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Financial Services Regulatory Relief Act of 2003 - Part V

Floor Speech

By:
Date:
Location: Washington, DC

entity, were derived from engaging, on an on-going basis, in activities that are not financial in nature or incidental to a financial activity during at least 3 of the prior 4 calendar quarters.
"(iii) GRANDFATHERED INSTITUTIONS.-Clause (i) shall not apply with respect to any industrial loan company, industrial bank, or other institution described in section 2©(2)(H) of the Bank Holding Company Act of 1956--
"(I) which became an insured depository institution before October 1, 2003 or pursuant to an application for deposit insurance which was approved by the Corporation before such date; and
"(II) with respect to which there is no change in control, directly or indirectly, of the company, bank, or institution after September 30, 2003, that requires an application under subsection ©, section 7(j), section 3 of the Bank Holding Company Act of 1956, or section 10 of the Home Owners' Loan Act.
"(iv) TRANSITION PROVISION.-Any divestiture required under this subparagraph of a branch in a host State shall be completed as quickly as is reasonably possible.
"(v) CORPORATE REORGANIZATIONS PERMITTED.-The acquisition of direct or indirect control of the company, bank, or institution referred to in clause (iii)(II) shall not be treated as a 'change in control' for purposes of such clause if the company acquiring control is itself directly or indirectly controlled by a company that was an affiliate of such company, bank, or institution on the date referred to in clause (iii)(II), and remained an affiliate at all times after such date.".
(3) TECHNICAL AND CONFORMING AMENDMENTS.-Section 18(d)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1828(d)(4)) is amended-
(A) in subparagraph (A) by striking "Subject to subparagraph (B)" and inserting "Subject to subparagraph (B) and paragraph (3)(C)"; and
(B) in subparagraphs (D) and (E), by striking "The term" and inserting "For purposes of this subsection, the term".
Page 47, line 21, insert "or are applicable to an insured State nonmember bank under section 18(d)(3) of the Federal Deposit Insurance Act" after "Revised Statutes of the United States".
Page 51, line 4, insert before the semicolon at the end "and inserting the following new paragraph".
Page 51, after line 4, insert the following new paragraph:
"(5) APPLICABILITY TO INDUSTRIAL LOAN COMPANIES.-No provision of this section shall be construed as authorizing the approval of any transaction involving a industrial loan company, industrial bank, or other institution described in section 2©(2)(H) of the Bank Holding Company Act of 1956, or the acquisition, establishment, or operation of a branch by any such company, bank, or institution, that is not allowed under section 18(d)(3).".
Page 58, line 19, insert "(i)" after "section 38(e)(2)(E)".
Page 88, strike line 1 and all that follows through the 2 items following line 15 on page 94 (and redesignate subsequent sections and any cross reference to any such section and conform the table of contents accordingly).

The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentleman from Ohio (Mr. Oxley) and a Member opposed each will control 10 minutes.

The Chair recognizes the gentleman from Ohio (Mr. Oxley).

PARLIAMENTARY INQUIRY

Mr. FRANK of Massachusetts. Mr. Chairman, I have a parliamentary inquiry.

The CHAIRMAN pro tempore. The gentleman will state it.

Mr. FRANK of Massachusetts. I do not see anyone on the floor who is opposed to this amendment. Is it then permissible under the rules for me to request the rest of the time?

The CHAIRMAN pro tempore. The gentleman may request unanimous consent.

Mr. OXLEY. Mr. Chairman, I yield myself 3 minutes.
Mr. Chairman, my amendment makes certain technical and conforming changes to the bill requested by the Federal financial regulators, deletes sections from the bill reported by the Committee on Financial Services that have been superseded by other legislative or judicial developments, and, most importantly, incorporates compromise language developed by two highly respected members of our committee, the gentleman from Ohio (Mr. Gillmor) and the gentleman from Massachusetts (Mr. Frank), limiting the scope of the de novo branching authority provided for in section 401 of the bill.
As reported by the Committee on Financial Services, section 401 eliminates current statutory restrictions on banks' ability to branch across State lines. When the committee marked up H.R. 1375, the gentleman from Ohio (Mr. Gillmor) and other Members expressed concerns about extending this de novo branching authority to industrial loan companies, or ILCs, that are owned by commercial companies, such as retailers and auto manufacturers. Since the markup, the gentleman from Ohio (Mr. Gillmor) and the gentleman from Massachusetts (Mr. Frank) have worked together to develop language that would permit ILCs owned by financial firms to avail themselves of the new de novo branching authority while prohibiting branching by ILCs owned by nonfinancial or commercial firms that did not become insured depositories until after a grandfather date specified in the amendment.
Like any good compromise, the Gillmor-Frank amendment does not embody total consensus. There are those in this body who believe we should place no restrictions on the activities of ILCs that do not also apply to other depository institutions and those on the other hand who feel equally strongly that the ILC charter has been expanded beyond its original purpose and should be scaled back. Indeed, we have heard strong debate on that during general debate. On the whole, I believe that the Gillmor-Frank language strikes a reasonable compromise on a very difficult issue, and I am pleased to include it in this manager's amendment.
Mr. Chairman, I urge all Members to support the manager's amendment.
Mr. Chairman, I reserve the balance of my time.

