Spencer Bachus

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on Wednesday April 30th I missed rollcall vote 149 due to attending an awards ceremony for the National Teacher of the Year at the White House. If I had been present I would have voted ``yea'' on rollcall vote 149.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on Monday, April 7th, I missed rollcall votes 109, 110 and 111, due to a flight delay. If I had been present I would have voted ``yea'' on rollcall No. 109, ``yea'' on rollcall No. 110 and ``yea'' on rollcall No. 111.

Mr. BACHUS

Mr. BACHUS. We should be particularly concerned about the negative effects which needless regulatory uncertainty and policy turmoil are having on this country's telecommunications industry. The United States' economy is very dependent on an efficient and effective telecommunication industry and the links they provide. Maintaining these important systems and building new advanced networks we are going to need requires a climate of regulatory stability. No one is going to invest heavily if they do not know what the fundamental rules of the game are. The 1996 Telecommunications Act envisions the FCC coming up with a workable, judicially sustainable, competitive framework in short order. Seven years have passed since the act was signed into law, and according to most authorities, the FCC's latest decision is almost certain to be reversed and remanded once more. In closing, Congress has a responsibility to the shareholders of these companies, to the hundreds of thousands of employees, and, most of all, to millions of consumers to end this turmoil. It is not good for anyone.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I rise in strong support of the amendment of the gentleman from Minnesota (Mr. Kennedy) and the gentleman from Washington (Mr. Nethercutt). Let me ask all Members to think about this, because there are some things we all agree to. We all agree that we are winning the war, but I think we all believe that it is going to be harder to establish the peace. That is our concern now. We have won the war, but we have to be successful in winning the peace. We all agree, both sides of the aisle, that we are facing anti- American sentiments. We should ask ourselves, where have those sentiments come from? They have come from the regime in Iraq, but they have also come from those that have supported them. France, Germany, Russia, Syria, the people named in this amendment have caused a great deal of the anti-American sentiment that we are now facing. I ask Members to picture themselves a citizen of Iraq. We hear what the French and Germans have said, that we are there to get the oil. Then we see the American tanks; we see the American bullets. There is a lot of work for Americans to do after that. The last thing we want is then to see the French coming in and the Germans coming in and rebuilding Iraq; America coming in and conquering or invading, according to the French, and then the French rebuilding. That is going to do nothing to dissolve the anti-American sentiments. In fact, we know the French intentions are not good. We know what they said; we know what they have done. It would add tremendous insult to the injury that American families have had, those who have sent loved ones into Iraq and lost those loved ones, for us now to send the French in behind them to capture the good will and the hearts of the Iraqi people. It is the American people; it is the British. We are the ones that ought to be at the forefront and those visible in building the peace and rebuilding Iraq; not those who have made our job harder, those who have openly promoted anti-American sentiments, not only in Iraq but around the world. Mr. Chairman, I urge the Members, let us not compound the immense problem we have today in establishing the peace and in trying to restore our credibility with the people of Iraq. Let them see Americans rebuilding Iraq. If the French want to be there, we ought to invite them to be there; and the French taxpayers can pay for the French companies who come in and rebuild. But with our money, it ought to be Americans because of this tremendous amount of ill will in the world, and particularly in Iraq. If we lose this opportunity, we will always be viewed as those that came in with tanks and bullets and guns, and the French and the Germans will come behind us and self-promote themselves as those that came in and repaired the damage. I close by simply saying this: If the French had not supplied Iraq with many articles of war, and the Germans, if they had not encouraged Saddam Hussein to stand and fight, our job would be a lot easier. They have caused some of the damage in Iraq. They have not acknowledged that. Even today in their newspapers they are continuing to stir up ill feelings. Let us not take our money and give them an opportunity to continue to do that.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Burgess). (Mr. BURGESS asked and was given permission to revise and extend his remarks.)

Mr. BACHUS. Mr. Chairman, I yield 3 minutes to the gentleman from Alabama (Mr. Aderholt).

Mr. BACHUS. Mr. Chairman, I yield 2 minutes to the gentleman from Colorado (Mr. Beauprez).

Mr. BACHUS. Mr. Chairman, I yield 2 minutes to the gentlewoman from Florida (Ms. Ginny Brown-Waite).

Mr. BACHUS. Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Hensarling).

Mr. BACHUS. Mr. Chairman, I yield 2 minutes to the gentleman from Kansas (Mr. Moran).

Mr. BACHUS. Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. Tiberi).

