Michael Enzi

Mr. ENZI

Mr. ENZI. If there is no further business to come before the Senate, I now ask the Senate stand in adjournment under the previous order.

Mr. ENZI

Mr. ENZI. For the information of all Senators, the Senate will convene on Monday, May 10, at 12 noon with a period of morning business until 2 p.m. Therefore, there will be no rollcall votes during Monday's session of the Senate.

Mr. ENZI

Mr. ENZI. Mr. President, I ask unanimous consent that when the Senate completes its business today, it stand in adjournment until the hour of 12 noon on Monday, May 10. I further ask consent that on Monday, immediately following the prayer, the routine requests through the morning hour be granted, the time for the two leaders be reserved for their use later in the day, and the Senate begin a period of morning business until 2 p.m., with the time equally divided between the majority leader or his designee and the minority leader or his designee, with Senator Collins allotted 15 minutes of the majority leader's time.

Mr. ENZI

Mr. ENZI. I ask unanimous consent that the Senate begin consideration of S. 254, the juvenile justice bill, at 9:30 a.m. on Tuesday, May 11, 1999.

Mr. ENZI

Mr. ENZI. Mr. President, I thank you for the recognition. I appreciate this opportunity to speak. There is a certain amount of tension that builds up as you listen to some of the comments. The comments have been very good about CRA, the Community Reinvestment Act, in general, and in general nothing is going to happen to that CRA. The Community Reinvestment Act will still be in place. There will still be community reinvestment. There are two changes in this bill that have been suggested. They make some changes. They make some important changes that may make CRA more viable, more valuable, more productive, and more useful. There has been a tremendous escalation in the number of dollars being given in CRA commitments. We note that in 1995 the annual dollars were 26 million, almost $27 million. In 1998, the annual dollars were 694 million. What do you suppose caused the increase? Are banks just discovering this? I don't think so. A while ago you had the opportunity to listen to some of the contents of an agreement that was necessary in order to move on in a banking arrangement. There are a lot of clauses in that which are pretty disturbing to me. It has been said that you are not hearing from the banks. If that letter has been used by many groups--you can see by the numbers that it is rapidly escalating--how many groups are being brought into this? There is a clause in that which says they cannot complain about CRA. That is freedom of speech? You cannot complain about somebody extorting money from you? When banks are merging, there are a lot of stockholders who are nervous. There are customers who are nervous. They do not know whether they want to stay with the bank or not just because of the media turmoil that is caused by the merger. Then you have a group coming in to take advantage of that crisis moment, that interest moment. They raise an issue. The bank isn't found to be out of compliance; the bank is in compliance. Under this bill, they have to have been in compliance for 3 years. For 3 years they have been following this. We had some discussion earlier that there are audits done on this. They are checked on. It has always been shown that the ones that are most likely to be involved in this, the bigger banks, are also the best respondents. But there is a clause they have that says, first of all, they are not going to complain about CRA; second, they are going to write this Congress and say what a good deal CRA is. Does that sound like a normal business transaction? Does that sound like something that businesses ought to be involved in? If these things are really invalid actions by those banks, they ought to be taken to the highest level and the highest opportunity to punish. But that destroys the value of the company. So they enter into agreements like this and send letters that say that the CRA is OK. This bill does not gut CRA. It keeps the same program in place. If a bank, which is audited regularly, has met the criteria for 3 years, and meets it at the moment, then actual objections have to be lodged. It seems like common sense to me. It doesn't sound like doing away with the program. It is just common sense. Small banks were mentioned. There is a change for small banks in here, too, if they have under $100 million in assets. I think if any of you look into banks, you will find that it is a very small bank that has five or six employees. You will probably find that one of those employees is dedicated to just doing CRA--doing CRA so they can prove that they don't have a problem. It is only rural banks. We have had these letters from Fort Wayne and some other cities. Those aren't rural banks. I don't care what their asset base is. They don't get this advantage. We are talking about the very small communities. I have those in Wyoming. Those very small communities, even if they only have one or two employees, have to have somebody dedicated to doing the CRA. It is a paperwork experience. They are having to fill out paperwork to prove that they are not in violation in a community where there may not even be minorities. So they cannot rest as well, because they don't have a classification they can meet in their customer base in their community. Three-fourths of the banks are rural banks. It was said that we had an amendment that put that at $2 million. I also want to point out a comment that was made about these small banks. There were over 16,000 of them audited for CRA. There were three out of compliance. According to my record, there were three out of compliance. There are some that get lower ratings, and I have explained why they are lower ratings. But even if they were considerably more out of compliance, it is not good auditing to do it under that basis. I am an accountant. I am the only accountant in the Senate. When you have criteria for auditing businesses, you come up with higher statistics than that kind of a base, or even a higher base than that. You have to. Otherwise, you are wasting resources. What I am saying is that some of these benefits that are talked about may not have been worth it even on the basis of the auditing costs. We are talking about the basis of the business cost as well complying with this law. These banks are community banks--rural banks. In Wyoming, the bank may be 100 miles from another bank. Who do you think they serve? People from other States in the Nation don't mail their money there. It is the people who live in that community, and they expect and they get service, or the bank goes out of business. We have heard some statistics about how business has increased because of the CRA. We have heard statistics about how loans have increased because of the CRA. Take a look at the timeframe. It wasn't the CRA that drove up the number of people buying houses or drove up the opportunity for more people to go into business. It was the interest rate. The interest rate plummeted. More people could make house payments. More people bought houses. It wasn't that the banks were being forced into this; the banks are already precluded from having to do bad loans. They are not loaning to just anybody who comes in the door. They are just doing a lot of paperwork to show that the loans they are granting are valid loans and the ones they are not are not valid loans. The economy makes the difference in whether new businesses start and whether people buy more houses. The exemption for small banks will solve some problems for small banks, and it probably ought to be a higher amount than that. Again, if you are looking at auditing statistics, you could double or triple that number without affecting the numbers that are out of compliance; hardly at all. I want to reiterate again that that amount of extortion to the big banks has gone from $27 billion up to $694 billion. That is going to be something on an ever-increasing basis. As more people get into the business of taking on CRA, taking a base and a commission off of that, none of this goes to the sector of the community we are talking about. CRA is important. CRA is included in the bill. CRA only makes two changes. It does not gut the bill. There are two changes: One for small, rural banks so we don't have to spend so much annually complying with CRA and they instead can put it into their community, which is where they put their money; the other one is for the big banks so they don't have to write these required letters we heard to their Congressman saying they don't have any problem with CRA. This is not an attempt to gut CRA. This is an attempt to make it more valuable, more useful and more applicable in the banks. I yield the floor.

