Providing for consideration of the bill (H.R. 1375) to provide regulatory relief and improve productivity for insured depository institutions, and for other purposes.

Mr. Chairman, I thank the gentleman for yielding me this time, and I rise today to bring some more facts to the debate over industrial loan companies.

ILCs are well regulated, both at the State and Federal levels. They have played an important part in our country's financial system for over 100 years. I have a letter from the chairman, Donald Powell, of the Federal Deposit Insurance Corporation, and I will provide it for the Record, but I also thought I would just read some of the observations that Chairman Powell makes about ILCs.

Chairman Powell says that industrial loan companies and industrial banks have existed since the early 1900s, and overall it is the FDIC's view that ILC charters pose no greater safety and soundness risk than other charter types. As with any other insured institution, ILCs are subject to examinations and other supervisory activities. The FDIC's authority to pursue formal or informal enforcement actions against an ILC is the same as the FDIC authority with respect to any other State nonmember bank, with limited exceptions. In short, the FDIC does not believe that there are any compelling safety and soundness reasons to impose constraints on this charter type that are not imposed on other charter types.

Chairman Powell of the FDIC goes on to say that the FDIC and the State chartering authorities directly supervise insured ILCs, which must comply with the FDIC's rules and regulations, including those requirements for capital standards, safe and sound operations, and consumer compliance and community reinvestment. Further, as he says, the FDIC has the authority to examine any affiliate of an ILC, including its parent company, as may be necessary, to determine the relationship between the ILC and the affiliate, and to determine the effect of such relationship on the ILC.

I thought I would bring those facts to light. I know that some competitors of ILCs worry because they do not want more competition in the banking marketplace, but we all know that competition is good for consumers, it is good for businesses, and it is good for our economy as a whole. And since I have heard other companies make the argument that ILCs are not safe and sound, I wanted to respond by saying that ILCs are heavily regulated financial institutions, ILCs are regulated by the FDIC and by State banking regulators in every State in which they operate, and I think we should judge ILCs on the facts.

To that end, Mr. Chairman, I submit the letter of Chairman Donald Powell for the Record herewith:

Federal Deposit

Insurance Corporation,

Washington, DC, April 30, 2003.

Hon. Edward R. Royce,

House of Representatives,

Washington, DC.

Dear Congressman Royce: Thank you for your recent letter

concerning industrial loan companies. We are closely

monitoring the recent attention that industrial loan

companies are receiving and appreciate your questions.

Industrial loan companies and industrial banks

(collectively, ILCs) have existed since the early 1900s.

States with existing insured ILCs include California,

Colorado, Indiana, Minnesota, Nevada, and Utah. There are 51

insured ILCs, with the vast majority operated from Utah (24)

and California (17). The charters are unique in that, as long

as they meet certain criteria (typically, not accepting

demand deposits), they are not considered ``banks'' under the

Bank Holding Company Act. As a result, an ILC's parent

company is not subject to supervision by the Federal Reserve.

Just as is true of unitary thrift holding companies and

parent companies of limited-purpose credit card banks,

the parent companies of ILCs include a diverse group of

financial and commercial firms.

Overall, it is the FDIC's view that ILC charters pose no

greater safety and soundness risk than other charter types.

As with any other insured institution, ILCs are subject to

examinations and other supervisory activities. The FDIC's

authority to pursue formal or informal enforcement actions

against an ILC is the same as the FDIC's authority with

respect to any other state nonmember bank, with limited

exceptions. Those exceptions pertain to cross-guaranty

authority and golden parachute payments, and legislative

changes to eliminate those exceptions are being pursued in

H.R. 1375, the proposed Financial Services Regulatory Relief

Act of 2003. In short, the FDIC does not believe there are

compelling safety and soundness reasons to impose constraints

on this charter type that are not imposed on other charter

types.

The risk posed by any insured depository institution

depends on the appropriateness of the business plan and

model, management's competency in administering the

institution's affairs, and the quality and implementation of

risk management programs. Similar to institutions with other

charter types, an ILC's capital adequacy and overall safety

and soundness is driven by the composition and stability of

its lending, investing and funding activities and the

competence of management.

The FDIC and the state chartering authorities directly

supervise insured ILCs, which must comply with the FDIC's

Rules and Regulations, including, but not limited to, those

requirements for capital standards, safe and sound

operations, and consumer compliance and community

reinvestment. ILCs also are subject to Sections 23A and 23B

of the Federal Reserve Act, which restrict or limit

transactions with a bank's affiliates and the Federal Reserve

Board's Regulation O, which governs credit to insiders and

their related interests. Further, the FDIC has the authority

to examine any affiliate of an ILC, including its parent

company, as may be necessary to determine the relationship

between the ILC and the affiliate and to determine the effect

of such relationship on the ILC.

Answers to your specific questions are enclosed. If you

would like additional information, please do not hesitate to

contact me or Alice Goodman, Director of our Office of

Legislative Affairs, at (202) 898-8730.

Sincerely,

Donald E. Powell,

Chairman.

Enclosure.

Response of the Federal Deposit Insurance Corporation's Division of Supervision and Consumer Protection to Questions Concerning Industrial

Loan Companies

In what banking activities are these institutions engaged? Do

they have the authority to provide services that may not

be offered by full-service commercial banks?

Generally, the authority of industrial loan companies and

industrial banks (collectively, ILCs) to engage in activities

is determined by the laws of the chartering state. The

authority granted to an ILC may vary from one state to

another and may be different from the authority granted to

commercial banks. Except for offering demand deposits, an ILC

generally may engage in all types of consumer and commercial

lending activities and all other banking activities

permissible for banks in general.

Core ILC functions are traditional financial activities

that can generally be engaged in by institutions of all

charter types. The exception would be institutions organized

and chartered as limited-purpose institutions, which

generally focus on credit card or trust activities.

