Spencer Bachus

Mr. BACHUS

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

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

Mr. BACHUS. Mr. Chairman, this legislation passed out of the Subcommittee on Financial Institutions and Consumer Credit, which I chair, on a vote of 24 to four. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from Connecticut (Mr. Maloney), my Democratic colleague on the full committee.

Mr. BACHUS. Mr. Chairman, I yield 3 minutes to the gentlewoman from New York (Mrs. Kelly).

Mr. BACHUS. Mr. Speaker, the body has just heard a lot of information. It was probably about equally divided between information that is not relevant to the legislation before us and misinformation about the legislation. It is very hard in 5 minutes to rebut all of that. First, let me say that this has nothing to do with WorldCom, Enron, and Quest. Those companies are not in the rent-to-own industry, so any confusion, I hope we dispel that right up front. What the gentlewoman is talking about is the rent-to-own industry. It is the largest industry in America that is not regulated. The States are pretty much divided: One-third of them have no regulation, one- third of them have weak-to-moderate regulation, and one third of them have strong regulation. What this legislation does, it leaves in place all consumer protection legislation at the State level, all. It leaves all those laws passed by the State legislature, all, and I will explain that, all of them in place. It simply has a floor. It requires certain things. If the State has a stronger provision, that is applicable. If the State has a weaker provision, the Federal standard applies. Today, over 40 States do not require that they put a price tag on a rent-to-own item. Every consumer group has condemned this. This legislation will require a price tag so the consumer knows what he is paying, what it is costing him. In every State, in 46 States, the legislatures have looked at these transactions and they have said that it is not a consumer credit sale. It is not a credit sale, it is a lease or a lease-purchase or a rent- to-own. It is not a credit sale. But judges in three courts around the country have said, no, it is a credit sale. It is a consumer credit transaction, and we are going to apply all the Federal law that applies to those transactions to this. We are going to apply all the Federal laws that apply to those transactions, including an APR statement, a disclosure statement. The FTC, in a fairly exhaustive study, looked at that, and the Federal Reserve and the FTC said that requiring these APR statements and these consumer disclosures which are required for credit sales, when we apply them to rent-to-own, we confuse or mislead the customer. California does not do it, New York does not do it; but judges, not State legislatures, judges in three or four States have said we are going to do that. This legislation does change the law in Wisconsin, New Jersey, and one other State, Vermont. It changes it in those three States by saying that it is not a credit sale. It does not repeal any law that the legislatures passed. It does invalidate a judge-made law in those States. But in no case, in no case other than in those four States, three or four States, does it make any change in the law. Furthermore, Mr. Speaker, and I have said that repeatedly during this debate, there is nothing in this legislation that prevents a State from passing any law that they want to pass to ban or put additional restrictions on these sales, except to mischaracterize it as a consumer credit transaction. These people are going in and they are renting property, that is what they say, and they do not think they are applying for a loan. Those regulations should not apply to them. The gentlewoman from California (Ms. Waters) has asked us to really apply the law of four States to the law of 46 States. I say, resist this motion to recommit and let us get on with protecting the people, the 15 million Americans that use these rent-to-own transactions.

