Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. I wish to associate myself with the statements of my colleague, Senator Bryan, the author of the amendment adopted by the Banking Committee. My understanding in voting for his amendment was that it codified the Barnett Bank standard for preemption of State laws. The Committee Report accompanying S. 900 seeks to amplify, or put a gloss on, the Barnett Bank standard. I would like to ask the Senator from Nevada whether the gloss put on the ``prevent or significantly interfere'' standard in the Committee Report is in keeping with his amendment.

Mr. SARBANES. I would like to point out that the language of the amendment offered by my colleague from Nevada was previously explained in the Report of the Banking Committee that accompanied H.R. 10 last year. For State laws that fall outside the 13-point safe harbor, the bill does not limit in any way the application of the Supreme Court's Barnett Bank decision. State laws outside the safe harbor could be challenged under that decision. This year's Committee Report incorrectly describes the standard that State laws must meet under Barnett Bank in order to avoid being preempted.

Mr. SARBANES

Mr. SARBANES. Mr. President, I am pleased to announce that ten elementary schools throughout Maryland have been named Blue Ribbon School Award winners by the United States Department of Education. These schools are among only 266 elementary schools nationwide to be honored with this award, the most prestigious national school recognition for public and private schools. The designation as a Blue Ribbon School is a ringing endorsement of the successful techniques which enable the students of these schools to succeed and achieve. Over the past few years, I have made a commitment to visit the Blue Ribbon Schools and have always been delighted to see first hand the interaction between parents, teachers, and the community, which strongly contributed to the success of the school. I look forward to visiting each of these ten schools and congratulating the students, teachers and staff personally for this exceptional accomplishment. According to the Department of Education, Blue Ribbon Schools have been judged to be particularly effective in meeting local, state and national goals. These schools also display the qualities of excellence that are necessary to prepare our young people for the challenges of the next century. Blue Ribbon status is awarded to schools which have strong leadership; a clear vision and sense of mission that is shared by all connected with the school; high quality teaching; challenging, up-to-date curriculum; policies and practices that ensure a safe environment conducive to learning; a solid commitment to family involvement; evidence that the school helps all students achieve high standards; and a commitment to share the best practices with other schools. After a screening process by each State Department of Education, the Department of Defense Dependent Schools, the Bureau of Indian Affairs, and the Council for American Private Education, the Blue Ribbon School nominations were forwarded to the U.S. Department of Education. A panel of outstanding educators from around the country then reviewed the nominations, selected schools for site visits, and made recommendations to Secretary of Education Richard Riley. The ten winning Maryland elementary schools are as follows: Ashburton Elementary School, located in Bethesda, is home to 515 students and 64 staff members which provide for a richly diverse school community with an exemplary record of student achievement and an outstanding academic program. This award also credits the SHINE Program--Successful, Helpful, Imaginative, Neighborly, and Enthusiastic--with recognizing students who participate positively