Thank you for holding this second hearing on S. 1405, the "Financial Regulatory Relief and Economic Efficiency Act of 1997". Last week we had a very informative session on the provisions of this bill which would allow the Federal Reserve to pay interest on reserves and those which would finally allow interest to be paid on commercial checking accounts. Today, we have the opportunity to listen to a wide range of experts on the remaining portions of the bill. I look forward to learning the concerns and judgements of all our witnesses.
At the outset, Mr. Chairman, I want to say that while we all here can agree that there are a great number of "miscellaneous" provisions included in this bill -- we certainly don't shy away from amending many sections of our banking laws. As I stated last week, this is our fourth try at simplifying the laws on financial services. This year again as in years past, Senator Shelby and I have attempted to make sense of our laws without compromising safety and soundness, without infringing on the rights of consumers, and with some regard for preserving and promoting practical regulation. I realize all those present may not agree that we have erred on the right side of the line with some provisions, but that is what a hearing is all about.
I understand concerns may be raised about the anti-tying provisions. In repealing certain sections of the Bank Holding Company Act, we sought to improve the market for consumers of financial services. We believe discounting and bundling of services can be a very good thing for people -- many other industries do it, why not here too. Make no mistake, we certainly do not favor allowing coercion to occur. But, how many times have we heard the phrase "and if you purchase this product, you will get a discount on the following ..." At the time the original anti-tying provisions were passed it could be argued that banks had a monopoly on credit services, but that simply is not the case anymore. Our goal in including these changes is to allow banks to compete effectively with other credit grantors while at the same time benefitting consumers. Allowing banks to develop a myriad of packages and choices for consumers contributes to the positive dynamic of a free market -- if they market wisely and fairly, they will be rewarded with repeat customers. If they don't, the market will punish them with reduced business. That's my idea of good legislation.
As for the parts of the bill that deal with allowing affinity groups to receive benefits for referrals, there too we have attempted to benefit the consumer while bringing the financial services industry onto par with other industries. Giving a charitable contribution to one's alma mater has become commonplace in the offerance of life insurance or retirement planning. The same benefit could be extended to consumers of credit transactions such as home equity loans. Here again, at one point in time it could be argued that when someone was applying for a mortgage or settlement services, they were at a competitive disadvantage vis-a-vis the provider, but no longer. Today's consumers shop with their feet for such services.
Finally, the provisions which amend the Fair Debt Collection Practices Act and those which simplify the disclosure provisions under TILA are music from the same songsheet. Contrary to what some may say here today, we are seeking to make some sense of the current law without disadvantaging anyone in the process. I hope everyone will understand that fundamental point and try to work with us in pursuing the goal of common sense regulation.
Thank you again Mr. Chairman for holding this hearing and I look forward to the
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