Broadcast Decency Enforcement Act of 2004

Mr. Chairman, I thank the gentleman for yielding me this time and for his leadership, and I rise in support of the Ose- Maloney amendment, a compromise approach to deposit insurance coverage that holds standard account coverage at $100,000 while offering increased protection for retirees.

Mr. Chairman, as a whole, this is an outstanding bill. As an original cosponsor of H.R. 522, I am supportive of the overwhelming majority of provisions in the legislation. It is long past time to merge the BIF and SAIF insurance funds. Additionally, eliminating the 23 basis point cliff and providing a new premium system that takes into account the past contributions of institutions are major steps forward.

The bill includes a mechanism for determining credit for past contributions to the insurance funds that is based on an amendment I cosponsored along with the gentleman from Nebraska (Mr. Bereuter) last session. This is a critically important provision as a matter of fairness to institutions that recapitalized the funds, and I thank the gentleman from Alabama (Mr. Bachus) for including this balanced amendment in the legislation.

Despite these many positives, I believe the immediate 30 percent increase in insurance coverage in the bill is a serious mistake. This coverage increase to $130,000 is opposed by all the Federal financial service regulators, including Alan Greenspan, Treasury Secretary Peter Fischer, OCC Comptroller John Hawke and OTS Director James Gilleran.

Proponents of increased coverage argue that it poses no new risk to the insurance system, but the regulators who oppose this increase are the very officials whose job it is to protect the safety and soundness of the financial system. The unanimity of regulator opposition to increased coverage is an extremely powerful message.

Another argument put forth by proponents of coverage increases is that inflation has eroded deposit insurance. I do not believe this argument matches the actual situation of the banking industry. The fact is that only 2 percent

of insured accounts have more than $100,000 according to a study by the Federal Reserve. The same Fed study put the average account balance at merely $6,000. Any way you look at it the increase in coverage will benefit very, very few depositors.

Proponents of increasing coverage also contend that because insurance premiums are paid by banks, increasing coverage does not cost taxpayers. While I concede this point, I think we have to remember that behind the deposit insurance funds is the full faith and credit of the United States Government.

Since I joined the Committee on Financial Services at the close of the savings and loan crisis, I have been committed to protecting the safety and soundness of the financial service system. While the causes of the S&L failures were many, as my friend from Alabama pointed out, the fact is that standing behind the insurance system are our constituent taxpayer dollars. No matter what the reasons are for a future bank failure or string of failures, by raising insurance coverage we increase the potential liability of the government. Additionally, raising coverage may encourage the concept of moral hazard. Institutions will be encouraged to engage in riskier behavior to boost earnings if they know that failure is insured by the Federal Government.

Finally, I urge support for this amendment because it strikes a compromise. It holds the line on coverage for standard accounts while offering retirees additional insurance. I believe that there are many valid policy arguments for offering additional coverage and additional insurance for this special class of banking account. At its core this amendment represents a compromise. It allows Members the opportunity to support the concerns of the regulatory community on standard accounts while offering increased insurance on retirement accounts.

This is a good bill and I will support its passage. I simply think it would be much improved with the adoption of this amendment, and I thank the gentleman from California (Mr. Ose) for his leadership and I thank also the gentleman from Alabama (Mr. Bachus) for crafting a fine underlying bill, along with the chairman, the gentleman from Ohio (Mr. Oxley), and the Democratic leader, the gentleman from Massachusetts (Mr. Frank).

Mr. Chairman, I include for the Record the following testimony from our committee hearing:

Prepared Testimony of the Honorable Peter R. Fischer, Undersecretary for Domestic Finance, Department of the Treasury, 9:30 a.m., Wednesday,

February 26, 2003--Dirksen 538

Mr. Chairman, Senator Sarbanes, and Members of the

Committee, I appreciate the opportunity to provide the

Administration's views on deposit insurance reform. I also

want to commend Chairman Powell and the FDIC staff for their

valuable contributions to the discussion of this important

issue.

The Administration strongly supports reforms to our deposit

insurance system that would, first, merge the bank and thrift

insurance funds, second, allow more flexibility in the

management of fund reserves while maintaining adequate

reserve levels and, third, ensure that all participating

institutions fairly share in the maintenance of FDIC

resources in accordance with the insurance fund's loss

exposure from each institution. The Administration strongly

opposes any increases in deposit insurance coverage limits.

Our current deposit insurance system managed by the Federal

Deposit Insurance Corporation (FDIC) serves to protect

insured depositors from exposure to bank losses and, as a

result, helps to promote public confidence in the U.S.

banking system. I am concerned today that our deposit

insurance system has structural weaknesses that, in the

absence of reform, could deepen over time. I want to

emphasize that there is no crisis in the FDIC; both of its

funds are strong, well managed, with adequate reserves. This

is the right time to act--when we do not face a crisis--and

the Administration supports legislation focused on the repair

of these structural weaknesses.

Increases in FDIC benefits, however, including any increase

in the level of insurance coverage, are not part of the

solution to these problems and should be avoided. When I

testified before this Committee last April, I argued that an

increase in deposit insurance coverage limits would serve no

sound public policy purpose. Nothing has occurred since then

to change that view. The Administration continues to oppose

higher coverage limit in any form. Indeed, we feel that the

entire issue of coverage limits regrettably diverts attention

from the important reforms that are needed.

merging the bank and thrift insurance funds

We support a merger of the Bank Insurance Fund (BIF) and

Savings Association Insurance Fund (SAIF) as soon as

practicable. A larger, combined insurance fund would be

better able to diversify risks, and thus withstand losses,

than would either fund separately. Merging the funds while

the industry is strong and both funds are adequately

capitalized would not burden either BIF or SAIF members. A

merged fund would also end the possibility that similar

institutions could pay significantly different premiums for

the same product, as was the case in the recent past and

could occur again in the near future without this change. A

merger would also recognize changes in the industry. As a

result of mergers and consolidations, each fund now insures

deposits of both commercial banks and thrifts. Indeed,

commercial banks now account for 45 percent of all SAIF-

insured deposits.

Flexibility in the Management of FDIC Reserves

Current law generally requires each insurance fund to

maintain reserves equal to 1.25 percent of estimated insured

deposits, the ``designated reserve ratio.'' When the reserve

ratio falls below this threshold, the FDIC must charge either

a premium sufficient to restore the reserve ratio to 1.25

percent within one year, or a minimum of 23 basis points if

the reserve ratio would remain below 1.25 percent for a

longer period. Since the latter would be expected when the

banking system, and probably the economy as well, were under

stress, such a sharp increase in industry assessments could

have an undesirable pro-cyclical effect, further reducing

liquidity precisely when liquidity is needed. Were FDIC fund

contributions to come from resources that otherwise might be

part of capital, every dollar paid would mean a potential

reduction of 10 or 12 dollars in lending, or as much as $12

billion in reduced lending for a $1 billion FDIC

replenishment.

Reserves should be allowed to grow when conditions are

good. This would enable the fund to better absorb losses

under adverse conditions without sharp increases in premiums.

In order to achieve this objective and also to account for

changing risks to the insurance fund over time, we support

greater latitude for the FDIC to alter the designated reserve

ratio within statutorily prescribed upper and lower bounds.