in the school community. Brook Grove Elementary School, located in Olney, not only has a commendable academic strategy, but also is recognized as a school that encourages excellence in the arts and in athletics, and values individuality and diversity as critical to the well-being of the student body. Our Lady of Mercy School is a co-educational Catholic school in Potomac that combines traditions of academic excellence, intellectual curiosity and fundamental moral and religious values in a successful program that has almost half of its 283 students meeting the criteria of giftedness set by the Institute for the Academic Advancement of Youth. Oak Hill Elementary School, the most culturally and economically diverse school in the Severna Park area, prioritizes parental involvement in the successful pursuit of quality education for its students. The concept of the ``Oak Hill School Family'' aims to provide a safe and nurturing school environment, a strong academic program and a philosophy that encourages community involvement. Salem Avenue Elementary School, located in Hagerstown, has made great strides in the last decade and, as a leader in Washington County, is a school of many ``firsts,'' including being the first Title 1 school to receive a satisfactory or excellent rating in all areas of the Maryland School Performance Assessment Program (MSPAP); the first elementary school to be named a Blue Ribbon School; the first to create and appoint the position of Curriculum Coordinator; and the first to be named a National Distinguished School. Templeton Elementary School, located in Riverdale, is an award winning Prince George's County school which has made dramatic gains on the Maryland School Performance Assessment Program (MSPAP). Templeton's mission is to provide its diverse student body with the knowledge and skills to be productive members of society. Vienna Elementary School, located in Vienna, is a small, rural school which draws from a large geographical area and is an integral part of the community. With virtually no staff turnover and a strong School Improvement Team, students, staff and parents form a close-knit community and serve as a model in the district for student achievement, staff commitment and participatory leadership, including development of character and ethical judgment. West Annapolis Elementary School, situated in downtown Annapolis, was used as an example by the Maryland State Department of Education for two videotapes highlighting outstanding teachers. This award also credits West Annapolis' belief in the importance of a united school community as evident in its concept of TEAM/excellence which works to improve the teaching and learning environment in which students can excel. The Summit School is a non-profit school that was created 10 years ago to promote literacy and school success among children with unique educational needs, namely bright students that are disabled readers. Summit, located in Edgewater, enables students to come to understand their own unique learning styles by identifying their strengths and weaknesses through a variety of individualized strategies. The Trinity School, located in Ellicott City is an independent, co-ed Catholic school that was designated as an Exemplary School by the U.S. Department of Education in 1990. Trinity offers a challenging curriculum while also offering a variety of community outreach programs to involve students and their families in extracurricular activities. These ten elementary schools in the State of Maryland represent a model for schools across the nation. Their hard work and dedication has resulted in a tremendous achievement for the students, teachers, parents and community. This committed partnership proves that a concerned community can produce excellent results.

