Spencer Bachus

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on rollcalls Nos. 394-396, I was not present in the House due to a family emergency. Had I been present, I would have voted ``yea.''

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I thank the leadership, Chairman Pombo, Subcommittee Chairman Gilchrest and Ranking Member Pallone for allowing the House to consider this legislation. The bill before us today, H.R. 4947, represents a 2nd major step by this Congress in protecting and preserving one of the most biologically diverse areas of the United States. In 2000, I introduced the legislation that created the Cahaba River National Wildlife Refuge. That bill passed this Congress and was signed into law. Since that time, each year the Appropriations Committee has dedicated funding for land acquisition. The initial 3,500 acres authorized in that bill have been completely purchased by the U.S. Fish and Wildlife Service. The strong support of local elected officials and property owners, coupled with that of many environmental organizations such as The Nature Conservancy, The Cahaba River Society, and The Land Trust has fostered plans to expand the existing boundaries of The Cahaba River National Wildlife Refuge. Alabama is the 5th most biologically diverse State in the country, but it also has the unfortunate distinction of being the most extinction-prone State in the continental United States, with at least 98 species extinct. The Cahaba River basin alone supports 69 rare and imperiled species. The river is recognized nationally for its unique biological diversity; the Cahaba Shiner, a federally endangered species is just one of more than 131 species of fish that call the Cahaba home. That is more species of fresh water fish than inhabit the entire State of California. The Cahaba's wealth of fish species is greater than any other river of its size in North America. The Cahaba River also harbors the world's largest population of the imperiled shoals lily, known locally as the ``Cahaba Lily.'' Recently a population of Cahaba pebble-snails was discovered in the refuge. Once thought to be extinct, this marked the first time this species had been seen since the 1960s, an accomplishment that can be attributed to the protection offered by the Cahaba's designation as a Wildlife Refuge. The proposed expansion of the Cahaba River National Wildlife Refuge would: Increase direct protection of the banks of the mainstem Cahaba River from the current 3.5 miles to approximately 8 miles, thereby giving additional protection to additional large populations of the globally imperiled shoals spider lily (aka Cahaba lily), and many other rare species. Provide large enough areas of forest to support viable breeding populations of declining Neotropical migratory birds, both in the longleaf pine forests (e.g. Northern Bobwhite Quail, Brown-headed Nuthatch) and in hardwood forests (e.g. Swainson's Warbler, Louisiana Waterthrush, Acadian Flycatcher). Provide significant increase in public access to the Cahaba River for canoeing, fishing and other riverine recreational activities. Provide a significant increase in acreage available to the public for hunting, hiking, birding and other outdoor wildlife-based activities (Alabama has only about 3 percent public land, less than most other States in the Nation). Provide a significant boost in revenue to Bibb County, one of the poorest counties in the Nation. Due to low prevailing property tax rates, the revenue to the County coffers from the Federal Refuge Revenue Sharing Program (payments in lieu of taxes) have averaged about $6 per acre per year (versus a yield of about $1 per acre per year as privately owned timberland). H.R. 4947 authorizes the U.S. Fish and Wildlife Service to purchase up to an additional 3,600 acres of land and waters. This would double the number of protected acres of the Cahaba, all of which will be purchased from willing sellers. Protecting the land upstream from the original refuge will add to the buffer zone needed to shield this critical habitat and watershed. The bill before us will help protect one of the greatest natural treasures in my State of Alabama and I urge a ``yes'' vote.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I rise today in support of the Voting Rights Act Reauthorization as an original cosponsor. I also rise in support of this amendment. From the 1790s to the 1970s, our forefathers came to this country, America, from across the globe. They spoke a multitude of languages. They became American citizens. They exercised their right to vote, and they did so in English. Teddy Roosevelt was right when he said: ``There can be no divided allegiance here. We have room for but one flag, the American flag. We have room for but one language here, and that is the English language.'' It was good enough for our forefathers, it was good enough for our grandparents, it should be good enough for us. There is a tradition in this country. For 180 years, we voted in English. That is the true American tradition, and this amendment is true to our heritage, not what has existed unnaturally for the last 20 years.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I thank the chairman, and I would like to respond to the gentleman from Texas and the gentleman from Massachusetts and tell you why we need this bill and we need it desperately. We have been trying to move this legislation for 5 years, and in the 5 years that we have failed to move it, as many as half a million young teenagers have become compulsive gamblers. Now, the Harvard Medical School, the University of South Florida, and the American Psychiatric Association have all told us that the younger someone is exposed to gambling, the younger they start gambling, the more addictive it becomes. In fact, about three times more addictive. The University of Connecticut did a recent study, and I am going to introduce it for the Record, that says Internet gambling is three times as likely to produce a problem gambler. Seventy-four percent of the young people that they surveyed who said they had gambled on the Internet developed a serious addiction. Now, what happens when they gamble and they get an addiction? McGill University did a study, and they said that teenagers who gamble on the Internet show increased criminal activity, strained family relationships, and depression. Thirty percent of those who became addicted to gambling on the Internet actually attempted suicide. That is why Mr. Leach talked about the young man who was the class sophomore president at Lehigh University who actually robbed a bank. A 17-year- old who lost a $6,000 bet on the Internet committed suicide. We have got to move against this. Finally, let me conclude with this: let me tell you what has happened in the past year. According to the University of Pennsylvania, in the last year we have gotten another 150,000 young compulsive gamblers. It is already illegal. What we are doing is stopping it. You have got the criminals on one side, and you have got young people on the other side; and we must protect the young people from these criminals. Mr. Speaker, I rise today in strong support of H.R. 4411, the Goodlatte-Leach Internet Gambling Prohibition and Enforcement Act. I want to begin by thanking Chairmen Oxley and Sensenbrenner and Congressmen Goodlatte and Leach for bringing H.R. 4411 to the Floor today and for their undying determination to put an end to Internet gambling in the United States. H.R. 4411 would help stop the growing threat that Internet gambling poses to the most vulnerable in our society, kids and problem gamblers. H.R. 4411 provides strong new enforcement mechanisms to stop the offshore casinos that flagrantly violate existing state and federal laws against Internet gambling. This bill enables our financial regulators to prescribe regulations limiting the acceptance of financial instruments for unlawful Internet gambling. In addition, H.R. 4411 amends the Wire Act of 1961 to expressly prohibit illegal online interstate gambling. H.R. 4411 was reported by both the Financial Services and Judiciary Committees. Similar legislation has passed the House in the previous two Congresses. Now is the time to cut off illegal Internet gambling once and for all. We have been discussing this issue for years. It has taken way too long. In the time we've been debating this issue, Internet gambling sites have virtually overrun the Internet. Five years ago, there were less than 50 Internet gambling sites. Today, there are more than two thousand sites that will generate upwards of $5.9 billion this year alone, nearly half of the $12 billion bet worldwide on Internet gambling. Support for our efforts to stop the money flow to illegal gambling sites have been nearly universal, from family and religious groups to anti-gambling groups, from professional sports to college athletics, from major players in the banking and credit card industries to law enforcement and Internet service providers. Mr. Speaker, it is far easier and far quicker to just list who doesn't support our efforts. That would, of course, be the illegal gambling industry itself. They have launched an all-out effort at obfuscation and mischaracterization in hopes of defeating this bill and perpetuating their noxious activities. The ability of the Internet to penetrate every home and community has both positive and negative consequences. It can be a valuable source of information and a way to communicate quickly with loved ones. But, the Internet can also override community values and standards. Gambling is an excellent example of this. Gambling is currently illegal in the United States unless it is regulated by the states. With the Internet, however, prohibitions against gambling and regulations governing gambling are turned on their head. The negative effects of gambling have been widely documented. All too often, gambling results in addiction, bankruptcy, divorce, crime and moral decline. Internet gambling magnifies the destructiveness of gambling by bringing the casino into your home. According to an extensive survey done by the University of Connecticut Health Center, 74 percent of those who have used the Internet to gamble have serious problems with addiction, and many of those have resorted to criminal activities to pay for the habit. We heard testimony at one of our hearings that Internet gambling is proving to be a serious problem for many college students. One student reportedly lost $10,000 on Internet sports gambling over a three-month period. Imagine if you found out that a casino was being built next door to your house, and that they had invited your children to participate in gambling activities. You would probably think that was unacceptable. But Internet gambling Web sites are actually worse than that. Sitting right on the computer desk in your home or in your child's bedroom is a computer with easy access to more than 2,000 Web sites that offer illegal Internet gambling services. Worse yet, your kids could use your credit card to gamble on the Internet and run you into bankruptcy--without you even knowing it. In addition, Internet gambling has been linked to terrorists and organized crime. The FBI and the Department of Justice have testified that Internet gambling serves as a vehicle for money laundering that can be exploited by terrorists. These Internet sites--most of which are operated offshore--represent a serious money laundering vulnerability for our country. So what would H.R. 4411 do? H.R. 4411 addresses the problem of Internet gambling in four ways: First, it clarifies that the Wire Act covers all forms of gambling including