Securities Law Technical Corrections Act of 2007

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6513) to amend the Federal securities laws to enhance the effectiveness of the Securities and Exchange Commission's enforcement, corporation finance, trading and markets, investment management, and examination programs, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and insert extraneous material thereon.

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

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

Mr. Speaker, I rise today in support of H.R. 6513, the Securities Act of 2008.

This commonsense legislation enjoys broad bipartisan support. H.R. 6513 will also better protect investors, promote greater confidence in our capital markets at a crucial time, as investor anxieties persist because of this ongoing financial turmoil.

Additionally, H.R. 6513 increases the effectiveness of the Securities and Exchange Commission by strengthening its enforcement authority.

The current economic woes have once again highlighted the need for the Congress to vest regulators with the authority they need to keep markets balanced and their participants honest. The Securities Act of 2008 thus provides the commission with many of the important regulatory tools that it has sought as part of its annual authorization requests in recent years.

In particular, the commission's enforcement program will benefit greatly from the provisions authorizing the nationwide service of subpoenas and the imposition of collateral bars. These provisions respectively will allow the commission to allocate its funds more efficiently and prevent bad actors from re-entering other parts of the industry.

Securities Exchange Chairman Cox has expressed a letter of his support for this legislation to implement the commission's recommendations. Chairman Cox has also commended the Financial Services Committee's bipartisan leadership in developing this bill. The North American Securities Administrators Association has also endorsed this bill by noting that now is the time to strengthen securities regulation, given what has happened on Wall Street in recent years.

In addition to updating the Federal securities laws by making numerous technical corrections, this bill improves investor protection in at least three other ways.

First, it provides greater clarity about the commission's authority to impose sanctions on and seek remedies from individuals who violated the law but who are no longer associated with a regulated entity.

Second, the bill conforms the language of the law to existing interpretations about when unlawful margin lending occurs.

Third, this bill helps investors by extending the insurance provided by the Securities Investor Protection Corporation to securities futures held within their portfolio. As a result, this bill enhances the competitiveness of the U.S. markets by advancing portfolio-based margining for the customers of broker-dealers.

Capital flows to the most efficient markets, and because most financially developed countries allow this risk-based, investor protection hedging practice, the U.S. equity markets simply must keep pace to compete in today's global economy by allowing it as well.

As per my earlier unanimous consent request, I am inserting in the Congressional Record a more detailed statement about these three important investor protection measures in order to provide greater legislative history on them.

Before closing, I should note that previously the House has unanimously passed during the 110th Congress several of the provisions contained in this larger reform package. Moreover, this bill has strong bipartisan support, and my colleagues on both sides of the aisle therefore deserve tremendous credit for working together on this legislation. In particular, the gentleman from New York (Mr. Meeks), the gentleman from Illinois (Mr. Roskam), the gentleman from Kentucky (Mr. Davis), and the gentleman from California (Mr. Campbell) have worked diligently on many of these provisions in this bill. I appreciate their prior efforts and their support as cosponsors of this larger legislative package.

The chairman, Mr. Frank, and the ranking member, Mr. Bachus, of the Financial Services Committee, in addition to my ranking member (Ms. Pryce) on the Capital Markets Subcommittee all support this bill.

Our cooperative effort on this bill illustrates that good policy can emerge from this body when ideology and partisanship yield to practicality and the common good.

I would just like to comment that that sentence represents the career, to some extent, of Ms. Pryce. Ms. Pryce is joining us on the floor today, possibly for the last time in her congressional career. She has been my chairman and my ranking member as my career through Congress has occurred. Deborah knows that when I first heard of her intentions to retire, I was greatly saddened, because this body will be losing an individual on either side of the aisle who has been most cooperative, most nonpartisan, and most productive as a legislator of anyone I can remember in my years here in this body.

I wish her well in her retirement. I know it will only be a retirement in terms of leaving the Congress, not leaving active, productive, and contributing life in another form in Ohio or somewhere else. But we will miss you on the committee, on the subcommittee, and in this Congress, Ms. Pryce.