Mr. SARBANES

Mr. SARBANES. Mr. President, last week the Senate lost one of its most able and committed staffers; the country lost a brave public servant, a true patriot. Beyond that, with the passing of Adm. James W. ``Bud'' Nance, many of us have lost a good friend. I want to touch for just a moment on his Maryland connections. Admiral Nance graduated from the Naval Academy in Annapolis in 1944, then went off to serve in our Navy in World War II. He in fact served in World War II, in the Korean war, and in the Vietnam war. In the mid-1950s, he was a project pilot for the flight test division of the Naval Air Test Center in Patuxent River, MD, in St. Mary's County, the mother county of our State. I simply say we were honored to have had his presence in our State for an extended period on those two occasions. Here in the Senate, an institution sometimes marked by acrimony and divisiveness, Bud Nance displayed a warmth and generosity of spirit. He was able to work constructively with those on both sides of the aisle to enhance our Nation's interests. That was always first and foremost in Bud's mind--what served the interest of our great country. Each time I had occasion to work with him, Bud listened to my concerns and responded promptly and fairly. Others had the same experience. He fought hard for the principles in which he believed, but always in a manner that commanded respect and admiration. As the chairman of our committee has indicated, his lifetime friend made an invaluable contribution to our Nation's policies. I was particularly moved by the way Admiral Nance dealt with his illness. Having had an illustrious 35-year career in the Navy, he knew how to surmount the gravest challenges and how to maintain strong leadership throughout. He demonstrated that once again by showing up for work every day with a smile and a vitality that masked whatever pain and discomfort he may have felt. Every day he reported for duty. Rather than complaining about his own situation, he showed a genuine interest in the health and well-being of those around him, and the other staff members of the committee will recount his unfailing courtesies towards each and every one of them. I join my colleagues in offering my deepest condolences to Bud's wife of 53 years, Mary Lyda, and to his four children and seven grandchildren. The Senate Foreign Relations Committee and the Senate itself were fortunate to have had the benefit of his dedicated service over the past 8 years. He will be remembered fondly, not only for his lifetime of service to this country--civilian as well as military--but also for his integrity, courage, and grace. Mr. President, I yield the floor.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise today to commemorate a group of individuals and agencies whose cause represents the ideal of public service--the improvement of the lives of those who are less fortunate. The Maryland Association of Community Action Agencies (MACAA), which begins its annual conference Monday in Ocean City, is a group of seventeen Community Action Agencies (CAA) which combat poverty in cities, towns and rural communities throughout our State, and provide services to countless low-income families and individuals. This year's MACAA conference is made even more significant as 1999 marks the 35th anniversary of the creation of Community Action Agencies. CAA's were developed as part of the Economic Opportunity Act of 1964 which was the centerpiece of President Johnson's War on Poverty. This Act also began other critical social service programs including the Head Start pre-school program and the Job Corps Training Center program. Currently, the MACAA serves individuals and families in Baltimore City and 23 counties throughout Maryland. Working with 1000 agencies nationwide, CAA's serve 98% of our Nation's cities and counties and are a primary source of support for the more than 38 million Americans living in poverty in rural and urban areas. Services provided by CAA's and their dedicated volunteers include employment training, adult and child educational services, senior assistance, income management, housing and rental assistance, emergency services and food and nutritional relief. Whether it is through the exchange of information on poverty issues, the provision of services and assistance, the development of funding resources, or the effort to influence public policy, the ultimate mission of these agencies and volunteers is to assist low-income citizens to achieve a higher level of self- sufficiency. Mr. President, for more than 30 years, MACAA has sponsored this annual conference which brings together hundreds of individuals involved in the effort to eliminate poverty. Appropriately, this May has been designated National Community Action Month, and May 4-10 has been designated National Community Action week to publicize the achievements of CAA's and to emphasize their continuing importance in our communities. This is a most fitting occasion to celebrate a coalition such as MACAA, which is so integral to the health and well being of citizens throughout Maryland. I am pleased to congratulate the MACAA for thirty years of invaluable service, and for their efforts to, to borrow the CAA credo, provide a ``hand up, not a hand out.''