Within these bounds, the FDIC should provide for public

notice and comment concerning any proposed change to the

designated reserve ratio. The FDIC should also have

discretion in determining how quickly the fund meets the

designated reserve ratio as long as the actual reserve ratio

is within these bounds. If the reserve ratio were to fall

below the lower bound, the FDIC should restore it to within

the statutory range promptly, over a reasonable but limited

timeframe. We would also support some reduction in the

prescribed minimum premium rate--currently 23 basis points--

that would be in effect if more than one year were required

to restore the fund's reserves.

Nevertheless, as we learned from the deposit insurance

experience of the 1980s, flexibility must be tempered by a

clear requirement for prudent and timely fund replenishment.

The statutory range for the designated reserve ratio should

strike an appropriate balance between the burden of pre-

funding future loses and the pro-cyclical costs of

replenishing the insurance fund in a downturn. A key benefit

to giving the FDIC greater flexibility in managing the

reserve ratio within statutorily prescribed bounds is the

ability to achieve low, stable premiums over time, adequate

to meet FDIC needs in bad times, with the least burden on

financial institutions and on the economy. We also believe

that with this reform, the possibility of recourse to

taxpayer resources is even further removed.

Full Risk-Based Shared Funding

Every day that they operate, banks and thrifts benefit from

their access to federal deposit insurance. For several years,

however, the FDIC has been allowed to obtain premiums for

deposit insurance from only a few insured institutions.

Currently, over 90 percent of banks and thrifts pay nothing

to the FDIC. This is an untenable formula for the long-term

stability of the FDIC.

Moreover, current law frustrates one of the most important

reforms enacted in the wake of the collapse of the Federal

Savings and Loan Insurance Corporation (FSLIC) and the

depletion of FDIC reserves: the requirement for risk-based

premiums. When 90 percent of the industry pays no premiums,

there is little opportunity to do what any prudent insurer

would do: adjust premiums for risk. Nearly all banks are

treated the same, and lately they have been treated to free

service.

For example, today a bank can rapidly increase its insured

deposits without paying anything into the insurance fund. As

is now well known, some large financial companies have

greatly augmented their insured deposits in the past few

years by sweeping uninsured funds into their affiliated

depository institutions--without compensating the FDIC at

all. Other major financial companies might be expected to do

the same in the future. In addition, most of the over 1,100

banks and thrifts chartered after 1996 have never paid a

penny in deposit insurance premiums. Yet if insured deposit

growth by a relatively few institutions were to cause the

reserve ratio to decline below the designated reserve ratio,

all banks would be required to pay premiums to raise

reserves.

To rectify this ``free rider'' problem and ensure that

institutions appropriately compensate the FDIC commensurate

with their risk, Congress should remove the current

restrictions on FDIC premium-setting. In order to recognize

past payments to build up current reserves, we support the

proposal to apply temporary transition credits against future

premiums that would be distributed based on a measure of each

institution's contribution to the build-up of insurance fund

reserves in the early-to-mid 1990s. In addition to transition

credits, allowing the FDIC to provide assessment credits on

an on-going basis would permit the FDIC to collect payments

from institutions more closely in relation to their deposit

growth.

We strongly oppose rebates, which would drain the insurance

fund of cash. Over much of its history, the FDIC insurance

fund reserve ratio remained well above the current target,

only to drop into deficit conditions by the beginning of the

1990s. Therefore, it is vital that funds collected in good

times, and the earnings on those collections, be available

for times when they will be needed.

There are other important structural issues that need to be

addressed sooner than later. It would be appropriate to

evaluate whether there are changes to the National Credit

Union Share Insurance Fund (NCUSIF) that would be suitable in

light of the proposed reforms made of FDIC insurance so as to

avoid unintended disparities between the two programs.

Perhaps even more important is the need to address the long-

term funding of supervision by the National Credit Union

Administration, particularly in view of recent trends toward

conversions from federal to state charters and growing

consolidation of credit unions. Similarly, there are

structural problems in the funding of the Office of the

Comptroller of the Currency and the Office of Thrift

Supervision, the resolution of which should not be delayed.

Deposit Insurance Coverage Limits

The improvements to the deposit insurance system that I

have just outlined are vital to the system's long-term

health. Other proposals, however, would not contribute to the

strength of the taxpayer-backed deposit insurance system and

may actually weaken it.

Increasing the general coverage limit up front or through

indexation, or raising coverage limits for particular

categories of deposits, is unnecessary. Savers do not need an

increase in coverage limits and would receive no real

financial benefit. Unlike other government benefit programs,

there is no need for indexation of deposit insurance coverage

because savers can now obtain all the coverage that they

desire by using multiple banks and through other means.

Higher coverage limits would not predictably advantage any

particular size of banks, would increase all banks' insurance

premium costs, and would mean greater taxpayer exposure by

adding to the contingent liabilities of the government and

weakening market discipline. An increase in coverage limits

would reduce--not enhance--competition among banks in general

as the efficient and inefficient offer the same investment

risk to depositors; in fact, perversely, investors would be

drawn at no risk to the worst banks, which usually offer the

highest interest rates.

Higher Coverage Limits Not Sought by Savers

First of all, the clamor for raising coverage limits does

not come from savers. The evidence that current coverage

limits constitute a burden to savers is scant; there has been

little demand from depositors for higher maximum levels. The

recent consumer finance survey data released by the Federal

Reserve confirm what we found in the previous survey, namely

that raising the coverage limit would do little, if anything,

for most savers. Median family deposit balances are only

$4,000 for transaction account deposits and $15,000 for

certificates of deposit, far below the current $100,000

ceiling. The same holds true even when considering only older

Americans, a segment of the population with higher bank

account usage: median transaction account balances and

certificates of deposit total $8,000 and $20,000,

respectively, for those households headed by individuals

between the ages of 65 and 74.

Examining the Federal Reserve data for retirement accounts

shows present maximum deposit insurance coverage to be more

than adequate. The median balance across age groups held in

IRA/Keogh accounts at insured depository institutions is only

$15,000. For the 65 to 69 age group, median household IRA/

Keogh deposits total $30,000.

A small group of relatively affluent savers might find

greater convenience from increased maximum coverage levels.

But it is a tiny group. Only 3.4 percent of households with

bank accounts held any uninsured deposits, and the median

income of these households was more than double the median

income of all depositors in the survey.

Under current rules, these savers have plenty of options,

with the market place presenting new options for unlimited

deposit insurance coverage without changing federal coverage

limits. At little inconvenience, savers with substantial bank

deposits--including retirees and those with large bank

savings for retirement--may place deposits at any number of

banks to obtain as much FDIC coverage as desired. They may

also establish accounts within the same bank under different

legal capacities, qualifying for several multiples of current

maximum coverage limits. Firms are now developing programs

for exchanging depositor accounts that could offer seamless

means of providing unlimited coverage for depositors without

any change in current limits.

One of the fundamental rules of prudent retirement planning

is to diversify investment vehicles. Many individuals,

including those who are retired or planning for retirement,

feel comfortable putting substantial amounts into uninsured

mutual funds, money market accounts, and a variety of other

investment instruments. Just 21 percent of all IRA/Keogh

funds are in insured depository institutions. There is simply

no widespread consumer concern about existing coverage limits

that would justify extending taxpayer exposure by creating a

new government-insured retirement program under the FDIC.

Coverage Limits and Bank Competition

Banks, regardless of size, continue to have little trouble

attracting deposits under the existing coverage limits.

