventional home 
mortgages extended to African Americans increased by over 70 percent.
  Over the same period, the number of home mortgage loans increased 45 
percent for Hispanics, and 30 percent for Native Americans.
  According to the Small Business Administration, loans to African-
American-owned businesses doubled between the years of 1993 and 1997.
  More than $1 trillion has been leveraged under CRA--credit for home 
mortgages, small businesses, and other purposes--that has enabled 
creditworthy citizens, minority creditworthy citizens to improve their 
economic status and that of their families in both rural areas and 
inner cities.
  We should not retreat from these laudable goals if we are going to 
make the modernization of financial services conform with the 
modernization of a society that reaches out to each and every sector of 
that society to see to it that they have the equal opportunity to 
invest and to grow and to enjoy the full benefits of being Americans.

[[Page 8201]]

  Despite these strides, CRA has not erased all lending discrimination 
in this country.
  In 1997, mortgage loans for African Americans, Native Americans, and 
Hispanics were denied at a rate of more than twice those of white 
mortgage applicants of similar incomes. For both urban and rural areas, 
CRA has played an invaluable role in economic development.
  I recently received a letter from the U.S. Conference of Mayors, 
signed by the mayors of nearly 200 towns and cities of all sizes, from 
New Haven, CT, to Houston, TX. Let me quote them. It states:

       The Community Reinvestment Act has played a critical role 
     in encouraging federally insured financial institutions to 
     invest in the cities of our nation.

  The letter goes on further and says:

       Unless the onerous CRA provisions are addressed and the CRA 
     is preserved, we would urge strong opposition to the Senate 
     bill as presently drafted.

  Urban areas are not the only beneficiaries of CRA. CRA loans assist 
small farmers in obtaining credit for operating expenses, livestock, 
and real estate.
  Less than a month ago, we voted unanimously to award a Congressional 
Medal of Honor to Rosa Parks. As we all know, Ms. Parks led the fight 
in this country for racial equality. The CRA provisions in this bill we 
have before us today would send, in my view, Rosa Parks and many others 
to the back of that bus economically. They would directly hurt 
minorities and rural citizens by restricting their right to pursue the 
American dream to own a home, start a small business, to receive fair 
access to credit.
  Despite my strong support for financial services modernization--and, 
Mr. President, it is very strong, indeed--if the price of modernization 
is the denial of financial services in the 21st century to rural 
Americans, African Americans, Asian Americans, Hispanic Americans, and 
Native Americans in the country, then I am unwilling to pay it.
  I strongly urge my colleagues to support Senator Sarbanes' substitute 
amendment and Senator Bryan's CRA amendment. In my view, if these 
measures are improved, as I believe they should be, then I think we 
would have a strong bill.
  There are a lot of other amendments that may be offered. There is a 
debate over the op-sub and the affiliate issue. I think that is an 
important issue. I think the issue of privacy in financial dealings is 
an important issue. And there are many other matters that may be 
raised.
  But, in my view, nothing--nothing--is as important as whether or not 
we are going to provide equal access to our financial institutions to 
all Americans. The Community Reinvestment Act has made a significant 
contribution to tearing down the barriers that have existed far too 
long and has provided the access to credit, home mortgages, and 
improving the financial future of too many of our citizens to retreat 
now. To back up on a major, major bill such as this, I think, would be 
a great retreat, indeed.
  So as strongly as I support the concepts included in the fundamental 
financial modernization bill, Mr. President, I could not support a bill 
that treats too many of our Americans unfairly as they presently are by 
retreating on Community Reinvestment Act provisions.
  So I urge my colleagues, those who care about financial 
modernization, those who care about civil rights and care about access 
to financial institutions, to support the substitute, support the CRA 
amendments. I think then we would have a strong bill, and remaining 
issues could be resolved without too much difficulty. But a bill that 
fails to address this issue is a bill that, in my view, will not pass 
and will not be signed into law, and it would be an unfortunate, 
unfortunate day, indeed.
  Mr. President, with that, I yield the floor and suggest the absence 
of a quorum.
  The PRESIDING OFFICER (Mr. Gorton). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BYRD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BYRD. Mr. President, is time under control?
  The PRESIDING OFFICER. There is no control of time.
  Mr. BYRD. I thank the Chair.
  I presume that the Pastore rule has expired for the day?
  The PRESIDING OFFICER. It expired at 1:15 this afternoon.
  Mr. BYRD. I thank the Chair.
  Mr. President, I ask unanimous consent to speak for not to exceed 5 
minutes out of order.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________