The CHAIRMAN pro tempore. Does any Member claim time in opposition to the amendment?

Mr. FRANK of Massachusetts. Mr. Chairman, if it is appropriate, I will, although I am not in opposition.

The CHAIRMAN pro tempore. If not, without objection, the gentleman from Massachusetts may claim the time otherwise reserved for opposition to the amendment.

There was no objection.
Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume.
I just want to address one important issue on this question of the industrial loan companies that the gentleman from Iowa had raised previously. It is clear, as we all agree, that the ILCs are in fact regulated. They are regulated by a Federal bank regulator, the FDIC. The element of unregulation goes with holding companies. Bank holding companies are regulated by the Federal Reserve. Heretofore, these holding companies have not had, in my experience, much independent existence and so the regulation by the FDIC has done it.
I will say to the gentleman from Iowa, while he is not here right now, he has been very conscientious on this bill and is probably following this, that I would be prepared to work with him on the question of whether or not an appropriate form of regulation for the holding companies ought to exist. Perhaps the FDIC or some other entity should have it. I do not think we have a regulatory hole. We have not had one historically. I do not think we are creating one. But I would note the only potential argument is there would not be a regulation of the holding company. All of the bank activities of the ILCs would be regulated by the FDIC.
Having said that, I just would repeat what the gentleman from Ohio essentially said. This is, I think, an effort to fine-tune regulation. I do not believe in any regard it cuts back excessively. I did disagree with the proposal to cut the review time for antitrust to 5 days. We have an amendment that will be coming soon from the gentlewoman from California that will push it back up to 15, not exactly where I would like it. We then will have a couple of other amendments to deal with. But I would note that we are going to correct what I think is one of the flaws in this bill.
Mr. Chairman, I reserve the balance of my time.

Mr. OXLEY. Mr. Chairman, I am pleased to yield 3 minutes to the distinguished gentleman from Ohio (Mr. Gillmor).

(Mr. GILLMOR asked and was given permission to revise and extend his remarks.)

Mr. GILLMOR. Mr. Chairman, I rise in strong support of the manager's amendment to this bill. I want to thank the gentleman from Ohio (Mr. Oxley) both for his outstanding work on this bill and also for allowing an essential provision authored by myself and the gentleman from Massachusetts (Mr. Frank) in the manager's amendment. I want to thank the gentleman from Massachusetts for the very effective and the bipartisan way that he has worked to make this amendment happen. Our compromise language closes a dangerous loophole that would allow large commercial entities to obtain bank charters and to be unregulated at the holding company level in providing banking products and services in all 50 States.
Section 401 expands the authority of banks and industrial loan companies, or ILCs, to branch across State lines on a de novo basis rather than acquiring an existing bank. That means if a large retailer were to acquire an ILC, they could not only enter the banking industry without being subject to the Bank Holding Company Act but branch freely across the country. This would clearly be in defiance of our longstanding tradition of separating banking and commerce, most recently affirmed by Congress in the Gramm-Leach-Bliley Act of 1999. Large retailers have attempted to acquire, and in some cases have acquired, ILCs in several States and continue to express publicly their desire to offer financial services to their customers. While this amendment grandfathers some ILCs which were owned by commercial firms before, it provides that any ILC acquired in the future must play by the same rules in interstate branching as other financial institutions. There are some commercial or industrial companies who oppose the manager's amendment. Some companies want to prospectively create a giant loophole for themselves that would enable them to branch interstate in a way that no one else can. They include companies such as Wal-Mart, John Deere, Target, among others. The manager's amendment closes the loophole and simply requires they be treated the same as anybody else.
The existing business relationships of longstanding ILCs supported by FDIC insurance are protected by our language in the form of a grandfather clause. However, the risks associated with the mixing of banking and commerce are real and the compromise provisions contained in this language such as that allowing corporate reorganizations are not in any way meant to allow circumvention of our overall goal of preventing the acquisition of a grandfathered ILC by a commercial parent.
I urge support of the manager's amendment.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield back the balance of my time.

Mr. OXLEY. Mr. Chairman, I yield back the balance of my time.

The CHAIRMAN pro tempore. The question is on the amendment offered by the gentleman from Ohio (Mr. Oxley).

The amendment was agreed to.