In sum, I urge all my colleagues to vote ``yes'' on H.R. 6513.

Mr. Speaker, I rise today to express further support for the Securities Act of 2008, to explain why this legislation confirms certain existing authorities of the Securities and Exchange Commission, and to provide for the legislative history some background on the facts that informed the drafting of this bill.

In regard to section 3 on Formerly Associated Persons in H.R. 6513, many provisions of the Federal securities laws that authorize the sanctioning of a person who engages in misconduct while associated with a regulated or supervised entity explicitly provide that such

authority exists even if the person is no longer associated with that entity.

Several provisions, however, do not explicitly address this issue, although the intent of earlier Congresses appears to have been that the Securities and Exchange Commission had such authority, and no contrary statutory language or legislative history exists. In fact, the Congress has earlier amended several statutory provisions to ratify and confirm the authority of the Commission to discipline a person formerly associated with a regulated entity for conduct while an associated person, but it did not express intent to provide such authority only for those provisions being amended.

To build on these previous efforts, section 3 of H.R. 6513 amends additional provisions of the securities laws that do not explicitly address this issue. These changes confirm that the Commission may sanction or discipline persons who engage in misconduct while associated with a regulated or supervised entity, even if they are no longer associated with that entity. Accordingly, the amendments would not alter or expand the Commission's current authority. They would only ratify and confirm it.

As a general rule, it is the intent of the Congress that the securities laws, including but not limited to those provisions amended by this section, apply to and provide meaningful remedies for sanctioning persons who engage in misconduct while associated with a regulated or supervised entity, even if the person is no longer associated with that entity.

Also, the Capital Markets Efficiency Act of 1996 inter alia exempted from Federal margin requirements, adopted under section 7 of the Securities Exchange Act of 1934, credit extended, maintained, or arranged to or for a member of a national securities exchange or registered broker-dealer under certain circumstances. In the portion of section 7 that was not substantively amended by the Capital Markets Efficiency Act, the word ``and'' was inserted, which could be read to mean that margin lending would be unlawful only if both elements of the pre-existing prohibitions were violated, when prior to the Capital Markets Efficiency Act violation of either prong was sufficient to make such margin lending unlawful.

Specifically, the first prong, section 7(c)(1)(A), states that margin lending is unlawful if done in contravention of the Federal Reserve Board's rules, and the second prong, section 7(c)(1)(B), states that margin lending is unlawful without collateral or on any collateral other than securities, except in accordance with the Federal Reserve Board's rules. The proposed change would clarify that a violation of either prong remains sufficient to establish a cause of action for improper margin lending. This technical drafting amendment contained in section 7 of H.R. 6513 conforms the statutory language of section 7 of the Exchange Act to existing interpretations that provide that the two clauses represent independent requirements.

Additionally, section 8 of H.R. 6513 would amend the Securities Investor Protection Act of 1970 to extend Securities Investor Protection Corporation insurance to futures positions held in a portfolio margining account under a program approved by the Commission. In paragraph (b)(2)(B)(iii) of this section, the word ``such'' refers to those securities positions described in paragraphs (b)(2)(A) and (b)(2)(B)(ii). The purpose of paragraph (b)(2)(B)(iii) is to extend protection to any person who has a claim against the debtor arising out of sales or conversions of securities described in either paragraph. Any claims for security futures under this section are claims for cash and not for a ``security.'' In addition, ``security futures contract'' as used in this section has the same meaning as ``security future'' as defined in 15 USC 78111 (14).

With this additional legislative history in mind, I will vote for this bill. I urge my colleagues to do the same.

I reserve the balance of my time.

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

Mr. Speaker, I raise a point of order against consideration of the rule because the rule contains a waiver of all points of order against the bill and its consideration. Therefore, it is in violation of section 426 of the Congressional Budget Act.

Mr. Speaker, the Congressional Budget Office says that there are unfunded mandates in this bill, but we really don't know what's there because we got this thousand-page bill, thousand-page bill, just about 12 hours ago.

