[Congressional Record (Bound Edition), Volume 149 (2003), Part 18]
[House]
[Pages 24304-24309]
[From the U.S. Government Publishing Office, www.gpo.gov]




CONFERENCE REPORT ON H.R. 1474, CHECK CLEARING FOR THE 21ST CENTURY ACT

  Mr. OXLEY. Mr. Speaker, pursuant to the order of the House of October 
7,

[[Page 24305]]

2003, I call up the conference report on the bill (H.R. 1474) to 
facilitate check truncation by authorizing substitute checks, to foster 
innovation in the check collection system without mandating receipt of 
checks in electronic form, and to improve the overall efficiency of the 
Nation's payments system, and for other purposes.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Duncan of Tennessee). Pursuant to rule 
XXII, the conference report is considered as having been read.
  (For conference report and statement, see proceedings of the House of 
October 1, 2003, at page H9083.)
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Oxley) and the 
gentleman from Tennessee (Mr. Ford) each will control 30 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).


                             General Leave

  Mr. OXLEY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on the conference report to accompany H.R. 1474.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. OXLEY. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, I rise today in support of the conference report for 
H.R. 1474, the Check Truncation for the 21st Century Act, or Check 21, 
as it has come to be known. I want to thank the gentlewoman from 
Pennsylvania (Ms. Hart) and the gentleman from Tennessee (Mr. Ford) for 
guiding this bill through the House, and the subcommittee chairman, the 
gentleman from Alabama (Mr. Bachus), the ranking member, the gentleman 
from Massachusetts (Mr. Frank) and the gentleman from Ohio (Mr. Tiberi) 
for their substantive input into this process. Also, I would like to 
thank Chairman Shelby for a smooth conference process.
  After the September 11 terrorist attacks, domestic flights were 
suspended, preventing millions of checks from physically moving through 
the payment system. The Federal Reserve was forced to take emergency 
action to continue the movement of checks around the country.
  The Committee on Financial Services responded to the terrorist 
attacks with legislation aimed at shutting off terrorist financing, 
getting our financial markets open and operating and providing 
businesses with protection from future losses from terrorist attacks.
  Check 21 is another important effort by our committee to protect the 
payment system in times of national emergency by ensuring that checks 
will continue to be processed through the payment system with limited 
interruption. We must ensure that our banking system operates as 
efficiently as possible, while preserving safety and soundness.
  Check 21 achieves these goals by improving our payment system and 
encouraging the electronic movement of checks across the country. At 
the same time, this measure benefits consumers by maintaining current 
protections in the payment system and ensuring that consumers have the 
ability to retrieve improperly debited funds and are given information 
on the operation of this new system. Check 21 grants banks useful tools 
to improve the delivery of services to their customers and expedite the 
flow of funds through the system.
  Finally, I want to point out that the conferees included provisions 
in this conference report which will address concerns of the Federal 
Reserve and the Treasury Department relating to currency 
collateralization and compensating balances.
  Mr. Speaker, this is an excellent bill that deserves the support of 
all of my colleagues, and I urge everyone to cast an ``aye'' vote on 
the conference report.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FORD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it is always good to see a gentleman from Tennessee in 
the Speaker's Chair. I thank the gentleman from Ohio (Chairman Oxley) 
for his leadership on this and many other issues. I also thank the 
gentleman from Massachusetts (Mr. Frank) for his leadership, not only 
on this set of issues, but the way in which he and the gentleman from 
Ohio (Chairman Oxley) worked together and the way he leads our side on 
all of the critical issues that come before the committee.
  Mr. Speaker, let me thank the gentlewoman from Pennsylvania (Ms. 
Hart) and my friend, the gentleman from New Jersey (Mr. Ferguson). I 
rise in support, obviously, of this Check 21 conference report. Both 
the gentlewoman from Pennsylvania (Ms. Hart) and the gentleman from New 
Jersey (Mr. Ferguson) were key and original sponsors of the 
legislation, and it was a pleasure to work with both of them.
  I also want to thank the gentleman from Alabama (Chairman Bachus), 
again, the gentleman from Ohio (Chairman Oxley), the gentleman from 
Massachusetts (Mr. Frank) and the gentleman from Vermont (Mr. Sanders) 
for their stewardship of this bill through the committee and the 
conference with the Senate. I had my chance to serve on my first 
conference committee. I did not say anything. If that is the standard 
for getting things done like you want, I will be happy to follow that 
from here on out.
  As I say, this is a good bill for all of my colleagues in the 
Congress. I might add, from a consumer perspective, it is probably one 
of the more important pieces of legislation to come out of this 
committee and in this session.
  The intent of Check 21, as the gentleman from Ohio (Mr. Oxley) 
indicated, is very simple: It is to modernize the Nation's check 
payment system and enable it to keep pace with new technologies. Check 
21 will bring the benefits of new technologies to more consumers, while 
strengthening our finance system.
  In recent years, the financial system of this country has undergone 
tremendous change. Technology has brought the world closer together and 
accelerated speed of business. Millions of dollars can flow across the 
continent and across oceans with the click of a mouse. Consumers and 
businesses are making increasing use of credit cards, debit cards, 
direct deposits, electronic funds transfers and other electronic forms 
of payment.
  At the same time, checks remain a vital and extremely popular form of 
payment. Millions of Americans rely on checks to pay house rent, 
monthly bills, groceries and many other kinds of purchases and 
expenses. This year, upwards of 60 billion checks will be written in 
the United States.
  According to the Federal Reserve Board, the volume of checks peaked 
in the 1990s and checks will remain an indispensable part of our 
financial system and our economy for decades to come.
  Check 21 will bring the check payment system into the 21st Century, 
and, in doing so, help preserve the institution of the check by 
creating more efficiencies. By making check processing more efficient 
and more cost-effective on the back end, we can make sure more 
consumers, particularly seniors in this country, have the option of 
writing checks on the front end.
  Here is how Check 21 works. It unleashes innovation by removing legal 
obstacles to check truncation. Check truncation is when information on 
a paper check is captured off the check and delivered electronically, 
instead of the paper check being presented physically. Through check 
truncation, paper checks are rendered into zeros and ones, digital 
signals which can move through the payments system at digital speeds.
  In crafting this bill, my colleagues and I shared the goals 
articulated by the Fed when it drafted the Check Truncation Act. We 
wanted to find a way to facilitate check truncation and foster 
innovation without mandating the receipt of checks in electronic form.
  It is important that banks, businesses and consumers continue to have 
the option of accepting checks in paper form. Check 21 accomplishes 
this by establishing a new negotiable instrument, a substitute check 
with the same