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise today in support of S. 30, the Agricultural Market Failure Protection Act of 1999. The purpose of this bill, of which I am co-sponsor, is to protect farmers against income loss resulting from severe economic downturns and weather- related crop losses. In my view this legislation is very timely, considering the current status of our nation's agricultural economy. We have been experiencing alarming economic conditions in the agricultural sector for over two years. A combination of declining crop prices, reduced yields, and unfavorable export markets have led to a substantial decrease in overall farm incomes. As a nation, we often forget how important it is to protect the vitality of our agricultural producers. We do not want to wait until farms disappear and our supermarkets can no longer stock their shelves to address this situation. Farmers in my own state of Maryland are not immune to the effects of this crisis. Over the past two years, they have been hit hard by low commodity prices and a widespread drought that has destroyed a significant number of crops. The Maryland Agricultural Statistics Service reports that total farm income fell $8.2 million last year to $265.4 million overall. This was a 3 percent decline. Since 1996, farm incomes in Maryland have fallen 26 percent. Prices for grain, corn, soybeans, and hogs are all down, some at 20 to 30 year lows. A recently published article from The Baltimore Sun illustrates the impact of this crisis on the economy of Maryland. In an effort to address this decline, the Agriculture Market Failure Protection Act would revise marketing assistance loan rates, authorize six-month loan extensions, and amend the Internal Revenue Code to temporarily increase the number of years permitted for the carry back of net operating losses for certain farmers. In short, it would help prevent future income loss by giving farmers a chance to run their operations without constantly being at the mercy of the market. With these changes to the Agricultural Market Transition Act, farmers will be able to spread crop sales throughout the entire season, and subsequently allow them to take advantage of higher prices. The legislation which Senator Daschle has introduced leaves commodities in the hands of farmers, thereby allowing them to make their own marketing decisions for the future. I commend him for introducing this legislation, and in light of the current state of the agricultural economy, I urge all of my colleagues to support S. 30, the Agricultural Market Failure Protection Act of 1999. I ask to have printed in the Record the Baltimore Sun article. The article follows. Md. Farm Income Down 3% in 1998; Grain Growers Suffer Big Losses, But Poultry, Dairy Farmers Do Well (By Ted Shelsby) The extra-fat paychecks of poultry farmers and dairymen last year were not enough to offset big losses by grain growers, and the state ended 1998 with a 3 percent decline in net farm income, according to preliminary estimates released yesterday by the Maryland Agricultural Statistics Service. Total farm income in Maryland fell $8.2 million last year to $265.4 million. It was the second consecutive year that Maryland farmers have been hurt by low commodity prices and drought. Farm income last year was 26 percent lower than in 1996. ``This is going to have a serious impact on our rural economy,'' Maryland Department of Agriculture Secretary Henry A. Virts said. ``The farm equipment dealers are going to suffer. The feed dealers are going to suffer. The truck dealers, restaurants and furniture stores are going to suffer, too. Anybody who serves the farm industry is going to feel the decline.'' The drop in farm profit last year was blamed primarily on low commodity prices and a summer drought that destroyed grain crops in Southern Maryland and the Eastern Shore. ``Grain prices were down, down, down last year,'' said Ray Garibay, head of statistics services for the Agriculture Department, in releasing his net income estimate. He added that the prospects for prices are no better for this year as a result of large supplies of grain in storage. But not all segments of agriculture shared in the hard times. Garibay said that 1998 will be remembered fondly by poultry and dairy farmers. ``Last year was our best in the past 10 or 12 years,'' said Lewis R. Riley, an Eastern Shore chicken grower and former state agriculture secretary. ``Poultry prices stayed healthy throughout 1998, and in most case farmers were paid a price bonus by the processors,'' Riley said. He explained that the bonus, which totaled between $5,000 and $6,000 for his farm, is like a profit-sharing plan in which the chicken processors pay farmers above their contract price when wholesale poultry prices rise. ``It's a windfall for good prices,'' Riley said, ``and it made 1998 a very good year for poultry growers.'' State dairy farmers also benefited from record milk prices late last year due to a shortage of milk caused by weather problems in Southern California. Ed Fry, who operates a dairy farm near Kennedyville, said farmers profited from a shortage of cheese and butter last year. ``High milk prices, coupled with low grain prices, made for a very good year for the dairy industry in general,'' he said. Fry noted that the good times are coming to a halt. He said the basic formula price of milk set by the U.S. Department of Agriculture dropped 37 percent last week, and farmers will feel the bite in their milk checks beginning next month. Grain farmers have been feeling a financial pinch for more than a year. Melvin Baile Jr., past president of the Maryland Grain Producers Association, said corn and soybean growers were lucky to break even last year. ``Prices were off 20 percent for corn and the same for soybean,'' said Baile, who farms 700 acres outside New Windsor in Carroll County. He said the double whammy of low prices and poor yields was particularly hard on Southern Maryland and Eastern Shore farms that experienced the brunt of last year's drought.