Federal Reserve data have shown that smaller banks have grown

more rapidly and experienced higher rates of growth in both

insured and uninsured deposits than have larger banks over

the past several years. After adjusting for the effects of

mergers, domestic assets of the largest 1,000 commercial

banks grew 5.5 percent per year on average from 1994 to 2002;

all other banks grew 13.8 percent per year on average. Nor

are smaller banks losing the competition for uninsured

deposits. Uninsured deposits of the top 1,000 banks grew 9.9

percent annually on average over this period, while such

deposits at smaller banks grew on average by 21.4 percent

annually.

Higher Coverage Limits for Municipal Funds Erode Discipline

Proposals for substantially higher levels of protection of

municipal deposits than of other classes of deposits would

exacerbate the inherent moral hazard problems of deposit

insurance. Rather than keep funds in local institutions,

state and municipal treasurers would have powerful incentives

to seek out not the safest institutions in which to place

taxpayer funds but rather those offering the highest interest

rates. Since these are usually riskier institutions, state

and municipal treasurers would be drawn into funding the more

trouble banks. Local, well run, healthy banks might have to

pay a premium in increased deposit rates to retain municipal

business. Today there are incentives for state and local

government treasurers to monitor risks taken with large

volumes of public sector deposits. Should the FDIC largely

protect these funds, an important source of credit judgment

on the lending and investment decisions of local banks would

be lost.

conclusion

In conclusion, I reaffirm the Administration's support for

the three-part general framework that I have outlined to

correct the structural flaws in the deposit insurance system.

I encourage Congress to pursue these improvements with a

steady focus on the important work that needs to be done. The

Administration does not support legislation that raises

deposit insurance coverage limits in any form, and we urge

that Congress avoid such an unneeded and counterproductive

diversion from real and necessary reform.

Mr. Chairman, I yield myself 7 minutes.

Mr. Chairman, I rise in support of H.R. 522, the Federal Deposit Insurance Reform Act of 2003. I want to begin by thanking the gentleman from Ohio (Mr. Oxley), the chairman of the committee, for his tremendous leadership in steering what is a complex bill through the legislative process. I also want to thank the ranking member of the committee, the gentleman from Massachusetts (Mr. Frank), for his support of this important piece of legislation. The committee and the Congress in its votes on this legislation in the past, legislation very similar, has shown that it can work together in a very bipartisan manner.

Deposit insurance reform has been thoroughly discussed and debated over the past several years. During the 107th Congress, I introduced comprehensive deposit insurance reform, H.R. 3717. The legislation was a by-product of recommendations by the FDIC in early 2001, industry representatives coming together urging that we take action. The American Banking Association, The Credit Union National Association, Independent Bankers and Financial Services Roundtable, all urging the Federal Reserve, the administration, urging us to take action to reform Federal deposit insurance. We did take action, and the 107th Congress passed H.R. 3717 by a vote of 408 to 18.

Unfortunately, that bill died in the other body.

Earlier this year, I introduced the same legislation. This time it is H.R. 522, the Deposit Insurance Reform Act of 2003. The gentleman from Ohio (Mr. Oxley) and the gentleman from Massachusetts (Mr. Frank) joined me in introducing this legislation, along with 57 other cosponsors on both sides of the aisle. It was approved by the Committee on Financial Services by a unanimous voice vote. I am pleased that the Senate now plans to act on similar legislation in the very near future, and that the President's budget for fiscal year 2004 outlines a proposal similar to our legislation.

The legislation is supported not only by American bankers, the Financial Services Roundtable made up of the 100 largest financial corporations in America, but also by the credit unions, the thrift associations, the community bankers, the securities industry, and also by groups that we sometimes do not find on the same side; the American Association of Retired Persons has recently endorsed this legislation.

Federal deposit insurance has been the hallmark of our Nation's banking system for almost 70 years. The reforms made by this legislation will ensure that the system that serves savers and depositors so well for so long will continue for future generations.

What does the legislation do? First, it merges separate insurance funds that currently apply to deposits held by banks on the one hand and savings associations on the other, creating a stronger, more stable fund that benefits banks and thrifts alike.

Second, it changes the ``pro-cyclical'' bias of the current system. In other words, it spreads out over time the assessments to the institutions which results in, by doing this, a more uniform assessment. Presently we have sharply higher premiums served during recessionary times and much lower premiums during good times. Banks can least afford to pay a higher premium during recessions, and we found that out, and this corrects that.

Third, the legislation includes modest increases in the amount of coverage available. The system has gone from 1980 without an increase in coverage. If we took 1980 as our basis and we increased coverage based on inflation, we would go to $200,000. If we went back to 1980, the $100,000, and we increased it based on per capita income, it would actually go to $300,000. So we are proposing $130,000, a very modest increase.

If we went back to 1974, because some have said they should not have raised it in 1980, they should have kept it at the 1974 level, and we increased it for inflation, it would go to $140,000.

Mr. Chairman, there are some who will offer amendments who have actually publicly stated that they do not believe in Federal deposit insurance, one of the gentlemen offering an amendment later on. So there are Members of the body who do not believe that our deposits in banks should be federally insured.

I understand that; but I, for one, disagree with that. I think Americans have come to rely and have a sense of security in knowing that when they put their retirement funds in a bank or thrift that it is federally insured. Particularly in light of the recent volatility on Wall Street, people have, I think, come to rely more and value more the fact that they can put their money in a federally insured financial institution and not lose that money.

All of us have heard from community bankers in our districts about the challenges that they face in competing for deposits with large- money center banks that are perceived by the market, rightly or wrongly, as being too big to fail. By strengthening the deposit insurance system, our legislation will help small neighborhood-based financial institutions across the country, especially in rural areas, continue to play an important role in financing economic development.

The independent bankers have actually said that this legislation is key to maintaining local home-owned banking institutions. The deposits that community banks are able to attract through Federal deposit insurance guarantees are cycled back into local communities in the form of consumer and small business loans. One reason for this legislation is we value the right of every American to go down to his corner financial institution.

My thanks go to the chairman of the committee.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. Tiberi).

Mr. Chairman, I yield 2 minutes to the gentleman from Kansas (Mr. Moran).

Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Hensarling).

Mr. Chairman, I yield 2 minutes to the gentlewoman from Florida (Ms. Ginny Brown-Waite).

Mr. Chairman, I yield 2 minutes to the gentleman from Colorado (Mr. Beauprez).

Mr. Chairman, I yield 4 minutes to the gentleman from Ohio (Mr. Oxley), the chairman of the Committee on Financial Services.

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

Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Burgess).

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

Mr. Chairman, I yield 3 minutes to the gentleman from Alabama (Mr. Aderholt).

Mr. Chairman, I yield myself such time as remains.

Mr. Chairman, there are opponents to this legislation. Those opponents give several reasons, and we may hear those during the amendments; but I think the most honest opponent of this legislation is the gentleman from California (Mr. Rohrabacher), who will offer an amendment or who may not offer an amendment but who has filed an amendment to strike the increases in coverage.

The gentleman from California (Mr. Rohrabacher) said in the American Banker, and I quote him, in today's edition, ``I don't believe in Federal deposit insurance.'' I think that pretty much sums up the opposition because if a person does not believe in it, then a person does not want it to increase to allow for inflation or for increase in per capita income. If a person does believe in it, then they want it to remain current. They want it to remain current with per capita income and inflation.