Mr. ENZI. Mr. President, I thank the chairman of the Banking Committee. I thank him for the time. I also thank him for the leadership and direction and focus he has had on this issue and his willingness to talk to others about the issues. I rise to oppose the substitute amendment offered by the ranking member of the Banking Committee. Most of the reasons for my opposition lie within the great expansion of the Community Reinvestment Act, or CRA. For example, the amendment would allow the Federal banking agencies to take actions, including divestiture, forcing people to sell off parts of their business if an institution fails to maintain a satisfactory or better CRA rating. Currently, the enforcement action authorized for the banking agencies is the ability to deny the noncompliant banks' application to acquire another facility. The substitute would expand the reach of CRA to noninsured institutions or wholesale financial institutions, and they don't even deal with consumers. Previously it had been argued that banks and thrifts convey an economic benefit as a result of deposit insurance, and thus the CRA is justifiably imposed on those institutions. But now, for the first time, this amendment would expand CRA to the non-FDIC- insured institutions. It would allow a Federal banking agency to take enforcement action, such as the cease and desist order, civil monetary penalties, or even criminal sanctions, all for not complying with the CRA. That is an expansion. These penalties could even be extended to an officer or director of the holding company or bank. In addition to extraordinary CRA expansion, I found several other problems with the substitute amendment. First, it reduces the authority of State insurance commissioners and creates the National Association of Registered Agents and Brokers, NARAB. The insurance agents in Wyoming oppose the NARAB provision because they believe it is the precursor to Federal regulation of insurance and Federal bureaucracy. The substitute amendment also reduces the ability of the bank to engage in trust and fiduciary activities. On the other hand, S. 900 allows a bank to engage in traditional trust and fiduciary activities, just as they have done for so many years. Additionally, it is apparent that there is not consensus in the substitute bill, and it differs from the product of last year. I voted for H.R. 10 last year. I will not vote for this substitute. It is not the same bill. The most significant difference lies in the operating subsidiary provisions. Last year, H.R. 10 only passed the House by one vote. Just last week the House Commerce Committee held a hearing on H.R. 10, which is nearly identical to the substitute amendment, and the Members on both sides of the aisle were very critical of the bill. I strongly encourage my colleagues to oppose the substitute amendment. It does not represent a consensus, and it is certainly more burdensome and expansive on the affected industries. It is not the product of compromise. I yield back the remainder of my time.

