Richard Baker

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Chairman, if the gentleman would continue to yield, I was talking about the amendment of the gentleman from Massachusetts, and the results of it and others in the concentration of poor people.

Mr. BAKER of Louisiana. Mr. Chairman, I regret that. If I had had more time, I would have.

Mr. BAKER of Louisiana. Mr. Chairman, will the gentleman yield?

Mr. BAKER of Louisiana. Mr. Chairman, I demand a recorded vote, and pending that I make the point of order that a quorum is not present.

Mr. BAKER of Louisiana. Mr. Chairman, I thank the gentleman for his courtesy. I think this amendment really goes to the heart of the debate over how public housing should be managed in America. There is probably nothing more volatile with working families in America today than the thought that someone would be in need and not have a helping hand extended. Virtually everybody I talk to says if they are suffering, uneducated and want an education, if they are homeless and want to be safe in the evenings, we should do those things. All we ask is that those individuals extend the courtesy to us of trying to improve their own situation. But when you have people who live in house trailers, working a construction job, and moms at home trying to educate and care for those children, and you told them well, I tell you what, since you are having a bad month, I am the trailer park operator, I am just going to not worry about rent this month even though you are paying $25, where is the equity in that family who works to pay taxes from daylight until dark, who cares for the kids, who pays for the expenses at the grocery stores, who pays the rent on the house trailer, to say to them we are going to tax you at higher and higher rates and put money in government programs so there will be individuals who cannot read, but will not go to school; people without work, who will not get job skills? This is a revolution. It is a dramatic change in the philosophy of how we are going to try to help people. We are simply going to say you try, we will try. If you make the effort, we will give you the resources. But no longer are we going to say we are going to tax working families in America and provide free housing for individuals, with free utilities, with access to food programs, when you will not insist that your children remain in school, when dad will not go to a drug rehab program, and mom not get out and try to get her own job to help. In many cases, a small helping hand is not giving more money; it is giving opportunity, the opportunity for that individual to regain their own dignity and honor, the decency of work, the ability to get an education, and to walk in the front door and say to his children, here are your tennis shoes, I worked for them, I earned them, and I want to give them to you to provide for a better America. It is regrettable, it is despicable that we have generations of families who have grown up on programs of social dependency, and the only model they have is that dad no longer lives at home, mom goes to the mailbox and gets a check, and they live in public housing where they literally board themselves in behind the door at night because they are afraid of someone breaking in during the evening and stealing what little they have. We have to find a way to give dignity decency, and safety back to these individuals. And the safeguard for those who are worried that 83 cents a day, $25 a month, is too much a commitment to ask from someone who has got a shelter for their family? The housing authority may, upon a demonstration of hardship, grant a waiver to that family and not require them to pay that onerous 83 cents a day rent, for whatever period of time the housing authority determines is necessary. But nowhere should we say that anyone is entitled to free housing forever. Make some demonstration that you want to improve your personal circumstance and we will be there to help you. We will make sure that the drug dealers are out of your housing authority. We will make sure that your kids have a safe school to go to. We will make sure there is a job training program available to you, so you can get that job. But America is saying to us, stop throwing money away at faster and faster rates because we are not helping, we are in fact making it worse.

Mr. BAKER of Louisiana. Mr. Chairman, I demand a recorded vote.

Mr. BAKER of Louisiana. I am shocked.

Mr. BAKER of Louisiana. Does the gentleman mean these people are telling us if somebody goes to work they want them to be able to keep the money?

Mr. BAKER of Louisiana. Excuse me, because I am still having a hard time. We are characterizing local public housing authorities across this country as people who do not care about those people. By and large, are not most of these individuals who serve on these authorities either very low paid or volunteers trying to perform a public service to help people in their community have decent housing? Is it the belief that if we do what we are suggesting, as the chairman is trying to lead this Congress, in doing that we are going to go out into all communities in the country and start throwing people out of public housing, is that the belief?

Mr. BAKER of Louisiana. Mr. Chairman, does the gentleman mean people live in public housing for years?

Mr. BAKER of Louisiana. Mr. Chairman, does that mean, if the gentleman will continue to yield, that if we keep the current system in place, we discourage people from getting job skills and going to work and maybe one day moving out of public housing? Is that the problem?