As I said, we last increased the levels in 1980. If we adjusted them for per capita income, they would actually go to $300,000. If we increased them for inflation, they would go to $200,000. We, to build a consensus, only increased them to $130,000; but we did increase retirement funds to $260,000, but we felt that there were people other than retirees who deserve the protection to keep up with per capita income and inflation.

So we increased everyone's coverage to 130, including small businesses and depositors, many of whom we found in testimony sell their house, deposit the entire proceeds in a financial institution and assume, sometimes tragically, that there is sufficient coverage.

There are additional reasons why people are opposing this legislation. There is a question of cost. The CBO scored the same bill last year as a savings of $750 million. This year they say it has a cost of $1 billion.

Chairman Powell of the FDIC responded to the CBO estimate and said this, because it conclusively rebuts any CBO estimate that this will cost the taxpayers and any argument that may be made on the floor today about the budgetary impact of the legislation, and he says, ``H.R. 522 provides the FDIC with the tools to achieve revenue neutrality in the management of the deposit insurance system. Because any analysis that determines 522 will result in an increase in net government spending must necessarily rely on assumptions regarding how the FDIC Board will exercise the discretion provided in the legislation.'' And here is the most pertinent part: ``I can assure Congress that the leadership of the FDIC has no intention of managing the deposit insurance system in a way that increases the cost to the government or increases the burden on insured institutions. The costs of the deposit insurance system will continue to be borne by the banking industry, but in a manner that establishes a strong risk-based premium system and avoids the procyclical risks inherent in current law.'' I do stress there are risks in the current law if we do not amend it.

He also in a letter to this body on March 31 says, ``No analysis of the `costs' of legislation is complete without a full consideration of the benefits provided by the bill,'' and he goes on to list many benefits to the economy, to savers and to strengthening our banking institution.

Another rabbit that has been turned loose by opponents of this bill is that the increase in coverage, the last increase was what precipitated the savings and loan crisis. That is simply not a fact. There were many causes. In fact, let me read from a report from this own body as to the reason for the savings and loan crisis. The causes of the thrift crisis can be traced to a number of factors: poorly timed deregulation, the dismal performance of some thrift management, inadequate oversight supervision and regulation.

Mr. Chairman, I was standing to claim the time in opposition.

Mr. Chairman, I yield myself such time as I may consume.

I speak in opposition to this amendment. One of the statements by the proponent of this amendment has been that the former increase in coverage was the primary reason for the savings and loan crisis, and let me say in that regard that the cause of the savings and loan collapse, crisis in this country, has been well examined and well documented. The FDIC, in fact, issued a report called ``History of the Eighties, Lessons for the Future and Examination of the Banking Crisis of the 1980s.''

Here is their reasoning. The rise in the number of bank failures in the 1980s had no single cause or short list of causes. Rather, it resulted from a concurrence of various forces working together to produce a decade of banking crises.

First, broad national forces, economic, financial, legislative and regulatory established the preconditions for the increased number of bank failures. Second, a series of severe regional and sectional recessions hit banks in a number of banking markets and led to the majority of the failures. Third, some of the banks in these markets assumed excessive risk and were insufficiently restrained by supervisory authorities with the result that they failed in disproportionate numbers.

As a result of that, Mr. Chairman, we have made several changes in the law in this body in an attempt, and I think a successful attempt thus far, to make these institutions subject to more oversight and to stronger capital requirements.

One Member of our body's father served as the FBI director during the savings and loan crisis. He was asked in a congressional hearing for his comment on the savings and loan crisis, and he said that criminal activity, fraud and looting were the primary causes of the crisis. In fact, the committee staff has made a fairly exhaustive study of the various articles written concerning the collapse of the savings and loans, and these were the reasons given at the time.

My colleagues can see we have a basic laundry list of reasons, but there is actually evidence that the increase in coverage at the time gave savers some degree of security and actually prevented a panic at many institutions, and some of that body of evidence supports that it actually helped in a contagion of that crisis.

Mr. Chairman, the final argument is a moral-hazard argument. The offerer of this amendment has argued that increasing coverage will create a greater moral hazard in the system; but then, surprisingly, his amendment does not raise the level from $100,000 to $130,000. It does away with that, but then he raises retirement accounts to $260,000, and he raises municipal deposits; and by doing that, they have managed in the subcommittee to basically arouse everyone's opposition to the amendment because if we raise the coverage for retirements in municipal deposits, then one is, in fact, arguing against the reason for offering his own amendment.

I will close simply by saying that this moral-hazard argument has been looked at by the FDIC. They asked two respected economists to make a report, and they were Federal Reserve Governor Alan Blinder, and this is what he said. The point is made that if the FDIC is given the authority to charge risk-based premiums, and that is what H.R. 522 does, then ``most objections based on moral hazard should evaporate.'' He goes on to state, ``In a world of properly priced deposit insurance, it seems more appropriate to ask the opposite question: Why have any coverage limits at all?''

In fact, I think that ought to be the question we are debating: Why have any coverage limits at all? Even the CBO says that this bill will result in an increase of insured deposits in our institutions. Is that not something that we have all argued for? Do we not want an increase in the deposits in our financial institutions? Does that not strengthen our economy? Is that not good for America? They say that some institutions will fail and some people in that institution will lose 200 or $220,000 worth of retirement funds. Do we not want them to have federally insured coverage? Do we want them to lose this money? I do not think so.

Finally, do we believe in insurance? I think that is the essence of this whole argument. I mean, do we believe in insurance? Do we believe in insuring for losses? If we do, and I for one think that insurance is a good thing, I believe that insurance is a prudent thing, and I believe that in order for our Federal deposit insurance system to survive and have any relevance then that insurance protection, which I believe in, I believe in insuring against risk, I believe it is a prudent thing to do, then why would we want the Federal deposit insurance system to wither on the vine?

Why would we not want it to stay current with inflationary rates and per capita income? And the only way to do that is to vote ``yes'' on this bill. A vote against this bill basically would be like going back to 1980 and reducing the coverage from $100,000 to $30,000 if you went on per capita income, or $47,000 if you went on inflation.

How many in our body would do that? How many in our body would vote today to take those levels back to the 1980 level? I do not think any of us would. A few of us would because, as the gentleman from California (Mr. Rohrabacher) says, I do not believe in Federal deposit insurance. I do not believe in the Federal Government supplying insurance. Well, it is the depositors, for one thing. The Federal Government does not. If he would look, he would see it is the banks through their premiums.

I yield to the gentleman from Massachusetts.

Mr. Chairman, I yield myself such time as I may consume and simply close by doing two things. One is responding to the gentleman from California when he uses the analogy that if someone wants to deposit or wants over $100,000 in their account they can simply take part of that money out of one account and place it in another account or they can drive down the street.

Now, Americans today are a highly mobile society, and we know that Americans sell their homes and we know that in almost every case, when they do that, they deposit that money in their bank. They do not take that check and split it. They do not ask for two checks. We know that the average cost of a house is well in excess of $100,000 and we know that they deposit that money in a bank. And if that bank fails, they lose all but $100,000. We do not think that is right.

The authors of this amendment also do a strange thing. They say we are increasing the coverage and that is a bad thing; but then they increase the coverage for retirement accounts to $260,000 and municipal accounts to $2 million. So they basically argue against their own amendment.

Mr. Chairman, may I inquire into the amount of time remaining?

Mr. Chairman, I yield 30 seconds to the gentleman from Alabama (Mr. Davis).