Internet gambling and increases the maximum penalty for violations of the Wire Act from two to five years in prison. Second, and most importantly, it cuts off the flow of money to Internet gambling Web sites by regulating the payments system. The legislation directs the Treasury Department and the Federal Reserve to jointly develop regulations preventing financial transactions related to illegal Internet gambling. Third, the legislation authorizes State and Federal law enforcement to seek injunctions against persons who facilitate illegal Internet gambling; and Fourth, the U.S. government through the Treasury Department is exhorted to advance international cooperation in law enforcement efforts against illegal gambling and related money laundering. Internet gambling is already illegal under Federal and State law, but most of the more than two thousand Internet gambling sites operate from offshore locations. Currently, these ``virtual casinos'' advertise the ease of opening betting accounts mainly through the use of credit cards. Therefore, they operate beyond the reach of our law. The regulations and anti-money laundering laws that apply to casinos in our country do not apply to these fly-by-night offshore Internet operators. Shutting off the money source is the only way to shut down these illegal Internet gambling Web sites. In closing, Mr. Speaker, let me just say that a vote for this bill is a vote against illegal Internet gambling. This bill shuts off the money. That is what these people are waiting for, the money. If we shut off the money, we shut off the sites. My thanks again go to Chairman Oxley, Chairman Sensenbrenner, Congressman Goodlatte and Congressman Leach for their tireless efforts in moving this bill forward and bringing it to the floor today. I urge all of my colleagues to vote in favor of this legisiation. disordered gambling among university-based medical and dental patients: a focus on internet gambling George T. Ladd and Nancy M. Petry--University of Connecticut Health Center. The authors evaluated gambling behaviors, including Internet gambling, among patients seeking free or reduced- cost dental or health care. Three hundred eighty-nine patients at university health clinics completed a questionnaire that included the South Oaks Gambling Screen (SOGS; H. R. Lesieur & S. Blume, 1987). All respondents had gambled in their lifetimes, with 70% gambling in the past 2 months. On the basis of SOGS scores, 10.6% were problem gamblers, and 15.4% were pathological gamblers. The most common forms of gambling were lottery, slot machines, and scratch tickets. Internet gambling was reported by 8.1% of participants. Compared to non-Internet gamblers, Internet gamblers were more likely to be younger, non-Caucasian, and have higher SOGS scores. This study is among the first to evaluate the prevalence of Internet gambling and suggests that people who gamble on the Internet are likely to have a gambling problem. Results also illuminate the need to screen patients seeking health care services for gambling problems. The fourth edition of the Diagnostic and Statistical Manual of Mental Disorders (American Psychiatric Association, 1994) describes pathological gambling as a disorder that involves preoccupation with, tolerance of, and loss of control relating to gambling behaviors. A recent meta-analysis of prevalence rates (Shaffer, Hall, & VanderBilt, 1999) concluded that approximately 1.6% of North American adults may be Level 3 (pathological) gamblers. An additional 3.9% may be Level 2 (problematic) gamblers, bringing the combined percentage of disordered gamblers to more than 5%. Although prevalence rates in general populations have been described (Shaffer et al. 1999), there is a paucity of studies that have focused on the prevalence of gambling among primary-care patients (Miller, 1996b; Pasternak & Fleming, 1999; Van Es, 2000). As a consequence, health care professionals may not be aware of the impact that gambling behaviors can have on the health of their patients. Health comorbidities found to be associated with pathological gambling include substance abuse, circulatory disease, gastrointestinal distress, sexual dysfunction, anxiety disorders, and depression (Bergh & Kuhlhorn, 1994; Daghestani, 1987b; Lesieur, Blume, & Zoppa, 1986; Miller, 1996a; Pasternak & Fleming, 1999). This study presents two central opportunities for contribution to the existing body of knowledge about disordered gambling. First, we directed our attention toward gambling behaviors among a subset of the population that seeks free or reduced-cost health care. A second focus of this study was the types of gambling activities in which people engage, with special attention paid to Internet gambling. Many researchers have examined the prevalence of disordered gambling (e.g., Shaffer et al., 1999), but few have presented data on the types of gambling in which individuals participate, and no known published studies have focused on the prevalence of Internet gambling. method Participants for this study were drawn from patients seeking treatment at the University of Connecticut Health Center (UCHC) each year. Of the 389 patients included in this study, 76.5% were from UCHC dental clinics, which serve primarily uninsured patients. The remaining 22.5% of participants were from other UCHC medical clinics. The UCHC is located 8 miles southeast of Hartford, Connecticut, and is approximately 65 miles from two large casinos. Procedures Questionnaires were left in the waiting areas of various UCHC health and dental clinics for 13 months (8/1/99-9/2/00) along with collection boxes. Approximately 2,000 patients were treated in these clinics during the study period. Signs encouraging questionnaire completion were displayed in these general areas. On occasion, a research assistant would approach patients within clinics and ask them to complete a screen. No patients who were verbally asked to complete a questionnaire refused. Nonresponses were probably a result of failure to notice the signs and questionnaires rather than refusal to participate. An overall average return rate of 85.7% across the UCHC clinics was determined on weeks in which the numbers of screens left out and collected were monitored. Measures The 2-page questionnaire consisted of the South Oaks Gambling Screen (SOGS; Lesieur & Blume, 1987) as well as questions regarding demographic information and gambling activities. Data analysis We used the SOGS (Lesieur & Blume, 1987) component of the questionnaires to classify participants as Level I (score of 0-2), Level 2 (score of 3- 4), or Level 3 (score > 5) gamblers (Lesieur & Heineman, 1988; Shaffer et al., 1999). We present here the types of participants' gambling activities, along with the frequency and intensity of recent gambling behaviors (past year, past 2 months, and past week) by level of disordered gambling. We compared participants who reported experience with Internet gambling and participants who reported no experience with Internet gambling on demographic variables and SOGS scores. We evaluated differences among the three levels of gamblers, as well as between Internet versus non-Internet gamblers, using the chi- square test for categorical data, analysis of variance for continuous data, and Kruskal-Wallis tests for non-normally distributed continuous data. results Response rates and demographic characteristics of the respondent sample In total, 402 questionnaires were filled out. Thirteen respondents left many SOGS items unanswered and were thus excluded, leaving 389 questionnaires for further analysis. Continuum of SOGS scores Of the respondents, 46.8% scored a 0 on the SOGS, indicative of no problematic gambling behaviors. Additional segments of respondents scored 1 (17.0%) and 2 (10.3%) on the SOGS. Therefore, according to the classification system described by Shaffer et al. (1999), 74.0% of respondents qualified as Level 1 gamblers, and 10.6% of the respondents were classified as Level 2 gamblers, with 6.2% scoring a 3 and 4.4% scoring a 4. The final 15.4% of respondents were classified as Level 3 gamblers, with 6.9% scoring between 5 and 9, 5.7% scoring between 10 and 14, and 2.8% scoring between 15 and 20. Demographic characteristics Although no statistically significant group differences were found with regard to gender, the three groups of gamblers differed on other demographic characteristics. Specifically, differences among the groups emerged with respect to age, F(2, 382) = 8.58, p <.01; ethnicity, X \2\ (6, N = 374) = 23.01, p <.001; marital status, X \2\(8, N = 384) = 18.80, p <.001; education, X \2\(8, N = 376) = 34.45, p <.001; and yearly income, X \2\(6, N = 374) = 12.89, p <.05. Compared to Level 1 gamblers, Level 2 and 3 gamblers were more likely to be younger, of non-Caucasian ethnicity, not married, and have lower levels of education and income. Gambling participation All of the respondents reported having gambled in their lifetimes, with 90.0% having gambled within the past year, 70.0% within the past 2 months, and 42.0% within the past week. The most common form of gambling was the lottery, with 89.2% of the total sample having lifetime experience with the lottery. Twenty-five percent of the sample reported weekly or more frequent lottery playing. Slot machines were the next most popular gambling activity, with 81.7% of the sample having lifetime experience, and 6.7% playing slots at least weekly. Scratch tickets were played by 78.7%, with 19.0% of participants playing at least weekly. Card-playing forms of gambling were reported by 70.8%, with 8.7% of participants playing at least weekly. More than half of the participants reported lifetime participation in sports betting (56.9%), bingo (56.0%), and animal betting (52.7%). Lifetime participation in other gambling activities, such as games of skill (40.8%), roulette (37.1%), dice (33.8%), high-risk stocks (23.6%), and video lottery (21.7%) were each reported by only a minority of the total sample. Internet gambling Of note is that 8.1% (n = 31) of participants reported Internet gambling in their lifetimes, including 3.7% (n = 14) who reported gambling on the Internet at least weekly. Demographic and other characteristics of Internet gamblers compared to non-Internet gamblers are shown in Table 1. Age, F(I, 378) = 17.68, p <.01, and ethnicity, X \2\(3, N = 376) = 17.80, p <.001, were found to differ significantly among participants who reported Internet gambling compared to those who did not. Younger participants were more likely than older participants to have Internet gambling experience. Although non-Caucasian participants represented 15.8% of the total participants, they represented 35.8% of those participants who had experience with Internet gambling. The comparison of participants with or without Internet gambling experience revealed significant differences in both SOGS scores, F(1, 382) = 40.79, p <.01, and classified gambling levels, X \2\(2, N = 389) = 63.23, p <.001. Only 22% of participants without any Internet gambling experience were Level 2 or 3 gamblers. In contrast, 74% of participants with Internet gambling experience were classified as Level 2 or 3 gamblers. Discussion We examined gambling participation and problems of 389 patients who completed questionnaires at the UCHC medical and dental clinics. When the lifetime rates of 10.6% for Level 2 and 15.4% for Level 3 gamblers are combined, the resulting 26.0% rate of disordered gambling (Levels 2 and 3) in this study far exceeds the 6.7% derived from general population surveys conducted since 1993 (National Gambling Impact Study Commission, 1999; Shaffer et al., 1999).