Mr. BAKER of Louisiana. The very folks who are in charge?

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, today I would like to pay tribute to Dr. W.L. ``Bill'' Senn, one of Baton Rouge's most- respected businessmen and community leaders, on the occasion of his retirement after 38 years of service with Exxon Chemical Americas. Bill received bachelor's, master's, and doctoral degrees in chemistry from Louisiana State University and served in the U.S. Air Force. His Exxon career began in 1957 as a chemist in the Exxon Research Laboratories in Baton Rouge. He served in various supervisory assignments including department and division head posts until 1976. Dr. Senn served as manager of the company's engineering department for 2 years and then was named manager of Exxon's Baytown, TX chemical plant. In August 1981, he returned home to Baton Rouge as manager of the Baton Rouge Chemical Plant which he has headed since. Mr. Speaker, I've known Bill Senn since 1986 and have always sought and valued his counsel. Whenever I return home and whatever I do, Bill is always there supporting local communities with his time and talents. Since he and his wife, the former Patricia Harrison of Baton Rouge, will continue to make their home in Baton Rouge, I expect Bill will be just as active in the community after retirement as he is now. Highlights of his involvement in industry, governmental affairs, and community organizations include serving in the past as chairman of the board of directors of the Louisiana Chemical Association [LCA], chairman of the board of directors of the Louisiana Public Affairs Research Council, and chairman of the Baton Rouge United Way general campaign. He has been chairman of the board of directors of the Louisiana Chemical Industry Alliance since its inception and also currently serves on the LCA board. Mr. Speaker, Dr. Bill Senn has served his company and community with distinction and integrity. I value the counsel he has shared with me over the years and wish him the best as he moves on to new challenges and opportunities.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, today I am introducing comphensive legislation to provide the Federal Home Loan Bank System [FHLB] the tools it needs to expand on the significant contributions it has already made to the Nation's housing finance delivery system. It is especially fitting today, as we debate the role of the Federal Government in providing and stimulating economic development in the 104th Congress, to work with an existing private entity to deliver a much-needed and public purpose. The Federal Home Loan Bank System was established in 1932 primarily to provide a source of intermediate- and long-term credit for savings institutions to finance long-term residential mortgages and to provide a source of liquidity loans for such institutions, neither of which was readily available for savings institutions at that time the Federal Home Loan Bank System was created. In recent years, the System's membership has expanded to include other depository institutions that are significant housing lenders. The segment of savings institutions and other depository institutions that are specialized mortgage lenders has decreased in size and market share and may continue to decrease. The establishment of the Federal National Mortgage Association [Fannie Mae], the Federal Home Loan Mortgage Corporation [Freddie Mac], and the Government National Mortgage Association [Ginnie Mae], and the subsequent development of an extensive private secondary market for residential mortgages has challenged the Federal Home Loan Bank System as a source of intermediate- and long-term credit to support primary residential mortgage lenders. For most depository institutions, residential mortgage lending has been incorporated into the product mix of community banking that typically provides a range of mortgage, consumer, and commercial loans in their communities. Community banks, particularly those in rural markets, have a difficult time funding their intermediate- and long-term assets held in portfolio and accessing capital markets. For example rural nonfarm businesses tend to rely heavily on community banks as their primary lender. Like the savings association in the 1930's these rural community banks draw most of their funds from local deposits. Longer term credit for many borrowers in rural areas may therefore be difficult to obtain. In short, the economy of rural America may benefit from increased completion if rural community banks are provided enhanced access to capital markets. Access to liquidity through the FHLB System benefits well-managed, adequately capitalized community banks. For these banks, term advances reduce interest rate risk. In addition, the ability of a community bank to obtain advances to offset deposit decreases or to temporarily fund portfolios during an increase in loan demand reduces the bank's overall cost of operation and allows the institution to better serve their markets and community. Used prudently, the FHLB System is an integral tool to assist properly regulated, well-capitalized community banks, particularly those who lend in rural areas and underserved neighborhoods, a more stable funding resource for intermediate- and long-term assets. With that in mind, I have introduced this legislation today to enhance the utility of the Federal Home Loan Bank System. I want the mission of the System to remain strong in the ability to help Americans realize the dream of home ownership, but equally as important: I want the System to enrich the communities in which Americans build their dreams. America is the world capital of free enterprise. Free enterprise is the foundation on which the American dream is built, and it is the engine by which American ingenuity is driven. My legislation will help nurture American free enterprise. That is why I call this bill the Enterprise Resource Bank Act. The Enterprise Resource Bank Act will strengthen the System's mission to promote residential mortgage lending--including mortgages on housing for low- and moderate-income families. Enterprise Resource Banks will facilitate community and economic development lending, including rural economic development lending. And Enterprise Resource Banks will facilitate this lending safely and soundly, through a program of collateralized advances and other