[[Page 24306]]

legal status as original checks. These substitute checks would contain 
a two-faced image of the original check. They would include the 
magnetic code at the bottom, so that any bank can process them, using 
existing equipment, and conform to standards for size, paper stock and 
the like. These substitute checks can be used by banks and consumers in 
the same way as original checks.
  So why is check truncation a good thing? The gentleman from Ohio (Mr. 
Oxley) has spoken to it already. But according to Roger Ferguson, the 
Vice Chairman of the Federal Reserve, check truncation ``reduces the 
number of times a check must be physically processed and shipped. As a 
result, check truncation is generally more efficient, more cost-
effective, less prone to processing errors and fraud.'' It sounds like 
a good thing for consumers.
  I might add that with the help of many of our colleagues on the 
committee, particularly the gentleman from North Carolina (Mr. Watt), 
as well as the gentleman from Alabama (Mr. Davis), we were able to 
address some of the concerns raised by consumers related to consumer 
protections and trying to ensure that all of the protections provided 
in the Uniform Commercial Code would indeed be afforded to consumers 
under this bill.
  I have a long statement which my staff put together, an exhaustive 
statement. The gentleman from Ohio (Mr. Oxley) has pretty much walked 
through all of these issues.
  Mr. Speaker, I rise in support of the conference report on the Check 
21 Act, which I was proud to introduce with the gentlelady from 
Pennsylvania, Ms. Hart, and the gentleman from New Jersey, Mr. 
Ferguson.
  I want to thank Chairman Bachus, Chairman Oxley, and Ranking Members 
Frank and Sanders for their stewardship of this bill through the 
Financial Services Committee and the conference with the Senate. This 
is a good bill that has gotten stronger from a consumer perspective, 
and I would urge my colleagues' support.
  The intent of Check 21 is simple--to modernize the Nation's check 
payment system and enable it to keep pace with 21st century technology. 
Check 21 will bring the benefits of new technologies to more consumers 
while strengthening the financial system, which is the very lifeblood 
of our economy.
  In recent years, our financial system has undergone tremendous 
changes. Technology has brought the world closer together and 
accelerated the speed of business. Millions of dollars can flow across 
the continent and across oceans with the click of a mouse. Consumers 
and businesses are making increasing use of credit cards, debit cards, 
direct deposits, electronic funds transfers, and other electronic forms 
of payment.
  At the same time, checks remain a vital and extremely popular form of 
payment. Millions of Americans rely on checks to pay house notes, 
monthly bills, groceries--and countless other kinds of purchases and 
expenses. This year, upwards of 60 billion checks will be written in 
the United States. According to the Fed, the volume of checks peaked in 
the 1990s--but checks will remain an indispensable part of our 
financial system and our economy for decades to come.
  Check 21 will bring the check payment system into the 21st century, 
and in so doing, help preserve the institution of the check. By making 
check processing more efficient and more cost-effective on the back 
end, we can make sure more consumers have the option of writing checks 
on the front end.
  The technology to make the check system more efficient exists, and is 
already in use. But the legal framework behind the check payment system 
has not kept up with technological advances. Under today's system, 
millions of paper checks are physically transported every night, by 
ground and by air. Checks move from the bank to which they are 
deposited, to any number of intermediary banks, check processors, and/
or the Federal Reserve, then are sent to the paying bank, and finally, 
in some cases, back to the person who wrote the check.
  The problem is that under current law, unless a bank enters an 
agreement with another bank to process payments electronically, the 
banks must physically exchange the original paper checks. This outdated 
legal framework can only be described as clumsy and inefficient. It's 
unnecessarily slow, and it prevents millions of consumers from 
realizing the benefits of new technologies.
  Another weakness of the current system--one with potentially severe 
consequences for the economy--was exposed on September 11, 2001. When 
the Nation's aviation system was grounded in those harrowing hours and 
days after the terrorist attacks, millions of checks could not reach 