Existing ILCs can generally be grouped according to one of

four broadly defined business models:

Institutions that are operated as community-focused

institutions, including stand-alone institutions and those

serving a community niche within a larger organization. These

institutions often provide credit to consumers and small- to

medium-sized businesses. In addition to retail deposits (many

ILCs offer NOW accounts), funding sources may include

commercial and wholesale deposits, as well as borrowings.

Institutions that operate within a larger corporate

organization may also obtain funding through the parent

organization.

Independent institutions that focus on specialty lending

programs, including leasing, factoring, and real estate

activities. Funding sources for this relatively small number

of institutions may include retail and commercial deposits,

wholesale deposits, and borrowings.

Institutions that are embedded in organizations whose

activities are predominantly financial in nature, or within

the financial services units of larger corporate

organizations. These institutions may serve a particular

lending, funding, or processing function within the

organization. Lending strategies can carry greatly, but,

within a specific institutions, are often focused on a

limited range of products, such as credit cards, real estate

mortgages, or commercial loans. Corporate strategies play a

larger role in determing funding strategies in these cases,

with some institutions periodically selling some or all

outstanding loans to the parent organization. Parent

assessments of funding options across all business units

frequently determine the specific tactics at the ILC level. A

few institutions restrict themselves to facilitating

corporate access to the payment system or supporting cash

management functions, such as administering escrowed funds.

Institutions that directly support the parent

organizations' distinctly commercial activities. These

institutions largely finance retail purchases of parent

company products, ranging from general merchandise to

automobiles, truck stop activities, fuel for rental car

operations, and heating and air conditioning installations.

Loan products might include credit cards, lines of credit,

and term loans. Funding is generally limited to wholesale or

money center operations, borrowings, or other options from

within the parent organization.

From a federal law perspective, one of the primary

differences between an ILC charter and other depository

institution charters is that certain ILCs have a

grandfathered exemption from the requirements and

restrictions of the Bank Holding Company Act (BHCA).

Generally, an LIC can maintain its exemption so long as it

meets at least one of the following conditions: (1) the

institution does not accept demand deposits, (2) the

institution's total assets are less than $100,000,000, or (3)

control of the institution has not been acquired by any

company after August 10, 1987.

How does the FDIC go about regulating ILCs? What authority

does the FDIC have to examine ILC parent companies? Does

the FDIC feel it has the tools necessary to adequately

and comprehensively regulate ILCs and their relationship

to their owners?

The FDIC regulates ILCs in the same manner as other state

nonmember institutions. ILCs are subject to the FDIC's safety

and soundness regulations (with two exceptions discussed

below), as well as federal consumer protection regulations.

Like all insured depository institutions, ILCs receive

regular examinations, during which compliance with the

regulations is reviewed and overall performance and condition

are analyzed. For FDIC-insured, state-chartered institutions

that are not members of the Federal Reserve System, the FDIC

and/or the state authority will conduct the examination. The

FDIC has agreements with most states to conduct examinations

under alternating schedules, although in the case of a

troubled institution, the FDIC and the estate authority

generally conduct joint or concurrent examinations.

Transactions with affiliates are reviewed during each

examination. An ILC's transactions with its affiliates are

restricted by Sections 23A and 23B of the Federal Reserve

Act, which are made applicable to state nonmember banks in

general by section 18(j) of the FDI Act, 12 U.S.C.

Sec. 1828(j). Section 23A essentially limits the total amount

of loans to affiliates and limits other transactions between

a bank and its affiliates. These restrictions also apply to

loans to third parties to pay debts to or purchase goods and

services from an affiliate. Section 23B generally prohibits

any transaction with an affiliate on terms or conditions less

favorable to the bank than a transaction with an unrelated

third party.

While the FDIC does not have statutory authority to

supervise the parent companies of ILCs, the FDIC does have

the authority, in examining any insured depository

institution, to examine any affiliate of the institution

(under 12 U.S.C. Sec. 1820(b)(4)), including its parent

company, as may be necessary to determine the relationship

between the institution and the affiliate and to determine

the effect of such relationship on the institution. In the

case of a parent subject to the reporting requirements of

another regulatory body covered under the Gramm-Leach-

Bliley Act of 1999, such as the Securities and Exchange

Commission or a state insurance commissioner, the FDIC has

agreements in place to share information with the

functional regulator.

In determining whether to grant deposit insurance to an

ILC, the FDIC must consider the same statutory factors of

section 6 of the FDI Act, 12 U.S.C. Sec. 1816, that it

considers for all other applications for deposit insurance.

These factors are:

The financial history and condition of the depository

institution;

The adequacy of its capital structure;

Its future earnings prospects;

The general character and fitness of its management;

The risk presented by such depository institution to the

deposit insurance fund;

The convenience and needs of the community to be served by

the depository institution; and

Whether its corporate powers are consistent with the

purposes of the Act.

The FDIC has determined that there are two limitations in

our authority regarding ILCs as compared to other

institutions. These two limitations would be addressed by

remedies included in the Financial Services Regulatory Relief

Act of 2003, as proposed. These are:

Amendment to clarify the FDIC's cross-guarantee authority:

As part of the Federal Financial Institutions Reform,

Recovery, and Enforcement Act of 1989 (FIRREA), Congress

established a system that generally permits the FDIC to

assess liability across commonly controlled institutions for

FDIC losses caused by the default of one of the institutions.

Currently, cross-guarantee liability is limited to insured

depository institutions that are commonly controlled as

defined in the statute. The definition of ``commonly

controlled'' limits liability to insured

depository institutions that are controlled by the same

depository institution holding company, i.e., either a bank

holding company or a savings and loan holding company. Since

the parent company of an ILC is neither a bank holding

company nor a savings and loan holding company, ILCs that are

owned by the same parent company would not be ``commonly

controlled.'' As a result, cross-guarantee liability may not

attach to ILCs that are owned by the same parent company. The

Financial Services regulatory Relief Act of 2003 contains

language that would enhance the FDIC's efforts to protect the

deposit insurance funds by establishing parity with other

charter types. This discretionary authority would extend only

against an insured depository institution under common

control with the defaulting institution.