financial services that provide long- term funding, liquidity, and interest-rate risk management to its stockholders and certain nonmember mortgagees. Since 1932, the Bank System has served as a link between the capital markets and local housing lenders, quietly making more money available for housing loans at better rates for Americans. Today the Federal Home Loan Banks' 5,700 member financial institutions provide for one out of every four mortgage loans outstanding in this country, including many loans that would not qualify for funding under secondary market criteria. The bank system accomplishes this without a penny of taxpayer money through an exemplary partnership between private capital and public purpose. More than 3,500 of the bank system's current members are commercial banks, credit unions, and insurance companies that became eligible for bank membership in 1989. They demonstrate the market's value of the bank system by investing in the capital stock of the regional home loan banks. These institutions have recognized the advantages of access to the bank system's credit programs and have responded to their loan communities' needs for mortgage lending. As the financial marketplace grows larger and more complex, I envision the bank system as a necessary vehicle for serving community lending needs especially in rural and inner-city areas. The Federal Home Loan Bank System serves an active and successful role in financing community lending and affordable housing through the Affordable Housing Program [AHP] and the Community Investment Program [CIP]. The AHP Program provides low-cost funds for member institutions to finance affordable housing, and the CIP Program supports loans made by members to community-based organizations involved in commercial and economic development activities to benefit low-income areas. The Federal Home Loan Banks' loans--advances--to their members have increased steadily since 1992 to the current level of more than $122 billion. Since 1990, the banks have made $7.1 billion in targeted Community Investment Program advances to finance housing units for low- and moderate-income families and economic development projects. In addition, the banks have contributed more than $350 million through their Affordable Housing Programs to projects that facilitate housing for low- and moderate-income families. While these figures are impressive, the Federal Home Loan Bank System needs some fine tuning to enable it to continue to meet the needs of all its members in a rapidly changing financial marketplace. The Enterprise Resource Bank Act of 1996 recognizes the changes that have occurred in home lending markets in recent years, which is reflected in the present composition of the bank system's membership. Enacting this legislation will enhance the attractiveness of the banks as a source of funds for housing and related community development lending, and will encourage the banks to maintain their well-recognized financial strength. Specifically, my legislation--Targets the bank system's mission in statute to emphasize the System's important role of supporting our Nation's housing finance system and its potential role of supporting economic development by providing long-term credit and liquidity to housing lenders; Targets the bank system's mission in statute to emphasize the System's important role of supporting our Nation's housing finance system and its potential role of supporting economic development by providing long-term credit and liquidity to housing lenders; Establishes voluntary membership and equal terms of access to the System for all institutions eligible to become bank system members, and eliminates artificial restrictions on the banks' lending to member institutions based on their qualified thrift lender status; Equalizes and rationalizes bank members' capital stock purchase requirements, preserving the cooperative structure that has served the System well since it creation in 1932; Separates regulation and corporate governance of the banks that reflect their low level of risk while ensuring the banks can meet their obligations; and Modifies the methodology for allocating the bank system's annual $300 million REFCORP obligation so that the individual banks' economic incentives are consistent with their statutory mission to support primary lenders in their communities. Taken together, these interrelated provisions address the major issues identified in a recent series of studies of the bank system that Congress required from the Federal Housing Finance Board [FHFB], the Congressional Budget Office [CBO], the General Accounting Office [GAO], the Department of Housing and Urban Development [HUD], and a Stockholder Study Committee comprised of 24 representatives of Federal Home Loan Bank stockholder institutions from across the country. The Enterprise Resource Banks Act will make the banks more profitable by enabling them to serve a larger universe of depository institution lenders more efficiently, and it will return control of the banks to their regional boards of directors who are in the best position to determine the needs of their local markets. At the same time, it will provide for the safety and soundness oversight necessary to ensure that this large, sophisticated financial enterprise maintains its financial integrity and continues to meet its obligations. I first offered comprehensive legislation to modernize the bank system in 1992. The legislation is the culmination of efforts over the last 3 years to address in a balanced way the concerns of the banks' member institutions, community and housing groups, and various Government agencies. I look forward to passage of this important legislation to modernize an institution that works to improve the availability of housing finance and the opportunity of credit for all Americans, particularly those who are underserved.