their destination. The Nation's payment system ground to a temporary 
halt.
  Fortunately, due to the swift response of the Federal Reserve, banks 
all across the Nation, and the companies that transport checks, the 9/
11 attacks did not cause major disruptions in the financial system. But 
9/11 demonstrated that our check payment system is vulnerable to 
physical catastrophes--not only terrorist attacks but also natural 
disasters.
  Check 21 unleashes innovation by removing legal obstacles to check 
truncation. The name ``check truncation'' is industry jargon, so let me 
try to explain what it is--and why it's a good thing. Check truncation 
is when the information on a paper check is captured off the check and 
delivered electronically--instead of the paper check being presented 
physically. Through check truncation, paper checks are rendered into 
zeroes and ones--digital signals which can move through the payments 
system at digital speeds.
  In crafting this bill, my colleagues and I shared the goals 
articulated by the Fed when it drafted the Check Truncation Act, which 
this bill is largely based on. We wanted to find a way to facilitate 
check truncation and foster innovation ``without mandating the receipt 
of checks in electronic form. . . .'' It is important that banks, 
businesses, and consumers continue to have the option of accepting 
checks in paper form.
  Check 21 accomplishes this by establishing a new negotiable 
instrument, a ``substitute check,'' with the same legal status as 
original checks. These substitute checks would contain a two-faced 
image of the original check. They would include the magnetic code at 
the bottom so that any bank could process them using existing 
equipment. And they would conform to standards for size, paper stock, 
and the like. These substitute checks can be used by banks and 
consumers in the same way as original checks.
  So why is check truncation a good thing? According to Roger Ferguson, 
Vice Chairman of the Federal Reserve, check truncation ``reduces the 
number of times the check must be physically processed and shipped. As 
a result, check truncation is generally more efficient, more cost 
effective and less prone to processing errors and fraud.''
  Check 21 is a strongly pro-consumer bill. Consumers will benefit in a 
number of ways.
  First, Check 21 will promote efficiency in the banking system by 
lessening the need for the physical transportation of checks, which is 
costly and resource-intensive. As banks compete for their business, 
consumers will benefit from lower costs and expedited services.
  Second, banks will be enabled to compete with each other to offer new 
products and services, such as online access and review of check 
images, which gives consumers instant access to their checks, day or 
night. If a consumer makes an inquiry about a check, his or her bank's 
customer services representatives will be able to access and review the 
check instantly. This can sharply reduce the time for customer 
inquiries.
  Millions of consumers already enjoy these services, including members 
of the Congressional Federal Credit Union here on Capitol Hill, as well 
as credit unions in communities across the country. Credit unions have 
had check truncation for two decades and by all accounts it has been a 
great success.
  Consumers may also benefit from more deposit options. Because 
electronic processing could eliminate the need for daily physical pick-
up of checks, consumers could enjoy extended deposit cutoff hours and 
deposit services at ATMs in remote or underserved urban and rural 
areas.
  Third, this streamlined system will reduce the disruptions caused by 
bad checks. By speeding up the check clearing system, individuals will 
be notified faster if their check--or checks written to them--have not 
cleared. This will reduce the likelihood that a single bounced check 
will result in a ``chain reaction'' of bounced checks.
  Fourth, Check 21 establishes a new and important consumer 
protection--an expedited recredit for contested substitute checks. A 
consumer who raises a dispute because a check that has been rendered 
into a substitute has been improperly charged to his account will 
receive a recredit within 10 business days, for amounts up to $2,500. 
This ``right of recredit'' is an important part of this bill.
  Although the House and Senate bills were structurally similar, the 
conference report reconciles some important differences. And in each 
case, the conference adopted the pro-consumer position.
  The conference report adopts the Senate language on the timing of the 
recredit procedure. Consumers will have 40 days to submit