Mr. BACHUS. Mr. Chairman, I yield myself 7 minutes. Mr. Chairman, I rise in support of H.R. 522, the Federal Deposit Insurance Reform Act of 2003. I want to begin by thanking the gentleman from Ohio (Mr. Oxley), the chairman of the committee, for his tremendous leadership in steering what is a complex bill through the legislative process. I also want to thank the ranking member of the committee, the gentleman from Massachusetts (Mr. Frank), for his support of this important piece of legislation. The committee and the Congress in its votes on this legislation in the past, legislation very similar, has shown that it can work together in a very bipartisan manner. Deposit insurance reform has been thoroughly discussed and debated over the past several years. During the 107th Congress, I introduced comprehensive deposit insurance reform, H.R. 3717. The legislation was a by-product of recommendations by the FDIC in early 2001, industry representatives coming together urging that we take action. The American Banking Association, The Credit Union National Association, Independent Bankers and Financial Services Roundtable, all urging the Federal Reserve, the administration, urging us to take action to reform Federal deposit insurance. We did take action, and the 107th Congress passed H.R. 3717 by a vote of 408 to 18. Unfortunately, that bill died in the other body. Earlier this year, I introduced the same legislation. This time it is H.R. 522, the Deposit Insurance Reform Act of 2003. The gentleman from Ohio (Mr. Oxley) and the gentleman from Massachusetts (Mr. Frank) joined me in introducing this legislation, along with 57 other cosponsors on both sides of the aisle. It was approved by the Committee on Financial Services by a unanimous voice vote. I am pleased that the Senate now plans to act on similar legislation in the very near future, and that the President's budget for fiscal year 2004 outlines a proposal similar to our legislation. The legislation is supported not only by American bankers, the Financial Services Roundtable made up of the 100 largest financial corporations in America, but also by the credit unions, the thrift associations, the community bankers, the securities industry, and also by groups that we sometimes do not find on the same side; the American Association of Retired Persons has recently endorsed this legislation. Federal deposit insurance has been the hallmark of our Nation's banking system for almost 70 years. The reforms made by this legislation will ensure that the system that serves savers and depositors so well for so long will continue for future generations. What does the legislation do? First, it merges separate insurance funds that currently apply to deposits held by banks on the one hand and savings associations on the other, creating a stronger, more stable fund that benefits banks and thrifts alike. Second, it changes the ``pro-cyclical'' bias of the current system. In other words, it spreads out over time the assessments to the institutions which results in, by doing this, a more uniform assessment. Presently we have sharply higher premiums served during recessionary times and much lower premiums during good times. Banks can least afford to pay a higher premium during recessions, and we found that out, and this corrects that. Third, the legislation includes modest increases in the amount of coverage available. The system has gone from 1980 without an increase in coverage. If we took 1980 as our basis and we increased coverage based on inflation, we would go to $200,000. If we went back to 1980, the $100,000, and we increased it based on per capita income, it would actually go to $300,000. So we are proposing $130,000, a very modest increase. If we went back to 1974, because some have said they should not have raised it in 1980, they should have kept it at the 1974 level, and we increased it for inflation, it would go to $140,000. Mr. Chairman, there are some who will offer amendments who have actually publicly stated that they do not believe in Federal deposit insurance, one of the gentlemen offering an amendment later on. So there are Members of the body who do not believe that our deposits in banks should be federally insured. I understand that; but I, for one, disagree with that. I think Americans have come to rely and have a sense of security in knowing that when they put their retirement funds in a bank or thrift that it is federally insured. Particularly in light of the recent volatility on Wall Street, people have, I think, come to rely more and value more the fact that they can put their money in a federally insured financial institution and not lose that money. All of us have heard from community bankers in our districts about the challenges that 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, our legislation will help small neighborhood-based financial institutions across the country, especially in rural areas, continue to play an important role in financing economic development. The independent bankers have actually said that this legislation is key to maintaining local home-owned banking institutions. The deposits that community banks are able to attract through Federal deposit insurance guarantees are cycled back into local communities in the form of consumer and small business loans. One reason for this legislation is we value the right of every American to go down to his corner financial institution. My thanks go to the chairman of the committee. Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I yield 4 minutes to the gentleman from Ohio (Mr. Oxley), the chairman of the Committee on Financial Services. (Mr. OXLEY asked and was given permission to revise and extend his remarks.)

Mr. BACHUS. Mr. Speaker, on that I demand the yeas and nays.

Mr. BACHUS. Mr. Chairman, I yield 30 seconds to the gentleman from Alabama (Mr. Davis).

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume and simply close by doing two things. One is responding to the gentleman from California when he uses the analogy that if someone wants to deposit or wants over $100,000 in their account they can simply take part of that money out of one account and place it in another account or they can drive down the street. Now, Americans today are a highly mobile society, and we know that Americans sell their homes and we know that in almost every case, when they do that, they deposit that money in their bank. They do not take that check and split it. They do not ask for two checks. We know that the average cost of a house is well in excess of $100,000 and we know that they deposit that money in a bank. And if that bank fails, they lose all but $100,000. We do not think that is right. The authors of this amendment also do a strange thing. They say we are increasing the coverage and that is a bad thing; but then they increase the coverage for retirement accounts to $260,000 and municipal accounts to $2 million. So they basically argue against their own amendment. Mr. Chairman, may I inquire into the amount of time remaining?