The CHAIRMAN pro tempore. It is now in order to consider amendment No. 2 printed in House report 108-439.

AMENDMENT NO. 2 OFFERED BY MS. WATERS

Ms. WATERS. Mr. Chairman, I offer an amendment.

The Chairman pro tempore (Mr. Simmons). The Clerk will designate the amendment.

The text of the amendment is as follows:
Amendment No. 2 offered by Ms. Waters:

Page 84, strike line 1 and all that follows through line 13 (and redesignate subsequent sections and any cross reference to any such section and conform the table of contents accordingly).
The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentlewoman from California (Ms. Waters) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentlewoman from California (Ms. Waters).

Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume. I would first like to thank the gentleman from Ohio (Mr. Oxley) and the gentleman from Massachusetts (Mr. Frank) for the leadership that they have provided in this committee not only on this issue but on all of the issues that we work with on the Committee on Financial Services. I think someone said it earlier, and I agree, I believe it was the gentleman from Alabama (Mr. Bachus) who said it, we do have a way of working together, and we do have a way of respecting the work that is done on both sides of the aisle; and I am appreciative for the comradery that has developed out of that committee. So with that, I would like to thank also the chairman and the members of the Committee on Rules for making my rule in order.
During the course of a bank merger process, both the Federal financial supervisory agency and the Department of Justice review the merger proposal for competitive concerns. After a Federal banking agency approves a merger, DOJ has 30 days to decide whether to challenge the merger approval on antitrust grounds. At a minimum, the merging banks must now wait 15 days before completing their merger. As proposed, section 609 would reduce the minimum 15-day waiting period to 5 days when the Department of Justice indicates it will not file suit challenging the merger approval order.
This amendment is designed to preserve the existing 15-calendar-day waiting period in which members of the public may challenge a bank merger after the Department of Justice has approved a merger between banks or between bank-holding companies. This mandatory waiting period protects the rights of the public to raise concerns with respect to the propriety of bank mergers once the Department of Justice decides whether to challenge a merger on antitrust grounds. Currently, banking law allows third parties, other than Federal banking agencies or DOJ, to file suit during the post-approval waiting period. Such private enforcement is critical to ensuring that important policy concerns including the adequacy of the banks' Community Reinvestment Act performance, are taken into account when Federal courts evaluate whether an agency's approval of a proposed bank merger should be upheld. Such private suits are the vehicle through which community organizations may gain information about a proposed bank merger to ensure that the merger will not result in disproportionate branch closures in low-income or minority communities.
The existing law strikes the proper balance between the right of third parties to seek judicial review of bank merger approval orders and the rights of parties to the merger to finalize their transaction. Section 609 of the bill as reported would seriously impair the right of community organizations to seek this judicial review of Federal bank merger approval orders. The current 15-day waiting period should be preserved.
So my amendment has been made in order under the proposed rule, and I would ask support for the amendment.
Mr. Chairman, I yield back the balance of my time.

The CHAIRMAN pro tempore (Mr. Sweeney). Does the gentleman from Ohio (Mr. Oxley) rise in opposition to the amendment?

Mr. OXLEY. Mr. Chairman, I am not opposed.

The CHAIRMAN pro tempore. Without objection, the gentleman is recognized for 5 minutes.

There was no objection.

Mr. OXLEY. Mr. Chairman, I yield myself such time as I may consume. We are prepared to accept the amendment, and I say to the gentlewoman from California, good work on this issue.
Mr. OXLEY. Mr. Chairman, I have no further requests for time, and I yield back the balance of my time.

The CHAIRMAN pro tempore. The question is on the amendment offered by the gentlewoman from California (Ms. Waters).

The amendment was agreed to.

The CHAIRMAN pro tempore. It is now in order to consider amendment No. 3 printed in House Report 108-439.

AMENDMENT NO. 3 OFFERED BY MR. BACHUS

Mr. BACHUS. Mr. Chairman, I offer an amendment.

The Chairman pro tempore. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 3 offered by Mr. Bachus:

Page 94, strike line 16 and all that follows through line 20 (and redesignate subsequent sections and any cross reference to any such section and conform the table of contents accordingly).

The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentleman from Alabama (Mr. Bachus) and a Member opposed each will control 5 minutes.

The Chair recognizes the gentleman from Alabama (Mr. Bachus).