[[Page 24307]]

claims for recredit, as opposed to 30 days in the original House bill. 
Consumers facing extenuating circumstances will have that period 
extended ``for a reasonable amount of time,'' rather than 30 days in 
the House bill. The conference report retains the language of an 
amendment that Mr. Davis of Alabama introduced in Committee, which 
stipulated that the consumer need not currently be in possession of the 
substitute check to enjoy the right of expedited recredit.
  The conference report adopts the House language requiring banks to 
describe the process of check substitution for all new and existing 
customers. In the Senate bill, this consumer notice would expire after 
three years. The conference report makes it permanent.
  The conference report includes language requiring the Federal Reserve 
Board to publish data regarding the costs and revenue of transporting 
checks. I would like to commend the Fed and the transportation company 
AirNet for helping to negotiate this compromise language.
  Finally, the House bill would have gone into effect 18 months after 
enactment--the conference report adopts the Senate position of a 12-
month effective date.
  In conclusion, Check 21 will make our payments system stronger and 
more efficient. In so doing, it will protect our economic security and 
promote economic growth. I am proud to have introduced Check 21 with 
Ms. Hart and Mr. Ferguson. I respectfully urge my colleagues' support 
for this bipartisan, common-sense, pro-consumer bill.
  Mr. Speaker, I yield such time as he may consume to my friend, the 
gentleman from Texas (Mr. Hinojosa).
  Mr. HINOJOSA. Mr. Speaker, I want to thank my good friend and 
colleague from the great State of Tennessee for yielding time.
  Mr. Chairman, I wish to echo the accolades given to leaders on both 
sides of the aisle who made it possible to get H.R. 1474 to this point 
in the process. In particular I wish to acknowledge and thank the 
gentleman from Ohio (Chairman Oxley) and the ranking member, the 
gentleman from Massachusetts (Mr. Frank).
  Mr. Speaker, I rise in strong support for the conference report to 
accompany H.R. 1474, the Check Clearing for the 21st Century Act. I 
cosponsored virtually identical legislation last Congress, and I am 
glad to be an original cosponsor of H.R. 1474 this year and to support 
this conference report.
  Under current law, a bank may clear checks electronically only if it 
has entered into an agreement with another bank. H.R. 1474 would 
facilitate the use of check truncation by removing this requirement. 
This legislation authorizes, but does not mandate, banks to create an 
electronic image of a check, which can then be sent to another bank, 
eliminating the physical transfer of the original check.
  Recognizing that not all banks have the ability to send electronic 
transmission of a check, the conference report on H.R. 1474 authorizes 
the creation of substitute checks for payment. This substitute check 
would be used in place of the original paper check, and it would be a 
negotiable instrument. Banks that create an electronic check will be 
able to create a substitute check and use that for presentment to a 
bank that has not upgraded its system to accept electronic checks.
  This conference report recognizes that there are several levels of 
consumer protections already. However, the bill would establish 
warranty and indemnification provisions to protect against any losses 
involved with the use of substitute checks. A consumer could make a 
written claim for recredit within 40 days of the date of receiving a 
periodic statement or the date the substitute check is made available 
to the customer, whichever date is later.
  The customer could also submit a warranty claim on the substitute 
check if the production of the original check or better copy of the 
original check is necessary to determine the validity of a disputed 
claim.
  To its credit, the conference report on H.R. 1474 would require banks 
to provide to existing customers and to new account holders a brief 
notice about the use of substitute checks and a description of the 