Mr. BACHUS. Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. I yield to the gentleman from Massachusetts.

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume. I speak in opposition to this amendment. One of the statements by the proponent of this amendment has been that the former increase in coverage was the primary reason for the savings and loan crisis, and let me say in that regard that the cause of the savings and loan collapse, crisis in this country, has been well examined and well documented. The FDIC, in fact, issued a report called ``History of the Eighties, Lessons for the Future and Examination of the Banking Crisis of the 1980s.'' Here is their reasoning. The rise in the number of bank failures in the 1980s had no single cause or short list of causes. Rather, it resulted from a concurrence of various forces working together to produce a decade of banking crises. First, broad national forces, economic, financial, legislative and regulatory established the preconditions for the increased number of bank failures. Second, a series of severe regional and sectional recessions hit banks in a number of banking markets and led to the majority of the failures. Third, some of the banks in these markets assumed excessive risk and were insufficiently restrained by supervisory authorities with the result that they failed in disproportionate numbers. As a result of that, Mr. Chairman, we have made several changes in the law in this body in an attempt, and I think a successful attempt thus far, to make these institutions subject to more oversight and to stronger capital requirements. One Member of our body's father served as the FBI director during the savings and loan crisis. He was asked in a congressional hearing for his comment on the savings and loan crisis, and he said that criminal activity, fraud and looting were the primary causes of the crisis. In fact, the committee staff has made a fairly exhaustive study of the various articles written concerning the collapse of the savings and loans, and these were the reasons given at the time. My colleagues can see we have a basic laundry list of reasons, but there is actually evidence that the increase in coverage at the time gave savers some degree of security and actually prevented a panic at many institutions, and some of that body of evidence supports that it actually helped in a contagion of that crisis. Mr. Chairman, the final argument is a moral-hazard argument. The offerer of this amendment has argued that increasing coverage will create a greater moral hazard in the system; but then, surprisingly, his amendment does not raise the level from $100,000 to $130,000. It does away with that, but then he raises retirement accounts to $260,000, and he raises municipal deposits; and by doing that, they have managed in the subcommittee to basically arouse everyone's opposition to the amendment because if we raise the coverage for retirements in municipal deposits, then one is, in fact, arguing against the reason for offering his own amendment. I will close simply by saying that this moral-hazard argument has been looked at by the FDIC. They asked two respected economists to make a report, and they were Federal Reserve Governor Alan Blinder, and this is what he said. The point is made that if the FDIC is given the authority to charge risk-based premiums, and that is what H.R. 522 does, then ``most objections based on moral hazard should evaporate.'' He goes on to state, ``In a world of properly priced deposit insurance, it seems more appropriate to ask the opposite question: Why have any coverage limits at all?'' In fact, I think that ought to be the question we are debating: Why have any coverage limits at all? Even the CBO says that this bill will result in an increase of insured deposits in our institutions. Is that not something that we have all argued for? Do we not want an increase in the deposits in our financial institutions? Does that not strengthen our economy? Is that not good for America? They say that some institutions will fail and some people in that institution will lose 200 or $220,000 worth of retirement funds. Do we not want them to have federally insured coverage? Do we want them to lose this money? I do not think so. Finally, do we believe in insurance? I think that is the essence of this whole argument. I mean, do we believe in insurance? Do we believe in insuring for losses? If we do, and I for one think that insurance is a good thing, I believe that insurance is a prudent thing, and I believe that in order for our Federal deposit insurance system to survive and have any relevance then that insurance protection, which I believe in, I believe in insuring against risk, I believe it is a prudent thing to do, then why would we want the Federal deposit insurance system to wither on the vine? Why would we not want it to stay current with inflationary rates and per capita income? And the only way to do that is to vote ``yes'' on this bill. A vote against this bill basically would be like going back to 1980 and reducing the coverage from $100,000 to $30,000 if you went on per capita income, or $47,000 if you went on inflation. How many in our body would do that? How many in our body would vote today to take those levels back to the 1980 level? I do not think any of us would. A few of us would because, as the gentleman from California (Mr. Rohrabacher) says, I do not believe in Federal deposit insurance. I do not believe in the Federal Government supplying insurance. Well, it is the depositors, for one thing. The Federal Government does not. If he would look, he would see it is the banks through their premiums.

Mr. BACHUS. Mr. Chairman, I was standing to claim the time in opposition.