Amendment to clarify the FDIC's Golden Parachute

authority: As part of H.R. 1375, there also is an amendment

to section 18(k) of the FDI Act, 12 U.S.C. Sec. 1828(k), to

clarify that the FDIC could prohibit or limit a nonbank

holding company's golden parachute payment or indemnification

payment. In 1990 Congress authorized the FDIC to prohibit or

limit prepayment of salaries or any liabilities or legal

expenses of an institution-affiliated party by an insured

depository institution or a depository institution holding

company. Such payments are prohibited if they are made in

contemplation of the insolvency of such institution or

holding company or if they prevent the proper application of

assets to creditors or create a preference for creditors of

the institution. Due to the existing statutory definition of

a depository institution holding company, it is not clear

that the FDIC is authorized to prohibit these types of

payments made by nonbank holding companies (such as ILC

parent companies).

What differences, if any, exist between the manner in which

the FDIC regulates industrial loan banks compared with

commercial banks?

As indicated above, the FDIC regulates ILCs in the same

manner as all other state nonmember institutions.

In your view, would ILCs pose a greater risk to the safety

and soundness of the banking system than traditional

banks if both received enhanced de novo interstate

branching authority?

We do not believe that ILCs would pose a greater risk to

the safety and soundness of the banking system than

traditional banks if both received enhanced de novo

interstate branching authority. As described above, insured

ILCs are subject to the same Federal supervisory regime that

applies to other insured institutions. ILC transactions with

their parent companies are subject to the same restrictions

that apply to transactions between other insured institutions

and their parent companies.

Can you comment generally on the capital adequacy and safety

and soundness record of the ILCs and compare these to the

performance of commercial banks?

ILCs currently have an examination rating distribution

that is similar to the insured banking universe. Similar to

institutions with other charter types, an ILC's capital

adequacy and overall safety and soundness is driven by the

composition and stability of its lending, investing and

funding activities as well as competence of management.

For troubled ILCs, several common issues have generally

been evident, each reflecting faulty strategic or tactical

decisions rather than issues of permissible activities,

commercial affiliations, or the regulatory regime over the

larger corporate organization:

Poorly conceived lending strategies, characterized by

concentrations in relatively higher-risk loan problems,

economic sectors, or borrowers, have resulted in an excessive

volume of poor quality credits.

Less than satisfactory internal processes have hampered

institutions' ability to identify and respond to changing

circumstances, including deterioration in credit quality,

which have thwarted timely corrective actions or collection

efforts.

Reliance on potentially volatile funds management

strategies, including wholesale deposit solicitations,

borrowings, and large-scale loan sales, have placed

additional strain on the institutions' earnings performance

and liquidity posture.

If any institution is identified as troubled, the FDIC

modifies its supervisory strategy. In addition, these

institutions are generally subject to formal and informal

enforcement actions. As a rule, the FDIC's supervisory

strategies and specific actions are coordinated with those

of the chartering state authority. Further, in those

situations in which the parent organization controls

multiple insured institutions, the FDIC also coordinates

with the other state authorities or primary federal

regulators to ensure that a comprehensive strategy is

implemented.

Given the concerns some observers have raised about the

ILCs' ability to affiliate with a commercial entity, it is

important to note that the current group of troubled ILCs

have problems that are not unique to the ILC charter, nor do

the troubled ILCs have a history of unusual influence from

parent companies or affiliates. As described above, the

issues facing the troubled institutions are not dissimilar to

those encountered under all charter types, including those in

a traditional bank holding company framework.

Can you describe the regulatory framework that addresses

safety and soundness concerns, or potential conflicts of

interest, that may arise from the relationship of ILCs to

their parent companies?

In general, the regulatory framework used to address safety

and soundness concerns and potential conflicts of interest

regarding an ILC and its parent is the same as that

applicable to any insured state bank. For example, with

regard to safety and soundness, section 8 of the FDI Act, 12

U.S.C. Sec. 1818, generally provides the FDIC with the

authority to (i) terminate or suspend the insurance of an ILC

for unsafe or unsound practices or unsafe or unsound

condition, and (ii) order the ILC to cease and desist from

engaging in an unsafe or unsound practice, or from the

violation of any law, rule, regulation, written condition

imposed in connection with the granting of any application,

or any written agreement with the FDIC.

We do not believe that the potential for conflicts of

interest is any greater for ILCs than for other FDIC-insured

institutions operating in a holding company structure. For

example, an ILC and its parent company are subject to the

tying restrictions of section 106 of the Bank Holding Company

Act Amendments of 1970 to the same extent as if the ILC were

a ``bank'' and the parent company were a ``bank holding

company.'' Generally, the tying restrictions provide that a

bank may not extend credit, sell or lease property, or

furnish any service, or fix or vary the consideration for any

of the foregoing based upon any of five specific conditions.

Those conditions include, for example, that the customer

obtain some additional credit, property or service from the

holding company or an affiliate.

In order to ensure sufficient autonomy and insulation of

the bank from the parent, the state authority or the FDIC

typically imposes some or all of the following controls:

Executive ILC management is onsite at the ILC, as opposed

to the sometimes distant location of the parent and

affiliates;

The ILC Board of Directors consists of local

representatives who are capable of providing strong oversight

over the operations of the bank and establishing prudent

policies and procedures;

Lending files, credit documentation and ILC policies are

maintained at the institution and not the parent;

Lending policies and authorities are established and

enforced by the ILC;

The bank's policies, processes and activities are

consistent with regulatory laws, regulations, policy

statements and other regulatory guidance;

Definitive bank-level business plans are established and

followed by the bank;

All transactions with the parent or affiliate pass the

strictest arms-length scrutiny; and

Sufficient resources are available at the ILC to carry out

ILC activities.