consumer's right to recredit for improper payment.
  Mr. Speaker, there are many more provisions of this conference report 
that I support and could discuss, but will refrain from doing so at 
this time.

                              {time}  1045

  Mr. OXLEY. Mr. Speaker, I am pleased to yield 5 minutes to the 
gentleman from Alabama (Mr. Bachus), the chairman of the Subcommittee 
on Financial Institutions.
  Mr. BACHUS. Mr. Speaker, this legislation is just the latest example 
of legislation which has moved through the Committee on Financial 
Services this year. Like deposit insurance reform, like the Fair Credit 
Reporting Act, like other legislation, it would not have been possible 
without the leadership of the chairman of this committee, the gentleman 
from Ohio (Mr. Oxley). I think that there is probably not a Member of 
this body who would not agree that he has served in an outstanding 
manner and has had more success than I can remember in the 10 years I 
have served on the committee. So this is a salute to his leadership.
  I also want to thank the gentleman from Massachusetts (Mr. Frank), 
the ranking member on the other side, who has worked very closely with 
the chairman.
  With this particular legislation we have been very fortunate on our 
side, because of the gentleman from New Jersey (Mr. Ferguson) and the 
gentlewoman from Pennsylvania (Ms. Hart), who is the sponsor of this 
legislation and will address some of the particulars of it, who are 
very knowledgeable Members, very active Members. The gentleman from 
Tennessee (Mr. Ford) has done an outstanding job on his side.
  As my colleague, the gentleman from Alabama (Mr. Davis), said when 
this bill came up for debate on the House floor, this is a good bill 
for consumers, and it is a good bill for the industry. We had the 
support of various consumer groups. Consumers Union, Consumers 
Federation of America, United States Public Interest Research Group, 
and the industry worked very hard on this bill. And I think it is a 
tribute to what a fine piece of legislation we have that we actually 
had a recorded vote on this with 429 Members voting ``yes'' and no 
Members voting ``no.''
  The gentleman from Tennessee (Mr. Ford) mentioned the staff when this 
bill came up before. Those on the Democratic side that contributed: 
Kevin Swab, Jaime Lizarraga, and Jim Wert worked very hard with the 
gentleman from Tennessee (Mr. Ford) and the gentlewoman from 
Pennsylvania (Ms. Hart), from legislative counsel. On our side we had 
Kevin MacMillan who sort of led the effort, Hugh Halpern, Dina Ellis, 
Jim Clinger, Carter McDowell, Karen Lynch, and also, of course, Bob 
Foster. The gentleman from Ohio (Mr. Oxley) is to be saluted again for 
assembling such a wonderful staff as worked on this bill.
  Let me just conclude by saying that what this bill does, to me, more 
than anything else, and the most significant thing about it, it makes 
America more competitive in the world market. It makes our economy 
stronger; it makes our economy better. By making our economy stronger, 
by making it better, by making it more efficient, it is a job which I 
think will encourage job formation in America. It will keep jobs from 
migrating overseas.
  Today we have a law that has been on the books for 100 years, and 
this is the first year that we have actually made significant changes 
to the way that we treat checks. Today, checks are returned to the bank 
that they were originally drawn on. When this legislation comes into 
being, we will basically update that law 100 years. The technology has 
really been here for 20 and 30 years to have done this, but the 
bipartisan effort and the leadership to get this bill has not been 
here. But today, they come together. The Senate has worked with the 
House, Democrats with the Republicans, and today we will bring our 
banking system, our transfer of checks into the 21st century.
  Let me conclude by saying we have done this and we have also added 
new consumer protections that go beyond present law. We have done all 
of that, and we have done it in a unanimous, cooperative spirit.