Mr. SARBANES

Mr. SARBANES. Mr. President, I join with my colleagues in paying this tribute to Joe Biden on the occasion of him casting his 10,000th vote in the Senate. The casting of that vote is an occasion to pay tribute not for voting but for a real career of service and of great distinction. It has been one of the pleasures of my service in this body to have served with Joe Biden, and one of my pleasures that we represent adjoining States. Therefore, we interact on a number of issues that otherwise would not be the case amongst Members of the Senate. He has had an extraordinary career here. He is now in his fifth term. He got elected before he was old enough, actually, under the Constitution, before he was old enough under the Constitution to be a Member of the Senate. He was elected at the age of 29, and he has just had a terrific career of accomplishment. Those who have worked with him derive great pleasure from it. We have marveled at his legislative skill. I want to talk about two or three of the things in which he has been very much involved. We have served together on the Senate Foreign Relations Committee all of these years. And he has exercised extraordinary leadership of the Senate Judiciary Committee at various points during his career. We are making a lot of the fact now in America that crime rates are going down all across the country. So everyone is sort of looking to see what is the cause of that, or who ought to get the praise for it. I have to tell you that Joe Biden ought to get a lot of the praise for the fact that crime has gone down across this land. He has authored every significant anticrime initiative in the Congress over a period of time that he has been here--the Juvenile Justice Prevention Act, the Victims of Crime Act, the Violent Crime Control and Law Enforcement Act, and on and on and on. Senator Biden has been a great champion of law enforcement and of those who work in law enforcement. He has been sensitive on the important civil liberties and civil rights cases, which a democracy ought to be sensitive to. He has understood how you can balance those and put it together. There are thousands and thousands of cops on the street today giving us safer neighborhoods and more secure cities and communities all across America because of Joe Biden's initiatives. Senator Biden was the first to include the provisions with respect to violence against women and really raise to a very high level the whole issue of gender-based crimes. He has consistently focused our attention onto that area. He has dealt in a very effective way with the gun issue, which is not easy to deal with in this body, and certainly not an easy issue to deal with effectively. I have to tell you that I think throughout all of this period Senator Biden had a clear perception and focus on how to do something about the crime issue. He did not demagog it. He did not seek to emotionalize it. He worked hard to develop the real programs that would make a difference in our communities all across the country. I am extremely grateful to him for that. On the Foreign Relations Committee, he has consistently been an advocate of an international stance by the United States--actually, the expansion of NATO was in large part a consequence of his very effective advocacy and leadership. He has been sensitive to the importance of human rights and democratic values in American foreign policy. I have been very privileged to serve with him on the Foreign Relations Committee and to see his effective leadership in that arena. Finally, let me just say he is a terrific friend. I can't tell you how much I value and treasure his friendship, how much it has meant, how much I enjoy his sense of humor, and even how much I like to listen to his speeches--which occasionally go on for a while. But this institution has been honored by having him as a Member. It is extraordinary that at what is really, for the Senate, still a very young age, he has achieved his 10,000th vote. I wish him many, many, many thousands more. I thank him for his extraordinary service to the country and for his deep friendship to all of us. I yield the floor.

Mr. SARBANES

Mr. SARBANES. If the Senator will yield, the committee has brought out--in fact, it is on the calendar--a regulatory relief bill to lessen the regulatory burdens on the financial institutions, and it seems to me in that spirit of lessening burdens, this basic banking amendment would certainly be an opportune amendment to offer to that bill when it is before the Senate. I am pleased that the chairman has committed to having an up-or-down vote. I think the Senators are onto a very important issue, and it really is just a basic issue of equity and fairness for small people. I very much appreciate not only their raising it, but insisting that at some reasonable point we be given an opportunity to vote up or down on this important matter.

Mr. SARBANES. I simply want to underscore, the importance of this issue and the contribution which the very able Senator has made to it. Isn't it correct, most people don't realize these things can happen?

Mr. SARBANES. If the Senator will yield, I commend the Senator for his very strong statement. This is an extremely important issue. I appreciate the Senator speaking out on it. We have joined together, actually, in introducing legislation on this privacy question, along with Senators Leahy and Dodd and Hollings. Earlier today we raised the issue with the chairman. I think it would probably be helpful if the chairman could provide-- the Senator may want to question him himself--the similar assurances he gave earlier about the committee committing itself to examining this issue in a comprehensive way, with hearings and with the idea in mind, of course, to try to bring forth legislation that will address what the chairman himself has conceded is an important issue that needs to be addressed.

Mr. SARBANES. I suggest to the chairman, maybe if we take about 5 or 10 minutes to engage in a discussion with the people who have these amendments, we can find a way to perhaps accept some of them and go to conference with them at least and deal with the others, and then we can still move to final passage this evening and complete this legislation, which I think is highly desirable.

Mr. SARBANES. Mr. President, while there are so many Members on the floor, I want to engage the chairman of the committee in a discussion and maybe we can let Members know where we are going. This was the last of the very large--I do not want to suggest that any amendment any Member has to offer is not a large amendment; I recognize that, but this was the last of a series of large amendments that we had lined up. I know the chairman and leader's intention is to try to finish this evening. As I understand it, there are some amendments around. I guess we will find out very shortly. Maybe we can dispose of them or deal with them in a fairly reasonable way in a short period of time and then go to the final vote on this bill. As I understand it, the leader said that if we voted final passage tonight, there would be no votes tomorrow. Members, I think, would have to figure whether it is worth investing a little more time this evening in order to finish up. That is how I see the lay of the land. I just ask the chairman to comment.