With the above-noted prudential factors in place and

experienced bankers at the helm of ILCs, we have not noted

problems or issues unique to the ILC charter.

Mr. Chairman, I thank the chairman for yielding me this time.

Mr. Chairman, the financial services industry spends a great deal of time and a great deal of money every year complying with outdated and ineffective regulations. That is money that could be loaned to consumers and industries to buy new cars, new homes, new factories, new businesses, and that is what this bill is all about. It is also, as the chairman correctly said, delivering on a promise that this Congress made these same institutions, when we imposed title III of the PATRIOT Act, and also the Sarbanes-Oxley accountability measures. We told them that we would come and follow that with legislation to compensate them for that cost.

And in that regard, as the chairman so well put, I want to commend the financial institutions in this country for helping starve al Qaeda and other terrorist organizations. They have done an excellent job of cutting off the flow, not only to the terrorist organizations but also to narcotics traffickers and other criminal organizations, which is another benefit of these new money laundering legislations that this Congress put on the financial institutions. So it has had a very positive effect even on some areas that we might not have anticipated.

Secondly, I would like to commend the ranking member, the gentleman from Massachusetts (Mr. Frank). I would like to commend him for working closely on this legislation. We talk about bipartisanship in this body. This committee, under the chairman, the gentleman from Ohio (Mr. Oxley) and the ranking member, the gentleman from Massachusetts (Mr. Frank), has achieved on more than one occasion, on many occasions, a bipartisan spirit of cooperation which I think ought to be the model for other committees in the Congress as a whole. So I commend both these gentlemen.

I would like to commend the two sponsors of this bill, the gentlewoman from West Virginia (Mrs. Capito). She has done an excellent job. I would also like to commend the Democratic member of the committee who offered this legislation, and that is the gentleman from Arkansas (Mr. Ross).

Finally, I would like to call special attention to the legislation of the gentleman from Oklahoma (Mr. Lucas), the provisions within this legislation which will greatly improve the coordination between home and host State supervisors of State-chartered banks. When State- chartered banks branch beyond State lines, there is a great need for the bank supervisors to coordinate in the supervision. And I think this is a long overdue provision.

I would also like to commend the gentleman from Massachusetts (Mr. Frank) and the gentleman from Ohio (Mr. Gillmor) for working out, I think,

an excellent compromise on this ILC provision, their compromise, the widespread almost unanimous support of the committee. There are Members who this morning have protested it.

The gentleman from Iowa (Mr. Leach) had offered on another bill the way he wanted to address this. The committee on the bank interest bill actually rejected that idea, competing idea, by a vote of 50 to 8. So this has been an issue that has been debated on prior occasions.

Finally, I would like to say that this is a regulatory relief bill, not a regulatory burden bill. For that reason, I will be offering an amendment to take and strike section 614 which equates independent contractors who do business with the bank, whether they be attorneys, whether they be accountants, whether they be appraisers, whether they be real estate agents, all sorts of independent contractors, which equates them with having the same knowledge of banking operation as insiders. That is simply not the case. And, in fact, I believe strongly that in these cases they ought to have the right to a jury trial, to a full hearing.

But if we do not strike section 614, any accountants, any attorney, any realtor, any appraiser who does business with the bank, will be subjected to having the same knowledge as an insider. Simply not the case. I think we all agree they do not have that same knowledge. And I oppose the Weiner amendment which is a regulatory burden amendment.

Mr. Chairman, I rise in strong support of H.R. 522, the Financial Services Regulatory Relief Act of 2003.

I want to begin by thanking Chairman Oxley for the tremendous leadership he has shown in steering this complex bill through the legislative process. I also want to thank the ranking member of the committee, Mr. Frank, for his support of this important piece of legislation.

This bipartisan legislation, introduced by our colleagues on the subcommittee, Mrs. Capito and Mr. Ross, reflects a commonsense approach to easing regulatory burdens imposed on our nation's depository institutions. H.R. 1375 is largely a product of recommendations that the committee has received over the last several years from the Federal and State financial regulators.

The legislation has strong bipartisan support and was approved by the Financial Services Committee by a unanimous voice vote. It is supported by a host of interested parties, including the Financial Services Roundtable, America's Community Bankers, the National Association of Federal Credit Unions, and the Credit Union National Association.

The banking industry estimates that it spends somewhere in the neighborhood of $25 billion annually to comply with regulatory requirements imposed at the Federal and State levels. A large portion of that regulatory burden is justified by the need to ensure the safety and soundness of our banking institutions; enforce compliance with various consumer protection statutes; and combat laundering and other financial crimes.

However, not all regulatory mandates that emanate from Washington, DC, or other State capitals across the country are created equal. Some are overly burdensome, unnecessarily costly, or largely duplicative of other legal requirements. Where examples of such regulatory overkill can be identified, Congress should act to eliminate them.

The bill that Congresswoman Capito and Congressman Ross have introduced--and that I am proud to cosponsor along with Chairman Oxley--contains a broad range of constructive provisions that, taken as a whole, will allow banks and other depository institutions to devote more resources to the business of lending to consumers and less to the bureaucratic maze of compliance with outdated and unneeded regulations. Reducing the regulatory burden on financial institutions will also lower the cost of credit for consumers.

In closing, let me once again commend Mrs. Capito and Mr. Ross for this important legislative as well as the full committee chairman, Mr. Oxley. The chairman has demonstrated a strong commitment to getting regulatory relief legislation enacted this year. I look forward to working with him to help accomplish that objective.

Mr. Chairman, I offer an amendment.

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

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

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. 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.

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.

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.