[[Page 24308]]

  So Mr. Speaker, this bill deserves the support of each and every 
Member of this body.
  Mr. Speaker, present law requires that checks be returned to the bank 
where they were originally drawn, and that way of doing business has 
basically been the law and the procedure in this country for over 100 
years. We have technology now that makes something else possible, and 
that is electronic transfer, as opposed to transfer of the paper check.
  What we have in our country today is an antiquated process, which is 
also a tedious process, which each day involves as many as 10 to 12,000 
cars, trucks and airplanes returning checks when none of this is 
necessary.
  The credit unions some 20 years ago went away from this process. They 
have had zero consumer complaints. The largest banks have made 
agreements between banks, and they have gone away from this process; 
but today, two-thirds of the checks still are processed in this 
outdated manner.
  What this House has done in a bipartisan way is take a bill that has 
been cosponsored by two of our most able Members, the gentlewoman from 
Pennsylvania (Ms. Hart) and the gentleman from Tennessee (Mr. Ford), 
very aware of this issue, very knowledgeable on the issue, they have 
drafted this bill. The committee has looked at the bill. We have made 
changes to protect the consumer, slight changes. The bill as it exists 
today has been endorsed by the Federal Reserve, all the regulators, all 
the financial institutions involved, all the trade groups, consumer 
groups. It is a model for what this House can do when it puts aside its 
differences and works together for the good of the Nation as a whole.
  This bill is good for customers. This bill is good for consumers. 
This bill is good for the economy.
  We have talked about little things such as airport congestion, how 
this will help address that, congestion on the roadway, our energy 
dependence.
  I want to commend, in closing, the gentleman from Ohio (Mr. Oxley), 
who has made this one of his three goals for this year to move this 
legislation; the gentleman from Massachusetts (Mr. Frank), the ranking 
member, who identified this as necessary legislation.
  My colleagues may say, well, this ought to be simple. For 20 years we 
tried to reform our check-clearing process. We have not been able to do 
it until this moment. This House today I think will take a historic 
step in making us more competitive in the world economy by bringing our 
check-clearing system up to a model for the world.
  Mr. Speaker, I commend the gentleman from Tennessee (Mr. Ford) and 
the gentlewoman from Pennsylvania (Ms. Hart).
  Mr. FORD. Mr. Speaker, I yield such time as he may consume to our 
ranking member, the gentleman from Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. Mr. Speaker, I am very pleased to be here 
to support this bill. It is a good example of what the Committee on 
Financial Services can do when it is allowed to work out legislative 
matters in a cooperative way, as we have done here. I am particularly 
pleased with the work done by two of the younger Members on our side, 
the gentleman from Tennessee (Mr. Ford), who is managing this bill 
here, because that is a reflection of the initiatives he has taken, and 
also as the gentleman from Alabama, the chairman of the subcommittee, 
was gracious enough to mention, his Alabama colleague, the gentleman 
from Alabama (Mr. Davis), has also played a major role.
  What we have here is what ought to be the model and, I am pleased to 
say, has for much of this year been the model for legislation coming 
from our committee, which is a recognition of the importance of the 
market, a recognition that we have a responsibility to structure the 
rules so that the capitalist system can function to its maximum but, at 
the same time, recognizing that there will be issues that will not be 
resolved purely by the working of the market. We add protections for 
consumers. We add measures that deal with social concerns in ways that 
do not interfere with the market. I think that is our job. Our job is 
to recognize that the market is a wonderful mechanism for creating 
wealth, it does not do everything, and that we have a responsibility to 