Mr. BACHUS. Mr. Chairman, I yield 5 minutes to myself to speak in support of this legislation. Mr. Chairman, I speak to the whole House when I say that the subject of the legislation we find ourselves debating on the floor here today is the rent-to-own industry and the need to have some floor of regulations over that industry. There are 15 million citizens who annually use rent-to-own stores. There has been an exhaustive study, a survey of rent-to-own by the Federal Trade Commission. In fact, they made several suggestions and proposals. They outlined abuses in the industry. Let me speak to that industry. That industry is an industry, like many others, that people, their only connection with it is they drive by a store, and we see more and more rent-to-own stores in their neighborhood or in their city, but they do not know much about it. What the survey found is that people of all educational levels apparently are using rent-to-own. The number of people that have graduate school degrees, a good percentage of those people are using these stores. Sometimes people go in and they rent equipment, rent furniture for as little as a month or 2 months, or even 2 weeks. I recently talked to someone that said they had gone in a rent-to-own store, and their explanation was that they were going to be in a city for 2 months and they simply did not want to get a U-Haul. They checked on the U-Haul rate, and it was $900 out and $900 back, and so they made a decision to spend $1,500 on furniture. Many Members, such as the gentleman from North Carolina (Mr. Jones) and the gentleman from Connecticut (Mr. Maloney), felt there ought to be some protection for consumers. There are State laws in 40 percent of the States that have protections; but this will establish in all 50 States a floor of protection. With the floor of protection we do not, and I want to repeat this, we do not preempt State consumer laws. We do not preempt State consumer laws. So there will be 15 States, if we enact this legislation, that will have stronger laws than this legislation. There will be approximately 35 that have weaker laws. In fact, there are States that have no laws. There are a number of States that have no laws. They will suddenly have laws regulating this industry. In fact, the worse abuses were in those States with no laws. The abuses identified in this report, they are addressed in this legislation. There will be significant provisions in this legislation to stop those abuses. There are States with very strong laws. We do not preempt those laws. Do we preempt anything? Yes, we do. If we pass this law, there will be four States in which there is today an existing law, none which have been passed by the legislature, but four courts in four States have found that these are credit sales, and 46 States say they are leases. And those four States which say these are credit sales, we ought to give people disclosure like it was a credit sale, and we ought to show them the annual percentage rate. Well, the IRS has looked at this and they say this is not a credit sale, this is a lease. This is not a credit sale. The Federal Trade Commission and the Federal Reserve, we brought them in. We had them testify. Is this a credit sale or is it a lease-purchase or a lease? They both said it is actually misleading and confusing to consumers to have them sign, have them give an APR disclosure of the annual percentage rate. It is a confusing thing. It will add nothing. That is what the Federal Trade Commission and the Federal Reserve have said. And I think legitimately there are Members among us, and they have every right to their opinion, saying that the law in these four States, we do not want to preempt the four States that have said it is a credit sale. Well, the alternative is not to strengthen the law in 36 States. That is the choice we have. Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume. Let me simply respond to some of the arguments that we have heard here today and let me stress why I do not think those arguments have a lot of validity. They sound good. The gentleman from Wisconsin has said, ``We don't think there's a national problem,'' but the gentlewoman from California stood up and talked about all sorts of abuses in all sorts of States. The Federal Trade Commission outlined abuses in several States. We have almost 20 States that have no regulation. The gentleman from Wisconsin says that this is up to the States, that the States ought to do something about this. When it came to homeowners, when it came to people that transact business with financial institutions, with Fair Debt Collection Practice Act, the Equal Credit Opportunity Act, Truth in Lending Act, Consumer Lease Act, Electronic Funds Transfer Act, we felt like the American consumer, the American customer, was entitled to some Federal protection. There is no Federal protection. The gentleman did say that Wisconsin has acted, and acted in a tough way. Let me submit something to you. If we pass this legislation, there is nothing, nothing that prevents New Jersey, there is nothing that prevents Wisconsin, there is nothing that prevents Minnesota, there is nothing that prevents any of these States from banning these transactions. They can outlaw them. They can pass any type of tough legislation. The gentlewoman from California is going to offer an amendment to basically put the California law as the law of all 50 States because she says California has this really tough provision and we want it in this bill. It will still be the law after we pass this legislation. It will still be the law in California. But to get enough support to pass this legislation, we have set a floor. The gentlewoman from California talks about the attorney generals, that they wrote, all 50 of them, she said. But what you did not hear is that was to an original proposal before it came to the committee that I chair. When it came to the committee that I chair, we put in a provision that it does not preempt tougher consumer protection laws in those States that have it. In fact, my own attorney general who signed that letter wrote me September 13 and now says this legislation before us today will offer important new consumer protections for the citizens of my State. I do not have any protections now. The people of my State do not have any protections. The gentlewoman from California, and I applaud her, and another gentlewoman from California and one of the gentlemen from Florida said, ``In 40 States, you walk in these stores and there is not even a price tag on there. There is not even a disclosure as to the price.'' That is true. What did we do? We added a provision in this legislation that we are considering which, if it passes today, will require that in all 50 States, something that two of the States of the four that call this a credit sale do not even have today. And important, they said one of the most important protections a consumer ought to have. They will have that even in two of these States, including North Carolina. Several things that North Carolina does not have if this law passes, they will have a much stronger law. Yes, we are overruling a judge in four States because we have to have a national standard. This does not work. You have to either call it a lease if you are going to have a Federal statute, or you have to call it a credit sale. Forty-six legislatures have said it is a credit sale. Those States, not legislatures, 46 States, including the majority of legislatures who have looked at it, well, all the legislatures that have looked at it say it is a lease. None of the legislatures have said it is a credit sale. Four judges sitting in four courts in four States have said it is a credit sale. The FTC, the Federal Reserve said this could be confusing. The IRS says it is not, that it is a lease. That is how we have come down. We have come down on the side of every legislature that has looked at this, the two Federal agencies that have looked at this, we have come down on that side. We have disagreed with four judges sitting in four courtrooms across the country because we have to come down on one side or the other because we strengthen the protections in 36 States, and we absolutely do not preempt any law that California has on the books today or other States, the 15 that have stronger laws except the credit sales thing. Mr. Chairman, I reserve the balance of my time.