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

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

Mr. Chairman, I want to express my appreciation to the chairman of the committee and the chairman of the subcommittee, because this is another example of where we have been able to work in a cooperative way. We do not agree on everything, but our method of operation allows us to refine our disagreements and to present to the House some legitimate policy disagreements, but in a form and in a context that does not interfere with our ability to go forward where there is consensus.

There will be two amendments that we will be debating. The gentleman from Alabama will offer one, which I plan to oppose, that would reject a request from the FDIC to make it easier for them to proceed against people in the banking area that they think have been negligent. The gentleman from New York (Mr. Weiner) will be offering an amendment that I think protects consumers. I feel strongly in favor of that one. Other than that, I believe we have agreement at the committee level. I want to emphasize, and I must say I am very hopeful that the Weiner amendment will be adopted, but we will have to see what happens.

I just want to reiterate my view that this reflects what I think ought to be our approach; namely, we start with respect for the market and an understanding that the free market is the best way to make our economy prosper. Particularly in the financial area that our committee has jurisdiction over, the role of the institutions as intermediaries in garnering the financial resources that are then made available to the people who do the production of goods and services, that is very important; and it is our obligation to make sure that that can be done with the maximum efficiency.

At the same time we recognize, many of us, that the market is not perfect. It does well what it is supposed to do, but there are areas of importance in our life that the market does not deal with. There are also inevitable tendencies in any institution, government, the private sector, the nonprofit sector, to do things that if there were constraints, it should not do. That does not mean that they are evil or that they are dysfunctional; it just means that human nature being what it is, no entity ought to be able to function without some restraints.

So our job is to provide for consumer protection in particular, which the market itself would not automatically do. Let me check that. In some areas I think we can rely on the market in the consumer area. There is a major merger, or a major sale in New England going on now where Fleet Boston is being bought by Bank of America. I have worked very closely with a number of entities that are advocates for low- and moderate-income people in the area of housing and in the area of small business and community development, because I do not think the market itself will take care of those. In other areas, in customer service, I think you can rely more on the market. There are competing institutions that will try to steal customers away. That is a good thing because, in the area of customer service, there will be competition. In areas where we are talking about lower-income people, competition does not do it, and we have to try to intervene.

What we need to do is to recognize the importance of regulation but, at the same time, make sure that we do not regulate unnecessarily, because there are regulatory costs. I do not object to regulatory costs if they are essential to achieving an important public purpose. Where they can be shown not to have that relationship, they ought to be removed. We ought to also try to pick among various regulatory approaches until we get the one that gives us the most benefit for the least cost. This bill is, on the whole, an effort to do that.

The chairman mentioned that in the controversial area of industrial loan corporations, we heard the forceful statements of the gentleman from Iowa who thinks that we should be more restrictive. We have Members who represent particularly States where the ILCs have played a major role, California and Utah in particular, who are represented in our committee, who think we have been too restrictive. The gentleman from Iowa (Mr. Gillmor) took the lead, and I was glad to work with him, in using a formula we had previously adopted in the Congress; namely, that to be a financial institution you should be 85 percent financial in your revenues, and we have used that as a screen for the additional entities that might be entering the ILC field. I think that is a reasonable compromise. I think that will protect the public interests, while continuing to allow consumer choice, and I congratulate the chairman and others for creating the context in which we could work that out.

I know we will be proceeding to debate on a couple of controversial issues and, as I said, I think this is a good overall bill, but Members may be waiting to see what happens on some of the amendments to make their final judgment.

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

Mr. Chairman, I yield such time as he may consume to the gentleman from New York (Mr. Meeks), a very hard working member of this committee.

Mr. Chairman, I yield 5 minutes to the gentlewoman from New York (Mrs. Maloney), a very able member of our subcommittee, the ranking member of the Subcommittee on International and Domestic Monetary Policy.

Mr. Chairman, I yield 5 minutes to the gentleman from Vermont (Mr. Sanders), a member of the committee, who is the ranking member of the subcommittee which has jurisdiction over this bill.

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

Before yielding time to one of the coauthors of the bill, the gentleman from Arkansas, who has done a lot of work on this, I did want to respond to the gentleman from Vermont.

Frankly, I was somewhat surprised to hear him raise some of those issues because he is, as I noted, the ranking member on the minority side of the subcommittee of jurisdiction; and I must say that had he raised some of them when we were considering this bill, he might not now feel they were being ignored.

One of them, of course, is not germane to this bill, the credit card question. That was debated and voted on in the committee last year, but some of the other issues he raised now, I just have to say that it is a little late to come to the floor, when the bill is already before us, and raise issues, particularly when you are the ranking member of the subcommittee and you have hearings and you have markup in subcommittee and you have markup in full committee.

In one case I would note he objected to the fact that this bill reduces the period during which the Federal Government can wait and study a merger for antitrust. Yes, I agree that that is a problem. We debated that one, in fact, in committee. It was the gentlewoman from California (Ms. Waters) who raised that; and I appreciate the fact that because she, having raised it, stuck with it, she has worked with the majority, and an amendment that will put that back up to 15 days, instead of 5, I believe, is going to be accepted.

So I would like to inform the gentleman, he has left the floor, that there was, in fact, an agreement to address one of those issues that he raised.

He also raised the question of executive compensation, and I have been working with the very good staff that we have on our side of the committee to deal particularly with the aspect of executive compensation, top-level executive compensation, that is, the perverse incentive that stock options give to the top people.

So that one I assure him is going to be dealt with. But I do not think it makes sense to deal with it only for financial institutions. I think it should be dealt with across the board.

The committee is going to remain in business, and I have to say to my now absent colleague from Vermont that, as ranking member, he is fully positioned to raise these, and many of the other members would be glad to work with him, as we were able to work with the gentlewoman from California when she took a very serious look at this and accomplished something.

Mr. Chairman, I yield such time as he may consume to the gentleman from Arkansas (Mr. Ross), who is a cosponsor of this bill.

