Phil Gramm

Mr. GRAMM

Mr. GRAMM. Mr. President, today I join with Senator Kay Bailey Hutchison in introducing a bill to name the Austin, Texas federal building in honor of a great Texan: Congressman J.J. ``Jake'' Pickle. Congressman Pickle became an institution in Washington, D.C. throughout his 30-year tenure in Congress, and his dedication and service to the people of Austin and Central Texas continue today. I had the pleasure to serve with him in the House of Representatives, and I hold him in high esteem for the man he is and the spirit in which he served. Jake Pickle walked with giants like Lyndon Johnson and Sam Rayburn, and he is a giant in his own right. I believe that naming the federal building in Austin in Jake's honor is a fitting tribute to his service on behalf of our great state and in recognition of his significant and ever- lasting contributions to our country.

Mr. GRAMM

Mr. GRAMM. Mr. President, today I join with Senator Kay Bailey Hutchison in introducing a bill to name the Austin, Texas federal building in honor of a great Texan: Congressman J.J. ``Jake'' Pickle. Congressman Pickle became an institution in Washington, D.C. throughout his 30-year tenure in Congress, and his dedication and service to the people of Austin and Central Texas continue today. I had the pleasure to serve with him in the House of Representatives, and I hold him in high esteem for the man he is and the spirit in which he served. Jake Pickle walked with giants like Lyndon Johnson and Sam Rayburn, and he is a giant in his own right. I believe that naming the federal building in Austin in Jake's honor is a fitting tribute to his service on behalf of our great state and in recognition of his significant and ever- lasting contributions to our country.

Mr. GRAMM

Mr. GRAMM. Mr. President, I call up amendment 40.

Mr. GRAMM. That is right. It would be nice if our colleagues would let us have an up-or-down vote on it. I don't know why anybody would be opposed to this amendment. But it would be my objective, after yielding to the Senator solely for the purpose of a question, to move to table the pending amendment and ask for the yeas and nays. But I yield to the Senator from Washington.

Mr. GRAMM. That is correct. I also remind my colleague, we sent a letter from the committee on February 10 objecting to these regulations. The point is, when the committee of jurisdiction almost a month ago said no, the time has come for them to answer. That is why we brought this issue to the floor.

Mr. GRAMM. I yield, and then I will yield to the Senator from Washington for a question.

Mr. GRAMM. I would be happy to yield.

Mr. GRAMM. Mr. President, I ask unanimous consent the pending Ed-Flex bill be temporarily set aside and the Senate now proceed to the consideration of Calendar No. 26, S. 508, a bill to prohibit implementation of ``Know Your Customer'' regulations by the Federal banking agencies. I further ask consent that there be 20 minutes for debate on the bill equally divided in the usual form, there be no amendments in order, and following that debate the bill be read a third time and the Senate proceed to vote on passage of the bill with no intervening action or debate.

Mr. GRAMM. Take a bank in a medium-sized town and take the personnel they have, how in the world could they possibly comply with this outrageous regulation without it costing, on a nationwide basis, literally billions of dollars? I think one of the complaints that we have on this issue is a very simple one, not only is it unconstitutional, not only is it outrageous, but it shows, again, how callous Federal regulators are about the costs that are imposed on American business, and the loss of freedom for American consumers. It is sort of the idea that if someone has a social experimentation, it is the job of Americans to comply with their experiment and it is the job of business to pay for it. Nowhere in the regulation does it suggest that the Government is going to pay the bank in your hometown or the bank that is in a shopping center near where you live in Colorado; there is nothing in the regulation that says they are going to pay for all these costs. Who do you think is going to pay for it? You are going to pay for it with fees on your checking account. You are going to pay for it with lower rates of return on your CD. You are going to pay for it when you borrow money to buy your home or buy a car or borrow money on a guaranteed student loan to send your child to college. You are going to pay for these regulations in higher costs. I am delighted that the Comptroller of the Currency has become concerned, but why didn't they think about this before they promulgated this regulation? The point is, our job on the Banking Committee is to stop this kind of thing from happening.

Mr. GRAMM. Mr. President, my intention is to move to table the amendment before 10:20 and ask for the yeas and nays. I do know we are here this morning to talk about education, and that is very important. But I say to my colleagues, in apologizing for having to disrupt their debate, that this is about education. When we have the Federal Government imposing regulations that will cost our financial institutions billions of dollars to comply and that will end up driving up the cost of loans as people borrow money to send their children to college, I think it is something with which we have to deal. We are reaching the point where we could have a final determination. We are encouraged that the Office of the Comptroller of the Currency has raised concern about it responding to 140,000 objections. But the point is, on Monday, we are going to have, potentially, a final determination. We had hoped when we sent a letter on February 10 that we would get action. We did not get that action. As a result, we are here today. Mr. President, I move to table amendment No. 40, and I ask for the yeas and nays.

Mr. GRAMM. First of all, I would guess that those 33 people who were for it are the people who are going to sell all the management services and the training programs and the computer programs for enforcement. It is a foul breeze that doesn't blow somebody some good. The point is, you have 260 million Americans who lose a constitutional right, when you have financial institutions that have every confidence that people have in the security of their deposits, not that they are going to lose the money but that they are going to lose their freedom to take their paychecks, deposit in their bank without people knowing how much they have deposited, and spend their money on things they want to spend it on without being second guessed as to whether this expenditure was out of the ordinary, with language like ``determine the particular customer's normal and expected transaction.''