Mr. BACHUS. Mr. Chairman, I yield myself 3 minutes.
Mr. Chairman, my amendment simply strikes section 614, and what 614 does is, in a read relief bill, it actually shifts a burden to any independent contractor that deals with the banks, and it creates a presumption or a burden of proof on any independent contractor dealing with a bank in an enforcement provision by one of the regulatory agents. It puts a burden of proof on them in an administrative court hearing to basically prove their innocence. And they have no right to a trial by jury. They have no right to an appeal and trial de novo. Their assets can be frozen while these hearings are going on. And I think that that is a tremendous hammer to give to the regulatory bodies, one that we certainly do not need to do in this bill.
What section 614 would do, and I will be brief in this, is it simply equates and says that an independent contractor dealing with a bank will be treated as having the same knowledge or an equivalent knowledge as a bank insider, a director or a board member of that bank. So if they are an attorney, if they are an accountant, if they are an appraiser, if they are a Realtor, or if they are any of these affiliated parties, they are treated as if they have the inside knowledge of a bank insider; and that is simply not the case.
Not only are they equated with that knowledge, but when these charges are brought against them, as I said a minute ago, they have no right to a jury trial, and the administrative judge that makes a determination on whether they are guilty or innocent is appointed by the regulatory agent. And right now the burden of proof is on the regulatory agent to prove that the insider knew, had knowledge, or was reckless. And I think that standard proved to be the right standard during the savings and loan crisis during the mid-1980s. There has been no shortage of enforcement action by the regulators. So I simply say, let us strike section 614. The gentlewoman from Oregon (Ms. Hooley), the gentleman from Alabama (Mr. Davis), and the gentleman from Virginia (Mr. Cantor) are supporting me in this amendment, as are the American Bar Association, the appraisers, the accounting organizations, all of which simply are aghast that we would put some provision like this in a bill which would give the regulators such ominous authority.
Mr. Chairman, I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, I rise in opposition. Mr. Chairman, I yield myself 3 minutes.
This is one of the two disagreements here. I should note that the section that is in the bill that the gentleman from Alabama seeks to strike was requested by the Federal Deposit Insurance Corporation. What they said was they want to be able to issue their orders. They do not have criminal procedures here. This does not take away one's right to a jury trial for any criminal trial. The FDIC has administrative powers. They can order one to cease and desist from a certain practice; they can debar one from working.
What they are saying is they do not want to be unable to bar people or to order a stop to people who are being grossly negligent. The language that will be governing the FDIC's regulating authority with regard to lawyers and others who work on banking matters, these are people that are hired by banks as professionals; and let me say there was some argument before that, well, these people should not be held to knowing banking law. We are not talking about the guys who install the drywall. We are not talking about the people who do the valet parking at the big soirees. We are talking about lawyers and other professionals. And, yes, I do believe it is reasonable to hold lawyers to a standard of knowing bank law when they do lawyering for banks. And what the FDIC said is we do not want to have to prove that they were reckless or deliberate. If they are grossly negligent, we want to be able to step in.
It is not a criminal proceeding. It is the FDIC. The FDIC wants to be able to hold professionals who are offering their professional services voluntarily to banks and working on bank matters to a knowledge of banking law to the extent if they are negligent, or even grossly negligent, if this amendment said the standard was gross negligence, it would be less of a problem for me, but this says for the FDIC to be able to discipline an attorney or any other professional servicing a bank, it must be a standard of either knowledge or recklessness of the conduct, and I think that is a mistake.
We know that there is not always a great difference between the people who work full-time for the bank and the people who are working as professionals for the bank. There are people who specialize, lawyers who specialize, in serving banks, other professionals who would specialize in serving banks. It seems to me entirely reasonable for them to be held to that standard.
So I do agree that we want to be deregulatory here, and a few minutes ago some of us were saying it was a good thing we have the FDIC. They are the regulators of the ILCs. They are an important regulator. This is a case where the regulators have asked us to keep a standard for them which they use when they are dealing with the banks themselves, and they want to be able to apply it to the independent contractors. I think it would be a mistake to give the FDIC significantly less power to act in enforcement proceedings against lawyers and other professionals than they now have.
Mr. Chairman, I reserve the balance of my time.

PARLIAMENTARY INQUIRY

Mr. FRANK of Massachusetts. Mr. Chairman, I have a parliamentary inquiry.

The CHAIRMAN pro tempore. The gentleman will state the inquiry.

Mr. FRANK of Massachusetts. Mr. Chairman, do I have the right to close on this amendment?

The CHAIRMAN pro tempore. Yes, the gentleman will. The manager in opposition has the right to close.

Mr. BACHUS. Mr. Chairman, I yield back the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield back the balance of my time.

The CHAIRMAN pro tempore. The question is on the amendment offered by the gentleman from Alabama (Mr. Bachus).

The amendment was agreed to.