Mr. Chairman, I have a parliamentary inquiry.

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?

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

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

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. Chairman, do I have the right to close on this amendment?

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. Chairman, in the apparent absence of anyone in opposition, I would ask for the time.

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

Mr. Chairman, this is, as I think has been made clear, a bill that has already passed the House. Clearly the former reasons for the prohibition on interest on business checking accounts no longer make sense in light of the current economy.

I appreciate the gentlewoman from New York (Mrs. Kelly) alluding to the issue of the ILCs. When we had originally dealt with this, it had been my hope as this bill went forward in the other body, the compromise we had adopted could be considered there. For a variety of reasons this did not go forward in the other body. And the rules prohibit me from commenting on whether or not anyone ought to be surprised by the absence of that progress, so I shall not.

But this, once again, we hope will go forward; because it is, I think, an important thing especially, as has been clear, for the small businesses. Interest on their checking accounts, if you are a smaller business and you have to maintain a large percentage of your funds in checking accounts for a variety of reasons, then the lack of interest could become a significant factor.

So I hope that this will ultimately pass, but I do hope that the ILC issue will get some further attention.

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

Mr. Chairman, I ask unanimous consent to reclaim my time, and I also yield 1 minute to the gentleman from Pennsylvania (Mr. Toomey).

Mr. Speaker, I thank the gentleman from Texas (Mr. Sessions) for yielding me the customary 30 minutes, and I yield myself such time as I may consume.

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

Mr. Speaker, the Committee on Financial Services and the Committee on the Judiciary referred an imperfect bill to the full House. However, in a rare bipartisan move, the chairman, the gentleman from Ohio (Mr. Oxley), the ranking member, the gentleman from Massachusetts (Mr. Frank), and the gentleman from Ohio (Mr. Gillmor) joined together to try to fix what is one of the more controversial elements of this bill. And they deserve credit for trying to work in a bipartisan way and to build consensus and to bring something to this floor that a majority of this House will be able to support.

Unfortunately, last night, the Committee on Rules failed to follow the lead set by our three distinguished colleagues. In what has become a very disturbing standard of operating procedure in the people's House, the Committee on Rules once again issued a restrictive rule. Now, this is the 12th rule considered by this body this year so far, and only one of them has been open. Mr. Speaker, a restrictive rule on a noncontroversial bill, and I think it is fair to say if the manager's amendment gets approved, this is a fairly uncontroversial bill, is simply undemocratic.

Every day, the people I talk to grow more and more outraged with the way this Republican leadership shuts down the democratic process in this House. This restrictive rule I think is also an insult to the former chairman of the Committee on Financial Services, the gentleman from Iowa (Mr. Leach), who I have great admiration for. The major controversy with the underlying bill is the regulation of industrial loan companies, or ILCs. The manager's amendment includes the compromise that I mentioned, worked out among the chairman, the ranking member (Mr. Frank), and the gentleman from Ohio (Mr. Gillmor).

The gentleman from Iowa (Mr. Leach), as he testified last night in the Committee on Rules, was not satisfied with the compromise language on ILCs. And as is his right, he came to the Committee on Rules last night to offer an amendment regulating these businesses. Now, during their testimony, I asked the chairman and I asked the ranking member if they supported the right of the gentleman from Iowa (Mr. Leach) to offer his amendment on the floor today. And while they said that they had some issues with the substance of his amendment, and they would not be able to support it, they both agreed that the former chairman of the Committee on Financial Services deserves the right to offer his amendment before the full House, an amendment that deals with a very important aspect of this bill.

Now, if the chairman of the Committee on Financial Services and if the ranking Democrat on the Committee on Financial Services do not have a problem with the offering of the gentleman's amendment, why in the world does the Committee on Rules have a problem with the gentleman from Iowa being able to offer his amendment?

The amendment that was brought before the Committee on Rules was completely in accordance with the rules of this House. There were no waivers that were required in order for it to be considered on the floor today. In fact, if

this was an open rule, he would be able to offer the amendment. There would be no problem. The gentleman from Iowa (Mr. Leach) is a distinguished Member of this House who drafted this amendment in a thoughtful way, and I believe that the former chairman of the Committee on Financial Services deserves more than he is getting here today.

There are other amendments that were brought before the Committee on Rules last night that were not made in order. In addition, the Committee on Rules set a deadline for submitting amendments to the committee of 10 a.m. yesterday morning. By the time the Committee on Rules convened to report the rule last night, the Republican leadership knew full well that only 10 amendments would be offered today. Instead of granting an open rule so that all 10 amendments could be considered under regular order, the Committee on Rules granted this rule which provides for 1 hour of general debate and 70 minutes for consideration of the amendments.

With this restrictive rule, the Republican leadership not only shuts out one of their more distinguished Members but other Members who would like to offer amendments to this bill. Again, during the hearing last night in the Committee on Rules, both the gentleman from Massachusetts (Mr. Frank) and the gentleman from Ohio (Mr. Oxley) made mention of the fact that all these amendments could be dealt with in a relatively short period of time; that there was no reason why some of these amendments needed to be shut out of the process.

For the life of me, I cannot figure out why the Committee on Rules and the Republican leadership continues to insist on shutting down democracy in this House of Representatives. Sometimes, like today, it seems as though they stifle debate just because they can. It is like a bad habit they cannot break. Mr. Speaker, the Republican leadership is addicted to their own power, and I urge them to take the first step toward recovery by admitting that they have a problem, a big problem. And it is not too late. Democrats stand ready to help you, there are thoughtful Members on the Republican side who stand ready to help you.

There is no reason why this bill needs to come to the floor today under this restrictive process. This should be an open process. This should be a relatively noncontroversial process, but you have made it more controversial than it needs to be. So I hope the Republican leadership at some time comes to their senses and does the right thing, but I am not holding my breath. But we are going to continue to insist that this process be more open and be more democratic.