As we know, we have a House rule that says we are supposed to get a bill like this 72 hours before instead of 12. Common practice has been if you can't get 72 hours, then at least 24. We've cut that in half, just 12. And most of that was during the time when most of us were asleep. I can guarantee you that few, if any, in this body have read this bill; yet we are voting on it, a billion dollar bill that virtually nobody knows what's in it.

We do know, however, and that's the reason this point of order lies against the bill, there are unfunded mandates in the bill.

We also have rules with regard to earmarks air-dropped in a bill like this. It's not a conference report of an appropriation bill but an actual bill where they are dropped in at the last minute. The truth is, with a bill that's over a thousand pages long, we simply don't know what's in there; yet we are being told we have got to pass it, we've got to move this thing today. That's simply wrong.

I would like the assurance of those from the Rules Committee that there are no unfunded mandates in the bill or there are no earmarks that have been added to the bill.

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

Mr. Speaker, I would gladly yield to the gentleman if he will answer the question if there are any unfunded mandates in this bill in violation of the rules, had the rules not been waived, or if there are any earmarks in the bill.

Would the gentleman answer that question? Are there unfunded mandates in the bill or any earmarks in the bill?

I thank the gentleman.

Let me read from the CBO: ``These provisions also contain several private sector earmarks. CBO estimates that their aggregate costs would well exceed the annual threshold established in the Unfunded Mandates Reform Act for private sector mandates, $131 million in 2007, adjusted annually for inflation.

There is the answer to the question of unfunded mandates. They are in the bill. We're waiving those points of order so we can get around that.

I would suggest that at some point you've got to say, are we living up to the promises that were made at the beginning of the year?

Now, the majority has made a habit, and I don't blame them, of saying this is what you Republicans did while you were in the majority. That is true. Many of us stood here and raised these same points of order when our own party did it. I would love to see on the other side somebody stand up and say this is the wrong thing to do. If it was wrong when Republicans did it, it's wrong when Democrats do it.

With regard to earmarks in this legislation, nobody has been able to do anything more than a cursory read of a thousand-page bill that we got just 12 hours ago. But in the biofuels subtitle, we've found a university-based research and development competitive grant program. This grant will be for universities to conduct research and development of renewable energy technologies for ``trees dying of disease or insects infestation as a source of woody biomass.'' This grant is for universities that are near ``trees dying of disease or insect infestation as a source for woody biomass.'' That smells a lot like an earmark to me. It sounds like there is probably just one university, a particular university, or two that meet that qualification. That is certainly an earmark. And that's why these rules were waived again to get around that kind of thing.

The Democrats put in some good earmark rules at the beginning of the year, but your rules are only as good as your willingness to enforce them. And that's the problem here. We are not enforcing our own rules.

I yield to the gentleman from Florida.

I have no clue.

Thank you. I know it's a very difficult thing. That is a very large bill.

That earmark is somewhere in here. We have no idea where. My guess is there are a lot more of them.

Let me just talk about one other one. Another questionable provision that looks like an earmark to me is a provision terminating the remaining portions of the New York Liberty Zone tax incentives program. The House-passed previous version of the energy bill gave New York a tax credit of $2 billion to build a rail line from JFK to Lower Manhattan.

The bill now purports to reduce the cost of the New York tax provision to $1.1 billion, but the result is only true thanks to some very creative drafting.

In fact, passage of the bill would still let New York keep a total of $2 billion of Federal taxpayer money, with at least $900 million of that coming between the year 2018 and 2019.

Again, that creative drafting is somewhere in this document that we got last night, 12 hours ago. And we're expected to go through this and make sure that it complies with the rules. Why are we doing this? Why are we doing this when we have very specific rules?

And as I mentioned, I was the first to commend the majority for putting in some good transparency and accountability rules in January. I felt they were better than what we did last year. But your rules are only as good as your willingness to enforce them, and there seems to be no willingness here. That's the problem.