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I want to compliment the Committee on Rules and the leadership for getting this bill on a fast track, and I want to compliment my colleagues on the Committee on Energy and Commerce. We acted very swiftly to get this bill to the floor. In fact, we passed the bill out 49 to 1 just last week.

I would like to say as well that I think this rule is a fair rule. I think the amendments will be debated fairly. I think that the membership of the House will respond to those amendments; and obviously my hope is to adopt the bill, the legislation, overwhelmingly at the end of the day.

I want to say to the gentleman from Michigan (Mr. Stupak) on media ownership, there will be a time and place for that debate. We had a little debate on this last year. There was a compromise that was made as part of the appropriations process. This issue is not going to go away, but I think it is imperative that we get this bill to the President's desk as fast we can.

The President did send a veto signal as a statement of administration policy last year on this very issue. If for some reason that amendment was attached to this bill, there is no question it would delay enactment of this bill. It is not in place to add that amendment to this bill. I accept what the Committee on Rules did yesterday. We had a good debate on it yesterday afternoon. I think they made a wise decision not to make that amendment in order, knowing there is another day and time when we can debate that issue.

Mr. Speaker, I compliment the gentleman from Michigan (Mr. Stupak) for offering virtually the same amendment in full committee last week and then withdrawing that amendment even though a point of order had been raised.

I urge Members to support this fair rule so we can get this bill to the President's desk as fast as we can.

Mr. Chairman, I yield myself 5 minutes.

Mr. Chairman, I ask my colleagues to support this legislation this morning. This legislation actually appeared on my radar screen last year as we began to set our agenda for 2004. I introduced the legislation in early January, held our first hearing on the legislation before the Super Bowl, and the administration supports our bill. They sent us a statement that they supported our bill in committee, and I will include that Statement of Administration Policy as part of the Record in support of this legislation today.

Statement of Administration Policy

The Administration strongly supports House passage of H.R.

3717. This legislation will make broadcast television and

radio more suitable for family viewing by giving the Federal

Communications Commission (FCC) the authority to impose

meaningful penalties on broadcasters that air obscene or

indecent material over the public airwaves. In particular,

the Administration applauds the inclusion in the bill of its

proposal to require that the FCC consider whether

inappropriate material has been aired during children's

television programming in determining the fine to be imposed

for violations of the law. The Administration looks forward

to continuing to work with the Congress to make appropriate

adjustments to the language of the bill as it moves through

the legislative process.

I remember a speech well by Michael Powell, the Chairman of the Federal Communications Commission, where he said the fines under current law are peanuts. It is a cost of doing business. They are not high enough.

In fact, in the hearings that we held, we discovered that by the time you saddle up some of those attorneys at the Department of Justice and send them out to file a claim in Federal Court to go after the dollars that the FCC might have fined, they are not going to recoup their costs.

The Upton-Markey-Tauzin-Dingell-Barton bill has been cosponsored by more than 140 Members of Congress, Republicans and Democrats. Chairman Powell and his four other commissioners, two Republicans and two Democrats, when you look at their statements in support of this legislation, when you look at their statements as they imposed fines on broadcasters who cross that line, every one of them, Republican or Democrat, has lamented the fact that they cannot raise the fines higher than they are under current law, a maximum of only $27,500.

Because of the legislation we pursued on a strong bipartisan basis, and again, I commend my colleagues on the other side, the gentleman from Massachusetts (Mr. Markey) and the gentleman from Michigan (Mr. Dingell), we were able to pass this legislation out of the Committee on Energy and Commerce last week on a recorded vote of 49 to 1. The other body is beginning to move as well. They passed their legislation out 34 to 0.

Our bill was strengthened in the full committee markup. We added a provision on three-strikes-and-you-are-out. That is, if you are a repeat offender, a broadcaster, and you go through three series of fines violating the current standard, there is set up an automatic revocation hearing to take away that license.

We established a ``shot clock'' so that the FCC has to act on complaints within a certain number of days. We protected affiliated broadcasters. They do not always know what is coming down the pike in terms of what they are broadcasting. We raised the fine from the initial bill as I introduced it of $275,000 for the maximum fine to $500,000. We added a provision asking for the National Association of Broadcasters to make part of their code a Broadcast Decency Code, something they had years ago and was struck under antitrust violations.

We also added a provision making the performers, the talent, liable for their own words. You cannot tell me that they do not know what the standards are. I have heard them whine, I have heard them take out that violin and whine about what this bill will do. Well, guess what, Mr. Chairman? It is time to take away that violin and give them the fork. They are done. This ought to stop.

Guess what? Our bill does nothing to change existing standards. Zero. Nada. Not a thing. I would note that the 1927 Radio Act has held up in the courts for more than 75 years. The FCC has the authority to punish those who air obscene, indecent or profane language. It has been upheld by the Supreme Court, who ruled in 1978 that the government does have the right to regulate indecent broadcasts and to, in fact, establish a definition of indecency that remains the FCC's guiding principle.

There is language, material, that describes sexual or excretory material or organs, and it is deemed patently offensive as measured by contemporary community standards. In the mid 1990s, the court limited the ban on indecent airing between the hours of 6:00 in the morning and 10:00 at night, when kids are most likely to be watching or listening.

This legislation pertains only to broadcast radio or TV. Why is that? Because it is the public airwaves, that is why. And for those that challenge the standards that are out there and do not realize what some of these broadcasters have said, I would ask them to come see me during the next couple of hours of debate on the floor, because with me I have a notebook, and in that notebook we have the specific language that broadcasters have used in defiance of the law.

You cannot tell me that this stuff should be on the air. It should not be. We need to make sure we stop it, and we do, in its tracks.

Mr. Chairman, I yield 2 minutes to the gentleman from the good State of Indiana (Mr. Buyer), a member of the subcommittee, a cosponsor of the bill, and a very helpful force in getting this bill to the floor.

Mr. Chairman, I yield 2 minutes to the distinguished gentleman from the State of Pennsylvania (Mr. Pitts), a very active member on this issue, an original cosponsor, one that has helped in many ways to get this bill to the floor.

Mr. Chairman, I yield 5 minutes to the gentleman from Texas (Mr. Barton), the distinguished chairman of the Committee on Energy and Commerce, my friend and colleague.

(Mr. BARTON of Texas asked and was given permission to revise and extend his remarks.)

Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Oregon (Mr. Walden), who offered a very constructive bipartisan amendment that is part of the package of this bill.

Mr. Chairman, will the gentleman yield?

Yes, I do. The testimony was provided by Brent Bozell, President of the Parents Television Council. The FCC claims, however, that they no longer adhere to that policy.

I agree with the gentleman from Illinois (Mr. Rush), consumers should not be forced to record every program that they watch or listen to in order to submit a complaint to the FCC alleging indecent content. It is an outrage that the FCC continues its practice of dismissing consumer complaints for lack of a tape or transcript.

I agree with the gentleman from Illinois (Mr. Rush).

The committee will closely monitor the FCC's action to ensure that the FCC actually changes their policy in that regard, and I thank the gentleman for bringing this to our attention; and I look forward to working with him on this issue to make sure that that change, in fact, is made in order.

Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Gingrey).

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

Mr. Chairman, I yield 2 minutes to the gentleman from Virginia (Mr. Forbes), a cosponsor of the legislation.

Mr. Chairman, I yield 2 minutes to the gentleman from the good State of California (Mr. Ose).

Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Smith), an original cosponsor of the legislation.

