Phil Gramm

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent that a cost estimate on the Export Administration Act of 1999, prepared by the Congressional Budget Office, be printed in the Congressional Record.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent that the Senate Committee on Commerce, Science, and Transportation be authorized to meet during the session of the Senate on Thursday, November 4, 1999, at 9:30 a.m. on local competition in the voice and data marketplaces.

Mr. GRAMM. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet at 9:30 a.m. on Thursday, November 4, 1999, in open session, to consider the nominations of Mr. Alphonso Maldon, Jr. to be assistant Secretary of Defense, Force Management Policy, and Mr. John Veroneau to be Assistant Secretary of Defense, Legislative Affairs.

Mr. GRAMM. Mr. President, I ask unanimous consent that the Senate Committee on the Judiciary be authorized to meet during the session of the Senate on Thursday, November 4, 1999, at 11 a.m., in Dirsken Room 226, to conduct a hearing.

Mr. GRAMM. Mr. President, I ask, unanimous consent that the Senate Committee on Indian Affairs be authorized to meet during the session of the Senate on Thursday, November 4, 1999, at 9:30 a.m. to conduct a joint hearing with the House Committee on Resources on S. 1586, the Indian Land Consolidation Act Amendments of 1999; and S. 1315, to permit the leasing of oil and gas rights on Navajo allotted lands. The hearing will be held in room 106, Dirksen Senate Building.

Mr. GRAMM

Mr. GRAMM. Mr. President, the understanding of the gentleman from Utah is correct.

Mr. GRAMM. Mr. President, the understanding of the gentleman from Utah is correct.

Mr. GRAMM. Mr. President, it would be my objective to speak and end by 3:30 and we would have the vote.

Mr. GRAMM. Mr. President, success is claimed by a thousand parents. And today there are a lot of people who can claim parenthood. I am very happy to have played a part in delivering the bill before the Senate today. I think it represents the American legislative process at its best. It has resulted more from an effort to reach a logical conclusion than to satisfy various special interest groups. In that way, it is not unique but it is different. But the question is not how proud we are of this bill today. The question is, How will it look 50 years from now when it has gone from infancy to maturity? Obviously, after setting out a dramatic change in public policy, it is fair to set out a test for determining its success. How will people judge whether we were successful in passing this bill today? My test is, What are we trying to do in the bill? Are we trying to benefit banks or insurance companies or securities companies, or are we trying to benefit consumers and workers? The test that I believe we should use--the test I will use, the test I hope people looking at this bill years in the future will use--is, Did it produce a greater diversity of products and services for American consumers? Were those products better? And did they sell at a lower price? I think if the answer to those three questions is yes, then this bill will have succeeded. The world changes, and we have to change with it. Abraham Lincoln used to tell the story about how Government had to change all outmoded laws because they did not fit anymore, much as it would be unreasonable to expect a man to wear the same clothes he wore as a boy; that there is a nature to things and to society, and as they change, Government has to change to recognize the new reality. I believe today we are changing financial services in America to reflect that we do have a new century coming and we have an opportunity to dominate that century the way America dominated the last century. Ultimately, the final judge of the bill is history. Ultimately, as you look at the bill, you have to ask yourself, Will people in the future be trying to repeal it, as we are here today trying to repeal--and hopefully repealing--Glass-Steagall? I think the answer will be no. I think it will be no because we are doing something very different from Glass- Steagall. Glass-Steagall, in the midst of the Great Depression, thought Government was the answer. In this period of economic growth and prosperity, we believe freedom is the answer. This is a deregulatory bill. I believe that is going to be the wave of the future. Although this bill will be changed many times, and changed dramatically as we expand freedom and opportunity, I do not believe it will be repealed. It sets the foundation for the future, and that will be the test. So I am proud to have been part of this. I am proud to have worked with everybody as part of the process. It has been interesting and Government at its best. I think one of the reasons we run for public office is to get a chance to do things such as this. I am glad to have had an opportunity to play a part and urge all of my colleagues to support this dramatic move into the future. Mr. KERREY addressed the Chair.

Mr. GRAMM. Mr. President, the interpretation of the Senator from Idaho on this point is correct. The intent of section 502 is to assure that consumers receive clear and conspicuous notice of a financial institutions' privacy policies and practices, and to assure that consumers can direct that their non-public information not be disclosed to third parties. So long as consumers receive a notice that gives them a clear choice about whether or not that non-public personal information can be transferred to non-affiliated third parties, the opt-out choice need not be provided separately for each disclosure of such information. insurance company investments

Mr. GRAMM. Mr. President, the understanding of the Senator from Utah is correct.

Mr. GRAMM. Mr. President, the understanding of the Senator from Florida is correct. Section 507 is intended to apply only to subtitle A of title V of the bill, and is not to be construed to apply to any provision of law other than the provisions of the subtitle. Thus, section 507 does not affect the existing FCRA provisions on that statute's relationship to state laws. section 502(b)

Mr. GRAMM. Mr. President, the understanding of the Senator from Utah is also correct.