Mr. BACHUS. Mr. Chairman, I yield such time as he may consume to the gentleman from North Carolina (Mr. Jones), one of the sponsors of the legislation. North Carolina has been mentioned as one of the four States, and there are sponsors of this legislation from the State of North Carolina.

Mr. BACHUS. Mr. Speaker, I rise to seek time in opposition.

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, one thing I would like to point out, I have great respect for the gentleman from Wisconsin (Mr. Sensenbrenner), who did speak against this legislation. I would point out to the gentlewoman from California (Ms. Waters) that what the gentleman said was we do not need any Federal legislation regulating this industry. That is not what the gentlewoman from California (Ms. Waters) has said or what the gentleman from New York said, or what all of these consumer groups have said. What they have said is we need to regulate this industry. There is certainly not disagreement among the opponents. I think some of the opponents want the present state of affairs where there is absolutely no regulation in a number of States to continue. There are others that want to put this industry out of business, and then there are those of us in the middle who believe this is a legitimate business. We may never go there as customers. There are a lot of stores I do not go in as a customer, but I do not try to close them down because 15 million Americans do go there. There are Members of this body who think if they do that they are crazy and we ought to protect them by stopping them from going in those stores. I would say to the gentleman from New York (Mr. LaFalce) that I went in a store in Manhattan a few weeks ago. There were a lot of things in that store I cannot afford. I simply turned around and walked out because the price was not right. There are people that might want to pay that. There were many people paying that much for those items. I could not do it. I made a decision. People are free to come in and leave. People are free to make choices in America. There does need to be some minimum protection for those customers. Whether this legislation passed or not, people are going to continue to go in rent-to-own stores. They are going to continue to operate in almost all our States. When they do, I think they ought to be protected. And this legislation does not preempt any of the strong consumer protection laws that exist. It preempts none of them except the characterization as a credit sale, and we have been over and over that in those four States. It does that. Now, let me talk about the amendment for a minute because this amendment is another example of we do not want to preempt, but here is an amendment that we want to use to preempt. It is a preempting agreement. It preempts the law of 49 States. What the gentlewoman from California (Ms. Waters) has offered here is an amendment that would overturn the long-established contract law in 49 States and make the law of California the national standard. It would apply the law of California. Right now in the legislation we have, what she is advocating is the law of California and once this passes, if it passes, will continue to be the law in California. But we will not put that law on the other 49 States because what California does, it says when there is a rent-to- own agreement or a rent-to-purchase agreement, or the consumer leases something, they cannot shift the liability for that property onto the customer except, and there is an exception, and I do not want to misrepresent this, it says if the customer deliberately causes damage to the item or it occurs due to the consumer's negligence, then the merchant can get his money back. The gentlewoman and I agree on that. If somebody goes out and they rent a TV, they get home and they get mad at their wife and throw the TV at their wife or husband, they have to pay for the television. She and I agree that is the thing to do. But we do not agree if the husband or the wife rents the TV, the wife takes the TV home, the husband picks up the TV and throws it out the window, then I think the merchant ought not have to pay for that. She says no, no. That was not the customer, that was the husband of the customer. I believe when something is rented and taken home, if the next door neighbor comes in and they destroy it, or the renter's son or daughter destroys it, the renter has it and it is destroyed, I think the renter ought to be responsible for that, and 49 States say they ought to be responsible for that. I can tell Members, we all respect California and their position on this; but this is something California feels ought to be the law. I can tell Members in Alabama, if I rent something to somebody and their dog chews it up or their wife breaks it or their next door neighbor destroys it, or even somebody comes in and steals it from them, I do not feel like that is the merchant's responsibility. I feel it is the customer's responsibility. I happen to believe that. The legislatures and the courts of 49 States agree with me. California is different. This legislation says that is right. The law of California stays in place because we do not preempt any of those laws. Now what that does is that means it drives up the cost for everybody in California. If California wants to make that decision, that is fine. I do not agree. I want to close simply by thanking the gentleman from Ohio (Chairman Oxley) for his leadership on this bill, again thanking the gentleman from North Carolina (Mr. Jones) for his leadership, and the gentleman from Connecticut (Mr. Maloney) for what I think is a very important piece of consumer protection. It does not go as far as some have urged, but it does not preempt States that go further. It establishes a floor in those States that have weak or no protection. Mr. Chairman, I yield back the balance of my time.