Mr. GRAMM. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. GRAMM. Senator Santorum.

Mr. GRAMM. If the Senator would allow me to reclaim my time, very briefly, not only is it an unconstitutional, unjustified, and unwarranted search and seizure, but wisely, the Securities and Exchange Commission and the National Credit Union Administration have not promulgated such rules. While we are being critical, and justifiably so, of the agencies that have, we should point out that these agencies did not follow suit, and I think they deserve some credit. The point is, if I know that the Federal Government is going to be spying on my little bank account that might have $1,100 in it, and I can take it and put it in a credit union or put it in a mutual fund and have some degree of privacy, every little bank, every savings and loan or community bank in America ends up being disadvantaged, because the Federal Government is using them to snoop on their customers. As a result, they lose customers.

Mr. GRAMM. Mr. President, we now find ourselves in a situation where the Federal Reserve Board, the Office of Thrift Supervision, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, or FDIC, have introduced a regulation called ``Know Your Customer.'' This regulation has a 90-day public comment period which will end on March 8. On behalf of the Banking Committee, Senator Bennett and I sent a letter to each of the regulators, urging them to drop this proposed regulation. I would like to briefly tell our colleagues what this regulation does. Under these regulations imposed on every bank and every thrift in America, banks and thrifts would have to set up a program to document a system of internal controls for compliance with the regulation including independent testing, monitoring of day-to-day compliance, and annual personnel training. What all this would be geared toward is looking at the bank account of every single American who has an account, large or small, in any thrift or any bank in America, to determine the identity of any new customers, to determine the customer's source of funds in bank transactions, to determine the particular customer's normal and expected financial transactions, to monitor account activity for transactions that are inconsistent with the normal and expected transactions, and to report transactions of customers that are determined to be suspicious to the regulatory authority. If you ever wondered what happened to all those people in the former Soviet Union who used to run things there and now are permanently out of work, the answer is they are all in the Clinton administration and they are running the banking authorities of this country. Can you imagine having in place in America regulations so if your mama doubles the contribution she makes on Sunday to the church, her banker looks at it to see if it is out of the ordinary? I don't doubt that somewhere, somebody had some good intention. The objective here is to look at money laundering. But the problem is, this is such a broad-reaching regulation that it infringes on our constitutional rights. I would like to call the attention of my colleagues to amendment IV in the Constitution. Amendment IV says: The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated. . . . Our Federal Government has no right to routinely monitor your bank account. Our Federal Government has no right to keep records on where your money comes from, or how you write checks, or how you spend your money, unless there is some clear, compelling case that you are violating the law. What these bank regulators have done is not only run afoul of public opinion--over 135,000 Americans have filed comments in opposition to this process--but they have run afoul of something more important than public opinion. They have run afoul of the Constitution of the United States. As a result, not having heard a definite answer from the regulators, members of the Banking Committee are here today to begin our process of engaging in oversight to be sure that when we pass laws, as we did setting up these agencies, that those laws are adhered to. I believe our committees spend too much time writing law and too little time seeing that regulatory agencies abide by that law. I have two colleagues here today who have been leaders in this effort to introduce the bill that we were unable to call up because a unanimous consent was objected to. Let me first yield to Senator Allard.

Mr. GRAMM

Mr. GRAMM. Regular order.

Mr. GRAMM. All right. Fine.

Mr. GRAMM. OK.

Mr. GRAMM. Mr. President, the amendment before us contains several major changes to the Tax Code, changes that affect the competitiveness of America in the world market, changes that represent fundamental modifications to the Tax Code. I realize that we have taken a holiday from reality here in spending billions and billions of dollars, but to come to the floor of the Senate in violation of the Constitution and to start rewriting the Tax Code when the Constitution says that tax bills shall originate in the House is taking this whole process too far. Constitutional Point of Order

Mr. GRAMM. Mr. President, I make a constitutional point of order against this amendment in that it violates the Constitution, and I ask for the yeas and nays.

Mr. GRAMM. The point of order was a constitutional point of order made under the provisions of article I, which require that revenue bills originate in the House. The Senator's amendment changed three provisions of the Tax Code and therefore violated the Constitution. As the Chair ruled, under precedent, the Chair does not rule as to whether order stands. Therefore, we voted 80-20 to sustain that point of order.

Mr. GRAMM. Mr. President, I assume that there is going to be a vote on this amendment. Having listened to the Senator from Delaware, and recognizing that the Constitution says all revenue bills shall originate in the House, I make a constitutional point of order against this amendment.

Mr. GRAMM

Mr. GRAMM. Mr. President, I have to object. This resolution is not on the Calendar. Therefore, it is not in order to present it to the Senate. Mrs. FEINSTEIN addressed the Chair.

Mr. GRAMM. Mr. President, I send a motion to the desk, a motion to indefinitely postpone the consideration of the Feinstein motion.

Mr. GRAMM. Mr. President, I ask that reading of the motion be dispensed with, and I ask for the yeas and nays.