Mr. SARBANES. Mr. President, I suggest the absence of a quorum.

Mr. SARBANES. I guess I should state I am going to vote against this bill on final passage. We have had a very spirited debate. We have had a number of very close votes on important amendments, and in my view the bill has not been improved sufficiently to warrant an affirmative vote, therefore I intend to vote against it. I am not, obviously, going to lay out all the reasons at this hour of night because I know we want to go to a vote here.

Mr. SARBANES. Will the Senator yield me 4 minutes?

Mr. SARBANES. Will the Senator yield me 4 minutes?

Mr. SARBANES. What is the parliamentary situation?

Mr. SARBANES. Mr. President, what did this deal with?

Mr. SARBANES. Mr. President, I move to reconsider the vote.

Mr. SARBANES. Mr. President, in view of the comments that were just made by my able colleague from Wyoming, I want to address this safety and soundness issue. The Federal Deposit Insurance Corporation, to which he referred, the regulatory agency with the most at stake in terms of protecting the deposit insurance funds, sees the op-sub as equivalent to the holding company structure for safety and soundness reasons. The argument was just made that there are some safety and soundness problems. The FDIC Chairman, Donna Tanoue, wrote a letter to the Banking Committee: With the appropriate safeguards, the operating subsidiary and the holding company structures both provide adequate safety and soundness protection. We see no compelling public policy reason why policymakers should prefer one structure over the other. And absent such a compelling reason, we believe the Government should not interfere in banks' choice of organizational structure. That is the current Chairman of the FDIC. Lest someone says that is only the current Chairman, let me refer to an article written by three previous FDIC Chairmen, both in Democratic and Republican administrations: Ricki Tigert Helfer, William Isaac, and William Seidman, all of them with many years of direct experience in this area. They all agree with the current FDIC Chairman and have offered strong support for the operating subsidiary approach. In fact, I will quote from their article. I ask unanimous consent that this article be printed in the Record at the conclusion of my statement.

Mr. SARBANES. The article says: The debate on banks conducting financial activities through operating subsidiaries has been portrayed as a battle between the Treasury and the Federal Reserve. The Treasury believes banks should be permitted to conduct expanded activities through direct subsidiaries. The Fed wants these activities to be conducted only through holding company affiliates. Curiously, the concerns of the Federal Deposit Insurance Corp. have been largely ignored. The FDIC, alone among the agencies, has no ``turf'' at stake in this issue, as its supervisory reach extends to any affiliate of a bank. The FDIC's sole motivation is to safeguard the nation's banks against systemic risks. They go on to say: Every subsequent FDIC chairman, including the current one, has taken the same position . . . In other words, allowing with the view toward bank subsidiaries conducting these activities. In fact, they point out that requiring the bank-related activities be conducted in holding companies will place insured banks in the worst possible position. They will be exposed to the risk of the affiliates' failures without reaping the benefits of the affiliates' successes. It is very clear that the regulator concerns of the Federal Deposit Insurance Corporation are supportive of doing it either way. Will the Senator yield me 1 more minute?

Mr. SARBANES

Mr. SARBANES. Will the chairman yield?

Mr. SARBANES. On the point of amendments, I think it would be very helpful to the managers if Members could now let us know in the next hour or so whether they have amendments they intend to offer and what the subject matter will be. That will give us a chance to think about how we might structure the day. The leader's intent, as I understand it, is to try to finish this bill tonight. I think the chairman will probably agree with me that there is the real possibility that we could do that, but in order to accomplish that, it would be very helpful if Members who are thinking of offering amendments would let us know about them so we can incorporate that factor into our thinking as we think about how we are going to move the bill along. I would be most appreciative if people could do that.