So I would be glad to hear from the other side. I will retain my time and hope to hear an explanation of whether or not there are actual earmarks in the bill or unfunded mandates.

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

Mr. Speaker, the gentlelady's comments that we have finally removed special interests from the energy field with this bill, when you have a bill like this, I guarantee you it's full of special interest provisions, many of which we haven't discovered yet.

I mentioned you have one earmark in here, a grant for universities that are near ``trees dying of disease or insect infestation as a source of woody biomass.'' I would suggest it's probably one particular university in mind, or some special interest, that an earmark will be going to. The New York Liberty Zone provision is another special interest provision.

I would also make the point that this is technically not a conference report; there wasn't a conference. This is a House amendment to a Senate amendment to H.R. 6, if I'm not mistaken. What that means is the point of order that I would have liked to have raised against the provisions that may include earmarks in the bill doesn't lie against the bill because it's not a conference report, because it's a House amendment to a Senate amendment. That's another creative way to get around the rules that the majority themselves have put in place.

If you say that there are no problems with this bill, why are we waiving all points of order against it? Of course it's to hide things in it. People should be skeptical whenever they see something a thousand pages long, a thousand pages long that nobody, not anybody on the Rules Committee, not anybody anywhere has had the opportunity to read, 12 hours, 12 hours to read that. I don't think Evelyn Wood, with a speed-reading course, or anybody could get through this. And when the majority can simply say, We're not aware of anything, I mean, you can take the Fifth, you can plead the Fifth in court, but I don't think you can do it here. I don't think that that flies, certainly not outside of the Beltway. Certainly people around here should be skeptical of a multi-billion-dollar bill with special interest provisions rife throughout it that we've had 12 hours to review before voting on.

When all the majority can tell us is, We're not aware of things in there, let me remind the majority that we had an instance earlier this year, or several instances, where the chairman of the Appropriations Committee signed off on an appropriation bill saying, There are no earmarks in this bill, which prevented us in the minority from actually lodging a point of order against the bill, after Members had already issued press releases claiming credits for their earmarks in the bill.

So clearly you can pass some good rules, which you have, but you have got to enforce those rules, and they're not being enforced here. That's why we should uphold this point of order and not move forward and proceed with this bill. You cannot put a thousand-page bill, give it to us with 12 hours to review, with problems rife throughout it, and not have problems.

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

Mr. Speaker, I would like to reclaim my time.

Let me just make one point with regard to special interests, that they have been removed from this process. Because we were trying to get copies of this legislation and couldn't yesterday, we couldn't get it from the majority, so many of the Republicans were actually getting excerpts and pieces of this legislation from firms along K Street, from the special interests themselves. They seemed to have copies before we in the majority did. There is something wrong with this process. We only get it last night from the majority, but we were getting it yesterday from special interests downtown who already had copies of it, or portions, at least.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Madam Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Hensarling).

Madam Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Gillmor).

Madam Speaker, I yield 2 minutes to the gentleman from New Jersey.

Madam Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Neugebauer).

Madam Speaker, I yield to myself such time as I may consume.

I want to take this occasion to first thank Mr. Frank and congratulate him. I think this is the first piece of legislation that he is bringing to the floor in his capacity as the new chairman of the Financial Services Committee. I congratulate you on your appointment to that important position, Mr. Frank.

Yes, I would yield.

That sounds very good to me.

I do want to thank you for this piece of legislation because I think it is both a predictor of the past in that this committee has worked in a bipartisan way to do the right thing for both the customers of financial services and for the financial services institutions. And I am very optimistic that we will continue to work together.

I am going to yield back the balance of my time. I have about a five- page statement that I will spare the body having to listen to.

I do want to say this: last year this legislation came up, a similar legislation to this, both in March and July of last year; so this is basically our third shot in less than a year. It amends the Bank Secrecy Act; it amends specifically the part of that act dealing with currency transaction reports. It does not amend the part dealing with suspicious activity reports. They will continue to report to the different law enforcement agencies. What this will affect is your drug stores, your grocery stores, your retail outlets, who every day are filing these reports.

