|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Tuesday, October 12, 1999||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, today joined Rep. Jim Leach, chairman of the financial services conference committee and the House Banking Committee, and Rep. Tom Bliley, chairman of the House Commerce Committee, to release the chairmen's mark of the financial services modernization legislation. Gramm made the following comments:
"We have done good work in the last week, and I think the good news is that we're going to pass a financial services modernization bill. My hope is that we will finish it Thursday night.
"I think that when people look at our effort to try to reach an agreement between the competing provisions of the two bills, I think the reaction by Republicans and Democrats will, by and large, be positive.
"My guess is that we will have a fairly full day Thursday. The chairman, Congressman Leach, has agreed to carry over to Friday and, if people should demand so, potentially beyond that, but my estimate is that we have a real chance of finishing Thursday night.
"Let me sort of review the provisions. We had very different bills on operating subsidiaries. Given that we are about to create financial supermarkets, given that we are on the verge of passing the most important banking bill in sixty years, the real question is, in what corporate structure should banks and other financial institutions provide these expanded financial services?
"The position of the Senate was that they should provide these financial services as part of holding companies. In this way we would keep a clear separation between risky activities and the operation of the bank, with the attendant safety and soundness concerns, together with the special benefits that are available to banks: access to the Fed window, the Fed wire, the presence of deposit insurance and, ultimately, taxpayer liability. The Senate took the position that these new financial activities should be undertaken in the holding company.
"The House bill took the position that some of these activities should be conducted within the bank. Those of you who followed the debate in the Senate know that this is a much debated, important issue. You've heard all the arguments, which I won't get into here today.
"We do have in the bill now the point at which the negotiations really started between the Treasury and the Fed, a provision that would allow op subs but under very stringent conditions. It is our hope that we will see between now and Thursday a continued and an ultimately successful effort between the Treasury and the Fed to reach a compromise. I think that obviously would be a good outcome. I don't think anyone can guarantee it, but I think we're all hopeful.
"In terms of the CRA provisions in the bill, nothing in this bill overturns any CRA provision in current law. We do shine sunshine on CRA agreements. We require that future agreements be made public. We require that those that receive substantial amounts of assets under CRA settlements report to the public about what they do with those assets. We don't exempt small banks from CRA, but we provide fairly dramatic regulatory relief for all rural banks and all city banks up to $250 million in assets.
"And finally, in a gesture toward the White House, we require that at the time that an institution applies to establish a financial services holding company, the institution have a favorable CRA rating.
"In terms of the unitary thrift issue, probably no issue is more contentious for members of the conference and members of the Congress. I don't know that the White House and the Fed have taken hard positions on it, but basically, this is an issue where the mark document will establish an effective date beyond which no new application for a unitary thrift could be approved. We had two different dates; in the markup document we took the Senate date, the Senate's grandfather date. We will have in essence a jump ball on this issue. And for those who say, `Well, it's unsettled,' in a sense it is unsettled. We're going to make a decision: we've established a mechanism for settling, and I assume by Thursday night, that this issue will be settled.
"I think we have written a good bill. I think this bill will promote the interest of working men and women in America. I think this bill will mean that we will have a greater diversity of financial services available to working people in America, and I think they'll be available at a lower price and with greater accessibility.
"We have made an effort to be respectful of the views of Democrats in the House and Senate. We made an effort to look at the president's concerns. I think we have written a bill that merits the signature of the president, and I hope in the end that he will decide to sign the bill."