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

Mr. Speaker, will the gentleman yield?

Mr. Speaker, maybe we need to go get the text of the hearing last night. I asked specifically whether or not either the gentleman from Massachusetts (Mr. Frank) or the gentleman from Ohio (Mr. Oxley) had a problem with the gentleman from Iowa (Mr. Leach) offering his amendment, and the answer was no. There was no qualification.

So that is why I asked the question. And I repeated it several times during the hearing to make the point that even though they had some problems with the substance of the gentleman's amendment, they had no problem with him offering his amendment.

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

I just want to commend the gentleman from Iowa for his comments. Again, I wish that he had the opportunity to offer his amendment because I think there were a lot of Members who share his concerns. Maybe before this debate is over with, we can get an explanation from someone on the Committee on Rules as to why his amendment which was perfectly in order, required no budgetary waivers, was not allowed here, which I think is really unfortunate. We certainly have the time to be able to debate it and every Member should have the right to vote up or down on it.

Mr. Speaker, I yield 8 minutes to the gentleman from Massachusetts (Mr. Frank), the ranking Democrat on the Committee on Financial Services who most recently David Broder in a Washington Post article referred to as one bold thinker among Democrats, one of the most effective Members of this House.

Mr. Speaker, I yield 5 minutes to the distinguished gentleman from New York (Mr. Weiner), one of the more thoughtful Members of this House and a member of the Committee on the Judiciary.

Mr. Speaker, I yield myself such time as I may consume to close for our side.

Let me just again get back to the issue of the rule. I understand that there may be occasions for rules to come before the Members of this House that are not completely open, and the majority does after all have the responsibility of making sure that this House runs, that the legislative agenda moves forward. And I would prefer that any rules that come to the floor that have any kind of restrictions in them be done in consultation with the chairman and ranking members of the appropriate committees and subcommittees.

But here we have a situation where the ranking member of the Committee on Financial Services and the chairman of the Committee on Financial Services said that they had no problems with the amendments that were being offered last night; and specifically in response to a question by me regarding the gentleman from Iowa's (Mr. Leach) amendment, they said they had absolutely no problem with his offering that amendment on the floor today. And I do not understand why the majority of the Committee on Rules decided last night to cut the gentleman from Iowa (Mr. Leach) out of the process.

There has been a very interesting dialogue between the gentleman from Iowa (Mr. Leach) and the gentleman from Massachusetts (Mr. Frank). This is obviously a very important issue. Members have strong feelings on both sides. This is the kind of amendment that we should have a debate on on the floor and Members of both sides should be able to vote up or down on. And it is not like we do not have the time. According to the schedule that the majority put out today, we are going to be out of here by three o'clock. I do not think this would take very much time.

They do not want to deal with issues of substance. We cannot deal with the extension of unemployment benefits. We cannot deal with a trade bill to stop sanctions against U.S. products. I do not know where the transportation bill is or health care bills or anything else, but we do have this bill on the floor. We do have the time. And it just seems to me to be somewhat puzzling that they could not find it within their wisdom last night as the majority to allow this amendment to come to the floor and for Members to vote up or down on it. Maybe it is just because they are in the habit of restricting things and closing things down.

But it just seems to me on a bill that is relatively noncontroversial where the chairman and the ranking member have no problem with the gentleman from Iowa (Mr. Leach) offering his amendment, I do not understand why the Committee on Rules has such a big problem. And I think it is unfortunate, and I think Democrats and Republicans need to continue to point out the unfairness of this process. We can do much better. And on bills like this, there is absolutely no reason why this should not have been a wide-open rule. We could have handled this in a reasonable period of time, and we could have respected all the Members of this House, both Republican and Democrat; and I just think it is unfortunate that this is becoming a trend in the Committee on Rules.

We only had one open rule this year, notwithstanding all the great speeches those guys give about how they are committed to openness. This is not how we should be doing this, and I apologize to the gentleman from Iowa (Mr. Leach) and others who did not have their amendments made in order last night, but I hope in the future that we do better.

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

Mr. Speaker, I am just trying to figure all of this out because, in the past, the Committee on Rules has used the excuse that Members have brought amendments up in their relevant committees of jurisdiction and they have not passed, so therefore we should make them in order. Now you are saying that because he did not, the gentleman from Iowa did not bring his amendment up in his committee of jurisdiction, that it should be made in order. So I do not understand.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 566 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), my friend, pending which I yield myself such time as I may consume. During consideration of this resolution, all time is yielded for the purposes of debate only.

The resolution before us is a structured rule providing 1 hour of general debate equally divided and controlled by the chairman and ranking minority member of the Committee on Financial Services. The rule waives all points of order against consideration of the bill. However, the only Budget Act waiver granted in this rule is for section 302(f).

It also provides that the substitute amendment provided by the Committee on Financial Services and the Committee on the Judiciary is considered as read as an original bill for the purpose of amendment.

This rule also waives all points of order against consideration of the substitute, however, the only Budget Act waiver granted in this rule is for section 302(f). It makes in order only those amendments printed in the Committee on Rules report accompanying the resolution. These amendments shall be considered as read, and may only be considered in the order printed in the report, may only be offered by the Member designated in the report, and shall be debatable for the time specified in the report equally divided and controlled by the proponent and an opponent; not to be subject to amendment and not to be subject to a demand for a division of the question in the whole House or in the Committee of the Whole.

Finally, this rule waives all points of order against the amendments printed in the report and provides one motion to recommit with or without instructions.

Mr. Speaker, today, I rise to introduce the rule for H.R. 1375, the Financial Services Regulatory Relief Act. This bill is commonsense legislation

that will diminish or eliminate outdated statutory banking provisions to reduce the regulatory compliance burden faced by our Nation's financial institutions to improve their productivity, as well as to make necessary technical correction to current statutes.