Mr. BACHUS. Mr. Chairman, I yield 6 minutes to the gentlewoman from New York (Mrs. Kelly).

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in opposition to the amendment. Mr. Chairman, this amendment, and I think the gentleman from New York (Mr. LaFalce) was accurate in basically much of what he said, and what he said was, I believe that we ought to have a price control; we ought to have price restriction. And 12 States do have that in their State legislation. And after we pass this legislation today, if the State chooses to pass it, those price restrictions will still be in place. There is no preemption. As I have said repeatedly on the floor of this House in this debate here today, the only thing, the only thing that is preempted is the decision by four judges in four States, three or four States, there is a question in one of the States, whether to call this credit sales. And we have come down on the side of what the great body of evidence, all the State legislatures who have considered this as for tax treatment, IRS, how they have treated it, as a lease. And as I said, we have to make that decision if we are to have Federal regulation. We have done that. And in those four States, there are three States, they are absolutely right, if this is an important protection for consumers in this State then that is taken away. However, I will tell you that in Wisconsin because of legislation, all the rent-to-own stores are closing or have closed so they are not giving anybody in Wisconsin that approach, did not give them any choice. It basically drove the industry out. I applaud the gentlewoman from California (Ms. Waters) for her honesty. She has said, I do not like this industry. I do not want them in business. And she has been upfront about that. As far as the consumer groups that we keep hearing about, when this legislation was introduced, they came to the Hill en mass and they said, We like some of what is in here, but I will tell you what we do not like, we do not like preempting those States with stronger laws and we are not going to support legislation until that is done. Now, I would not have co-sponsored the bill. I did not introduce the bill. It came to my committee and at that time before 4 or 5 days of hearing, that is what they came to me and said. They said, Absolutely we will not support it unless that is in it. Put that in it and we will talk to you. We had Members on both sides that did not like the fact that we preempted certain protections in certain States. So we have backed up, and we did not preempt any of those consumer protection laws. They are not preempted. The attorney general of Alabama in a letter that he wrote me this week said, ``If enacted, the legislation employed would set the floor for consumer protection while leaving intact existing State regulations that offer greater protection to consumers; and going forward under this legislation, any State legislature that chooses to do so can enact additional protection for its citizens that go beyond what is included in H.R. 1701.'' Now, that is absolutely a fact. I do not think there is any argument there. I applaud the gentlewoman from California (Ms. Waters). I applaud the other gentlewoman from California in that they have been opposed to this legislation and that they will be opposed to this legislation from now on. They want these stores closed. And there may be other Members of the body that want that. There may be others that want price restrictions. Twelve States have opted for it. I really do not understand this. I do not understand how 38 States have said we do not want price restrictions. Yet the gentleman from New York (Mr. LaFalce), who said, We are preempting what four States have done, now gets up with an amendment that changes the law in 38 States. Where is the consistency there? When this proposal came up we went to the Federal Reserve. The gentleman from New York has said the Federal Reserve will set these cash prices formulas. Can my colleagues imagine when the Federal Reserve heard about an amendment that the Federal Reserve would have to start taking all their time and going around and setting these maximum prices? Do I need to inform this body they are opposed to having to do this? Absolutely they are opposed to it. As the FTC concluded in its report, and I have it on page 98, we talked about all these exorbitant and excessive profits. The FTC looked at that, page 98, and what they said is they said there are almost no barriers to entering this business. They said a person can get a store front, a delivery truck and an inventory of household merchandise, and they can enter the industry. They said because there are no barriers to entering this industry, if people are making a big profit, somebody else will come in down the street and open up, and they said that excessive profits can be maintained only if there are significant barriers to entering, to collusion, or some type of anticompetitive barrier. There do not appear to be any significant barriers to entry that would prevent new firms from entering the rent-to-own industry. That is what they concluded. They said no evidence that excessive profits, and they said, therefore, and the issue here was price restrictions, until it is shown that there are some barriers to introduction in this industry or some States erect barriers to people getting into the industry, and I know of none, that price restrictions that are contemplated, they should be explored more fully but they should not be enacted. Another thing, the consumer groups, and my colleagues know these same consumer groups, it is interesting, if we look back at some of the important legislation that this Congress has passed, legislation including the Consumer Leasing Act, Fair Debt Collection Act, Fair Reporting Act, these consumer groups, it never was good enough for them. They always opposed them. They always wanted a little more. They push for it but they wanted something else and they urge, and they will continue even though we have 46 States, we do nothing about strong protection, we increase protection. We increase protections in all 50 States. As I said, some of the four States that call this a credit sale do not require people to put a price tag on there. We require that. One of the consumer groups said the terrible abuse, the gentlewoman from California (Ms. Waters) pointed this out, to her credit, was that these people go in and they do not know what they are paying for this. There are 40 States throughout who do not require any disclosure today at where the item is as to the price they are paying, 40 States, including some that set the price. This legislation requires point-of-rental disclosures as to price, something that the consumer groups say is badly needed. This legislation does it. They oppose it. They say they want preemption because 12 States have gone beyond what we establish. They do not want us to interfere with those 12 States. So we did not. They are still opposed to it and they will be opposed to it ad infinitum, and that is okay. That is their right, but the one thing that we do not need in this body is we do not need to misrepresent this thing as a bill that does not increase consumer protection because it absolutely does. In 46 States it absolutely does, and four where they have the credit sales thing, one can argue that that effectively keeps people from going to rent-to-own stores. So in those four States, it might aid the industry, but in the other States it will not because it establishes new requirements, and because I am one of those 46 States I will be on the floor voting for this.