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I rise in strong support of House Resolution 895 by Chairman Oxley. I commend Chairman Oxley as the primary sponsor and author of the USA PATRIOT Act. He has been committed to combating terrorist financing, and I want to commend him for his tireless efforts in bringing this resolution to the floor. We are at war against a savage and relentless enemy. While Americans have a long-established right to know about the actions of their government, when we are at war, when there is a national security concern, there is also a well-founded historical precedent for conducting covert actions out of the media spotlight. Now, there can be alternatives, as the gentleman from Massachusetts said, but there can be no alternatives to a strong national defense. There can be no alternatives to a strong national security. And the judges of what those are and how to conduct those should not be left to the New York Times. They are for this body to determine. Following the death of Zarqawi, an internal al Qaeda memo was recovered from his hideout. It explicitly states that al Qaeda's efforts have been hurt by tightening the resistance's financial outlets. This statement serves as concrete evidence, concrete evidence that programs such as the administration's Terrorist Finance Tracking Program are both necessary and effective. Remember, the 9/11 Commission was critical of the government's failure to track the sources of terrorist financing prior to the September 11 attack. However, in its final report, the commission applauded the government-wide effort to combat terrorist financing after 9/11 for making significant strides in using terrorist finance as an intelligence tool. They were talking about this program. This program was an important stride. Indeed, the program paid big dividends, including the arrest of the mastermind of the 2002 Bali bombing, a violent bombing that killed 202 innocent people. In fact, he was convicted based on information from this program, a program The New York Times made a determination to expose. There is no doubt that America and our allies in the war on terror are safer today because of this program, which is exactly the sort of protection that Americans want and expect from their government. Some question or debate whether al Qaeda knew about this valuable program. Do they know about it now? Do they know the details? The answer to the question is, yes, no doubt about it. How do they know? Because they put it on the front page of the newspaper. Not just any paper, but the largest newspaper in the biggest city in the United States. Who are they? They are the editors and publishers of The New York Times. If you are al Qaeda, the appropriate response to this publication is thank you. If you are indifferent, the answer is so what. But if you are an American citizen endangered by terrorists, the insensitivity, the arrogance, the irresponsibility of this paper and its publication, then the appropriate response is anger and outrage and this resolution. Now, due to their irresponsible actions, this vital intelligence- gathering program is virtually defunct. No longer would terrorists conduct their financial business with the Swift cooperative. Sadly, no longer will we be able to track their actions. This clearly hampers, clearly hampers, our Nation's ability to conduct the war on terror. Hopefully, our intelligence agencies will devise other means to effectively monitor our enemies. It won't be easy. They will have to start over. We won't be restricting their financial operations as well as we did before this publication. But at least I would hope that if we do fashion a new program that it will not be reported by the media outlets who want to get a scoop ahead of national security. Let me close by thanking the chairman. Mr. Speaker, I rise in strong support of House Resolution 895, which is sponsored by Chairman Oxley, expressing our support for the Administration's efforts to track terrorist financing through the U.S. Treasury Department's Terrorist Finance Tracking Program. Chairman Oxley--one of the primary authors and sponsors of the terrorist financing provisions in the USA PATRIOT Act--has been committed to combating terrorist financing, and I want to commend the Chairman for his tireless efforts and for bringing this resolution to the floor today. We are at war with a savage and relentless enemy. While Americans have a long-established right to know about the actions of their government, when we are at war and when there is an overriding national security concern, there is also a well-founded historical precedent for conducting covert actions out of the media spotlight. Following the death of Abu Musab al-Zarqawi, an internal al-Qaeda memo was recovered from the terrorist's hideout. It explicitly states that al Qaeda's efforts have been hurt ``by tightening the resistance's financial outlets.'' This statement serves as concrete evidence that programs such as the Administration's Terrorist Finance Tracking Program are both necessary and effective. Remember, the 9/11 Commission was critical of the government for its failure to track the sources of terrorist financing prior to the September 11th attacks. However, in its final report, the Commission's Public Discourse Project applauded the government-wide effort to combat terrorist financing after 9/11 for making ``significant strides in using terrorism finance as an intelligence tool.'' This program was one such important stride. Indeed, the program paid big dividends, including the arrest of the mastermind of the 2002 Bali bombing, a bombing in which 202 innocent people were killed. In fact, he was convicted based on information from this program. There is no doubt that America and our allies in the war on terror are safer today because of this program, which is exactly the sort of protection that Americans want and expect from their government to prevent further terrorist attacks. Some question or debate whether al-Qaeda knows about this valuable program. Do they know about it? Do they know the details? The answer to the questions is ``yes.'' No doubt about it. How do we know that? Because they put it on the front page of the newspaper. Not just any paper, but the largest newspaper in the biggest city of the United States. Who are they? The editor and publisher of that very paper. If you are al-Qaeda, the appropriate response is, ``thank you.'' If you are indifferent, the answer is, ``so what?'' If you are an American citizen endangered by the insensitivity, arrogance and irresponsibility of this newspaper, the appropriate response is anger and outrage! Now, due to their irresponsible actions, this vital intelligence gathering program is virtually defunct. No longer will terrorists conduct their financial business with the Swift cooperative, and sadly no longer will we be able to track their actions. This result clearly hampers our nation's ability to conduct the War on Terror. Hopefully, our intelligence agencies will devise other means of effectively monitoring our enemies and restricting their financial operations at least until that program, too, is reported by media outlets that place getting a scoop ahead of national security. Outrageous conduct such as that exhibited in the disclosure of this legal, effective program cannot be allowed to escape just condemnation. Therefore, this resolution. Let me close by again thanking this Administration and Chairman Oxley for their efforts in combating terrorist financing. Their dedication and vigilance with regard to these issues have made our nation and the world a safer place. I urge my colleagues to support House Resolution 895.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I yield back the balance of my time and urge all Members to vote in favor of this legislation.

Mr. BACHUS. Mr. Speaker, I would like to inquire as to how much time remains.

Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, for some 14 years the Congress of the United States has known and identified a problem, and that is the number of currency transaction reports required by the Bank Secrecy Act. The Internal Revenue Service, which administers this program, as early as 1993 made this statement. It said that 30 to 40 percent of these reports, and I quote, of routine deposits by large, well- established retail businesses have no likelihood of identifying potential money laundering or other currency violations. The GAO in 1994 published a report which says, our analysis of CTR filing confirms that the volume of CTRs could be substantially reduced without jeopardizing law enforcement needs. The GAO, the Internal Revenue, FinCEN, have all recommended that what we do to reduce the number of CTRs by 30 to 40 percent is simply to exempt large well-established customers, what are so-called ``seasoned customers.'' In fact, I want to read into the Record and introduce into the Record a report by William Fox, who headed up FinCEN, the government's top law enforcement agency charged with coordinating money laundering and terrorist financing activities. Here is what he said: ``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.'' Working with William Fox, members of this committee, Mr. Frank, Mrs. Maloney, myself, Mr. Hensarling, Mr. Moore, Ms. Hooley, and several others, we actually fashioned legislation which we introduced and have passed out of this House on two different occasions over the past year. That legislation has died or was not acted on in the Senate. In the last case, it was simply because it was included in part of the reg relief bill. So the purpose of this legislation is to break it out, isolate it into specific legislation dealing with that and nothing else, and send it over to the other body in hopes that they will save our financial institutions from what the GAO in 1994 said was a cost of up to $15 per report, maybe as little as $3, but as much as $15, and save our law enforcement agencies $2 to $3 per report, an overall savings of tens of millions of dollars which will allow law enforcement and our financial institutions to concentrate on the bad guys, not well-established routine business transactions by their customers. Mr. Speaker, at this time I reserve the balance of my time.