The CHAIRMAN pro tempore. It is now in order to consider amendment No. 4 printed in House Report 108-439.
AMENDMENT NO. 4 OFFERED BY MR. WEINER

Mr. WEINER. Mr. Chairman, I offer an amendment.
The Chairman pro tempore. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 4 offered by Mr. Weiner:

Page 67, after line 13, insert the following new section (and conform the table of contents accordingly):
SEC. 410. CERTAIN CHECK DISHONORMENT FEES PROHIBITED.
(a) IN GENERAL.-Section 607 of the Expedited Funds Availability Act (12 U.S.C. 4006) (relating to miscellaneous provisions) is amended by adding at the end the following new subsection:
"(f) FEES ON DISHONORED CHECKS.-
"(1) RECEIVING DEPOSITORY INSTITUTION.-In the case of a check drawn on an account at an originating institution which is dishonored by the originating institution due to the lack of sufficient funds in such account to pay the check, a receiving depository institution may not impose any fee on the depositor, in connection with such check, due to such dishonorment.
"(2) RULE OF CONSTRUCTION.-No provision of this section shall be construed as affecting any intervening depository institution or the costs of the services provided by such depository institution.".
(b) EFFECTIVE DATE.-The amendment made by this section shall apply after the end of the 180-day period beginning on the date of the enactment of this Act.

The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentleman from New York (Mr. Weiner) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from New York (Mr. Weiner).

Mr. WEINER. Mr. Chairman, I yield 1 minute to the gentleman from Massachusetts (Mr. Frank).

Mr. FRANK of Massachusetts. Mr. Chairman, this is a very proconsumer effort. I do think people ought to be penalized when they can control it. But as the gentleman from New York as pointed out, bank practices today blame the victim. If one is a recipient of a bad check and they in good faith deposit it in their bank, they are penalized. Indeed, I would contrast this with the previous amendment. If one is an attorney now under this bill and they behave with gross negligence, the FDIC cannot do anything about it; but if they are the consumer who gets a bad check, they get whacked. I do not think it is anticapitalist to say that people who are the victims of bad checks once should not be victimized by bad checks twice. People have said, well, we should give them an incentive. As the gentleman from New York had said, I do not know many people who say I do not mind getting a bad check as long as my bank does not hurt me. I think there is already every incentive they have got to say no to it. We are not talking about someone who takes eight bad checks from the same person. The first time someone victimizes someone with a check that has insufficient funds, they are victimized.
This amendment is a good amendment.

Mr. WEINER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this is a very easy-to-understand issue, but a very difficult-to-understand fee. When someone writes someone a check and they do not have the funds in that account, they pay a penalty. They pay a fine. They violated the rules of the transaction. When they receive the check, what have they done wrong? What rule have they violated? What sanctions should be against someone for receiving the bad check? And the gentleman from Massachusetts was absolutely correct. This is a proconsumer measure. But let us remember who the recipients of most bounced checks are. They are small businesses, they are supermarkets, they are liquor stores, they are appliance stores that are not only out the money, they are out the goods. It simply makes no sense.
I have seen some of the arguments against this. They say, well, it is going to increase the cost of banking for consumers. If there is a cost to this transaction, I ask only one question: Why does the victim pay it? All my amendment does is it says they cannot charge the victim of a bad check for that action.

[Time: 12:45]

Why should the victim pay? Why should the victim pay?
Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I rise in opposition to the Weiner amendment, and I yield myself such time as I may consume.
Mr. Chairman, what this amendment does is it says, when a customer accepts a bad check from a third party and deposits that check into his account and the bank takes a hit, and it does take a hit anywhere from, according to the Massachusetts Division of Banks, which is one of the more liberal supervisors, it says that cost can be as much as $15, $14.46. It can be as little as $1 or $2. But this is not a pro-consumer bill; this is, in my mind, a pro-either customer who accepts a bad check, or a pro-person who issues worthless checks. I mean, the only person that is rewarded by this provision is someone who issues a bad check.
As drafted, it is not even clear whether the fee prohibition will apply only to the customer who accepts a bad check but, apparently, the prohibition will also pass through to the person who wrote the bad check.
So we have the perverse situation here where banks cannot charge for worthless checks. This provision is actually going to discourage responsibility by customers. It is going to prohibit the bank from passing that charge on to the customer who writes the check. In fact, what it could do is, if this thing passes, a fraudulent attempt could simply be to write a bunch of bad checks, deposit them in my account or deposit them in a friend's account, and we could swap and we could start inundating the bank with worthless checks.
Who would be saddled with that? Well, according to the gentleman from New York (Mr. Weiner), the bank, because the bank cannot pass it on to the customer, so what would the bank do? It would raise its fees to everyone. The end result would be that those customers, those of us who are diligent in determining who we are dealing with and accepting checks from other parties, would end up with the burden.
This really creates an unfair situation where customers who do not deposit bad checks or high-risk checks subsidize those who do on the cost of handling those items. In my mind, it is just the American system; banks are no different from you and I. When they incur costs, they ought to be able to charge the party responsible for causing that cost. Depository institutions should be allowed to charge those customers who cause the institution to incur the cost. It is just simply the way we have done business in this country since the start. We are simply absolving people of responsibility who are the people in the position to take responsibility. A customer who deposits a bad check has the opportunity, he often has the opportunity to pass any fees that are assessed back to the person who wrote the check.
So even if this is drafted, and I believe it is drafted where it is just a prohibition, it does not say that they can put it on anybody. They cannot put it on their customer. They certainly do not have any connection or relationship with the third party who wrote the bad check, so it is going to be almost very impractical, if not illegal under this provision, for them to charge the person who wrote the bad check.
Right now, I think it works very well. A landlord gets a bad check from a renter, the landlord takes that check down and deposits it to the bank, the bank gets stiffed with a bad check, it passes it back to the landlord, the landlord turns around and charges it to the renter. That is the way it ought to be. The bank, and all of the customers of the bank, should not have to pay for a renter who writes a worthless check to the landlord. That ought to be charged to the landlord, and then they can pass that back to the renter.
Let me simply close by saying this is a regulatory relief bill that we promised to the financial institutions because of all of the costs they were incurring as a result of the PATRIOT Act. It is not a regulatory burden bill. We do not reward someone with more punishment. We have imposed all of these money-laundering requirements on them, and we told them we would come back in this legislation and help them recover some of the costs, and thrifts are going to be stuck with this, credit unions cannot charge. It is going to really hurt a lot of institutions and a lot of customers.