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 include extraneous material on H.R. 1701, the bill just passed.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I thank the gentleman for yielding me this time. Mr. Speaker, many of us serve on the Committee on the Judiciary because we have a legal degree from a good law school, we have a great legal education, but let me tell my colleagues, a legal education sometimes is a terrible thing to inflict on society. I think that the Supreme Court must have had too much legal education when they made the decision they made, because we know when our children go on line, when they get on their computers and they see child pornography, we know they can be exploited, we know they can be molested, and we know as parents that it does not make a bit of difference whether it is computer-generated, actual or real. The Supreme Court said this despicable junk can go on; it is not illegal if it is computer-generated. If a prosecutor cannot play the impossible game of picking out an actual, identifiable child, then the molester goes off, he is free to molest, free to continue to abuse our children. If there is anything as a society we ought to do, it is protect our young people. If there is anything we ought to do, it is stop playing legal games with our fine legal educations and start doing what ought to be done, and that is protecting our children from these sexual predators no matter whether they use computer-driven images or actual images. It is time to stop it. It is time to stop drawing legal distinctions.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on Monday June 17th, Tuesday June 18th, and Wednesday June 19th, I missed rollcall votes 230, 231, 232, 233, 234, 235 and 236 due to my previously scheduled surgery being conducted in Alabama. If I had been present I would have voted ``aye'' on each of these votes.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, on Tuesday June 4 and Wednesday June 5th, I missed Rollcall votes 207, 208, 209 and 210 due to my primary election being held in Alabama. If I had been present I would have voted AYE on each of these votes.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, Customs currently can do border searches of everything that enters or leaves the United States--with one exception: outbound mail shipped by the U.S. Postal Service. The U.S. Customs Service should be able to inspect merchandise that is exiting the United States through the U.S. Postal Service--just like it can inspect all merchandise that enters the United States through the Postal Service. [19 U.S.C. Section 482; 19 U.S.C. Section 1581; 19 U.S.C. Section 1582; 19 C.F.R., Part 145; 19 C.F.R., Part 162] Existing law enables the U.S. Customs Service to inspect merchandise exiting the United States via any mode of transportation--including truck, ship, car, airplane, private express carrier, or person. [22 U.S.C. Section 401; 22 U.S.C. Section 2778; 31 U.S.C. Section 5317; 50 U.S.C. App. Section 2411] The Postal Service claims that it is exempt from these laws--making it the only mode of export for which Customs cannot inspect outbound merchandise. In fact, the Postal Authority not only refuses to cooperate with the Customs Service, but they openly resist their efforts to carry out their statutory obligations. Customs' inspection of outbound and inbound merchandise is Constitutional. Under the Constitution, the Customs Service has outbound and inbound border search authority for all merchandise, including that carrier on or in any airplane, vessel, vehicle, person, package, or envelope departing or entering the United States. Neither the Fourth Amendment nor any statute prohibits Customs from inspecting outbound merchandise. [See, e.g. California Bankers Assn. v. Schultz, 416 U.S. 21 (1973). United States v. Ramsey, 431 U.S. 606 (1977). United States v. Cardona, 769 F.2d 625 (9th Cir. 1985). United States v. Whiting, 781 F.2d 692 (9th Cir. 1986). United States v. Berisha, 925 F.2d 791 (5th Cir. 1991).] Furthermore, courts have upheld Customs' general border search authority and, in particular, over inbound mail and outbound shipments. These decisions support Congress acting to affirm Customs' authority. [See United States v. Ramsey; United States v. Berisha; United States v. Ezeiruaku, 936 F.2d 136 (3d Cir. 1991); United States v. Cardona; United States v. Udofot, 711 F.2d 831 (8th Cir. 1983)] The general public may not know about the inability of Customs to effectively search outbound merchandise, but others do. Some enterprising sellers of illegal drugs have even boldly stated on their internet site that mail-order customers should use the mails to avoid inspections. Do not use UPS, Federal Express, or any other overnight express service, as customs may look at it. Regular mail (registered, if you like) is anonymous and safe. Recent Congressional testimony of Customs pointed to the lack of export examination requirements as to USPS shipments as the ``greatest enforcement stumbling blocks,'' creating ``a money launderer's dream- come-true.'' [Testimony, U.S. Customs Service, House of Representatives Committee on Government Reform, Criminal Justice, Drug Policy and Human Resources Subcommittee Hearing, May 26, 2000.] Customs testimony at this hearing pointed out that not just money laundering is involved, that this ``loophole literally creates a haven for smugglers of all kinds. A flawed system such as this can facilitate many other illegal exports and in-transit shipments such as child pornography, items or materials to be used in terrorist attacks, weapons, sensitive military or high tech products not licensed for exportation . . .'' The Postal Service's position is clearly anti-law enforcement and allows the U.S. Postal Service to be the outbound smuggling method of choice for drug cartels and other criminal entities. No public policy is served by exempting outbound Postal Service shipments of merchandise from Customs' inspection. I urge the membership to give this legislation the strongest vote of confidence.