add to those market mechanisms things that will deal with other issues, 
but in ways that will not detract from the functioning of the market.
  In this bill we allow the banks to do the check truncation that will 
greatly promote efficiency. Consumers who have a need for copies of 
their checks can get them. There is the recredit provision that has 
already been described. So I am very proud that we have here, as I 
said, a model of what we ought to be doing; a measure which allows, and 
basically this is what we are doing, we are updating the basic law so 
that the private sector can take full advantage of evolving technology; 
and we are doing it in a way that we believe fully protects the 
legitimate interests and concerns of consumers.
  Mr. Speaker, I am very pleased that we were able to bring this bill 
forward. I thank the gentleman from Tennessee (Mr. Ford) for his time 
and, more important, for the work he has done on this bill.
  Mr. OXLEY. Mr. Speaker, I am pleased to yield 5 minutes to the 
gentlewoman from Pennsylvania (Ms. Hart), the author of the 
legislation, along with the gentleman from Tennessee.
  Ms. HART. Mr. Speaker, I would like to thank my chairman, the 
gentleman from Ohio (Mr. Oxley); my subcommittee chairman, the 
gentleman from Alabama (Mr. Bachus); my colleague, the gentleman from 
Tennessee (Mr. Ford) and fellow sponsor of this legislation in the 
House; as well as the ranking member, the gentleman from Massachusetts 
(Mr. Frank), for working together so well to get this legislation 
completed.
  Check Clearing for the 21st Century or, as we call it, Check 21, 
holds the promise of a much more efficient check collection system by 
removing legal barriers to full utilization of new technology. It is 
very simple. It is a win for consumers; it is a win for the financial 
services industry. It will empower banks to help prevent fraud and 
empower consumers with more control over their accounts. It also 
empowers them with more efficiency in availability of their funds.
  Thanks also to the staff who worked very well with the Senate 
regarding the conference committee during the period of time we needed 
to iron out a few issues with the Senate. I also want to thank the 
chairman in the Senate, Senator Shelby, for working together with us so 
well.
  Basically, our current legal framework has not kept up with 
technological advances. It has constrained the efforts of many banks to 
use innovations like digital check imaging, to improve check processing 
efficiency, providing improved services to customers, and substantial 
reductions in transportation and other check processing costs. It is 
important to implement these new technologies that are made in the 
field of payments to provide customers with those benefits I mentioned 
earlier, expedited access to capital and credit while ensuring, at the 
same time, they are more protected from fraud.
  The legislation permits banks, credit unions, and all financial 
institutions to truncate checks. That allows them to process and clear 
these checks electronically, without moving the paper check through the 
clearinghouses and having them flown across the country.
  The bill allows us to use something called a substitute check. And if 
you look at what a substitute check looks like, it might look awfully 
familiar to you. It actually looks just like a check. That substitute 
check contains all of the information that is on a check. In fact, that 
check will not be a substitute check unless it contains all of that 
information. It permits banks then to move this information just as it 
would move a canceled check; but, obviously, it will be much more 
efficient because planes do not have to fly the substitute checks 
across the country.
  This substitute check would be the legal equivalent of the original 
check. It would include all the information, as I said, contained in 
the original check, the imaging on the front, the imaging on the back, 
including the signature, and then especially the machine-readable 
numbers that are normally at the bottom of your check. They can be 
processed just like original checks. The bank would not need to invest 
in any new technology or otherwise change its