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, today, I am introducing legislation that encourages the Bureau of Printing and Engraving to consider making Federal Reserve Notes tactually identifiable by the blind and visually impaired. This legislation enjoys considerable bipartisan support from my colleagues on the House Committee on Banking as well as other Members who share the same interests in assisting visually impaired individuals exert their independence. In March 1994, the Bureau of Engraving and Printing commissioned the National Academy of Science to execute a study entitled ``Current Features for Visually Impaired People.'' This recently published study explores methods of making currency more accessible for all Americans. The report concluded that the needs of the blind could be better served if further study on specific changes such as size, color, and tactile marks be initiated. Currently, the Department of the Treasury is engaged in efforts to redesign the Federal Reserve Note to prevent counterfeiting. Indeed, the new $100 bill is prepared to be issued nationwide right now. With this window of opportunity upon us, I believe Congress has the chance to assist the millions of visually impaired Americans who strive to live independently by marking their money more accessible to them. My bill simply endorses the efforts of the Bureau of Printing and Engraving to study cost-effective tactile changes in Federal Reserve Notes and encourages the incorporation of those change in the national currency. My bill does not cost the Federal Government any money, nor does it impose any undue, unfair mandates. Such a minor change in currency will have a significant impact on the independence of visually impaired Americans. Further, a tactual mark can serve other purposes, such as being an additional counterfeit deterrent. Visually impaired individuals are capable, independent people whose valuable contributions touch all of our lives. It is important that all Americans are afforded equal opportunities to perform at the best of their abilities. My bill stresses that importance. I hope all Members will join me to pass this legislation.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Chairman, I thank the gentleman from Illinois for yielding this time to me. Mr. Chairman, this debate is really unbelievable. We are standing here tonight saying let us cut them loose, let us cut the money off, let us save taxpayers some good hard-earned tax dollars. We are going to save them 2 cents on that candy bar. Yes, we believe that. When the price of sugar drops, we know the price of those candy bars and cold drinks are going to come plummeting. In the meantime we cannot figure out why Americans cannot compete. OSHA, IRS, EPA, name it, we have got them crawling across the farm. They tell you where you can plant, they tell you when you can plant, they tell you what you can plant. They tell you after you plant it and you grow it and you are successful in the hurricane or an insect does not eat it because you cannot get your insecticides approved by some EPA regulator, they tell you what you can sell it for, and then if that is not enough we tell you who you can sell it to. OK, fellow, if you want to cut us loose, set us free. Let us farm. Let us grow our crop. Let us be like any other business in America, sell where we want to for what we can get. We will not have a problem. Get the Government off the farm and we will make a profit. Otherwise leave us alone.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, today I have introduced legislation that will be known as the Entrepreneurial Investment Act. The legislation will make it possible for roughly 5,000 of the Nation's 5,300 bank holding companies to make equity investments in the customers of their community-based banks. Business often needs equity capital to create new or retain existing jobs. This legislation acknowledges that a community banker knows his customer and is well positioned to invest some of his excess holding company capital in equity investments. Passage of the Entrepreneurial Investment Act will mean that communities will be better served by facilitating private sector economic development and job growth. This legislation has been drafted in consultation with the Federal Reserve.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Chairman, I rise to express my appreciation to the chairman and to the gentleman from California [Mr. McKeon] and also the gentleman from South Carolina [Mr. Graham] on working together to reach an accommodation with regard to the important issue of vocational rehabilitation. As the manager's amendment now stands, it would provide the ability of the State Governor to elect and to set up an independent commission at the State level to manage the resources of vocational rehabilitation delivery services. This is an extremely important step in providing consistency for those States who have aggressive vocational rehabilitation services in place. It is an important accommodation the chairman has made. I rise on behalf of all those interests who have expressed grave concerns about the future delivery of those services in the various States in saying we very much appreciate the courtesies extended and the willingness to meet the needs of that important community of service.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, 25 years ago, Congress took a bold and innovative approach to help millions of American families own a home. During 1969 and 1970, hard-working Americans who wanted to buy a home were confronted with an economic nightmare of high inflation and escalating interest rates. In short, money to buy a home was scarce and expensive. On July 24, 1970, in response to the collapse of the country's mortgage finance system, Congress created the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac. Its mission was clear: to help Americans buy homes by tapping a consistent flow of funds from national and international capital markets. Freddie Mac has dedicated its resources and innovation to fulfilling that mission. Since 1970, Freddie Mac has purchased $1.2 trillion in mortgage loans, which has enabled 16 million American families achieve the dream of an affordable and decent house. Freddie Mac purchases mortgage loans from lenders, packages these loans into securities, and sells these securities to investors. Through this process, Freddie Mac has created a broad, liquid, and efficient nationwide secondary mortgage market that is the envy of the world. As my colleagues are acutely aware, in these times of severe budget restraints, it is important that the private and the public sector join as partners to increase housing opportunities for low- and moderate- income families. Freddie Mac is an exemplary model of this partnership. Freddie Mac has worked with State and local governments to leverage resources for homeowners across the Nation. In addition, Freddie Mac has increased its mortgage purchases of low- and moderate-income homebuyers from 28 percent in 1993 to 38 percent in 1994. Many of these mortgages are for homes owned by minority homebuyers and in central cities and in rural areas. Mr. Speaker, by every measure Freddie Mac is a great success. As we work to consolidate government to serve taxpayers more effectively, we call on Freddie Mac to continue its commitment to all American homebuyers from all walks of life. I am sure that my colleagues and the American people join me in expressing our appreciation and congratulations to Freddie Mac on their 25th anniversary. We wish Freddie Mac well in its next 25 years.