Mr. BACHUS. Mr. Speaker, in conclusion, I simply want to say to the Members who may be listening to this discussion, what we are talking about here is a restaurant, a movie theater, a corner drugstore, a retail establishment. These are businesses that have been in the community for years and years. As a matter of course, every week, sometimes every day, they file large sums of cash. The very idea that we would impose, as we did in the Bank Safety Act, a requirement that the banks, every time this happens, file a report. As FinCEN estimated last year, it takes 25 minutes to prepare these reports, to review them, to catalog them and to file them. Then it takes the FBI or others, IRS, who administers this program, 5 to 6 minutes. So you are talking about, for the average small bank in a medium-sized town, as Mr. Hensarling said, you are talking about hundreds of hours of wages, not to speak of the time. As we have been hearing for 10 or 12 years, these reports have absolutely no usefulness in identifying money laundering, serious financial crimes, terrorist financing. It is past time that this Congress lifts what is a multimillion dollar burden on our financial institutions and, at the same time, allows law enforcement, directs law enforcement, in fact, to go after the bad guys. Focus attention on those nonroutine, nonstandard transactions. Remember, the banks still must require, any time something is out of the ordinary to the routine, causes any type of questions, they actually have rules and regulations where they are required, in those cases, even if it is an established customer, if it is an out-of-the- ordinary transaction or raises suspicion, they have to file a report. That is the purpose of this legislation, to streamline that process. Mr. Speaker, in closing, for the record, I would like to introduce the September 2005 testimony of William J. Fox, Director of the Financial Crimes Enforcement Network at the United States Department of Treasury. Statement of William J. Fox, Director, Financial Crimes Enforcement Network, United States Department of the Treasury Chairman Bachus, Ranking Member Sanders and distinguished members of the Subcommittee, I appreciate the opportunity to appear before you today to discuss your efforts to balance the burdens imposed on the financial industry by the requirements of the Bank Secrecy Act of 1970, specifically, providing the government with highly relevant information that assists law enforcement in making our financial system more transparent and our country safer. I am the Director of the Financial Crimes Enforcement Network, which has been delegated the responsibility by the Secretary of the Treasury to administer the Bank Secrecy Act. The Financial Crimes Enforcement Network is part of Treasury's new Office of Terrorism and Financial Intelligence, led by Under Secretary Stuart Levey. The creation of this office has greatly enhanced Treasury's efforts and accomplishments on issues relating to money laundering, terrorist financing and other financial crime. As the administrator of the Bank Secrecy Act, we bear responsibility for ensuring that the Bank Secrecy Act is implemented in a way that achieves the policy aim intended by the Congress, which is, simply stated, to safeguard the United States financial system from the abuses of financial crime, including money laundering and terrorist or other illicit financing. This is a day-to-day challenge in a financial system where we generally promote the unfettered, free-flow of commerce and where criminals strive to manipulate the system with the same ingenuity and sophistication of the very best in the industry. Ensuring that we strike the right balance between the cost and benefit of this regulatory regime is, in my view, a central responsibility for my agency. While I do not believe this cost/benefit analysis can be reduced to a mathematical formula, I believe we must constantly study how we can more effectively tailor this regime to minimize the costs and other burdens imposed on our financial institutions while at the same time ensuring that the law enforcement community receives the information it needs to combat financial crime and terrorism. This effort is particularly important because I am more certain than ever that compliance with the Bank Secrecy Act's regulatory regime is a critical component to our country's ability to utilize financial information to combat terrorism, terrorist financing, money laundering, and other serious financial crime. Moreover, the systems and programs that are mandated by the Bank Secrecy Act make our financial system safer and more transparent. Over the past year I have traveled quite a bit around the country listening to the frustrations members of the financial industry have with the Bank Secrecy Act. Many of those frustrations relate to how the Act is being implemented. Many in the financial industry complained about the lack of clarity in requirements and consistency in examination. At the same time, the Congress has questioned the effectiveness of our collective ability to implement this regime in light of several highly publicized and significant regulatory failures by certain financial institutions. Mr. Chairman, I am pleased to report that by working diligently with my colleagues at this table, we have made significant progress on these issues. In the past year: We have signed groundbreaking information-sharing agreements with the five Federal Banking Agencies, the Internal Revenue Service and thirty-three (33) state authorities. We are working to finalize similar agreements with the Securities and Exchange Commission and the Commodities Futures Trading Commission. We have assisted the Federal Banking Agencies with the development of a comprehensive Bank Secrecy Act examination manual that we believe will ensure greater consistency in examinations for depository institutions, and will provide a significant source of guidance and help for those institutions. We are together issuing more and better guidance to ensure greater clarity and consistency of regulatory policy. A good example of this is the recent guidance we issued jointly with the Federal Banking Agencies on the provision of banking services to money services businesses. We have created and staffed an Office of Compliance within our Regulatory Division to ensure better clarity and consistency in how the Bank Secrecy Act is implemented and provide us with an assessment of the overall success of our Bank Secrecy Act Regulatory Program. We are--for the first time--devoting nearly 25 percent of our analytic muscle to regulatory issues and programs. These analysts are not only identifying compliance problems and targeting problematic institutions for examination, they will also develop and provide information to the financial industry to help them better understand and assess the risks posed by their business lines and customer base. We believe these steps and the steps we have planned have helped improve the overall implementation and effectiveness of the Bank Secrecy Act. Ensuring that we present the financial industry with regulatory requirements that are both clear and consistent is, in my view, one of the best ways we can reduce the burden associated with Bank Secrecy Act compliance. Consistency is a crucial element of the effective implementation of the Bank Secrecy Act, and, indeed, is one of our core objectives. While we, of course, stand ready to assist the Committee and this Congress by examining any aspect of the Bank Secrecy Act, I would emphasize that over the past year, the level of cooperation between my agency and the Federal Banking Agencies has grown significantly. As reflected in the steps we have taken together, we all recognize the need for a consistent voice on these important regulatory issues, and are building the necessary coordination mechanisms. The focus of my testimony before the subcommittee today is on H.R. 3505, specifically, how that bill would affect the Bank Secrecy Act. I would like to focus on one key concept in this legislation; your effort to reduce the burden imposed on the financial industry of filing Currency Transaction Reports. We have been grappling with the issue of how to improve the Currency Transaction Report regime for some time. We know that Currency Transaction Reports are valuable to law enforcement. These reports--often coupled with other information--are used every day to identify and locate criminals and terrorists. However, we also know that some of the Currency Transaction Reports filed by financial institutions are of little relevance in the investigation of financial crime. We also know that depository institutions, especially our community banks, identify the time and expense of filing Currency Transaction Reports as the number one regulatory expense. Indeed, the Congress has in the past recognized the need to reduce the number of Currency Transaction Reports that may not have a high degree of usefulness to law enforcement, ordering us to find a way to do so. However, it is clear that our efforts to encourage the exemption of routine filings on certain customers have not brought about the reductions in filing that were sought. Two years ago we turned to the Bank Secrecy Act Advisory Group, bringing in the viewpoints of the industry, law enforcement, and regulatory communities, to address this question. Through this process, we learned that our colleagues in law enforcement have made significant strides recently in their ability to utilize currency transaction reporting data, marrying this data with other law enforcement data to maximize its benefit. We also have enhanced our analytic capability to exploit this data source on both micro and macro levels. Such innovations enhance the utility of our analysis, and it is essential that we not reduce the flow of critical information just as the technical firepower to exploit this information is reaching new heights. This Committee now is considering language that would amend current exemptions by allowing banks to qualify certain customers as exempt from routine currency transaction reporting. We believe this language addresses many of the issues with our current exemption regime that were causing it not to have its intended effect. Due to its complexity and the burden involved in exempting customers, financial institutions were not taking advantage of the exemption regime. This proposal seeks to streamline the exemption process by focusing on a one-time notice to my agency of an exemption and focusing on the customer's relationship with the bank as the grounds for such exemption. We believe that these changes will make the exemptions more effective while still ensuring that currency transaction reporting information critical to identifying criminal financial activity is made available to law enforcement. However, we also recognize that we need to monitor these changes to ensure that they do not result in a reduction in information that would be highly useful to our law enforcement clients, and accordingly the proposal contains a wise requirement to conduct a study after some time has elapsed to ensure that we are striking the proper balance. In conclusion, Mr. Chairman, I hope that my testimony today conveys the sense of commitment, energy, and balance with which all of us at the Financial Crimes Enforcement Network are addressing the challenging issues that confront our administration of the Bank Secrecy Act. The importance of your personal and direct support of these efforts cannot be overstated. Your oversight will ensure that we meet the challenges that we are facing. I know how critical it is that we do so, and we hope you know how committed we are to meeting those challenges. Thank you.