Mr. BACHUS. Mr. Chairman, I thank the gentleman for yielding me this time. Mr. Chairman, the approach taken in this legislation to outbound mail only makes common sense. There ought to be parity between outbound mail and inbound mail. Presently, there is absolutely no dispute that customs can search all inbound mail. And they do that. However, despite a number of court decisions, despite the Federal regulations, despite code provisions, postal regulations do not allow the post office to search outbound mail. It makes no sense. If you ship something by FedEx or UPS, if you put it in a car, put it on a ship, fly it in an airplane, even put it in your own pocket and you leave the country, you are liable to search. The only search that is not allowed is if you put it in an envelope and mail it out. Now, this disparity has been addressed, and I will name those decisions. There have been two Supreme Court decisions, Shultz, the Ramsey case. The Ninth Circuit has considered this; the Fifth Circuit has considered this. They have all said that customs has the right to do it. But what happens when they try to do it? Well, the postal service does not allow them to do it. Now, as a result, when the postal service has stopped this, there have been several protests lodged. In fact, the first was that we had testimony in this Congress in 2000 and 2001 that drug dealers were using outbound mail to ship the proceeds of drug sales. And, in fact, I introduced at a committee hearing a drug dealer's Web site where they say this. Here is what they say, and I am going to submit this for the Record. ``Do not use UPS, Federal Express, or any other overnight express service, as customs may look at it. Regular mail is anonymous and safe.'' That is actually on a drug dealer's Web site. But it was not just the drug dealers who knew this. President Clinton commissioned the International Crime Control Strategy Committee, a bipartisan committee. They looked at that. Among their findings was this: ``Customs has identified various methods of currency smuggling that remain a challenge. Notable among these methods is the exploitation of the U.S. mail. Hundreds of thousands of dollars can be smuggled out of the United States, at only the cost of postage, in letters and packages.'' But scariest of all is testimony that we heard prior to September 11 that terrorists were using the U.S. mail, that they were exploiting the U.S. mail. We heard testimony, the committees of this Congress, that we were creating one of the greatest enforcement stumbling blocks United States agencies had in fighting terrorists and money laundering. Despite that, the post office continued not to cooperate with the Treasury, the FBI and the customs. Therefore, we had this headline which we could have avoided or possibly avoided by adopting this language prior to September 11: Attacks Show a Lack of Cooperation Between Agencies. Has September 11 not taught us one thing? Has it not taught us that the post office ought to be a partner in our fight against terrorism? This language should have been adopted before September 11. Let us adopt it now. Let us slam the door on money launderers, terrorists and drug dealers and let us do it today. The U.S. Customs Service should be able to inspect merchandise that is exiting the United States through the U.S. Postal Service--just like it can inspect all merchandise that enters the United States through the Postal Service. Existing law enables the U.S. Customs Service to inspect merchandise exiting the United States via any mode of transportation--including truck, ship, car, airplane, private express carrier, or person. The Postal Service claims that it is exempt from these laws--making it the only mode of export for which Customs cannot inspect outbound merchandise. Customs' inspection of outbound and inbound merchandise is Constitutional. Under the Constitution, the Customs Service has outbound and inbound border search authority for all merchandise, including that carried on or in an airplane, vessel, vehicle, person, package, or envelope departing or entering the United States. Neither the Fourth Amendment nor any statute prohibits Customs from inspecting outbound