Mr. WEINER. Mr. Chairman, I yield myself such time as I may consume.
I do not know where to start. First, let us start about the mistake that the gentleman made about the bill, line 13, page 1: may not impose a fee on the depositor. Nothing in this bill stops the bank from charging a fee to the person who bounced the check. Let me say it again. Nothing in this bill stops the person who bounced the check from getting a fee. You can charge them $10,000. I think it is too high, but $10,000.
Here is the scenario I would like to explain to the gentleman. The gentleman from Alabama (Mr. Bachus) knows me. The gentleman and I serve on a committee together. I give the gentleman a check. I have violated the rules. I give the gentleman a check that does not have enough money to back it. Can the gentleman check whether I have enough money in the account? Under the rules of privacy we passed here, he can. He does everything exactly according to Hoyle.
The gentleman is now the victim of a bad check. The gentleman is the victim of a bad check, I say to the gentleman. I leave town. I do not get reelected. I get elected mayor. Stranger things have happened. And the gentleman from Alabama is now out the money for the check, and his bank is charging him a fee.
I want to make sure the gentleman understands this, because he misstated it consistently over 5 minutes. There is nothing stopping the bank from penalizing the person who bounces the check. This is about the person receiving the bad check. And this notion about the landlord and the oppression that we are putting on people, do my colleagues know who benefits from this bill the most? Those that are represented by the food marketing institute, local supermarkets, local liquor stores, local bodegas, people who receive checks in large numbers, who do everything according to the rules the gentleman from Alabama just described; and they are facing a sanction for the benefit of having a bounced check. The gentleman says, well, we are sticking this to the banks. No. There is no reason that we should stick this to anyone, but especially not the victim.
To oppose this amendment is to say, I believe the person who had the check bounced against them should pay this fee. I would say, Mr. Chairman, there are a lot of reasons why I can see the banks are so jealously guarding this. They all have dollar signs after them. They make a lot of money from this practice. But, frankly, it is patently unfair, unfair to individual consumers, unfair to that landlord. In the gentleman's description, the landlord is out the rent, and he is out the fee. What did that guy do wrong? What is the purpose of a penalty if it is not penalizing anything that he can avoid? He followed every single rule.
And I would ask the gentleman again, you are running a supermarket, you get a check. You say, I want to see your ID; I want to see your driver's license. I want a photograph. I want to know where you live. I want to know the names of your sisters and brothers. And they take the check, following every rule the bank set up, and it bounces. What have you done wrong? How do you avoid that sanction? What kind of a law do we ever pass here where we tell how you avoid the penalty? It is patently unfair.
I want to reiterate this. This is a consumer issue, because consumers get bad checks. Ninety-nine percent of these checks are to businesses, small businesses who use this check as an article of faith, and we should not penalize them for doing that.

The CHAIRMAN pro tempore (Mr. Sweeney). The gentleman's time has expired. All time has expired.

The question is on the amendment offered by the gentleman from New York (Mr. Weiner).

The question was taken; and the Chairman pro tempore announced that the noes appeared to have it.

Mr. WEINER. Mr. Chairman, I demand a recorded vote.

The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further proceedings on the amendment offered by the gentleman from New York (Mr. Weiner) will be postponed.

It is now in order to consider amendment No. 5 printed in House report 108-439.