Mr. BACHUS. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5341) to amend section 5313 of title 31, United States Code, to reform certain requirements for reporting cash transactions, and for other purposes, as amended.

Mr. BACHUS. Mr. Speaker, last September, William Fox, at that time head of FinCEN, made this statement at a hearing before the Financial Services Committee. He said: ``The Congress has in the past recognized the need to reduce the number of currency transaction reports that may not have a high degree of usefulness to law enforcement and ordered us to find a way to do so.'' As a result of that hearing, Chairman Oxley, the chairman of the full committee, made as a priority the committee working in a bipartisan way to find a way, working with law enforcement, to reduce the number of CTRs. It was a result of that hearing and numerous statements by both law enforcement, by financial regulators, by financial institutions, and by Members of Congress in both bodies to work out a solution to this long-existing problem. So I would like to commend Chairman Oxley. As a result of those hearings, there was introduced 3505, the Financial Services Regulatory Relief Act, by Congressman Renzi and Mrs. Maloney, who of course just spoke on this bill. They included a provision that was specifically drafted by Mr. Frank, Mrs. Maloney, Mr. Hensarling and Mr. Moore, which included a seasoned customer exemption. We passed 3505 out of this body by a vote of 415-2 back in March. More recently, the bill before us, 5341, which has 22 bipartisan supporters on the Financial Services Committee, passed the Financial Services Committee on a unanimous vote, and H.R. 5341 seeks to reduce the regulatory burden caused by the Bank Secrecy Act. Specifically, the legislation requires that the regulators 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 or more. This filing is required even in the case of seasoned customers who are long-time bank customers that routinely file large volumes of cash and whose business dealings are well known and understood by the institution to the extent to rule out the possibility of money laundering or the financing of terror. Unfortunately, the current process by which a financial institution seeks an exemption under such a scenario is both cumbersome, hard to understand, and requires annual renewals. Mr. Speaker, at this time I would like to recognize the gentleman from Texas (Mr. Hensarling), who helped draft this legislation and the original legislation which was included in H.R. 3505, for such time as he may consume.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on Friday, June 16, I was absent from the House in order to attend the wedding of my eldest son and was forced to miss rollcall vote No. 288. Had I been present for this vote, I would have voted ``aye.''

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, from April 29-May 1, 2006, approximately 1,200 students from across the country participated in the national finals competition of We the People: The Citizen and the Constitution, the most extensive educational program in the country developed specifically to educate young people about the U.S. Constitution and Bill of Rights. I am pleased to announce that Vestavia Hills High School from Birmingham, Alabama placed fourth in the competition. The We the People program is administered by the Center for Civic Education and funded by the U.S. Department of Education by act of Congress. The We the People national finals is a three-day academic competition that simulates a congressional hearing in which the students ``testify'' before a panel of judges on constitutional topics. Students demonstrate their knowledge and understanding of constitutional principles as they evaluate, take, and defend positions on relevant historical and contemporary issues. Among the questions students responded to in the competition includes, ``Is judicial review essential for the functioning of our American constitutional democracy? Explain and justify your position.'' Mr. Speaker, the names of these outstanding students from Vestavia Hills High School are as follows: Grace Anthony, George Bolshinskiy, Barrett Bowdre, Courtney Bragg, Jeannettee Dooley, Daniel Driscoll, Claire Foster, Sarah Graffeo, Lauren Howard, Sarah McKibben, Patrick Mulligan, John Nicholson, Tiffany Parrish, Hanna Perry, Julie Phillips, Joseph Siegelman, Kendal Spires, Wes Stevenson, Emily Unnasch, Amy Watson, Ryan Woodford, and Ansley Zarra. I also wish to commend the teacher of the class, Amy Maddox, who was responsible for preparing the student class for the national finals competition. Also worthy of special recognition are Janice Cowin and Kerri Williamson, the state coordinators and Jeff Northrup, the district coordinator, who are among those responsible for implementing the We the People program in my district. Mr. Speaker and my colleagues in the House, please join me in congratulating these young constitutional experts for their outstanding achievement.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I was inadvertently detained and missed rollcall votes No. 251-254. Had I been present I would have voted ``aye'' on each.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, doctors of optometry from around the Nation will convene in Las Vegas, NV, June 22-26 for the American Optometric Association's 109th annual convention. On Saturday, June 24, they will elect Dr. Tommy Crooks as the association's 85th president. Doctors of optometry are the Nation's largest eye care profession, serving patients in nearly 6,500 communities across the country, in more than 3,500 of these communities; they are the only eye doctors. The American Optometric Association is the professional society for optometrists nationwide and has more than 34,000 members. Dr. Crooks will lead the association on its mission to improve eye and vision care in the United States. Dr. Crooks is a resident of Birmingham, AL. He is a native son, a 1975 graduate of the University of Alabama and a 1979 graduate of the University of Alabama's School of Optometry who has practiced optometry in our State for 27 years. He is currently president and CEO of Eyecare Associates, Inc., in Birmingham, AL, a group practice consisting of 19 locations and 33 doctors. Dr. Crooks has been a leader in his profession at the State, regional and national levels. He has been a member of the Alabama Optometric Association since 1979, serving as president in 1990. In 1985, the Alabama Optometric Association named Dr. Crooks Alabama Optometrist of the Year. He is also a past president of the Southern Council of Optometrists and the Birmingham Area Optometric Society and in 1990 was named University of Alabama-Birmingham Alumnus of the Year. At the national level, Dr. Crooks has been a member of American Optometric Association, AOA, since 1979, and has served in the association's volunteer structure since 1989. He was elected to the AOA Board of Trustees in 1999 and was re-elected in 2002. Dr. Tommy Crooks has built a distinguished record of service and leadership in his profession and in his community. I am confident that he will have a very successful term as president of the American Optometric Association. I join his wife Kaye and their two sons, his friends and colleagues in congratulating him on this achievement and wishing him good luck and good health.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I support H.R. 5252. Communications technology today is advancing rapidly but communications law is not. H.R. 5252 will allow the law to not only ``catch-up'' with technology, but also to get out of the way so consumers may benefit from new innovations and competition for broadband video services. It is odd to me that, at the same time we are streamlining our policy in one area, we are considering new regulation in another area that has enjoyed explosive growth and innovation precisely because it has been free of government regulation. Mr. Chairman, this is not the time to start regulating the Internet. Some voices say new regulation is necessary to preserve the Internet and protect consumers. I do not agree. The Internet is growing and thriving without regulation. Until there is a specific problem to fix, I think Internet regulation is a heavy-handed solution in search of a problem that will have many unintended consequences. It is important to remember that the FCC has already adopted principles designed to ensure that Internet services are provided in a fair and neutral manner. Provisions of H.R. 5252 reinforce these principles without imposing innovation stifling regulation. Plus, my colleague on the House Judiciary Committee, Mr. Smith, is offering an amendment making it clear that our Nation's anti-trust laws are in place to protect consumers as well. I support his amendment and encourage my colleagues to approve H.R. 5252 and reject calls for Internet regulation.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I thank the gentleman. I think Members back in their offices ought to know this, and this is a longstanding dispute between the States of Florida, Alabama and Georgia. What this amendment does is authorize $15 million or as much as $15 million to be spent by the Corps of Engineers to revise their manuals to try to interject their decisions into what is in court today. The court proceedings are still going on. They are on appeal. And they are not only going to affect our three States, they are going to affect everybody who eats oysters because, as Mr. Boyd said, 90 percent of the oysters come out of the basin at the bottom of the Apalachicola River. These things do not need to be decided; the purity of that water in that basin or in those seven rivers does not need to be decided on the floor of the House by people who do not know what the right decision is that ought to be made. It ought to be made in the courts in the deliberative process and not by some bureaucrat or not by Congressmen or -women who do not understand the issues involved. I urge a ``no'' vote.