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, I rise to discuss an important issue that has received little attention thus far in the 104th Congress: reform of the REA's subsidized loan program for electric cooperatives. The REA has long been the target of loud criticism by many who believe the Federal Government's role in direct, subsidized lending to utilities should be curtailed. The REA has changed its name to the Rural Utilities Service [RUS], but it continues to provide subsidized loans to many healthy, financially stable electric co-ops at a cost of millions of dollars each year. Legislation I have introduced today, the Rural Electrification Loan Reform Act, would bring reform to this program which needs an overhaul. I believe we should reform the REA electric loan program in a manner consistent with the free-market principles that motivate our balanced budget proposal. The concept driving this reform legislation is simple: If an electric co-op is able to obtain credit at a reasonable rate and terms from private lenders, then that co-op should not be able to participate in the taxpayer-subsidized REA program. The Federal Government simply should not be the lender of first resort for many of these co-ops. Other Federal programs, including Small Business Administration [SBA] and Farmers' Home loans, now use this reasonable credit-elsewhere test in an effective manner. Farmers and small businesses must try to obtain credit from banks and other private lenders before turning to Federal loan programs. We should enact this reform to bring the REA program in line with other Federal lending programs. Instituting a credit-elsewhere test is a responsible way to reform the program in order to push the healthier electric co-ops toward private lenders, while preserving a scaled-back REA subsidized loan program for the struggling co-ops in the most distressed parts of rural America. My legislation will not terminate this REA program. Rather, it would concentrate the loan program for only those co-ops that can show a true need for assistance. Many do not realize that most electric co- ops now must obtain 30 percent of their financing from private sources, while the other 70 percent comes from the REA loan program at a subsidized interest rate. Congress should require co-ops to try to obtain 100 percent of their credit from a source other than the Federal Government, and retain the REA program for those co-ops that cannot access private capital. I certainly recognize the continuing need for subsidized credit assistance in some parts of rural America--including some parts of rural Louisiana. And if this legislation is enacted, these areas would continue to receive loan assistance from the REA program. But Congress must now make many difficult choices if we want to reach a balanced budget by 2002. I believe these are Federal dollars which could be better spent. [[Page E 1319]] As a longtime member of the House Banking Committee and the current chairman of the Subcommittee on Capital Markets, I have an interest in encouraging the use of private sources of credit wherever possible. I believe there is a larger, more active role private lenders can play in addressing the credit needs of electric co-ops. I ask the House Agriculture Committee to hold hearings to explore these reforms of the electric loan program.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Speaker, today I am introducing comprehensive legislation to provide the Federal Home Loan Bank System the tools it needs to expand on the significant contributions it has already made to the nation's housing finance delivery system. It is especially fitting today, as we debate the future of housing and housing finance in the 104th Congress, to work with an existing private entity to deliver a much need public purpose. Since 1932, the Bank System has served as a link between the capital markets and local housing lenders, quietly making more money available for housing loans at better rates for Americans. Today the Federal Home Loan Banks' 5,400 member financial institutions provide for one out of every four mortgage loans outstanding in this country, including many loans that would not qualify for funding under secondary market criteria. The Bank System accomplishes this without a penny of taxpayer money through an exemplary partnership between private capital and public purpose. More than 3,200 of the Bank System's current members are commercial banks, credit unions, and insurance companies that became eligible for Bank membership in 1989. They demonstrate the market's value of the Bank System by investing in the capital stock of the regional home loan banks. These institutions have recognized the advantages of access to the Bank System's credit programs and have responded to their local communities' needs for mortgage lending. As the financial marketplace grows larger and more complex, I envision the Bank System as a necessary vehicle for serving community lending needs especially in rural and inner-city credit areas. The Federal Home Loan Bank System serves an active and successful role in financing community lending and affordable housing through the Affordable Housing Program [AHP] and the Community Investment Program [CIP]. The AHP program provides low-cost funds for member institutions to finance affordable housing, and the CIP program supports loans made by members to community-based organizations involved in commercial and economic development activities to benefit low-income areas. The Federal Home Loan Banks' loans--advances--to their members have increased steadily since 1992 to the