Mr. ENZI. I apologize. I have been listening to a lot of statements made, and I probably reacted in a way that I should not have.

Mr. ENZI. The Senator doesn't even know what my statement would be. It would be difficult to yield for a question based on what I haven't said yet. There is a little bit of smoke that needs to be cleared out of the Chamber before we proceed.

Mr. ENZI. Mr. President, I believe the Senator from North Carolina has the floor. The question was being directed to the Senator from Indiana.

Mr. ENZI. I will yield for a question, yes.

Mr. ENZI. The answer to the question of the Senator from Massachusetts is, I think about 10 minutes.

Mr. ENZI

Mr. ENZI. Mr. President, I rise in support of S. 900, the Financial Services Modernization Act of 1999. I commend the senior Senator from Texas, the chairman of the Banking Committee, Mr. Gramm, for his leadership on this important measure, a bill that will increase global competitiveness of U.S. financial firms. It will increase access to financial services for all Americans, and it will decrease costs for consumers. I congratulate Senator Gramm on his willingness to meet with all of the different groups that have asked to meet with him, the way he has reached out and been willing to talk to people on both sides of the aisle, as well as spend innumerable hours with those of us who have had questions about some of the very detailed technical parts of the bill, particularly the operating subsidiaries, for the research that he has done. I compliment him on the simplification he has done. There were some very complicated issues in last year's bill that, because of the end of the year pressure, were included but weren't very concise. They seemed to be misunderstood by people on both sides of whatever issue. Of course, around here there are more than two sides to every issue. The chairman sat down with those people and worked out some simplification of language that they say they agree with now. One of the results is, it has reduced a 308-page bill to 150 pages without damaging anything, but it has greatly increased the readability. We have asked the banking industry and we have asked the agencies to put this in plain language. The chairman has done that and, I think, given people an opportunity to comment on it and discuss it with him in private meetings, if they wanted, as well as in other meetings. It is long overdue that Congress pass legislation that will allow full and open competition at least across the banking, securities and insurance industries. I believe now is the best time to pass S. 900 in order for U.S. financial intermediaries to be prepared for the challenges of the new millennium. The current laws governing our financial sector have been eroded by the actions of regulators, the decisions of the courts, the continuing changes in technology, and the increasing competitive global markets. In addition, these laws limit competition and innovation, thus imposing unnecessary costs onto the service provider, and that is ultimately additional costs on the consumer. There are several provisions in this bill I believe are particularly important as several of them are very relevant to small financial institutions. Section 306 of the bill requires the Federal banking agencies to use plain language in all of their rulemakings used to implement this bill. Since this legislation will impact both large and small financial institutions, this provision will help ensure that small banks will not have to hire several lawyers to interpret the new rules resulting from this legislation. The bill also requires the GAO to study expanded small bank access to S corporation status, specifically those provisions relating to Senator Allard's bill. I enthusiastically support his efforts to reduce the tax burden on small business corporations. Additionally, this legislation grants non-metropolitan banks of less than $100 million in assets--very small institutions by any standard-- an exemption from the paperwork requirements of the Community Reinvestment Act, or CRA. The total bank and thrifts assets exempt from this requirement would equal only 3 percent. Small, non-metropolitan banks and thrifts by their very nature must be responsive to the needs of the entire communities they serve or they will not remain in business. The exemption in this bill will help reduce the regulatory costs imposed on these smaller institutions. When less time is used to comply with the letter of the law, more time can be devoted to comply with the spirit of the law by better serving the needs of each customer and the entire community. Title III of the bill also eliminates the Savings Association Insurance Fund (SAIF) special reserve, a top priority of the FDIC. Senator Johnson and I have introduced identical language in a stand alone bill, S. 377, to ensure that the special reserve is abolished. This could save the thrift industry about $1 billion because the funds set aside in the special reserve cannot be used until the SAIF reaches a dangerously low level. Therefore, if unforeseen circumstances impact the SAIF, the FDIC may choose to increase insurance premiums on thrifts to recapitalize the SAIF. The elimination of the special reserve represents a sound public policy that will save the private sector from unnecessary costs. I strongly support the approach the chairman of the Banking Committee has taken to develop a more streamlined, less burdensome bill. It is only 150 pages. The bill reported out of the Banking Committee last year was 308 pages--double the length of the bill we are debating today. I do not believe more is usually better in terms of the length of a bill. Many times that policy means more hoops and ladders the private sector must go through, thus creating more inefficiencies and higher costs in the marketplace. I believe the bill before us will not hamper industries with unnecessary, congressional-created, burdens and inefficiencies. Before closing, I want to dispel some of the myths surrounding this legislation--specifically the allegation that the majority in the Banking Committee have abandoned the consensus reached by the Committee last year. There is no consensus in the substitute bill sponsored by the minority members of the Banking Committee. The House Commerce Committee held a hearing last week on H.R. 10, which is nearly identical to the substitute bill. Members on both sides of the isle were very critical of the bill. Ranking Member Dingell was especially harsh in his criticism. I mention this to prove there is not consensus on the substitute bill. Further, this substitute is not the product from last year. It differs in a number of respects from last year's bill, most significantly with regard to the operating subsidiary provisions. The op-sub provisions in the House bill and the minority's bill are those that are causing significant heartburn for the House Commerce Committee and Federal Reserve Chairman Alan Greenspan. In addition, I want to set the record straight about the vote on the old H.R. 10 in Banking Committee last year. The bill did pass by a vote of 16 to 2. However, I for one can say that I support the bill we are now debating, S. 900, much more than the H.R. 10 I reluctantly supported last year. My biggest concern with that H.R. 10 was, and continues to be, the expansion of CRA. It has been mentioned that with CRA there have been more loans, houses and businesses. I suggest that, particularly with the time period that we are relating to, those are as a result of low interest rates, not some kind of effort that we are making under CRA. I want to reiterate that there were 16,380 investigations into CRA, and three small banks were out of compliance. It takes an extra officer to handle CRA, and that is a huge cost to them. To find three people? There has to be something better that we can do. I strongly encourage my colleagues to support the bill passed by the Banking Committee. It represents a sensible approach to forming the future framework for our financial services industry. Mr. President, I ask unanimous consent that the time for debate be extended for Senator Reed to give his remarks, followed by Senator Specter.