It is estimated by the Financial Crimes Enforcement Network that the cost of these alone is 25 minutes spent filing each one of these reports. So this is going to be a tremendous burden taken away from them. The American Banking Association said that it will result in a savings of $187 million annually.

I rise in strong support of H.R. 323, The Seasoned Customer CTR Exemption Act of 2007.

H.R. 323, which I introduced with Chairman Frank, simplifies the process by which financial institutions may be exempted from filing currency transaction reports, CTRs, for seasoned customers while still ensuring valuable information is passed on to law enforcement.

Twice last year, legislation similar to H.R. 323 passed the House overwhelmingly: H.R. 5341, the Seasoned Customer CTR Exemption Act of 2006 passed the House by voice vote last July. In addition, the language was included in the House-passed version of regulatory relief legislation--H.R. 3505--which passed the House last March by a vote of 415-2.

H.R. 323 seeks to reduce regulatory burden caused by the Bank Secrecy Act. Specifically, the legislation requires regulators to promulgate new regulations and streamline the process by which financial institutions may be exempted from filing CTRs for seasoned customers. CTRs are required to be filed for cash transactions of $10,000 and above. This filing is required even in the case of seasoned customers-- long-time bank customers that routinely deal in large volumes of cash, but whose business dealings are well-enough understood to rule out the possibility of money laundering or the financing of terror.

The Financial Crimes Enforcement Network, FinCEN, which administers the Bank Secrecy Act, received over 12 million CTRs in 2005. According to a survey conducted by the Treasury Department, more than 30 percent of

these CTRs were on recurring customer transactions that were eligible for exemption for filing under existing rules.

Unfortunately, the current process by which a financial institution can exempt seasoned customers is rarely invoked because it is difficult to understand, needlessly cumbersome, and subject to redundant renewals.

The filing of these superfluous forms imposes an unnecessary cost on both the financial services industry and the law enforcement community.

With respect to the financial services industry, according to data released last year the number of CTRs filed on an annual basis now tops 13.1 million. Even FinCEN's conservative estimate of around 25 minutes per report for filing and recordkeeping indicates the banking industry as a whole devoted about 5.5 million staff hours to handling CTRs in 2005.

Based on a survey by the American Bankers Association, the industry paid around $187 million in wages for this staff time.

A typical bank with $2 billion of assets filed 1,400 CTRs in 2005. These filings took 583 staff-hours, with 438 of the staffhours simply to report on long-standing customers.

With respect to the law enforcement community, not only do these superfluous reports add nothing to its efforts, they actually make it more difficult for the law enforcement community to track suspicious activity by requiring it to wade through millions of pages of unnecessary paperwork.

The Government Accountability Office, GAO, the Internal Revenue Service, IRS, and FinCEN have all recommended that the number of CTRs be reduced by 30 to 40 percent by simply exempting large well- established customers or so-called seasoned customers.

In 1994, the GAO published a report which concluded, based upon an extensive analysis of CTRs, that the volume of reports could be substantially reduced without jeopardizing law enforcement priorities. According to that report, in 1993 the IRS, which administers the CTR program, stated that 30 to 40 percent of these reports of routine deposits by large, well-established retail businesses have no likelihood of identifying potential money laundering or other currency violations.

William Fox, who headed up FinCEN from 2003 to 2006, testified as follows before our Committee:

We know that some of the currency transaction reports filed

by financial institutions are of little relevance in the

investigation of financial crimes. We also know that

depository institutions, especially our community banks,

identify the time and expense of filing CTRs as the number

one regulatory expense. It is clear that our efforts to

encourage the exemption of routine filings on certain

customers has not brought about the reductions of filings

that were sought.

H.R. 323 will reduce the number of CTRs by clarifying the exemption process, thereby freeing financial institutions from having to file CTRs for routine cash transactions with their long- time customers, i.e. supermarkets, fast food restaurants or warehouse stores. This will enable law enforcement to target its resources on CTRs where criminal or terrorist activity is suspected. Moreover, under the legislation, banks will still be required to report suspicious transactions engaged in by exempted businesses pursuant to the Suspicious Activity Reporting regime administered by FinCEN.