America's banking laws are full of outdated and burdensome regulations, some dating back to the Great Depression, that have long outlived their usefulness. To address the problem of outdated rules and the rapidly advancing and highly competitive financial services industry, in 2001, Committee on Financial Services chairman, the gentleman from Ohio (Mr. Oxley), asked the State and Federal regulators of our Nation's financial institutions to provide him with a list of regulations that they believed have outlived their usefulness.

The regulators answered the chairman's call, along with the rest of the financial services community, providing the chairman with a number of suggestions that, when enacted, will benefit consumers and regulators alike by lowering the cost of transacting financial services.

This wide-ranging list of proposals affecting banks, savings associations, and credit unions was first passed by the committee as H.R. 3951, but unfortunately the 107th Congress expired before it could be considered on the House floor. The bill that is being considered on the floor today is a new and updated version of that original legislation and remains true to the original vision of providing regulatory relief in financial services that the gentleman from Ohio (Mr. Oxley) and the bill's chief sponsor, the gentlewoman from West Virginia (Mrs. Capito) had when they began this process more than 3 years ago.

This legislation accomplishes a number of important things, and in the interest of time I will only mention a few. For instance, for banks, H.R. 1375 removes the prohibition on national and State banks from expanding across State lines by opening branches. It eliminates unnecessary and costly reporting requirements on banks regarding lending to bank officials; and it streamlines bank merger application regulatory requirements.

For savings associations, the bill removes lending limits on small business and auto loans, and increases the limit on their business loans. It gives these institutions parity with banks with respect to broker-dealer and investment adviser SEC registration requirements; and it gives thrifts the same authority as national and State banks to make investments primarily designated to promote community development.

For credit unions, the bill expands the investment authority of Federal credit unions. It increases the general limit on the term of Federal credit union loans from 12 to 15 years, and it eases restrictions on voluntary mergers between healthy credit unions.

Finally, for the Federal financial regulatory agencies, the bill provides agencies with the discretion to adjust the examination cycle for insured depository institutions to use agency resources in the most efficient manner. It modernizes agency recordkeeping requirements to allow the use of optically-imaged or computer-scanned images. It clarifies that agencies may suspend or prohibit individuals charged with certain crimes from participation in the affairs of any depository institution and not only institutions for which that individual is associated.

By fixing these and many other technical and outdated problems, H.R. 1375 will allow financial institutions to devote more resources to the business of lending to consumers and less to the compliance with outdated and unneeded regulations. Reducing these regulatory burdens will lower the cost of credit for consumers and help our economy to grow and to provide more jobs even more quickly.

And while there are a number of things that Congress still needs to accomplish, like creating a uniform and cutting-edge national privacy standard for consumers, this legislation is a great step in the right direction. It will make all of our country's financial institutions more efficient, while balancing the additional regulatory burden they face each day as a result of the USA PATRIOT Act, and it will help our banks, savings associations, and credit unions to focus their compliance efforts on combating money laundering and terrorist financing, not on wasteful and duplicative regulations.

I strongly support this rule and the underlying legislation, and I urge my colleagues to do so. I would like to congratulate the members of the Committee on Financial Services who have made great contributions to this bill, including the chairman, the gentleman from Ohio (Mr. Oxley), the gentlewoman from West Virginia (Mrs. Capito), the ranking member, the gentleman from Massachusetts (Mr. Frank), the gentleman from Pennsylvania (Mr. Toomey), and the gentleman from Alabama (Mr. Bachus). These are the people who have helped to bring this bill to the floor today. I am proud of what they have done.

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

Mr. Speaker, I yield myself such time as I may consume, and I would stand to be corrected, Mr. Speaker, but as I recall the testimony last night in the Committee on Rules, it was that the chairman of the Committee on Financial Services said that he had no problem making the amendment of the gentleman from Iowa in order, but would defer to the Committee on Rules to make that decision. And, in fact, we did.

I yield to the gentleman from Massachusetts.

Reclaiming my time, Mr. Speaker, I thank the gentleman for his comments, and as part of that same openness to the gentleman from Davenport, Iowa, I yield 8 minutes to the gentleman from Iowa (Mr. Leach), the former chairman of the Committee on Financial Services, or perhaps it was the Committee on Banking and Financial Services at that time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Duluth, Georgia (Mr. Linder), from the Committee on Rules.

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

Mr. Speaker, the gentleman from Massachusetts does raise many very important points including that the distinguished chairman, former chairman, of the banking committee did appear before the Committee on Rules last night. The gentleman from Iowa (Mr. Leach) is a very valuable and important and thoughtful member of our conference. The fact of the matter is the Committee on Rules has, in our own judgment, a lot of things which we consider on a regular basis, and some of those things do deal with whether a

person chose to have a vote in the committee of jurisdiction or not. The fact of the matter is that the gentleman did not request a vote in the committee of jurisdiction that he came from.

And we felt like that in the interests of us moving things on the floor, that it would be best in this circumstance to let the committee of jurisdiction speak on that matter. They chose not to; the gentleman chose not to. We do not always feel that bringing it to the floor is the correct place.

Mr. Speaker, reclaiming my time, as a matter of fact, the gentleman is correct. But there are circumstances many times related to how close a vote is, whether it is controversial; there are a number of things which identify that as what we might call or term a jump ball. It is important at various times for the Committee on Rules to look at and to weigh those things which we believe are important to the efficiency of the use of this time on the floor.

In this case, we made a determination as to what we were going to do. We have made 3 Democrat amendments in order, we have made 2 Republican amendments and a manager's amendment in order. I believe that the time which we took yesterday in the Committee on Rules was appropriately done by the young chairman of the Committee on Rules, the gentleman from California (Mr. Dreier), and I am very proud of what we have done.

Mr. Speaker, I urge my colleagues to join me in supporting this rule and the underlying legislation.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

The previous question was ordered.