Mr. ENZI. Mr. President, I think I have about 7 or 8 minutes' worth and would be willing to stay for Senator Reed's comments as well.

Mr. ENZI

Mr. ENZI. No. If you paid the Social Security portion of the debt, you are really taking money out of the bank and putting it right back into the piggy bank. It has to be reloaned. There is no other alternative. Until there is reform on it, there is no other alternative except to loan it out. When it gets loaned out, we spend every penny. We are not supposed to spend the Social Security money. We are not supposed to be robbing the piggy bank. But that is what happens. That piggy bank, that trust fund, is IOUs. It is money lent to the Federal Government again, and spent again.

Mr. ENZI. The Social Security trust fund is lent to the Federal Government and we spend every dime that is lent to us. It is a loan.

Mr. ENZI. Absolutely. We have used Social Security, and then we put the money back into Social Security again, and then we spend it again. There has to be some major reform if we are going to have some Social Security money that is actually a trust fund that people will be able to use on their own. Several Senators addressed the Chair.

Mr. ENZI. If it is off your time, yes.

Mr. ENZI. Mr. President, I rise in support of the Social Security lockbox amendment as offered by the distinguished majority leader, Senator Lott, and the Budget Committee chairman, Senator Domenici. You can't spend IOUs. Right now, Social Security is a marked trust fund, but it is a box of IOUs. This amendment represents an unparalleled commitment by the Senate to pay off some IOUs, truly lock the Social Security money up and thereby assure present seniors and following generations of seniors that their Social Security benefits will be there when they need them most. When Social Security first started, there were 45 people working to take care of one person who is retired. It has been a huge pyramid, but it is now becoming inverted. We are fast approaching a time when only two or three people will be funding the one who is retired. If you have kids, think about how you would feel about making your children pay your Social Security by themselves out of their paychecks. That is what the future looks like. You can see what a bite out of a paycheck that is going to be for two or three people to be able to pay the monthly benefit of one retiree. Being fiscally responsible is one way to remedy this problem. Passing this lockbox amendment is a means to avoiding a last-minute Draconian event. As an accountant, I have an appreciation and respect for numbers. They can be just as misleading as they are truthful. But there should be no misconception about what our Nation's budget projections tell us. The surplus we expect to get over the next 15 years is Social Security revenue. This is an important point to understand. Budget surplus revenue, during the next 15 years, comes from mandatory Federal payroll taxes paid by working Americans. What is paid into the Federal Government as FICA taxes goes towards keeping the Social Security program running. What is paid in by the people working gets paid out to the people who are on retirement, and there is a slight excess at the moment. It just happens to match up with what we called the surplus last year. I have never seen an administration squeeze so much political mileage as there has been on the budget surplus. That is not hard to do when folks are promised funding for every popular Federal program, including a few that don't even exist at the moment. Unfortunately, I am unable to look people in the eye and tell them that the budget surplus is America's ``golden calf.'' Not only is it unconscionable, it is simply not true. These empty promises are how folks get the impression that the budget surplus is based on general revenue. It could be in just a few years, if we only respect and act on what the numbers really tell us, that the current surplus isn't general revenue but actually Social Security receipts. There can be some surplus if we have some discipline. If the Senate adopts the Social Security lockbox amendment, Congress could be debating what to do with true general revenue surplus shortly. For now, we have a duty to do what is right, preserve Social Security by retiring part of the $5.5 trillion debt and locking out the spending of Social Security money. Even though the economy is strong, I am surprised that so few people are aware that we, as a Nation, are in danger of passing on to our kids and our grandkids a $5.5 trillion debt and a potentially bankrupt Social Security system. Our society has become