Let me close by thanking Chairman Frank, Congressman Hensarling, Congressman Moore, Congressman Renzi, Congresswoman Hooley, and Congresswoman Maloney for all of their work on this legislation. Since this is the first bill that the gentleman from Massachusetts has brought to the floor in his capacity as Chairman of the Financial Services Committee, I want to congratulate him on his appointment, and tell him that I look forward to working with him to build on the record of bipartisan legislative accomplishments that our Committee has compiled over the past several Congresses.

Finally, let me also thank Former FinCEN Director Fox, who deserves a lot of credit for his work on this issue. I look forward to working with the Senate and the new FinCEN Director to ensure that this important legislation is signed into law.

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

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 846 and ask for its immediate consideration.

Mr. Speaker, this point of order is really essentially about whether or not we are going to consider the rule and, ultimately, the Energy Independence and Security Act. In fact, I would say that it may well be an effort by folks who are opposed to the legislation to find a way to kill the legislation itself. We believe that this legislation should proceed.

The fact is that the other side had absolute control in this body or had a majority in this body for 12 years, enjoyed control in both bodies and in the administration for the past 6, for most of that 6, and did not come up with an energy policy that did anything other than raise the cost of oil, home heating oil, gasoline, increase our dependence on foreign oil, weaken our national security and contribute to global warming. This legislation is about changing the direction of American energy policy, and the issues that have been raised in this legislation are ones that have been debated outside of this body for several years.

The legislation now brings to this body for its consideration such topics as increasing fuel efficiency, energy efficiency, green buildings, cellulosic agriculture-based energy efforts that will be vital to the farm sector and rural sectors of our economy.

So we believe that the House is going to have an opportunity to vote on this point of order and reach its judgment about whether it wants to proceed on the important question of changing the energy policy in this country.

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

I am not aware of any earmarks in the bill. I'm completely unaware of any earmarks in the bill. There is CBO information suggesting that the unfunded mandates, which is a separate one, is not within any of the rule provisions as it applies to the public sector, maybe as it applies to the private sector.

I am going to yield to the gentlewoman from Florida (Ms. Castor). But before I do, I would like to thank the gentleman from Arizona; I would like to thank him for the good work that he has done on earmarks that he did when he was a member of the majority and now as a member of the minority.

But I would also remind the gentleman that, in fact, under the leadership of the current Chair of the Appropriations Committee, there has been a massive change in direction on earmarks. In fact, it's been a reason why some of the budget bills took longer than last year because there has been an exhaustive effort to go through and identify anything that can be called an earmark to allow Members who wish to address it to raise their points.

What I've said to the gentleman is that we are unaware of any earmarks in this legislation. And I appreciate your late-night work at finding provisions that, as you have presented them, you're characterizing as possible earmarks. I am aware of absolutely no earmarks.

The so-called unfunded mandate, there is language in a letter, Mr. Speaker, from the CBO that suggests that there may be a slightly above the threshold under the rule, but that's a decision that this body can make and will make. It's incidental, not significant, to the overall policy.

So having said that, I yield 2 minutes to the gentlelady from Florida (Ms. Castor).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Ohio (Ms. Sutton).

Mr. Speaker, may I inquire as to how much time we have remaining on our side.

Mr. Speaker, I yield 1 minute to the gentlewoman from California (Ms. Solis).

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

I want to thank the gentleman from Arizona for his comments and his arguments here on this point of order, and also for the work that he has done.

I happen to believe that process does matter, but I also think substance matters, and they have to go together. Ideally, when we're working in a perfect world, they do. But one of the major reasons that we don't have an actual conference committee report is because our friends in the other body refused to go to conference, refused, refused to go to conference to discuss our energy future, Mr. Speaker. How is that right? Is that a proper use of process?

The reason we are here and the way that we're here is because there has been a decision made by the majority of the American people that they want a new energy policy, and the basic question for this body is whether we want to give that new energy policy or we don't.