merchandise. Courts have upheld Customs' general border search authority, and in particular over inbound mail and outbound shipments. These decisions support Congress acting to affirm Customs' authority. See United States v. Ramsey, 431 U.S. 606 (1977); United States v. Berisha, 925 F.2d 791 (5th Cir. 1991); United States v. Ezeiruaku, 936 F.2d 136 (3d Cir. 1991); United States v. Cardona, 769 F.2d 625 (9th Cir. 1985); United States v. Udofot, 711 F.2d 831 (8th Cir. 1983). Some enterprising sellers of illegal drugs have even boldly stated on their internet site that mail-order customers should use the mails to avoid inspections: Do not use UPS, Federal Express, or any other overnight express service, as customs may look at it. Regular mail (registered, if you like), is anonymous and safe. Recent congressional testimony of Customs pointed to the lack of export examination requirements as to USPS shipments as the ``greatest enforcement stumbling blocks,'' creating ``a money launderer's dream-come-true.'' Testimony, U.S. Customs Service, House of Representatives Committee on Government Reform, Criminal Justice, Drug Policy and Human Resources Subcommittee Hearing, May 26, 2000. Customs testimony at this hearing pointed out that not just money laundering is involved, that this ``loophole literally creates a haven for smugglers of all kinds. A flawed system such as this can facilitate many other illegal exports and intransit shipments such as child pornography, items or materials to be used in terrorist attacks, weapons, sensitive military or high tech products not licensed for exportation . . .'' The Postal Service's position is clearly anti-law enforcement and allows the US Postal Service to be the outbound smuggling method of choice for drug cartels and other criminal entities. No public policy is served by exempting outbound Postal Service shipments of merchandise from Customs' inspection. Protect the U.S. Border While Maintaining Privacy--Privacy of the U.S. Mail Is Not at Risk parity between outbound and inbound mail shipments The U.S. Customs Service should be able to inspect merchandise that is exiting the United States through the U.S. Postal Service--just like it can inspect all merchandise that enters the United States through the Postal Service. [19 U.S.C. Sec. 482; 19 U.S.C. Sec. 1581; 19 U.S.C. Sec. 1582; 19 C.F.R., Part 145; 19 C.F.R., Part 162] parity between modes of export Existing law enables the U.S. Customs Service to inspect merchandise exiting the United States via any mode of transportation--including truck, ship, car, airplane, private express carrier, or person. [22 U.S.C. Sec. 401; 22 U.S.C. Sec. 2778; 31 U.S.C. Sec. 5317; 50 U.S.C. App. Sec. 2411] The Postal Service claims that it is exempt from these laws--making it the only mode of export for which Customs cannot inspect outbound merchandise. constitutional basis Customs' inspection of outbound and inbound merchandise is Constitutional. Under the Constitution, the Customs Service has outbound and inbound border search authority for all merchandise, including that carried on or in an airplane, vessel, vehicle, person, package, or envelope departing or entering the United States. Neither the Fourth Amendment nor any statute prohibits Customs from inspecting outbound merchandise. [See, e.g., California Bankers Assn. v. Shultz, 416 U.S. 21 (1973). United States v. Ramsey, 431 U.S. 606 (1977). United States v. Cardona, 769 F.2d 625 (9th Cir. 1985). United States v. Whiting, 781 F.2d 692 (9th Cir. 1986). United States v. Berisha, 925 F.2d 791 (5th Cir. 1991).] letter privacy Allowing Customs to inspect outbound merchandise sent via the Postal Service does not change the law that Customs Officers may not open sealed letter class mail that only contains correspondence without a warrant or consent. [19 C.F.R. Sec. 145.3] For inbound Postal Service shipments, the Customs regulations prohibit Customs officers from opening letter class mail that contains only correspondence except when either a warrant or the consent of the sender/addressee is obtained. The Postal Service has endorsed these regulations for inbound shipments and they could easily be applied to outbound Postal Service shipments.