so tied to the immediate gratification received from spending money that we fail to recognize the danger that looms from this Federal credit card spending. Congress has no room to talk. Our massive Federal debt and ever- changing demographics will place a tremendous amount of pressure on our young workforce. Future generations deserve the same opportunities we demand for ourselves. Neglecting our responsibility to ensure Social Security solvency for future retirees begs distrust from our kids. We must not leave a financial burden we created for them to repay and no Social Security. If this amendment fails, we will continue to pay 13\1/ 2\ percent of total budget outlays in interest on the Federal debt. That alone amounts to $231 billion that could be used to help preserve Social Security each year. If this amendment does not pass, over $10 trillion of interest payments over the next 30 years will continue to be paid by taxpayers. Preserving the Social Security program by retiring our debt is the only way to avoid such senseless spending without a major reform. It isn't just Members of the Senate that believe in fiscal responsibility. I encourage the administration to read the testimony of Federal Reserve Chairman Alan Greenspan before the Senate Budget Committee earlier this year. He advises caution in our spending because Federal revenues are not guaranteed and they may fall short of expectations. Rather, we should be aiming for budget surpluses, true budget surpluses, and using the proceeds to retire outstanding Federal debt. That, he said, will help the economy and protect Social Security for a long time to come. That is Alan Greenspan. This amendment does just what Alan Greenspan said and recognizes real-life economic situations. We are in one of those real-life economic situations now with the war. Senators Domenici and Abraham have gone to great lengths to ensure that the pending Social Security lockbox amendment is sound and fair, providing flexible administration. If passed, it would authorize adjustments to the debt limits established for any Social Security modernization legislation that Congress and the administration enacts in the coming years. I continue to hope that the administration is serious about sensible structural changes to the program itself. In addition, the requirements of this amendment would be suspended during a period of economic recession, as well as for emergency spending and a declaration of war. Most would agree that such situations should not be subjected to statutory debt limitations. No tricks or gimmicks here. This is upfront fiscal responsibility. By retiring our debt, this amendment would protect the Social Security budget surplus from being spent on non-Social Security programs. It begins an overdue process of paying back the Government creditors and helping the taxpaying workers. Why should the Federal Government be allowed to incur a debt it currently has no intention of paying back? Repayment is the responsible thing to do. It makes sound economic sense. I strongly support the passage of the Social Security lockbox amendment. I commend the authors for this legislation. Their dedication to preserving Social Security through fiscal responsibility is admirable. I encourage all of my Senate colleagues to vote in favor of this amendment. I yield the floor and reserve the remainder of our time.

Mr. ENZI. That is correct.

Mr. ENZI

Mr. ENZI. Mr. President, this morning the Senate will immediately resume debate on the Social Security lockbox legislation with a vote on cloture at 11:30 a.m. Pursuant to rule XXII, Senators have until 10:30 a.m. to file second-degree amendments to the Lott amendment. Following the vote, if cloture is not invoked, it is the intention of the leader to proceed to the important Y2K legislation. The Senate may also consider any other legislative or executive items cleared for action. As a reminder, the Senate will not be in session on Friday due to the NATO summit taking place in Washington throughout the weekend. I thank my colleagues for their attention and, Mr. President, I yield myself such time as might be necessary.

Mr. ENZI

Mr. ENZI. I ask unanimous consent that reading of the amendment be dispensed with.

Mr. ENZI. Mr. President, I ask unanimous consent to lay the pending amendment aside to call up amendment No. 154.

Mr. ENZI

Mr. ENZI. The Senator will.

Mr. ENZI

Mr. ENZI. I ask unanimous consent that the bill be read the third time, passed, and the motion to reconsider be laid upon the table.

Mr. ENZI. I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 1212, just received from the House.