Mr. BACHUS

Mr. BACHUS. Madam Speaker, I thank Chairman Pryce, and will start by commending Chairman Pryce and Congresswoman Maloney and Congresswoman Biggert and also Ranking Member Frank for this legislation. A lot of citizens might be hearing this debate and they may be thinking, what has this got to do with the United States? What do problems in Latin America have to do with the United States? What is in it for me, my constituents might ask me? Why would you support spending $25 million a year on this program? What do Americans get out of this program? I submit to you that this program is probably one of the best uses of our taxpayers' money for one simple reason: when I go home today, people say to me, illegal immigration; do something about illegal immigration. Well, let me say this to fellow Members: if you want to do something about illegal immigration, this vote today, a ``yes'' vote on this bill, will do more from a practical standpoint to stem the flow of illegal immigration than anything else. James Schlessinger, one of my favorite quotes is a quote of his when he says: ``When a problem has no solution, it is not a problem. It is a fact.'' Well, I can tell you that illegal immigration is a fact. But it is also a problem that has solutions. And the first solution, the first step to solving it we can take today by voting for this bill. Now, why is that? Well, let me tell you about illegal immigration. Let me tell you about Mexico, one of the countries that benefits from this program. It creates small enterprises, small jobs in Mexico. In Mexico every year, 600,000 Mexicans enter the job force; but there is only room for 150,000 of them. So almost a half million of them cannot even get a job at any wage. The ones that do get a job is at one-fifth of what Americans pay, American jobs. Guatemala, El Salvador, the Dominican Republic, we are beginning to have more and more illegal immigrants from those countries. The reason? In the countries that I have just mentioned, about one out of every five young men or women that enters the job market can get a job. So I can tell you it is a fact of life when they cannot get a job at any salary, they are going to try to come over here. Yes, we can build walls. Yes, we can employ more people on the border. But a cheaper, more practical, more long-term solution is this legislation today which will create the very jobs these countries need. And that is not the large government enterprises. It is the private enterprise businesses. I close by saying this: another great thing about this program is we have partners. It is not a government program. The NGOs, the private sector business organizations, trade groups, they are all involved in this. Let us vote ``yes'' on this. Let us start creating jobs in those countries and stemming the flow of illegal immigration.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, earlier today I was inadvertently detained during rollcall vote No. 81. Had I been present, I would have voted ``aye.''

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, let me say under Chairman Oxley's leadership, this committee has been committed for almost 6 years with freeing depository institutions of unduly and unnecessary burdensome regulations. When we started this quest, the burden on those institutions was estimated at $25 billion a year. It is now $36 billion a year, and that is despite the fact that we have passed two or three pieces of legislation that have done away with some of these regulations. Last year the House passed overwhelmingly similar legislation to this legislation; it unfortunately died in the other body. The legislation before us has a potential to save somewhere between $15 and $20 billion, and that is not to depository institutions; that is actually money that will be available to loan to Americans to finance home purchases, cars, property, or it will be available to pay greater yields on their deposits. So this is a very good bill for America. It will strengthen not only our financial institutions, but our economy. I would like to commend the following people: Mrs. Maloney and Mr. Renzi. Mrs. Maloney has already spoken about the importance of the seasoned investor exemption where people who deal with banks on a daily and weekly basis depositing money, where those banks will not have to file unnecessary paperwork. It will aid Bill Fox at FinCEN, who is in charge of preventing money laundering and says that this provision will make it easier for law enforcement, for the FBI and other agencies to track money laundering and eliminate costly filings. I would like to commend Mr. Ryun for some very strong provisions helping our community and independent banks; and Mr. Kanjorski and Mr. Royce. Finally, I would say to Mr. Hensarling and Mr. Moore, you have done a fine job on this bill, and I commend you and commend this product.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I rise in strong support of the Deposit Insurance Reform legislation included in S. 1932, the Deficit Reduction Act of 2005. I want to begin by thanking Financial Services Committee Chairman Oxley for his relentless efforts on moving this deposit insurance reform legislation. He has shown tremendous leadership in steering this complex bill through the legislative process, and I am deeply grateful that he gave me the opportunity to work on this landmark piece of legislation. I also want to thank the Ranking Member of the Committee, Mr. Frank, for his support. This was truly a bipartisan effort, and I believe we have a better legislative product because of that. In addition, I want to express my deep appreciation for Senator Shelby's work on increasing coverage for retirement accounts to $250,000. Deposit insurance reform has been thoroughly discussed and debated over several years. During both the 107th (H.R. 3717) and 108th (H.R. 522) Congress, I introduced comprehensive deposit insurance reform legislation. The legislation was a byproduct of recommendations made by the FDIC in early 2001, a series of hearings held in my Subcommittee on proposed reforms to the Federal deposit insurance system, and broad- based bipartisan cooperation. H.R. 3717 passed the House in the 107th Congress by a vote of 408-18, and H.R. 522 passed the House in the 108th Congress by a vote of 411-11. During this Congress, Congresswoman Hooley and I introduced this same legislation--H.R. 1185--with Chairman Oxley and Ranking Member Frank. On May 4, 2005, H.R. 1185 passed the House by a vote of 413 to 10. The legislation is supported by the American Association of Retired Persons (AARP) as well as all of the banking and credit union trade associations. Federal deposit insurance has been a hallmark of our nation's banking system for more than 70 years. The reforms made by this legislation will ensure that this system that has served America's savers and depositors so well for so long will continue to do so for future generations. What does the legislation do? First, it merges the separate insurance funds that currently apply to deposits held by banks on the one hand and savings associations on the other, creating a stronger and more stable fund that will benefit banks and thrifts alike. Second, the bill makes a number of changes designed to address the ``pro-cyclical'' bias of the current system, which results in sharply higher premiums being assessed at ``down'' points in the business cycle, when banks can least afford to pay them and when funds are most needed for lending to jumpstart economic growth. By giving the FDIC greater discretion to manage the insurance funds based on industry conditions and economic trends, the legislation will ease volatility in the banking system and facilitate recovery from economic downturns. Third, the legislation makes monumental changes to law with regard to deposit insurance coverage levels. The system has gone 25 years without such an adjustment--the longest period in its history--and the increases provided for in the legislation are critical if deposit insurance is to maintain its relevance. The legislation establishes a permanent indexation system to ensure that coverage levels keep pace with inflation by indexing coverage from its current level of $100,000 every five years. The indexation, which begins in 2010, applies to all accounts, including retirement and municipal accounts. Without these changes, deposit insurance will wither on the vine, which is an unacceptable outcome for the millions of Americans who depend upon it to protect their savings. The legislation also immediately increases deposit insurance coverage available to retirement accounts, including IRAs and 401ks, from its current level of $100,000 to $250,000. Particularly in light of volatility on Wall Street and other developments that have shaken confidence in the markets in recent years, senior citizens and those planning for retirement need a convenient, conservative, and secure place for their retirement savings. With the higher coverage levels provided for in this bill, the American banking system will give seniors that safe haven. That is why the AARP has enthusiastically endorsed the coverage increases in this bill. All of us have heard from community bankers in our districts about the challenges they face in competing for deposits with large money- center banks that are perceived by the market--rightly or wrongly--as being ``too big to fail.'' By strengthening the deposit insurance system, the conference report will help small, neighborhood-based financial institutions across the country, particularly in rural America, continue to play an important role in financing economic development. The deposits that community banks are able to attract through the Federal deposit insurance guarantee are cycled back into local communities in the form of consumer and small business loans, community development projects, and home mortgages. If this source of funding dries up, it will have devastating consequences for the economic vitality of small-town America. I want to again commend Chairman Oxley for the tremendous leadership he has shown in steering this complex bill through the legislative process. I also want to thank Ranking Member Frank, Congresswoman Hooley, Senator Shelby, Senator Sarbanes, Senator Enzi, Senator Crapo, Senator Enzi, and Senator Johnson for all of their work on this legislation. Let me also take this opportunity to thank the staff members on the House Financial Services Committee who worked on this legislation. Both Chairman Oxley and Ranking Member Frank are to be commended for assembling such a talented group of staff to work on Deposit Insurance Reform legislation. On the majority side, I would like to thank Bob Foster, Carter McDowell, Peggy Peterson, Tom Duncan, Peter Barrett and Dina Ellis who serves as my designee on the Committee. I want to give a special thanks to Jim Clinger who recently left the Committee to work at the Department of Justice. Without Jim's hard work, dedication and knowledge we would not be here today, and I am grateful for all of his efforts. I would also like to thank Larry Lavender, Warren Tryon and Kim Olive of my staff for their work on this issue. On the minority staff, I would like to thank the following staff members: Jeanne Roslanowick, Jaime Lizarraga, Erika Jeffers, Ken Swab and Matt Schumaker of Congresswoman Hooley's staff. In closing, Mr. Speaker, let me just say that this legislation will promote the stability and soundness of the banking system. It will also provide assurance to working families, retirees, and others who place their hard-earned savings in U.S. banks, thrifts, and credit unions that their FDIC-insured deposits are safe and secure.