AMENDMENT NO. 5 OFFERED BY MS. JACKSON-LEE OF TEXAS

Ms. JACKSON-LEE of Texas. Mr. Chairman, I offer an amendment.

The Chairman pro tempore. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 5 offered by Ms. Jackson-Lee of Texas:

Page 83, line 4, strike the closing quotation marks and the 2nd period.
Page 83, after line 4, insert the following new subparagraph:
"© SENSE OF THE CONGRESS.-It is the sense of the Congress that, when a requesting agency requires expeditious action on an application for a merger transaction, consideration should be made as to the impact the merger transaction will have on corporate and individual customers in an effort to ensure that no harmful effects will result from the merger transaction.".

The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentlewoman from Texas (Ms. Jackson-Lee) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentlewoman from Texas (Ms. Jackson-Lee).

Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself such time as I may consume.
Let me, first of all, add my appreciation to the chairman of the full committee and the ranking member of the full committee and of course the subcommittee Chair and ranking member, because I believe that they understand that everyone in every community has experienced the impact which my amendment is attempting to address.
We understand that this is a Nation now of mergers and acquisitions, but the real question on bank mergers is what happens to the friendly bank officer that most of us are familiar with? What happens to the civic spirit? What happens to the decision-making, and what happens to the jobs?
My amendment is simple. It says that when there is an expedited process in a merger transaction, consideration should be made as to the impact the transaction will have on corporate and individual customers in an effort to ensure that no harmful effects will result from the merger transaction.
What does that mean? It means that we know when there are large conglomerates coming together, whether you are in an urban area or whether you are in a rural area, there is going to be some loss. What is that loss? First of all, we may lose something that this body has been discussing over a number of months because of the large percentage of unemployment in our Nation. We will lose jobs in a certain area. But then we will lose something that is very important that many of us do not focus on: the decision-making capacity to lend monies to the community, home loans, bank loans dealing with businesses, maybe even car loans.
I have in my possession information that shows that in rural Texas, 42 percent of those who apply for loans are able to get it; but then the other remaining body does not. So there is a problem. When a conglomerate will merge with smaller banks in rural areas, it takes away that ability to gain the right to a decision to secure monies.
Mr. Chairman, this is again a simple amendment that I would ask my colleagues to support enthusiastically, to not abdicate our responsibilities of oversight when a merger comes about in terms of its impact on our communities.
Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I rise in opposition to the amendment, and claim that time, and I yield myself such time as I may consume.
Mr. Chairman, I believe that the gentlewoman's concerns are already fully addressed in this legislation. I believe that because the current law requires Federal financial regulators to closely examine the impact of any mergers, not only on the financial system, but also on the communities involved. If my colleagues will look at 12 USC 1842, it says: "A Federal financial regulator may not approve any merger where the proposed acquisition merger or consolidation may substantially lessen competition, tend to create a monopoly, or restrain trade, unless it finds that the anti-competitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the communities to be served."
This section of the U.S. Code goes on to state that in every acquisition, merger, or consolidation the regulator shall take into consideration the financial and managerial resources and future prospects of the company or companies and bank concerns and the convenience and needs of the community. Let me stress that: and the convenience and needs of the communities.
All mergers, acquisitions, and consolidations are subject to antitrust review by the Department of Justice to ensure that there is not a negative impact on the financial system or on the communities that the financial institutions serve.
So we have all of these tests, all of these hurdles that must be gone through.
Finally, not only that, but notice must be given that a merger is being considered, and under the Community Reinvestment Act, members of the affected communities have the ability to comment on the impact of the merger to the banking agency. So we have all of this. Nothing in this regulation relief bill changes that.
These same protections and considerations apply when a financial institution is participating in an expedited merger process.

[Time: 13:00]

Accordingly, this amendment simply is not necessary. It will add additional cost. And I must urge its defeat on the grounds I have just stated and on the further grounds, as I have said in opposing the last amendment, that we promised the financial institutions, the credit unions, the thrifts, and the small banks, those that have the greatest regulatory burden, the greatest percentage of cost in complying with these new money laundering provisions, that we would take the burdens off of them, not put more burdens on them.
So I would urge the defeat of this amendment.
Mr. Chairman, I reserve the balance of my time.