Mr. BACHUS

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

Mr. BACHUS. Mr. Speaker, I thank the gentleman for yielding me this time, and let me just close by saying that there has been a rapid insurance deposit growth. In other words, people are putting a lot of money in accounts, in 2 or 3 financial institutions in this country, which have gone out and bought multiple subsidiaries and are advertising $500,000, $600,000, and $700,000 worth of coverage. Now, where is that money coming from, those hundreds of millions of dollars? It is coming from community banks in small towns and mainstream banks. People ought to have an option not to put that money in a Wall Street financial institution. A small business that has $300,000 or $400,000 deposited, they ought to have the option of putting that in their hometown bank. We talk about $100,000. Yes, $10,000 may be the average account, but there are a lot of small businesses in this country that maintain one bank account in their local bank. They ought to have more coverage.

Mr. BACHUS. Mr. Speaker, we had several speakers that wanted to speak out in favor of this measure and we have only got a limited amount of time. I ask unanimous consent that both sides be given an additional 10 minutes.

Mr. BACHUS. Mr. Speaker, I yield 3\1/2\ minutes to the gentlewoman from California (Ms. Waters) to speak in support of the legislation.

Mr. BACHUS. Mr. Speaker, I yield 5 minutes to the gentleman from New York (Mr. LaFalce), the ranking member of the Committee.

Mr. BACHUS. Mr. Speaker, I yield 2 minutes to the gentleman from South Dakota (Mr. Thune) in support of the legislation.

Mr. BACHUS. Mr. Speaker, parliamentary inquiry. Mr. Speaker, the gentleman consumed about a minute on that explanation, and that does go towards his time, does it not?