Mr. GRAMM. Mr. President, let me agree with my ranking member to say that we have waited 40 years for this bill. We are not waiting any longer than 3:30. If someone wants to get over here and speak, they had better do it. It is always a little bit risky to try to sum up on a bill such as this that has been in the making for 40 years, a bill that overturns a piece of legislation that Franklin Roosevelt said was the most important bill ever passed by an American Congress. Having listened to the debate, I have a few points in conclusion. First, there is often such a difference between reality and perception. I listened to some of my colleagues, especially those who oppose the bill, talk about special interests and what this special interest or that special interest got in this bill. In my period of service in Congress, I have never participated in the writing of a bill with less special interests involved than this bill. When Republicans on the committee started in January a series of meetings to talk about why we wanted to modernize the financial laws of the country, why we wanted to repeal Glass-Steagall, why we wanted to restructure the economy in terms of benefit, we set out a theory of financial services modernization and we set out a plan to try to achieve it. As I listened to all the talk about special interests, I remember Texas bankers and Texas insurance agents both sending a letter which arrived on the same day telling my constituents I had betrayed their particular interests to the other. The insurance agents sent out a letter saying I had sold out to the bankers; the bankers sent out a letter saying I had sold out to the insurance agents. The bottom line is nobody was sold out in this bill. We started a negotiation to try to deal with a legitimate concern. The concern was this: If someone is going to a bank for a loan, should that bank, while they are in the process of making that loan, have the right to try to sell an individual insurance? We tried to sit down with everybody knowledgeable and come up with a real solution. In the end, I am happy to say, both of these interest groups concluded nobody had sold their interests out and we had put together a good bill. However, there is a simple test on this bill. If anybody wants to set a marker today to determine whether in 20, 40, or 60 years from now we are going to compare this bill to Glass-Steagall, whether this bill is a success, there is a simple test. That test is, Will this bill generate more diverse products for the American consumer? Will those products better meet the needs of the American consumer? And will they be cheaper? If those things don't happen, this bill fails. That is what this bill is about. There is nothing in this bill that sets out to benefit big banks in New York. I don't represent New York. I don't have any huge banks in my State. Long ago, other people bought out the big banks in my State. I have sought in this bill, and I believe the vast majority of all of our Members, have sought to promote the interests of the consumer. This bill is about people who go to work every day and who borrow money on their homes. If someone can improve on their mortgage rate and bring down the interest they pay by even one-quarter of 1 percent, that means thousands of dollars in their pockets over a 30-year period. That is what this bill is about. This bill is about people who want checking accounts and who want services, and they want those services provided on a competitive basis where they are as cheap as can be produced and sold. That is what this bill is about. This bill is about people who want the ability to do their banking, their insurance, their securities, their retirement on a competitive basis. It is about bringing together those forces. We have been living with a system that was established during the Great Depression. I don't think there is any reason now to go back and rehash why it happened. But one can make a strong case that the Depression was produced by a failure of the Federal Reserve. Milton Friedman made that case in the ``Monetary History of the United States'' and won the Nobel prize principally for that work. Congress was frightened. They didn't know what to do. It was an age of demagoguery. Probably the most demagogic statement that has ever been made in American history was made by the President of the United States, Franklin Roosevelt, when during the debate on Glass-Steagall he said: The money changers have fled from the high seats in the temple of our civilization. That statement is reminiscent of statements being made in Central Europe at the same time. Congress didn't know what caused the Depression. They were frightened. They didn't know what to do so they passed a bill that I think one can argue historically was as punitive as it was prescriptive. It was aimed at one man, in some ways--J.P. Morgan-- probably the greatest American of the early 20th century. We don't know a lot about him because he never held public office, but he was probably the greatest American of the early part of this century. In this era, we had a bill passed that basically forced an artificial separation of the financial sector of our economy. That bill, despite the fact its author within a year had concluded it was a mistake, has been the law of the land. In fact, Time magazine calls it the defining financial legislation of the 20th century. We came here today to change the defining legislation of the 20th century. We came to bring logic back to the financial sector. We didn't come here today to bring it back to benefit banks or to benefit insurance companies or to benefit securities companies. We came to overturn the most significant financial legislation of the 20th century because it is in the interests of the American consumer that it be overturned. Let me touch on areas that will be much benefited by this that have had no discussion. The first point, one of the biggest problems we have, is the inability of small businesses to raise capital. Probably the most concentrated part of the American financial sector is securities underwriting. If a little business in Mexia or College Station, TX, or Cambridge or Easton, MD, or any other of thousands of small or medium-sized towns across America, has a good idea, they will have a hard time raising capital because it is hard to get Wall Street interested in a small business in a little town unless you have one of the great ideas of the century--and even then it takes a long time to prove it. By letting banks participate in underwriting securities now, every banker in every small town will have the ability to identify a good small business and give them access to capital that has never existed before in the history of this country. That is a benefit which will accrue to literally hundreds of thousands of small businesses over the decades to come as a result of this bill because we will vastly expand the number of securities underwriters, we will make every bank in every city in America a potential underwriter for small business. That is a dramatic and positive change in law. We dominate the world's financial markets, and we have done it with one hand tied behind us, because we have the greatest economic system in the history of the world. But we can untie that hand that we have had tied behind us, and we do it in this bill by repealing Glass-Steagall. This bill is going to make America more competitive on the world market, and that is important because it means thousands of jobs, high-paying jobs--not just on Wall Street in New York City, but for every business and every consumer in America. I believe we are too quick to say something benefits Wall Street instead of Main Street. The reality is, Wall Street is the foundation on which Main Street is built. When America is more competitive, every American benefits. There has been a lot of talk that what we are trying to do is already happening to some degree. And it is because almost immediately after the passage of Glass-Steagall, we had an effort by regulators to begin to bore holes in these walls between insurance and banking, and between securities and banking. We have seen, through regulatory innovation, a successful effort in some areas to get around the law. This has allowed some competition to occur. The problem is, what regulators give, they can take back. So we have created a situation where we have given virtual police power to regulators because they have allowed these innovations to occur and they can take them back at any moment. That creates too much power to be focused in the hands of a very small number of people. We change that by tearing down the walls, and in the process taking that discretionary power away from the regulators so people are guaranteed in law the right to be engaged in these activities. My dear colleague from Maryland mentioned yesterday the issue of ``too big to fail.'' That is a real issue. In this bill we start the process of dealing with the issue of too big to fail. We establish a principle, as part of the compromise that was worked out between Treasury and the Federal Reserve, which is not well understood. It is a complicated kind of issue. But what it does is profoundly important because for the first time in American financial law, we require big banks to have subordinated debt. That is debt that only gets paid once the depositors are paid, the creditors are paid, and everything else is paid off. That subordinated debt is a real live thermometer that is constantly telling us how well this financial institution is. It is constantly telling us how safe and how sound these institutions are. It represents, in my opinion, the beginning of our effort to deal with a very real problem that Senator Sarbanes talked about, and that problem is the problem of being too big to fail. We don't let banks do anything within the bank unless they have an incredibly high rating on that subordinated debt; that is, that it be rated AAA, AA, or A. There has been a lot of talk about CRA. The bottom line is we have done several very positive things. First, sunshine is the best disinfectant. How can people be held accountable if we don't know what they have been given money to do, how much money they have been given, and how they spend it. In this legislation, we have set out an ironclad process to guarantee us that information. Second, there is a regulatory burden problem. Small banks end up being heavily burdened by regulations that often have a relatively nominal effect on big banks. We have dealt with that by giving smaller banks some needed regulatory relief. In terms of privacy, we have heard a lot of discussion, but we need to remember two things: No. 1, we require in this bill, in a provision that was adopted in the conference, offered by Members of the Senate conference, a disclosure in detail of what a bank's privacy policies are. That gives consumers the most powerful tool that exists in a free society in protecting privacy, and that is if you do not like the bank's policy, you can take your business somewhere else. Second, we give consumers the power to opt out. So these are important provisions. I thought, as we waited to be sure everyone is here for this vote, that these points needed to be made. I reserve the remainder of my time.