Ms. JACKSON-LEE of Texas. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I am disappointed in the gentleman's opposition, but I press on in any event, because I press on on behalf of the consumers.
I would, with all due respect, refer to the gentleman from Ohio (Mr. Oxley), who is on the floor, to look at this amendment. It is simply a sense of Congress that we not abdicate our oversight.
I have heard the gentleman from Alabama (Mr. Bachus) on the fact that we have all of the oversight. But clearly I think in the expedited process, the indication or instruction, if you will, to the appropriate regulators that we should look keenly at whether or not these mergers impact negatively on corporate and individual consumers in the elements that I have listed, the loss of jobs, the element of decision-making, the question of civic mindedness, if you will, and clearly to note in our communities when headquarters lift up and move from cities that have hosted these banks for years and years and years.
This is not an excessive burden, Mr. Chairman. It is simply the responsibility of Congress to ensure that not only are we, if you will, the protectors of the corporate elite and large banking institutions, but we also respect the responsibilities that we have to the average Joe Consumer, whether that happens to be the small business consumer, the individual family who is seeking a home loan, or in individual accounts.
We know that the new kid on the block in our banking success stories is consumer banking. We know for a fact that we have had the opportunity to see our banks grow and thrive because of the fact that they have been basing their bottom line, their bottom black line, if you will, their success and profits on consumer banking. Why would we suggest that this is a burden to our credit unions or our banking institutions to be keenly sensitive to mergers and to make sure, in fact, that we have the opportunity to review this matter in a way that is appropriate for this body?
Again, it is a sense of Congress. That is all it is, gentlemen. Why in the world would we have a difficulty in a sense of Congress that does not in any way attempt to jeopardize the working relationship? It is not regulatory; it is a sense of Congress. Can we not have a commonality of viewpoints and response? I do not see why we cannot have an agreement on this. Again, it is a sense of Congress.
I want to just make this point, Mr. Chairman, if I can. The idea is that this is not isolated to one area versus another. All of us face mergers in our community. This is the next step of banks. We know that. For some reason they find it to be more accommodating to have these large institutions. This does not in any way undermine having a large institution. What it says is just be diligent to ensure that with respect to the sense of Congress that we ensure that these issues are covered.
I would ask my colleagues to support this amendment on behalf of rural America, urban America, suburban America, and on behalf of preserving the civic mindedness or at least paying attention to the civic mindedness that our banks provide.

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, we are concerned about many of the same things the gentlewoman from Texas (Ms. Jackson-Lee) is concerned about. We simply think that existing law addresses these concerns. And I have reiterated those.
Mr. Chairman, I yield back the balance of my time.

The CHAIRMAN pro tempore (Mr. Sweeney). The question is on the amendment offered by the gentlewoman from Texas (Ms. Jackson-Lee).

The question was taken; and the Chairman pro tempore announced that the noes appeared to have it.

Ms. JACKSON-LEE of Texas. Mr. Chairman, I demand a recorded vote.

The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further proceedings on the amendment offered by the gentlewoman from Texas (Ms. Jackson-Lee) will be postponed.

It is now in order to consider Amendment No. 6 printed in House Report 108-439.

AMENDMENT NO. 6 OFFERED BY MRS. KELLY

Mrs. KELLY. Mr. Chairman, I offer an amendment.

The CHAIRMAN pro tempore. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 6 offered by Mrs. Kelly:

Page 108, after line 14, insert the following new title (and redesignate the subsequent title and sections and conform the table of contents accordingly):
TITLE VII-BUSINESS CHECKING FREEDOM
SEC. 701. SHORT TITLE.
This title may be cited as the "Business Checking Freedom Act of 2004".
SEC. 702. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED FOR ALL BUSINESSES.
(a) Section 2 of Public Law 93-100 (12 U.S.C. 1832) is amended-
(1) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and
(2) by inserting after subsection (a) the following:
"(b) Notwithstanding any other provision of law, any depository institution may permit the owner of any deposit or account which is a deposit or account on which interest or dividends are paid and is not a deposit or account described in subsection (a)(2) to make up to 24 transfers per month (or such greater number as the Board of Governors of the Federal Reserve System may determine by rule or order), for any purpose, to another account of the owner in the same institution. An account offered pursuant to this subsection shall be considered a transaction account for purposes of section 19 of the Federal Reserve Act unless the Board of Governors of the Federal Reserve System determines otherwise.".
(b) Effective at the end of the 2-year period beginning on the date of the enactment of this Act, section 2 of Public Law 93-100 (12 U.S.C. 1832) is amended-
(1) in subsection (a)(1), by striking "but subject to paragraph (2)";
(2) by striking paragraph (2) of subsection (a) and inserting the following new paragraph:
"(2) No provision of this section may be construed as conferring the authority to offer demand deposit accounts to any institution that is prohibited by law from offering demand deposit accounts."; and
(3) in subsection (b) (as added by subsection (a) of this section) by striking "and is not a deposit or account described in subsection (a)(2)".
SEC. 703. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.
(a) REPEAL OF PROHIBITION ON PAYMENT OF INTEREST ON DEMAND DEPOSITS.-
(1) FEDERAL RESERVE ACT.-Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a) is amended to read as follows:
"(i) [Repealed]".


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