Mr. Chairman, I yield 2 minutes to the gentleman from Nebraska (Mr. Osborne), not only an original cosponsor of this legislation, but also one that came, before the Super Bowl, who sat through our first hearing, way back in January, to sit with the audience.

Mr. Chairman, I yield 2\1/2\ minutes to the gentlewoman from New Mexico (Mrs. Wilson), another original cosponsor of the legislation.

Mr. Chairman, I yield 2 minutes to the gentleman from Mississippi (Mr. Pickering), an original cosponsor of the bill and, more importantly, a fellow dad.

Mr. Chairman, I yield 2 minutes to the gentleman from Virginia (Mr. Goodlatte).

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

Mr. Chairman, I yield 1 minute to the gentleman from Indiana (Mr. Pence), a cosponsor of the legislation.

Mr. Chairman, I yield 2 minutes to the gentleman from California (Mr. Cox), an original cosponsor of the legislation.

Mr. Chairman, I yield 1 minute to the gentleman from Ohio (Mr. Gillmor), again, an original cosponsor of the legislation.

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, I spoke last night with our former chairman, the gentleman from Louisiana (Mr. Tauzin). He wishes that he was going to be here today, but he is preparing himself for cancer surgery next week. But I know that he would very much like to cast votes on every one of the recorded votes that we have the balance of the afternoon.

I want to remind my colleagues that we do not change the standards. That is not what this bill does. It strictly enforces the standards that are already on the books.

I told this story in my first hearing back in January before the Super Bowl. My staff prepared this broadcast indecency briefing materials book for me. Inside this book are the transcripts of broadcasters that have been fined for broadcasting indecent material. The material that is in this book was all on radio, it was not on TV. But what alarmed me more than anything else was the series of repeat offenders, whether they be in Detroit, Chicago, Washington or Los Angeles, and all broadcast on the public airwaves.

When I read through this book, I was embarrassed. I was embarrassed for the fellow that was sitting next to me on the airplane, because I had to read it like this. I had to shield the material in this book, the transcripts, that were fined thousands of dollars.

I made a mistake that day, Mr. Chairman. I read through the book, it was a long flight, we had terrible weather. In fact, frankly that day when we landed back at DCA, I thought we had gone back to Detroit, there was such bad weather here.

I looked through a lot of material, and I left it by mistake in the pocket in the seat that was in front of me. I walked off the plane, went back through the security, and got all the way to my car when I realized this book was still on the plane. Now, with the new security arrangements, I could not go back to the plane to get this book.

It has got my name on it, ``Chairman Upton, broadcast indecency briefing materials.'' Man, was I embarrassed, to go back into the Northwest Airline ticket line and ask someone to go retrieve that book. And, yes, they had found it. They saw my name, and they were very chagrined to get it back to me. But, thank goodness, I did get it back, and I do not think anybody read some of the material. But it is public record, and this stuff, this XXX smut stuff, should never be broadcast on the public airwaves.

I was asked the question by the press when we introduced our bill several weeks ago, ``Do you think, Mr. Upton, that your legislation is going to take this stuff down, that it will increase somehow the FCC's enforcement division?''

I thought about it, and I said, ``You know, I hope not. I hope that this legislation will send a message to the broadcasters and to the talent that is making these indecent remarks,'' and more than just a word, if you come over here and read these transcripts, it is more than a word, it is page, after page, after page, ``that we can get this stuff stopped with this legislation.''

I welcome the opportunity to work with my friend, the gentleman from Massachusetts (Mr. Markey). Together, we fashioned a very bipartisan bill every step of the way, from the calling of the witnesses to the questioning to the amendments, every step of the way, and I am pleased that the other body is working on that same procedure, where, again, they voted 34 to 0 earlier this week to pass similar legislation.

Our bill that passed 49 to 1 is a credit to this institution and to the Members on both sides who care about the public airwaves, to make sure that this stuff is not broadcast, and we send a message, whether it be to the shock jock or the DJ or the person with the finger on the pause button at one of those awards, whether it be the Academy Awards, Golden Globes or whatever else, we are going to make an impact,

and we are going to let our families know that this stuff has got to stop.

This bill does it. It is not an infringement of first amendment rights. It has all been certified, made legitimate from the courts of the land, from the highest court of the land down to the lowest court, and needs a positive vote here this afternoon.

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

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield 3 minutes to the gentleman from Missouri (Mr. Blunt), the distinguished whip of the House, an original cosponsor of our legislation, and once a proud member of our proud subcommittee.

Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, obviously I rise in strong support of the Upton amendment. This amendment ensures that

those who are the subject of indecency complaints are provided with a constitutional right to due process. For instance, until a forfeiture penalty has been paid or a court has finally determined that a forfeiture penalty is justified, a complaint should not be held against the broadcast station license.

Just like someone who is presumed innocent until proven guilty, this amendment guarantees that a broadcast license cannot be revoked or license renewal rejected until all of the appeals have been heard. This is a good amendment, it was pointed out in our hearing at the very end, and I would hope has bipartisan support. It tightens the loophole.

I just want to say in closing in support of this amendment, I want to thank in particular, I think, the many Members who have been so engaged in this legislation, and I want to thank the staff as well. On our side of the aisle, we have had terrific staff that have worked with the very good staff, terrific staff on the other side as well; but I want to particularly cite a number of individuals: Will Nordwind, Howard Waltzman, Neil Fried, Kelly Zerzan, Joan Hillebrands, Sean Bonyur, Jim Barnette, Jaylyn Connaughton, and Andy Black for their hard work in making sure that this bill got to the floor quickly and swiftly, and that, in fact, it was in a very strong bipartisan fashion.

Mr. Chairman, I reserve the balance of my time.

Mr. Speaker, I demand a recorded vote.

Mr. Chairman, I rise today in strong support of H.R. 522, the Federal Deposit Insurance Reform Act of 2003. Our country has the largest, most complex, most stable banking system in the world. Deposit insurance is one of the major reasons for this stability. And today we will strengthen this system so that it continues to serve as a model for the rest of the world.

Depositors, taxpayers, and depository institutions would be well- served by this legislation which will modernize the Federal deposit insurance system. Federal deposit insurance was created by the Congress in 1934 and it has successfully served the American people for almost 70 years. Public confidence has been maintained, and the stability of the Nation's banking system has been preserved during periods of financial uncertainty.

The deposit insurance system has been significantly modified only twice since 1934, both times in response to the savings and loan crisis of the late 1980s and 1990s. During this crisis the

Federal Government resolved 2,363 failures of insured institutions involving more than $700 billion in assets. As FDIC Chairman Powell has stated, ``There were no bank runs, no panics, no disruptions to financial markets, and no debilitating impact on overall economic activity.''

The existence of the Federal deposit insurance was a critical factor in maintaining public confidence in the banking system during these troubled times. H.R. 522, though technical in nature, seeks to apply the experience of the last decade to today's banking marketplace. It is the 21st century legislation for a 21st century banking industry, and this is it. And while the purpose of deposit insurance remains the same, industry growth, bank expansion from new powers, and the integration of banking and securities activities require that the scope and coverage of deposit insurance evolve so as to reflect the realities of a modern financial services industry. Moreover, the presence of Federal deposit insurance continues to be a key consideration for consumers in their decisions about where they do their banking and what level of deposit risk they are willing to assume.