Mr. BACHUS. Mr. Chairman, I yield myself such time as remains. Mr. Chairman, there are opponents to this legislation. Those opponents give several reasons, and we may hear those during the amendments; but I think the most honest opponent of this legislation is the gentleman from California (Mr. Rohrabacher), who will offer an amendment or who may not offer an amendment but who has filed an amendment to strike the increases in coverage. The gentleman from California (Mr. Rohrabacher) said in the American Banker, and I quote him, in today's edition, ``I don't believe in Federal deposit insurance.'' I think that pretty much sums up the opposition because if a person does not believe in it, then a person does not want it to increase to allow for inflation or for increase in per capita income. If a person does believe in it, then they want it to remain current. They want it to remain current with per capita income and inflation. As I said, we last increased the levels in 1980. If we adjusted them for per capita income, they would actually go to $300,000. If we increased them for inflation, they would go to $200,000. We, to build a consensus, only increased them to $130,000; but we did increase retirement funds to $260,000, but we felt that there were people other than retirees who deserve the protection to keep up with per capita income and inflation. So we increased everyone's coverage to 130, including small businesses and depositors, many of whom we found in testimony sell their house, deposit the entire proceeds in a financial institution and assume, sometimes tragically, that there is sufficient coverage. There are additional reasons why people are opposing this legislation. There is a question of cost. The CBO scored the same bill last year as a savings of $750 million. This year they say it has a cost of $1 billion. Chairman Powell of the FDIC responded to the CBO estimate and said this, because it conclusively rebuts any CBO estimate that this will cost the taxpayers and any argument that may be made on the floor today about the budgetary impact of the legislation, and he says, ``H.R. 522 provides the FDIC with the tools to achieve revenue neutrality in the management of the deposit insurance system. Because any analysis that determines 522 will result in an increase in net government spending must necessarily rely on assumptions regarding how the FDIC Board will exercise the discretion provided in the legislation.'' And here is the most pertinent part: ``I can assure Congress that the leadership of the FDIC has no intention of managing the deposit insurance system in a way that increases the cost to the government or increases the burden on insured institutions. The costs of the deposit insurance system will continue to be borne by the banking industry, but in a manner that establishes a strong risk-based premium system and avoids the procyclical risks inherent in current law.'' I do stress there are risks in the current law if we do not amend it. He also in a letter to this body on March 31 says, ``No analysis of the `costs' of legislation is complete without a full consideration of the benefits provided by the bill,'' and he goes on to list many benefits to the economy, to savers and to strengthening our banking institution. Another rabbit that has been turned loose by opponents of this bill is that the increase in coverage, the last increase was what precipitated the savings and loan crisis. That is simply not a fact. There were many causes. In fact, let me read from a report from this own body as to the reason for the savings and loan crisis. The causes of the thrift crisis can be traced to a number of factors: poorly timed deregulation, the dismal performance of some thrift management, inadequate oversight supervision and regulation.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and insert extraneous materials on the bill H.R. 522, the Federal Deposit Insurance Reform Act of 2003.

Mr. BACHUS

Mr. BACHUS. Madam Speaker, I yield myself 3 minutes. The legislation before us today, H.R. 758, the Business Checking Freedom Act, is a result of two things. In 1996, in a joint report called Streamlining Regulatory Requirements, the board of governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the Comptroller of the Currency and the OTS determined that the 1933 statutory prohibition against paying of interest on business checking accounts no longer serves a public purpose. Last year, President Bush joined many others in saying that small banks should be allowed to pay interest on their small business checking accounts. The reasons for this are basically two- or threefold. One is, it is a free-market approach. More than that, though, there is an advantage now in the present prohibition against small banks. Large banks can offer complex sweep accounts or other sophisticated ways of offering implicit interest on checking accounts. Small banks simply do not have the resources to do this. Secondly, large corporations today have several alternatives with what they can do with their funds to get interest. Small businesses, more often than not, have to rely on checking accounts and are denied equal treatment. So this will level the playing field between small banks and larger financial institutions. It will also level the playing field between small and large businesses. I want to commend the gentleman from Pennsylvania (Mr. Toomey), the gentlewoman from New York (Mrs. Kelly), the cosponsors of this legislation. I want to particularly commend the gentleman from Ohio (Mr. Oxley) for making this a priority. In closing, I want to say that this legislation has passed the House twice in the 107th Congress. It has wide bipartisan support. It came out of the Committee on Financial Services on a large, one-sided vote. It has the endorsement of certain groups, of the Chamber of Commerce, NFIB, Independent Insurance Agents, American Community Banks, and I could go on and on. Finally, I simply want to say there is another provision in this, and this offers the Federal Reserve the right to pay interest on sterile reserves. Recently, they testified before our committee that by being allowed to pay interest, it would both increase the amount of interest that small depositors could make or a depositor could make on their deposits in financial institutions, and it would also lower the cost of consumer credit. Madam Speaker, I reserve the balance of my time.

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