[Congressional Record (Bound Edition), Volume 149 (2003), Part 23]
[House]
[Pages 32121-32122]
[From the U.S. Government Publishing Office, www.gpo.gov]




 PRESERVING INDEPENDENCE OF FINANCIAL INSTITUTION EXAMINATIONS ACT OF 
                                  2003

  Mr. SMITH of Texas. Mr. Speaker, I ask unanimous consent that the 
Committee on the Judiciary be discharged from further consideration of 
the Senate bill (S. 1947) to prohibit the offer of credit by a 
financial institution to a financial institution examiner, and for 
other purposes, and ask for its immediate consideration in the House.
  The Clerk read the title of the Senate bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  The Clerk read the Senate bill, as follows:

                                S. 1947

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Preserving Independence of 
     Financial Institution Examinations Act of 2003''.

     SEC. 2. OFFER AND ACCEPTANCE OF CREDIT.

       (a) In General.--Title 18, United States Code, is amended 
     by striking sections 212 and 213 and inserting the following:

     ``Sec. 212. Offer of loan or gratuity to financial 
       institution examiner

       ``(a) In General.--Except as provided in subsection (b), 
     whoever, being an officer, director or employee of a 
     financial institution, makes or grants any loan or gratuity, 
     to any examiner or assistant examiner who examines or has 
     authority to examine such bank, branch, agency, organization, 
     corporation, association, or institution--
       ``(1) shall be fined under this title, imprisoned not more 
     than 1 year, or both; and
       ``(2) may be fined a further sum equal to the money so 
     loaned or gratuity given.
       ``(b) Regulations.--A Federal financial institution 
     regulatory agency may prescribe regulations establishing 
     additional limitations on the application for and receipt of 
     credit under this section and on the application and receipt 
     of residential mortgage loans under this section, after 
     consulting with each other Federal financial institution 
     regulatory agency.
       ``(c) Definitions.--In this section:
       ``(1) Examiner.--The term `examiner' means any person--
       ``(A) appointed by a Federal financial institution 
     regulatory agency or pursuant to the laws of any State to 
     examine a financial institution; or
       ``(B) elected under the law of any State to conduct 
     examinations of any financial institutions.
       ``(2) Federal financial institution regulatory agency.--The 
     term `Federal financial institution regulatory agency' 
     means--
       ``(A) the Office of the Comptroller of the Currency;
       ``(B) the Board of Governors of the Federal Reserve System;
       ``(C) the Office of Thrift Supervision;
       ``(D) the Federal Deposit Insurance Corporation;
       ``(E) the Federal Housing Finance Board;
       ``(F) the Farm Credit Administration;
       ``(G) the Farm Credit System Insurance Corporation; and
       ``(H) the Small Business Administration.
       ``(3) Financial institution.--The term `financial 
     institution' does not include a credit union, a Federal 
     Reserve Bank, a Federal home loan bank, or a depository 
     institution holding company.
       ``(4) Loan.--The term `loan' does not include any credit 
     card account established under an open end consumer credit 
     plan or a loan secured by residential real property that is 
     the principal residence of the examiner, if--
       ``(A) the applicant satisfies any financial requirements 
     for the credit card account or residential real property loan 
     that are generally applicable to all applicants for the same 
     type of credit card account or residential real property 
     loan;
       ``(B) the terms and conditions applicable with respect to 
     such account or residential real property loan, and any 
     credit extended to the examiner under such account or 
     residential real property loan, are no more favorable 
     generally to the examiner than the terms and conditions that 
     are generally applicable to credit card accounts or 
     residential real property loans offered by the same financial 
     institution to other borrowers cardholders in comparable 
     circumstances under open end consumer credit plans or for 
     residential real property loans; and
       ``(C) with respect to residential real property loans, the 
     loan is with respect to the primary residence of the 
     applicant.

     ``Sec. 213. Acceptance of loan or gratuity by financial 
       institution examiner

       ``(a) In General.--Whoever, being an examiner or assistant 
     examiner, accepts a loan or gratuity from any bank, branch, 
     agency, organization, corporation, association, or 
     institution examined by the examiner or from any person 
     connected with it, shall--
       ``(1) be fined under this title, imprisoned not more than 1 
     year, or both;
       ``(2) may be fined a further sum equal to the money so 
     loaned or gratuity given; and
       ``(3) shall be disqualified from holding office as an 
     examiner.

[[Page 32122]]

       ``(b) Definitions.--In this section, the terms `examiner', 
     `Federal financial institution regulatory agency', `financial 
     institution', and `loan' have the same meanings as in section 
     212.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections of chapter 11 of title 18, United States Code, is 
     amended by striking the matter relating to sections 212 and 
     213 and inserting the following:

``212. Offer of loan or gratuity to financial institution examiner.
``213. Acceptance of loan or gratuity by financial institution 
              examiner.''.

  Mr. SENSENBRENNER. Mr. Speaker, on November 24, 2003, the Senate 
passed unanimously S. 1947, the ``Preserving Independence of Financial 
Institution Examinations Act of 2003.'' This bipartisan legislation was 
introduced by Senator Hatch and Senator Leahy, the Chairman and ranking 
Member on the Senate Judiciary Committee. The bill would update two 
provisions of the Federal Criminal Code enacted in the mid-1900s.
  As the Nation's banking system has consolidated, it has become 
extremely difficult for bank examiners to obtain credit cards or 
mortgages for themselves because of these outdated provisions. This 
affects the hiring, retention, morale, and work of our Nation's bank 
examiners.
  To alleviate this problem, the bill would amend sections 212 and 213 
of title 18 of the United States Code to reflect the changes in our 
Nation's banking system. Under current law, these sections prohibit 
examiners from borrowing from banks they have examined, and prohibit a 
financial institution from extending credit to anyone who examines or 
has authority to examine that institution. These provisions have been 
interpreted to cover all kinds of borrowing, including standard credit 
cards and mortgages.
  In a December 4, 2003, letter the Legal Division of the Board of 
Governors of the Federal Reserve System explained that:

     [under current law] . . . an examiner could commit a crime by 
     obtaining a department store credit card that is ultimately 
     issued by a bank the examiner examined five years ago. 
     Examiners also have encountered difficulty in obtaining home 
     mortgage and other loans at the best available rates because 
     of restrictions on the range of permissible lenders.

  The proposed legislation updates the Criminal Code allowing for 
narrow exceptions to the statutes for bank examiners who hold credit 
cards and residential home mortgage loans on standard terms from the 
banks they are examining.
  I urge my colleagues to support this legislation.
  The Senate bill was ordered to be read a third time, was read the 
third time, and passed, and a motion to reconsider was laid on the 
table.

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