[[Page 24309]]

current check processing system unless it chooses to do so.
  As was mentioned earlier, consumers will benefit in multiple ways. 
But the most important, I believe, is the efficiency of the system. 
Consumer protections are important as well. Consumers can keep that 
canceled check in their own records. It will also be kept at easy 
access in the financial institution, the same check. You do not have to 
chase down one canceled check.
  So this is a win, really, for everyone involved. I am pleased to have 
been the sponsor of the bill in the House. I am pleased to have worked 
with everyone as part of this process. As we learned during the time 
where all the planes were grounded after September 11, it was very 
important for us to move forward because our financial system was 
pretty much stopped in its tracks when planes could not fly these 
canceled checks around the country. It is important for us to move 
forward. I am pleased we have the technology, and I am pleased that 
this Congress has recognized our responsibility to make this system 
much more efficient.
  Mr. FORD. Mr. Speaker, I yield myself 1 minute.
  Not having any other speakers, I do not know if the gentleman from 
Massachusetts (Mr. Frank) is still on the floor, but I want to thank 
him again for his leadership on this legislation and the ease which I 
think all of the committee finds in working with him; and reiterate 
again, to the gentleman from Alabama (Chairman Bachus), to thank him; 
and to Jeanne Roslanowick and Jaime Lizarraga and Ken Swab and Erika 
Jeffers, with whom I attended law school; and Lawranne Stewart; and, of 
course, Kevin MacMillan and Hugh Halpern; and the rest of the team on 
the other side, Carter and Dina and Bob; thank you as well. It was a 
pleasure to work with all of you, I know, on behalf of Scott Keefer and 
Luke Iglehart; also on my staff, who worked closely with them.
  This is a good bill. I hope my colleagues see fit to support it. All 
of the benefits have been touted. I thank the gentlewoman from 
Pennsylvania (Ms. Hart) again for her hard work, and I thank the 
gentleman from New Jersey (Mr. Ferguson) again for his initiating this 
legislation.
  With that being said and there are no other speakers on our side, I 
yield back the balance of my time.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
  Just in closing, let me say, this is indeed I think a classic example 
of how the legislative process ought to work around here. This was an 
interesting exercise because it was in this case the recognition that 
the technology was out there to make our banking system far more 
efficient instead of flying all of these checks all around. 
Unfortunately, it was the terrible incident of 9-11 that really made us 
realize how fragile that system is and how we can change it for the 
better.
  I had an opportunity to visit NCR, one of our fine Ohio corporations, 
a couple of years ago to actually see that technology and see how it 
could work; and that became really the germ behind the bill that we 
have before us today. It was some of the newer Members, the gentlewoman 
from Pennsylvania (Ms. Hart) and the gentleman from Tennessee (Mr. 
Ford), who really took the bull by the horns and moved this legislation 
through. I owe a great deal of thanks to them for their hard work and 
tenacity in putting this bill together.
  Somebody once said that when a great athlete is recognized as great, 
he makes things look easy. I am not referring to the gentleman from 
Tennessee (Mr. Ford), by the way. But when a great athlete like Sammy 
Sosa or somebody, they say they make it look easy and indeed, these 
folks made it look easy; and we are now on the verge of passing this 
legislation and sending it to the President. I think it is a proud day 
for the committee and those who were involved; the staff, who have been 
adequately thanked for their work, as well as the Members.

                              {time}  1100

  Mr. Speaker, I have no further speakers, I yield back the balance of 
my time, and I move the previous question on the conference report.
  The previous question was ordered.
  The conference report was agreed to.
  A motion to reconsider was laid on the table.

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