Mr. Chairman, there is broad consensus in this body, the Bush administration, the Federal banking and thrift regulators, and business and consumer groups in favor of improving and strengthening the deposit insurance system and making it more responsive to the cyclical nature of banking activities and the post-Gramm-Leach-Bliley financial and economic environment. This legislation fulfills our commitment to the American public. Indeed, H.R. 522 was reported out of committee on a voice vote, a testimony to its responsiveness and timeliness. Substantially similar legislation passed this body just last year with over 400 votes.

This legislation is based on the recognition that depositors, savers, and investors have integrated financial needs and that the deposit insurance system must be stronger, more flexible, and adaptable to changing depositor behaviors in real times. The bill provides the FDIC with the necessary supervisory tools to manage the deposit insurance fund in a way that balances all affected interests and allocates the benefits and costs of the system evenly and fairly.

I want to thank the chairman of the Subcommittee on Financial Institutions and Consumer Credit, the gentleman from Alabama (Mr. Bachus) for taking on this challenging, highly technical legislative process and for engaging all the major stakeholders in developing a bipartisan piece of well-balanced, highly effective legislation.

I also want to thank all of the bipartisan co-sponsors of this important legislation, particularly our distinguished ranking member, the gentleman from Massachusetts (Mr. Frank), for their good work in this effort. I strongly urge all of my colleagues to support this legislation, and by doing so we ensure the public continues to maintain its confidence in the U.S. financial services industry, by far the most stable in the world.

Mr. Chairman, in scoring last year's deposit insurance reform legislation, the CBO concluded that the bill would decrease net Federal spending by $700 million. This year, presented with a substantially similar piece of legislation reforming the deposit insurance system, the CBO applied a different set of assumptions in performing its analysis of H.R. 522, and concluded that this year's bill would increase net Federal spending by some $1.9 billion.

This large swing between last year's estimate and this year's is attributable in large measure to a change in CBO's calculation of how much premiums the FDIC will be able to collect from insured depository institutions under the two bills. In making this calculation, CBO acknowledged the speculative nature of its analysis, stating that ``it is possible that the FDIC could use its broad discretion [under the legislation] differently than we have assumed and that could result in either fewer or greater premium collections than CBO has estimated.''

The CBO's analysis is grounded in an arbitrary assumption that the FDIC Board will choose not to exercise its authority in a revenue neutral way. This assumption is directly contrary to the consistent congressional testimony of the FDIC that a central goal of deposit insurance reform is revenue neutrality.

In fact, in a letter that the Committee received on March 31, 2003, from the Chairman of the FDIC, the Honorable Don Powell, Chairman Powell stated the FDIC's position that H.R. 522 gives the agency ``appropriate tools and incentives to manage the deposit insurance system such that it will not result in increased net government spending.''

Chairman Powell's letter, which conclusively rebuts the notion that H.R. 522 will have an adverse affect on Federal spending, goes on to state:

H.R. 522 provides the FDIC with the tools to achieve

revenue neutrality in the management of the deposit insurance

system. Because any analysis that determines H.R. 522 will

result in an increase in net government spending must

necessarily rely on assumptions regarding how the FDIC Board

will exercise the discretion provided in the legislation, I

can assure Congress that the leadership of the FDIC has no

intention of managing the deposit insurance system in a way

that increases the costs to the government or increases the

burden on insured institutions. The costs of the deposit

insurance system will continue to be borne by the banking

industry, but in a manner that establishes a strong risk-

based premium system and avoids the procyclical risks

inherent in current law.

The Committee shares the view of the FDIC, the agency that has had responsibility for administering the deposit insurance program since its inception more than 70 years ago, and believes that the CBO analysis of the potential budgetary impact of H.R. 522 is fundamentally flawed.

For the Record, I am including a copy of the CBO estimate and the FDIC's response.

U.S. Congress,

Congressional Budget Office,

Washington, DC, March 28, 2003.

Hon. Michael G. Oxley,

Chairman Committee on Financial Services, House of

Representatives, Washington, DC.

Dear Mr. Chairman: The Congressional Budget Office has

prepared the enclosed cost estimate for H.R. 522, the Federal

Deposit Insurance Reform Act of 2003.

If you wish further details on this estimate, we will be

pleased to provide them. The CBO staff contacts are Mark

Hadley and Ken Johnson (for federal costs), and Judith Ruud

(for the private-sector impact).

Sincerely,

Barry B. Anderson

for Douglas Holtz-Eakin, Director.

Enclosure.

H.R. 522--Federal Deposit Insurance Reform Act of 2003

Summary: H.R. 522 would amend provisions of banking and

credit union law to reform the deposit insurance system.

Specifically, the bill would increase insurance coverage for

insured accounts from $100,000 per account to $130,000 for

most accounts (with higher levels of coverage for retirement

accounts and municipal deposits). Over time, the coverage

limit for insured deposits would increase to account for

inflation. Those provisions of the bill would affect deposits

held by banks and thrifts, which are insured by the Federal

Deposit Insurance Corporation (FDIC), as well as those held

by credit unions, which are insured by the National Credit

Union Administration (NCUA). In addition, the bill would

merge the Bank Insurance Fund (BIF) and the Savings

Association Insurance Fund (SAIF) to create a new Deposit

Insurance Fund (DIF) to pay the claims of depositors of

failed banks and thrifts. Finally, H.R. 522 would amend the

conditions under which banks and thrifts would pay insurance

premiums to the FDIC, which administers the funds.

CBO estimates that H.R. 522 would increase the net cost of

resolving failed financial institutions by $2.1 billion over

the next 10 years. Under the bill, the FDIC and NCUA would

offset some of that cost through increased insurance premiums

paid by financial institutions. Because H.R. 522 would allow

institutions to pay FDIC premiums with credits in lieu of

cash, the additional cost of resolving failed financial

institutions under the bill would exceed the cash receipts

from additional premiums. Consequently, we estimate that the

FDIC would bear nearly all of the increased costs of

resolving failed institutions during the next five years,

when most of the credits would be used. As a result, CBO

estimates that a would increase net direct spending by $1.9

billion over the 2004-2013 period.

H.R. 522 contains an intergovernmental mandate as defined

in the Unfunded Mandates Reform Act (UMRA). CBO estimates

that the mandate would impose no costs on state, local, or

tribal governments and, therefore, that it costs would not

exceed the threshold established in UMRA ($59 million 2003,

adjusted annually for inflation).

The bill contains private-sector mandates as defined by

UMRA, primarily because it would necessitate the payment of

increased deposit insurance premiums. CBO estimates that the

direct cost of those mandates would be below the annual

threshold specified in UMRA ($117 million in 2003, adjusted

annually for inflation) during the first five years after

enactment because the bill would provide credits to certain

institutions that would largely offset their insurance

premium assessments over the 2004-2008 period. We do not have

sufficient information to provide a precise estimate of the

aggregate cost of all the mandates in the bill.

Estimated cost to the Federal Government: The estimated

budgetary impact of H.R. 522 is shown in the following table.

The costs of this legislation fall within budget function 370

(commerce and housing credit).

--------------------------------------------------------------------------------------------------------------------------------------------------------

By fiscal year, in billions of dollars--

Mr. Chairman, I yield myself 7 minutes.

Mr. Chairman, I rise in support of this legislation. This is a bipartisan bill that the Subcommittee on Telecommunications and the Internet, led by the gentleman from Michigan (Chairman Upton) and the Chairman of the full committee, the gentleman from Texas (Mr. Barton), have put together, working in conjunction with the gentleman from Michigan (Mr. Dingell) and myself and the other members of the minority on the Committee on Energy and Commerce, working in a bipartisan fashion, in order to craft a bill related to the broadcast radio and television obscenity and decency and profanity issues.

