To make a conforming amendment to the Federal Deposit Insurance Act with respect to examinations of certain insured depository institutions, and for other purposes.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6345) to make a conforming amendment to the Federal Deposit Insurance Act with respect to examinations of certain insured depository institutions, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 6345.

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

Mr. Speaker, I rise today in strong support of H.R. 6345 which makes a minor but important change to the Financial Services Regulatory Relief Act of 2006. The Regulatory Relief Act, a strong bipartisan bill which was recently signed into law, is a strong first step in reducing the excessive regulatory burden on America's insured financial institutions in order to benefit consumers and to benefit the overall economy. This bill, which is virtually identical to the provision included in our House regulatory relief bill, which passed with overwhelming bipartisan support and which I had the honor to coauthor, will make it even better.

H.R. 6345, which is sponsored by Subcommittee Chairman Bachus, as well as Chairman Oxley and Ranking Member Frank, gives banking regulators the discretion to grant well-managed and well-capitalized institutions with good ratings an 18-month bank examination cycle rather than a 12-month cycle.

The bill that we are considering today is consistent with the goals of the Regulatory Relief Act that again was signed recently into law. Prior to passage of the Regulatory Relief Act, well-managed, well- capitalized insured depository institutions that had less than $250 million in total assets and that had an outstanding rating qualified for an 18-month exam cycle instead of the 12-month exam cycle.

In addition, the Federal banking regulators had the discretion to grant, through regulation, eligibility for the 18-month cycle to well- capitalized and well-managed institutions with good ratings, which the regulators have indeed done. The Regulatory Relief Act of 2006 included language to extend the exam cycle from 12 to 18 months only for outstanding rated institutions with assets up to $500 million but did not make a conforming change for institutions with good ratings. H.R. 6345 simply makes that parallel change.

H.R. 6345 is commonsense legislation. Changing the current discretionary threshold from $250 million in assets to $500 million gives the regulators more flexibility to focus on troubled institutions, while still examining well-capitalized, well-managed institutions at least once every 18 months. Nonetheless, the legislation would not prevent a Federal banking agency from conducting an examination of any institution more frequently, if deemed necessary.

Mr. Speaker, at this time, I insert into the Record a December 4, 2006 letter requesting this change, signed by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and finally, the Office of Thrift Supervision.

December 4, 2006.

Hon. Richard Shelby,

Chairman, Committee on Banking, Housing And Urban Affairs

U.S. Senate, Washington, DC.

Dear Mr. Chairman: Before adjourning the 109th Congress, we

urge you to consider the attached additional regulatory

burden relief amendment that would allow the appropriate

Federal banking agency to extend, from 12 months to 18

months, the on-site examination cycle for all qualifying

highly rated banks and savings associations with total assets

of up to $500 million if the agency determined that such

action was consistent with safety and soundness.

The Financial Services Regulatory Relief Act of 2006

(``FSRRA''), Pub. L. No. 109-351, made many important changes

that relieve unnecessary burden on our nation's depository

institutions. One such amendment in Section 605 raised, from

$250 million to $500 million, the total asset threshold below

which an insured depository institution may qualify for an

18-month (rather than a 12-month) examination cycle. In order

to qualify for an extended 18-month exam cycle, a small

insured depository institution also must be well capitalized

and well managed and meet certain other supervisory

conditions set forth in section 10(d) the Federal Deposit

Insurance Act. See 12 U.S.C. Sec. 1820(d).

One of these other supervisory conditions relates to the

composite condition of the institution. Prior to FSRRA, all

insured depository institutions that had less than $250

million in total assets (the then effective total asset

limit) could qualify for an 18-month exam cycle if the

institution had received a composite rating of

``outstanding'' or ``good'' at its most recent examination.

This was because Federal law authorized the Federal banking

agencies to permit institutions with assets of up to $250

million in total assets and a ``good'' composite rating to

qualify for an 18-month exam cycle if the agencies

determined, as we did, that such action was consistent with

principles of safety and soundness. See id. at

Sec. 1820(d)(10); 63 Federal Register 16378 (April 2, 1998).

Although FSRRA raised the total asset threshold for an 18-

month exam cycle to $500 million in section 10(d)(4), the Act

did not make a corresponding change to section 10(d)(l0) to

allow an institution with between $250 million and $500

million in total assets to qualify, with agency approval, for

an extended exam cycle if the institution has a ``good''

composite rating. Accordingly, numerous well capitalized,

well managed and well run community banks and savings

associations currently are not able to benefit from the

increased regulatory flexibility granted by section 605 of

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

I want to conclude and say again, I very much thank the ranking member for coming to the floor personally to urge passage of this legislation and to also, on a personal note, congratulate him as he will soon become the chairman of our Financial Institutions Committee.

As a Republican, I did not look forward to Democrat control of this House, but if I have to be stuck with somebody, I cannot think of one I respect more than the gentleman from Massachusetts who brings unparalleled wisdom and wit to the committee. I have no doubt that the great tradition of bipartisanship that Chairman Oxley established in this committee will be further carried out under his leadership.

I yield to the gentleman from Massachusetts.

Mr. Speaker, I thank the gentleman for his gracious comments as well.

Mr. Speaker, I urge passage of the bill and yield back the balance of my time.

Mr. Speaker, I join with the gentleman from Texas in urging the House to pass this bill. It is an example, I think, of how we should be flexible in our approach to regulation. Regulation plays a very important role in a sensible, capitalist economy, but it can only play that role if it is flexible and appropriate, and overregulating does damage in ways different, but still quite tangible, than underregulating.

We are in particular here responding, our committee is, in a bipartisan way to a very important group of officials, the State bank supervisors. In fact, it was the Conference of State Bank Supervisors who most pushed for this because what they have asked us to do is to give the Federal regulators with whom they work the flexibility that most of them have on their own.

As Members know, Mr. Speaker, some banks, depending on how they are chartered, are entirely Federal in their

regulation but some are State-chartered and are regulated by both State and Federal regulators in various ways. This bill will allow better coordination between State and Federal regulators. It will give the regulators the discretion, not the mandate, to be more flexible in the timing of regulations.

It is an example of how we should make regulation appropriate, not unduly burdensome, and therefore, I am glad to join with the gentleman from Texas in urging passage of this bill.

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

Mr. Speaker, will the gentleman yield?

Mr. Speaker, that is very gracious of the gentleman from Texas. I guess I should note that this may be the first of many collaborations between myself as chairman and his role, and I congratulate him as the new chairman of the Republican Study Committee, but he is absolutely right.

The parting chairman, the gentleman from Ohio (Mr. Oxley), set a very good tone for this committee of bipartisan cooperation. As I have said often, bipartisan cooperation does not mean that legitimate differences between the parties disappear. It means that we pursue those where they exist in a civil manner so that differences there do not poison our ability to work together on areas where there is no partisan difference as this one.

The gentleman from Texas has been a part of that tradition and I look forward to working with him and the other Members in that way, and I appreciate very much his kind remarks.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 6345, which was received from the House.

Mr. President, I ask unanimous consent that the bill be read the third time and passed, the motion to reconsider be laid upon the table, and that any statements relating to this bill be printed in the Record.