Mr. Chairman, thank you for holding this hearing today. It is important to conduct oversight hearings such as this on the condition of the banking industry, and it is certainly a pleasant task when the news is as good as it has been. The FDIC has been one of the principal bulwarks of the safety of our financial system. I am very pleased that they have instituted a risk based premium system. Higher premiums deter institutions from undertaking overly risky activities without sufficient levels of capital in place to lower the risk to tolerable limits. Risk based premiums are as important as any single regulation imposed on the banking industry.
In this time of economic strength and general prosperity, we must be ever more vigilant rather than complacent. Consumer debt is on the rise and, confidence in the banking industry is not merely a part time requirement. The challenge for the deposit insurance system is to be strong enough to meet the needs when there is an economic downturn. The FDIC has learned the lessons of the thrift crisis well. I congratulate them for their proactivity in ensuring that this debacle will never occur again. I also congratulate the members of this Committee for holding regular oversight hearings, which are the best way to monitor problems before they overwhelm the system.
However, now is not the time to rest on our laurels -- we must ensure that the banking industry remains healthy and flourishing and able to compete in the global marketplace. I have long been a proponent of responsible financial modernization; and I do believe that Congress should be the guiding force behind Glass-Steagall reform. However, in the absence of such guidance, the regulators have the responsibility to do all that the law allows to keep pace with the massive economic and technology changes that have occurred. Unwisely maintaining the status quo in the face of such change would actually increase risk rather than reducing it.
I am encouraged that the FDIC is taking regulatory steps to respond to this change. I understand that you have recently issued a proposed rule that is designed to add clarity to the standards required of state non member banks engaging in activities that are generally not permissible for a national bank. I am aware that the comment period on these proposed changes is still running, but I would like to know the kind of comments that have been received on this proposal.
With that said, it is worth noting that change is occurring on other fronts -- not only from federal regulators such as yourselves, but on the state level as well, In my home state of Illinois, and other states, agreements are being worked out between banks and insurance companies. I would be interested in hearing the thoughts of the regulators on these and other state level proposals.
Again, thank you Mr. Chairman, for holding this hearing. I look forward to hearing the
testimony of the witnesses.
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