Mr. Chairman, at the outset, I would like to note that this legislation was introduced before the Super Bowl this year, not after. It was an issue that had already percolated up to the attention of the American public and to our subcommittee, and we had already decided that extra attention needed to be paid to the Federal Communications Commission and its lack of enforcement of these very important provisions.

The Subcommittee on Telecommunications and the Internet held three hearings on this issue, and from our hearings we confirmed a number of things. We have learned that although the Federal Communications Commission is charged with ensuring that licensees serve the public interest and that the stations do not air obscene, indecent or profane content in violation of the law and Commission rules, that until very recently, the Commission has not been an aggressive enforcer of the rules. Testimony from Federal Communications Commission

Chairman Michael Powell indicates that cases are still languishing from 2 to 3 years ago.

We also learned that although the Federal Communications Commission has numerous enforcement tools, including the ability to revoke a station license, it appears as though the industry has largely concluded that the Federal Communications Commission is a paper tiger. The rare and paltry fines the Commission assesses have become nothing more than a joke within the broadcast industry, and the Commission never raises license revocation as a consequence for repeated indecency violations, even in the most egregious cases of these repeat violators. This legislation will help us to address the serious enforcement shortcomings at the Federal Communications Commission that we have identified.

Finally, we have also learned that the industry needs to do a better job in educating parents about the tools that already may be in their hands that parents can utilize to address the myriad concerns they raise with us about what is on television. Parents can use the television rating system and the V-Chip, which stems from legislation which I authored as part of the Telecommunications Act of 1996.

However, we have a huge educational challenge with the TV ratings system and how parents can use it in conjunction with the V-Chip. Studies indicate that if a parent of a child 12 and under has a V-Chip- ready TV and knows this, that some 47 percent of such parents use the V-Chip, and they like it, because it allows them to program their TV set for their children 12 and under. Almost all of these parents who know about it are enthused about it. The problem is with the qualifiers. Almost half of those who have bought the approximately 100 million V-Chip capable televisions since 2000 are not aware that they possess a television set with a V-Chip in it.

In addition, many of these parents express confusion over the TV rating system itself, and one major network, NBC, still does not use the comprehensive rating system utilized by everyone else in the television industry. The industry did a good job with much fanfare after the TV rating system was initially finalized, in doing public service announcements and other educational messages regarding the ratings. Yet those efforts have waned in recent years.

In my view, we need a comprehensive, industry-wide campaign to address this issue. The TV set manufacturers and the electronic retailers need to do a better job in alerting television buyers to the V-Chip, in part because many retail employees at these stores who sell TV sets are apparently unaware that the TV sets have a V-Chip in it. In addition, print media ought to include the television ratings of programs in the television guide so that parents see them when they look up what is on television that day or that evening.

Finally, I believe the broadcast industry should renew its educational efforts on the television ratings system and also consider a number of other ideas to better assist parents, which I will address to our television networks on an ongoing basis, in order to ensure that they know that this is an issue that Americans care about.

At our recent hearings, I challenged the industry to do several things to better help parents understand the TV rating system:

First, use the V-Chip and utilize available per-channel blocking technologies on cable television.

I requested that the television industry increase its public service advertisements about the television rating system and the V-Chip. I am happy to report that many, many industry participants on the networks and cable operators have agreed to do so, with some, such as Fox Television, including print advertising in their campaign as well.

I will come back in a while and outline what is happening in the rest of the television and cable industry, but I think it is important for the Congress to pass this legislation, and then to keep up the pressure so that parents are given the tools that they need in order to protect the sights and the sounds which their children are exposed to.

Mr. Chairman, I yield 5 minutes to the gentleman from Texas (Mr. Green).

Mr. Chairman, I yield 3 minutes to the gentleman from Maryland (Mr. Wynn), who added two very important amendments to this legislation.

Mr. Chairman, I yield 4 minutes to the gentlewoman from Los Angeles, California (Ms. Watson).

Mr. Chairman, I yield 6 minutes to the gentleman from Chicago, Illinois (Mr. Rush).

Mr. Chairman, I yield myself 3 minutes.

I just wanted to point out that I have requested that the television industry increase its public service advertisements about the television rating system, and I am happy to report that many in the industry have agreed to provide much more public education about this technology in TV sets so it is easier for parents to be able to figure out how to program it and to provide just the level of protection which they want for the children in their home, at whatever particular age they may be.

I also challenged the television networks to consider a couple of suggestions with respect to the broadcast of the ratings icon on the screen. I requested that the TV ratings icon appear not only at the top of a show but also after commercial breaks when the show resumes. That is because a lot of times people turn on the show after it has already started and they have no idea what the rating is. So I have asked them to actually put on the rating at each commercial break as well so that parents can see what the level of the rating is and make an adjustment for their own particular families.

I also requested that the networks add a voice-over when the ratings appear to also better alert parents. The ABC television network readily agreed to both suggestions, as did Bud Paxon on behalf of his PAX network. The other three major networks, Fox, NBC and CBS, have indicated that they are considering it but have not yet committed to doing so. I hope that they join ABC in doing it because I think it is helpful, quite frankly, to give parents this kind of additional information.

It does not detract from any network's ability to be able to put any programming on that they want. It just gives parents the information they need in order to shield their children from material which they believe may be inappropriate.

I also challenged the cable industry, in addition to increasing their public service advertisements, to increase consumer awareness of the provisions of the 1992 Cable Act that permits any cable subscriber in America to request that the cable company block any one of the cable programs that they believe is inappropriate for their family. It is a right that every American has in terms of their relationship with their cable company, but no more than 1 percent of all Americans even know they have the right to have any one of these individual cable channels blocked from coming into their home, even if they have bought the whole other part of the cable package.

I believe that if the cable industry made it clear in their bills, the information they give to consumers, that millions of American families would be much happier if they could take the whole cable package and then delete a couple of channels that they believe were too offensive for their young children and their family. I think it can be a real step forward, and I have received some very encouraging information from some of these cable networks that they will provide that option.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield 4 minutes to the gentleman from Michigan (Mr. Dingell), who is the ranking member of the full committee.

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

Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from North Carolina (Mr. Price).

(Mr. PRICE of North Carolina asked and was given permission to revise and extend his remarks.)

Mr. Chairman, could the Chair tell me how much time is remaining on either side?

Mr. Chairman, I yield 2 minutes to the gentleman from Wisconsin (Mr. Obey).

Mr. Chairman, I yield 2 minutes to the gentleman from New York (Mr. Hinchey).

Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from New York (Mr. Ackerman).

Mr. Chairman, I yield 3 minutes to the gentleman from New York (Mr. Serrano).

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

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

Mr. Chairman, if there is no one seeking recognition in opposition, I ask unanimous consent to control the time in opposition, even though I support the amendment.

Mr. Chairman, I yield myself 1 minute.

I would like to say that this is a good amendment. It has been crafted on a bipartisan basis. We have worked very closely together, Democrat and Republican, on this issue right from the beginning; and this amendment reflects that continuing level of cooperation. I just want any of the Members who are listening to this debate to understand that that consensus has been reached.

Mr. Chairman, I have no other Members seeking recognition, and I yield back the balance of my time.