Mr. BACHUS. Mr. Speaker, today, we have the opportunity to make significant improvements in our Federal Deposit Insurance system. We do this from a position of strength, as both the insurance fund and the banking industry are extremely healthy. What better time than to fine tune the system and establish a strong footing going forward. Basic principles of reform: Fairness and Flexibility The fundamental driving principles of reform were to provide fairness to all insured depository institutions by assessing each based on risk and provide the FDIC with greater flexibility to manage the fund to reflect different economic conditions. Regarding fairness: The bill provides greater fairness to insured banks in many important ways. First, it authorized the FDIC to revise the risk-based formula to better reflect the risk each institution poses to the insurance fund. In providing this authority, our Committee looked to and relied upon examples provided by the FDIC regarding how the new system might work, including FDIC representations that about 42 percent of all banks would likely remain in the lowest risk category. We know that the very nature of bank loans involves risk. Therefore, we expect the FDIC to form a reasonable system that encourages appropriate risk-taking, consistent with safe and sound banking, and with premiums at a level that protect the best run banks from being overcharged and that don't inadvertently stop lending. In this bill, we make explicit that the size of the financial institution should not bar an institution from being in the lowest risk category. It is risk that matters, not size. We expect the FDIC to time assessments in such a manner that banks are able to plan for such an expense, thereby avoiding unexpected or untimely costs on the bank. Secondly, the bill recognizes that about 10 percent of institutions have never paid a premium to the FDIC to support its operations. This has put a burden on those institutions that fully capitalized the insurance funds in the mid-1990s. Thus, this legislation provides that those institutions that capitalized the fund with initial credits--in proportion to each institution's financial contribution to FDIC--that are intended to offset premium assessments for many years to come. Those institutions that have not financially supported the FDIC would not have these credits and would begin to pay premiums to the FDIC. Moreover, should the insurance fund grow to the upper regions of the normal operating range for the FDIC, banks would be entitled to a cash dividend in proportion to their historic financial contributions. Regarding flexibility: The bill provides FDIC greater flexibility to manage the insurance fund. The law that our bill replaces constrained the FDIC from charging most banks when the reserve ratio remained above a certain level and would force FDIC to charge high premiums, 23 basis points, at times when it made the least sense. Our bill allows the FDIC to manage the fund within a wide range, with the idea that assessments would remain reasonably constant and predictable. Importantly, this bill is not intended to raise more money than what the FDIC would have collected under the old law. Nor is this bill intended to encourage the FDIC to build the fund to the highest possible level. In fact, we know that each dollar sent to the FDIC means that there are fewer dollars that can support lending in our communities. And as we considered this bill, we heard testimony that suggested that each dollar sent to Washington means that eight dollars of lending is lost. We cannot afford to restrict lending in our communities just to have more money added to the nearly $50 billion already in the insurance fund. To protect against the fund growing too quickly, the legislation provides an automatic braking system that would return as a dividend 50 percent of any excess when the reserve ratio of the fund is above 1.35 percent. It also caps the fund level, providing a 100 percent dividend when the reserve ratio exceeds the upper limit of the range at 1.50 percent. This assures that money will remain in our communities. And while we provided the FDIC some authority to suspend the 50 percent dividend under extraordinary circumstances where it expects losses over a 1-year timeframe to be significant, our expectation is that this authority be used rarely and be reviewed each year when the new designated reserve ratio is set. The intention of this exception is that it be temporary and not a regular event, and that the FDIC communicates to Congress and the industry its justifications. Designed for the Future Not only does the legislation provide fairness and flexibility, it also anticipates needed changes in the coverage levels over time. We know that inflation has cut in half the real value of the current insurance coverage since it was last changed in 1980. We also know that as the baby boomers move into retirement, that the current coverage level was inadequate to protect their life-long savings. Thus, this bill increased to $250,000 the insurance limit on retirement accounts. The House has repeatedly voted overwhelmingly in favor of legislation that would automatically index coverage levels based on inflation. The other body has only recently passed deposit insurance reform. The indexing language included in the Senate reconciliation bill required the FDIC to ``determine whether'' to increase coverage based on the amount of inflation increase plus a long list of factors. The compromise language we have agreed to calls on the FDIC and NCUA to jointly consider just three narrow factors. Those factors are (1) the overall state of the Deposit Insurance Fund and economic conditions affecting insured depository institutions; (2) potential problems affecting insured depository institutions; and (3) whether the increase will cause the reserve ratio of the fund to fall below 1.15 percent of estimated insured deposits. If the FDIC and NCUA elect not to increase coverage, they must make the case based on these three narrow factors. The key language in the compromise is that the FDIC and NCUA, ``upon determining that an inflation adjustment is appropriate, shall jointly prescribe the amount by which'' coverage ``shall be increased by calculating'' the amount of inflation. This change in language, from ``determine whether'' to ``shall jointly prescribe'' is a clear statement that Congress is establishing a presumption that the agencies will increase coverage if warranted by past inflation. Stronger than Ever This legislation will make the insurance fund even stronger than it already is and, in combination with the extensive regulatory and supervisory authorities of the FDIC, ensures that the fund and the banking industry will remain strong for a very long time.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, today, we have a great opportunity to make significant improvements in our Federal Deposit Insurance system. Our position is strong, as both the insurance fund and the banking industry are extremely healthy, making this the ideal time to fine tune the system and establish a strong footing going forward. Basic principles of reform: Fairness and Flexibility The two fundamental driving principles of reform are to provide fairness to all insured depository institutions by assessing each based on risk, and to promote greater flexibility by allowing the FDIC to manage the fund differently based on existing economic conditions. The bill provides greater fairness to insured banks in many important ways. It authorizes the FDIC to revise its risk-based formula to reflect with greater accuracy the risk each institution poses to the insurance fund. In providing this authority, our Committee looked at examples provided by the FDIC to determine how the new system might work, including FDIC representations that show about 42 percent of all banks would likely remain in the lowest risk category. Because the very nature of bank loans involves risk, we expect the FDIC to form a reasonable system that encourages appropriate risk-taking, consistent with safe and sound banking, and with premiums at a level that protect the best run banks from being overcharged but don't inadvertently stop lending. In this bill, we make explicit that the size of the financial institution should not bar an institution from being in the lowest risk category. It is risk that matters, not size. We expect the FDIC to conduct assessments in such a timely manner that banks are able to plan for such an expense, thereby avoiding unexpected or untimely costs. Secondly, the bill recognizes that about 10 percent of institutions have never paid a premium to the FDIC to support its operations. This has put a burden on those institutions that fully capitalized the insurance funds in the mid-1990s. This legislation provides that those institutions that capitalized the fund with initial credits in proportion to each institution's financial contribution to FDIC. The credits are intended to offset premium assessments for many years to come, Those institutions that have not financially supported the FDIC would not have these credits and therefore must begin to pay premiums to the FDIC. Moreover, should the insurance fund grow to the upper regions of the normal operating range for the FDIC, banks would be entitled to a cash dividend in proportion to their historic financial contributions. In addition to promoting fairness, the bill provides the FDIC greater flexibility to manage the insurance fund. The current law constrains the FDIC from charging most banks when the reserve ratio remained above a certain level and forces the FDIC to charge high premiums (23 basis points) at times when it makes the least sense. Our bill corrects these problems by allowing the FDIC to manage the fund within a wide range, with the intention that assessments would remain reasonably constant and predictable. Importantly, this bill is not intended to raise more money than what the FDIC would have collected under the old law. Nor is this bill intended to encourage the FDIC to build the fund to the highest possible level. In fact, we know that each dollar sent to the FDIC means that there are fewer dollars that can support lending in our communities. As we considered this bill, we heard testimony that suggested that each dollar sent to Washington means that eight dollars of lending is lost. We cannot afford to restrict lending in our communities just to have more money added to the nearly $50 billion already in the insurance fund. To protect against the fund growing too quickly, the legislation provides an automatic braking system that would return as a dividend 50 percent of any excess when the reserve ratio of the fund is above 1.35 percent. It also caps the fund level, providing a 100 percent dividend when the reserve ratio exceeds the upper limit of the range at 1.50 percent. This assures that money will remain in our communities. And while we provided the FDIC some authority to suspend the 50 percent dividend under extraordinary circumstances where it expects