The best process is going to get the best bill, but it takes cooperation on both sides. And if we have, in the other body, a refusal to even go into conference, it leaves leadership in this body with a single choice: do nothing and capitulate, or move ahead.

On this question of earmarks, we have given you as much assurance as we can possibly give you that there are not earmarks in here. We have the CBO letter about so-called unfunded mandates in the private sector. That's going to be a decision for the body.

I urge all Members to vote ``yes'' on this motion to consider.

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

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 323) to amend section 5313 of title 31, United States Code, to reform certain requirements for reporting cash transactions, and for other purposes.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to express themselves on this and to include therein extraneous material.

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

Madam Speaker, this is an example of sensible regulation because sensible regulation includes deregulation when that is appropriate.

The Committee on Financial Services reported this bill out last year. It passed the House. Surprisingly it managed not to make it through the Senate. The efficiency of that body failed us on this occasion apparently, but we are going to try again.

We believe in regulation, and this is an important area where we provide information to our financial detectives, and it is especially important with regard to terrorist financing.

But too much regulation can defeat the purpose for which regulation is intended, and we have a situation now where the banks are required to report every year on customers' transactions of $10,000 or more. Now, one of the things this bill would do is give the Secretary of the Treasury the authority to increase a dollar figure that has been left unadjusted for inflation for too long.

More importantly, we are talking now about the exemption that is given to what we call seasoned customers of the bank. When the banks are dealing, and this is particularly important for our community bankers, when they are dealing with people whom they know, with whom they have had regular and continuing relationships, having to report every time they do a transaction of $10,000 or more generates extra work for the bank, and I believe, if anything, interferes with the ability of the regulators to find what they should be looking for.

If we are telling people to find needles, we should not set about building them bigger haystacks. What this bill says is that where we are talking about regular customers, regular seasoned customers, they can apply for the exemption, which is in the control of the Secretary of the Treasury, with careful criteria.

And having received that exemption, as long as they remain seasoned customers of the same bank, that process does not have to be repeated every 2 years. It reduces the regulatory burden on banks, and it is particularly important to small banks.

I would ask at this point, Madam Speaker, under my general leave to include a letter to myself and the gentleman from Alabama from America's Community Bankers strongly endorsing this bill.

America's Community Bankers

Washington, DC, January 22, 2007.

Hon. Barney Frank,

Chairman, Financial Services Committee, House of

Representatives Washington, DC.

Hon. Spencer Bachus

Ranking Member, Financial Services Committee, House of

Representatives Washington, DC.

Dear Chairman Frank and Ranking Member Bachus: America's

Community Bankers is pleased to support H.R. 323, the

Seasoned Customer CTR Exemption Act of 2007. The legislation

would make important improvements to the current exemption

system for cash transaction reports (CTRs) by making it

easier to exempt the routine transactions of certain seasoned

business customers. H.R. 323 would more appropriately balance

the cost and benefits of the Bank Secrecy Act's CTR reporting

requirements. The legislation would also reduce the number of

CTRs filed on routine transactions of well-known, law abiding

customers.

We urge the full House of Representatives to adopt H.R. 323

and look forward to working with you to enact this important

legislation.

While we fully support H.R. 323, we urge the Committee to

modernize the Bank Secrecy Act further by increasing the

$10,000 threshold that triggers CTR filing. This threshold

has not been updated since 1970. Increasing the $10,000

trigger would more appropriately balance the reporting

obligations of depository institutions and the information

needs of law enforcement agencies.

Sincerely,

Robert R. Davis,

Executive Vice President and Managing

Director, Government Relations.

What this will do is to reduce the paperwork burden on the banks; it will ease the burden on the regulators. It will not diminish in any way the flow of information that is needed for those whose job it is to keep us safe.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I reserve the balance of my time.

I thank the gentleman, and if the gentleman would yield.

I would certainly recommend the way this bill is being treated and received on both sides as a precedent that I hope will be followed.

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