current level of more than $122 billion. Since 1990, the banks have made $7.1 billion in targeted Community Investment Program advances to finance housing units for low- and moderate-income families and economic development projects. In addition, the banks have contributed more than $350 million through their affordable housing programs to projects that facilitate housing for low- and moderate-income families. While these figures are impressive, the Federal Home Loan Bank System needs some fine tuning to enable it to continue to meet the needs of all its members in a rapidly changing financial marketplace. My legislation recognizes the changes that have occurred in home lending markets in recent years which is reflected in the present composition of the Bank System's membership. Enacting this legislation will enhance the attractiveness of the banks as a source of funds for housing and related community development lending, and will encourage the banks to maintain their well-recognized financial strength. Specifically, my legislation: Articulates the Bank System's mission in statute to emphasize the System's important role of supporting our nation's housing finance system by providing long term credit and liquidity to housing lenders; establishes voluntary membership and equal terms of access to the System for all institutions eligible to become Bank System members, and eliminate artificial restrictions on the Banks' lending to member institutions based on their Qualified Thrift Lender status; equalizes and rationalizes Bank members' capital stock purchase requirements, preserving the cooperative structure that has served the System well since its creation in 1932; separates regulation and corporate governance of the Banks that reflect their low level of risk while ensuring the Banks can meet their obligations; and modifies the methodology for allocating the Bank System's annual $300 million REFCORP obligation so that the individual Bank's economic incentives are consistent with their statutory mission to support home lending. Taken together, these interrelated provisions address the major issues identified in a recent series of studies of the Bank System that Congress required from the Federal Housing Finance Board [FHFB], the Congressional Budget Office [CBO], the General Accounting Office [GAO], the Department of Housing and Urban Development [HUD] and a Stockholder Study Committee comprised of 24 representatives of Federal Home Loan Bank stockholder institutions from across the country. My legislation will make the banks more profitable by enabling them to serve a larger universe of depository institution lenders more efficiently, and it will return control of the banks to their regional boards of directors who are in the best position to determine the needs of their local markets. At the same time, it will provide for the safety and soundness oversight necessary to ensure that this large, sophisticated financial enterprise maintains its financial integrity and continues to meet its obligations. I first offered comprehensive legislation to modernize the Bank System in 1992. The legislation is the culmination of efforts over the last 3 years to address in a balanced way the concerns of the bank's member institutions, community and housing groups, and various government agencies. I look forward to passage of this important legislation to modernize an institution that works to improve the availability of housing finance and the opportunity of home ownership for all Americans.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, if this amendment were to be properly characterized in financial terms, it may well be a derivative in itself because it is not apparently well-understood and second is attempting to solve a very complicated problem in a very simplistic manner. Further, if this were to be classified as a forward-looking statement, the disclosure required for the sale of initial public offering, it might well be actionable under the public fraud statute. Let me explain why. This amendment is purporting to solve the derivatives problem that exists in our marketplace internationally. It was inferred that if this were in effect, the Barings failure might not well have occurred. It was inferred that if this amendment had been operational, Orange County might well have been somehow prevented. The simple fact is this amendment creates a new cause of action for only a very small number of derivatives transactions. There are huge numbers of derivatives transactions on a daily basis. The ones that are the target of this amendment deal specifically with a very small number of investors and frankly are not held for investment purposes in most cases but are actually transactions between two knowledgeable business interests who are trying to minimize their business future risk. For instance, one gentleman may have a variable interest rate, one may have a fixed interest rate and for reasons we do not understand, they want to enter into the transaction which limits both their risk. The irony in this debate is derivatives have been lost, they have been mischaracterized. Derivatives in essence are instruments intended to minimize risk-taking. And because of the sensationalism surrounding a few very significant and unfortunate losses that have occurred in the international market, this amendment is being proposed to appear to be responsive to those problems. It is not in fact. If it had been adopted by this Congress and had been the law of the land, it would make no difference in any of the failures we are now discussing or debating and in fact will likely not preclude any forward failures as a result of its adoption. The chairman of the committee has proposed hearings on the matter and in our own Committee on Banking and Financial Services, there will be hearings on the matter and we should be taking a responsible look into the regulation of derivatives, but let me quickly add, none of the current regulators, whether it is the SEC, the Federal Reserve, the FDIC, the Comptroller of the Currency, all of whom have testified before the Committee on Banking and Financial Services at any time in the near term have indicated any need for any regulatory authority beyond which that they already have. I suggest to the Members this amendment is not well thought out, it is ill-timed, and should be rejected.