losses over a one-year timeframe to be significant, our expectation is that this authority will be used rarely and reviewed carefully each year when the new designated reserve ratio is set. This exception should be temporary and not a regular event, and the FDIC must communicate to Congress and the industry its justifications. The FDIC's development and implementation of a new risk-based assessment system should not negatively impact the cost of homeownership or community credit by charging higher premiums to prudently managed and sufficiently capitalized institutions simply because they fund mortgages and other types of lending through advances from Federal Home Loan Banks. The Gramm-Leach-Bliley Act took great care in trying to provide adequate funding resources for community financial institutions and insured housing lenders through expanding community institutions' access to Federal Home Loan Bank advances. The FDIC shall take into consideration the goals of the Gramm-Leach-Bliley Act with respect to Federal Home Loan Bank advances and the objectives of this Act when developing a risk-based premium system. Designed for the Future Not only does the legislation provide fairness and flexibility, it also anticipates needed changes in the coverage levels over time. We know that inflation has cut in half the real value of the current insurance coverage since it was last changed in 1980. We also know that, as the baby boomers move into retirement, the current coverage level was inadequate to protect their life-long savings. Thus, this bill increased to $250,000 the insurance limit on retirement accounts. The House has repeatedly voted overwhelmingly in favor of legislation that would automatically index coverage levels based on inflation. The other body has only recently passed deposit insurance reform. The indexing language included in the Senate reconciliation bill required the FDIC to ``determine whether'' to increase coverage based on the amount of inflation increase plus a long list of factors. Our compromise language calls on the FDIC and NCUA to consider just three narrow factors. Those factors are: (1) the overall state of the Deposit Insurance Fund and economic conditions affecting insured depository institutions; (2) potential problems affecting insured depository institutions; and (3) whether the increase will cause the reserve ratio of the fund to fall below 1.15 percent of estimated insured deposits. If the FDIC and NCUA elect not to increase coverage, they must make their case based on these three narrow factors. The key language in the compromise is that the FDIC and NCUA, ``upon determining that an inflation adjustment is appropriate, shall jointly prescribe the amount by which'' coverage ``shall be increased by calculating'' the amount of inflation. This change in language, from ``determine whether'' to ``shall jointly prescribe'' is a clear statement that Congress is establishing a presumption that the agencies will increase coverage if warranted by past inflation. Stronger than Ever This legislation will make the insurance fund even stronger than it already is and, in combination with the extensive regulatory and supervisory authorities of the FDIC, ensures that the fund and the banking industry will remain strong for a very long time.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I thank the Chairman for yielding time, and I rise in strong support of the Deposit Insurance Reform legislation included in the conference report to S. 1932, the Deficit Reduction Act of 2005. I want to begin by thanking Financial Services Committee Chairman Oxley for his relentless efforts on moving this deposit insurance reform legislation. He has shown tremendous leadership in steering this complex bill through the legislative process, and I am deeply grateful that he gave me the opportunity to work on this landmark piece of legislation. I also want to thank the Ranking Member of the Committee, Mr. Frank for his support. This was truly a bipartisan effort, and I believe we have a better legislative product because of that. Senator Shelby and the other Senators on his committee are also to be commended for their fine work. Deposit insurance reform has been thoroughly discussed and debated over several years. During both the 107th (H.R. 3717) and 108th (H.R. 522) Congress, I introduced comprehensive deposit insurance reform legislation. The legislation was a byproduct of recommendations made by the FDIC in early 2001, a series of hearings held in my Subcommittee on proposed reforms to the Federal deposit insurance system, and broad- based bipartisan cooperation. H.R. 3717 passed the House in the 107th Congress by a vote of 408-18, and H.R. 522 passed the House in the 108th Congress by a vote of 411-11. During this Congress, Congresswoman Hooley and I introduced this same legislation--H.R. 1185--with Chairman Oxley and Ranking Member Frank. On May 4, 2005, H.R. 1185 passed the House by a vote of 413 to 10. The legislation is supported by the American Association of Retired Persons (AARP) as well as all of the banking a credit union trade associations. Federal deposit insurance has been a hallmark of our Nation's banking system for more than 70 years. The reforms made by this legislation will ensure that this system that has served America's savers and depositors so well for so long will continue to do so for future generations. What does the legislation do? First, it merges the separate insurance funds that currently apply to deposits held by banks on the one hand and savings associations on the other, creating a stronger and more stable fund that will benefit banks and thrifts alike. Second, the bill makes a number of changes designed to address the ``pro-cyclical'' bias of the current system, which results in sharply higher premiums being assessed at ``down'' points in the business cycle, when banks can least afford to pay them and when funds are most needed for lending to jumpstart economic growth. By giving the FDIC greater discretion to manage the insurance funds based on industry conditions and economic trends, the legislation will ease volatility in the banking system and facilitate recovery from economic downturns. Third, the legislation makes monumental changes to law with regard to deposit insurance coverage levels. The system has gone 25 years without such an adjustment--the longest period in its history--and the increases provided for in the legislation are critical if deposit insurance is to maintain its relevance. The conference report establishes a permanent indexation system to ensure that coverage levels keep pace with inflation by indexing coverage from its current level of $100,000 every five years. The indexation, which begins in 2010, applies to all accounts, including retirement and municipal accounts. Without these changes, deposit insurance will wither on the vine, which is an unacceptable outcome for the millions of Americans who depend upon it to protect their savings. The legislation also immediately increases deposit insurance coverage available to retirement accounts, including IRAs and 401ks, from its current level of $100,000 to $250,000. Particularly in light of volatility on Wall Street and other developments that have shaken confidence in the markets in recent years, senior citizens and those planning for retirement need a convenient, conservative, and secure place for their retirement savings. With the higher coverage levels provided for in this bill, the American banking system will give seniors that safe haven. That is why the AARP has enthusiastically endorsed the coverage increases in this bill. All of us have heard from community bankers in our districts about the challenges they face in competing for deposits with large money- center banks that are perceived by the market--rightly or wrongly--as being ``too big to fail.'' By strengthening the deposit insurance system, the conference report will help small, neighborhood-based financial institutions across the country, particularly in rural America, continue to play an important role in financing economic development. The deposits that community banks are able to attract through the Federal deposit insurance guarantee are cycled back into local communities in the form of consumer and small business loans, community development projects, and home mortgages. If this source of funding dries up, it will have devastating consequences for the economic vitality of small-town America. I want to again commend Chairman Oxley for the tremendous leadership he has shown in steering this complex bill through the legislative process. I also want to thank Ranking Member Frank and Congresswoman Hooley for all of their work on this legislation. Let me also take this opportunity to thank the staff members on the House Financial Services Committee who worked on this legislation. Both Chairman Oxley and Ranking Member Frank are to be commended for assembling such a talented group of staff to work on Deposit Insurance Reform legislation. On the majority side, I would like to thank Bob Foster, Carter McDowell, Peggy Peterson, Tom Duncan, Peter Barrett and Dina Ellis who serves as my designee on the Committee. I want to give a special thanks to Jim Clinger who recently left the Committee to work at the Department of Justice. Without Jim's hard work, dedication and knowledge we would not be here today, and I am grateful for all of his efforts. I would also like to thank Larry Lavender, Warren Tryon and Kim Olive of my staff for their work on this issue. On the minority staff, I would like to thank the following staff members: Jeanne Roslanowick, Jaime Lizarraga, Erika Jeffers, Ken Swab and Matt Schumaker of Congresswoman Hooley's staff. In closing, Mr. Speaker, let me just say that this legislation will promote the stability and soundness of the banking system. It is also provide assurance to working families, retirees, and others who place their hard-earned savings in U.S. banks, thrifts, and credit unions that their FDIC-insured deposits are safe and secure.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I rise today to pay tribute to a very special member of the Birmingham community, Harry Hancock. Harry Hancock has provided compassionate and caring service as the District Manager of the Birmingham Downtown Social Security office for many years. For over a quarter century, Harry has given of his time to ensure that his fellow Americans are treated fairly in their attempts to access Social Security benefits. However, Harry's time with the Social Security Administration is but one aspect of a lifetime devoted to public service, which began with Harry's courageous service as a member of the United States Army during the Vietnam War. Mr. Speaker, I am honored to bring Harry Hancock's career of service to the attention of my colleagues here today. I join with the residents of the entire 6th Congressional District of Alabama in congratulating Harry Hancock as he retires from federal service. I wish Harry and his wife Rene nothing but happiness in the days ahead.