Mr. GRAMM. Mr. President, Senator Sarbanes and I have decided, giving people an opportunity to get here, that I will speak, and then Senator Sarbanes will speak. Then I will close out.

Mr. GRAMM. I am very happy to yield.

Mr. GRAMM. Mr. President, in response to my colleague, let me state that section 401 is intended to authorize the Office of Thrift Supervision to prevent evasions through actions that are consistent with the statutory, regulatory and interpretive provisions governing acquisitions or changes in control of savings associations and thrift holding companies that were in effect on the grandfather cut-off date, May 4, 1999. title v

Mr. GRAMM. Mr. President, that is correct.

Mr. GRAMM. Mr. President, that is my understanding.

Mr. GRAMM. Mr. President, I agree with Senator Allard's assessments on these points.

Mr. GRAMM. Mr. President, I would be happy to do so.

Mr. GRAMM. Mr. President, yes, the Senator's understanding is correct.

Mr. GRAMM. Mr. President, I yield to the vice chairman of the Financial Institutions Subcommittee.

Mr. GRAMM. Mr. President, yes, that is correct.

Mr. GRAMM

Mr. GRAMM. I thank our dear colleague from Nebraska for his leadership on this bill. We have dramatically changed the Federal Home Loan Bank system in this bill, and no one has had more to do with that dramatic change than the Senator from Nebraska. I personally thank him for the leadership he provided on that and many other issues in this bill.