Mr. BAKER of Louisiana. I yield to the gentleman from California.

Mr. BAKER of Louisiana. If I could reclaim my time, the gentleman's point is well made, and that is that in many cases these are negotiations entered into between two well-intended and understanding business partners for their mutual benefit. If we are actually looking to protect the unsophisticated investor from acquiring an interest in a product which they do not understand, this amendment does not accomplish that goal. If we are worried about pension fund investments or the working person who is trying to enhance his financial condition, adopting this amendment will not in fact help. It may in fact hurt. I thank the gentleman for his comment.

Mr. BAKER of Louisiana

Mr. BAKER of Louisiana. Mr. Chairman, I compliment the gentleman on his fine statement and agree with this state of frustration about our growing regulatory process. In working with the gentleman on this amendment, Mr. Chairman, I think it should be made clear that the action we are about to take is in relation to the Migratory Bird Act. For those who are not familiar with it, having been passed in 1918, it sets a framework in place which prohibits the taking of birds or migratory fowl that are protected by Federal law, and each year the Department of the Interior issues a waiver allowing all States to promulgate their own rules and regulations for the taking of migratory fowl. Stated in another way, Mr. Chairman, duck or geese hunting. It is now apparent that unless some action is taken by legislative remedy that this year's season for many avid hunters may be placed in jeopardy. In fact, we received a communication from the Secretary of the Interior indicating that they would be unable to promulgate timely, necessary rules to allow the season to go forward as is customary. For those reasons the gentleman's amendment, as I understand it, allows a provision which says, if the agency does not take action that hunting and fishing seasons would, and their conduct would, not be impaired by the failure of the agency to act timely. This is an appropriate response and one which the gentleman correctly describes as definitional, only it is not clearly the intention of the authors of the legislation to create this difficulty, and perhaps it does not. But due to the confusion from the secretary's letter which was created we have now consulted with Ducks Unlimited, a number of other organizations who have great interest in this matter, and they have all indicated their strong support for this amendment. Mr. Chairman, I am happy to rise in support of the gentleman's amendment and commend him for his leadership in this matter.