Mr. SARBANES. Mr. President, first of all, I want to indicate right at the outset that I am supportive of this amendment which the chairman has sent to the desk. I would like to address briefly the two aspects of it. First of all, it would preserve current law that ends the FICO assessment differential at the end of 1999. Actually, my colleague, Senator Johnson, was going to offer an amendment later, and part of that amendment would encompass this provision as well. That is an amendment that addresses the unitary thrift issue, which I believe is probably an amendment we will be able to get to fairly shortly this morning. In fact, the chairman and I are hopeful that when we do that, we will be able to work out a time agreement with those who are interested in the amendment so we could structure that debate, structure the vote, and Members would know how we are moving ahead. We indicated earlier, and I want to repeat the request--I will do it after we vote on this amendment--that Members who have amendments to let us know. Of course, we know about the unitary thrift amendment. We know about the op-sub amendment. We know that some Members are thinking of offering amendments. The chairman indicated earlier that, if we could see them, we might be able to work out accommodations with people offering amendments. It will be very helpful to us if Members will let us know. I think an opportune time will be when we have the vote on this amendment, or shortly thereafter we could begin to try to program and plan the day. The FICO assessment differential--let me briefly describe the legislative background and show why the current law should be preserved. In 1996, Congress passed the Deposit Insurance Funds Act of 1996 to resolve the disparity. Let me just say this amendment has two things: the FICO differential and this antifraud privacy provision in it. As the chairman has indicated, that is just a small step. I am going to address that shortly. Many Members have a very keen interest in the privacy issue. The privacy concerns which they have been focused on are sort of broader and separate and more extensive than what is in this amendment. But this amendment in and of itself, I think, is desirable, although it by no means addresses the privacy question in any broad or full manner. Coming back to the FICO assessment differential, when we passed the Deposit Insurance Funds Act of 1996 to resolve the disparity between the assessments being charged by the SAIFs and the BIFs to the thrifts and the banks for payment of interest on bonds issued by the financing corporation, so-called FICO bonds, it paid depositors of institutions that failed during the thrift crisis. Actually, the differential that caused thrifts to migrate assessable deposits to the BIF fund, the Bank Insurance Fund, in order to reduce their premiums, that obviously over time could have led to a destabilization of the SAIF funds. The legislation in 1996 required SAIF-insured institutions to pay a one-time $4.5 billion payment to the SAIF funds, and for 3 years, until the end of 1999, to pay assessments at a rate of 6.1 basis points of deposits, which was five times the rate at which BIF-insured funds were assessed. Then, as it were, as part of the arrangement for the thrifts undertaking these large payments, a one-time $4.5 billion payment and the five-time multiple on the assessment rate going into the SAIF funds, the Congress provided that the assessments would be equalized in the two funds no later than January 1, 2000, and the same rate would be assessed on BIF and SAIF-assessable deposits thereafter. The bill before has a provision in it, which the chairman has now proposed to strike, but that provision, if it remained, would extend the premium differential for another 3 years and, therefore, require SAIF-insured savings associations to pay a much higher deposit assessment for another 3 years, whereas the existing law would have eliminated that differential at the end of this year. This obviously would impose very significant additional and unexpected costs. I think, in thinking about this, that we have to really think about it in terms of in the sense of what the understanding was in 1996, what the expectations were, what the planning has been, and, of course, if we don't allow the law to take effect as it was laid out to do in 1996 in the Deposit Insurance Funds Act, we markedly changed people's expectations and people's planning. OTS Director Seidman and FDIC Chairman Tanoue both testified before the Senate Banking Committee opposing this section. Director Seidman testified that in a sense both BIF and SAIF-insured institutions have expected the FICO rate differential to end at the end of this year. Extending it could revive the incentive to shift deposits from the SAIF to the BIF. Deposit shifting represents a waste of resources and could unnecessarily lead the SAIFs less able to diversify to risks. FDIC Chairman Tanoue testified that faced with the possibility of a persistent rate differential, holders of SAIF-insured deposits may feel it is in their best interests to try to shift deposits to the BIF. This would result in the very inefficiencies that the Funds Act was intended to eliminate. Subsequently, FDIC Chairman Tanoue sent a letter to Chairman Gramm urging the elimination of section 304, and stating if the differential is extended ``inefficiency and waste will reemerge as institutions expend time and money to avoid this unequal fee structure.'' Mr. President, I think obviously we need to give careful consideration to these arguments advanced by the FDIC and the OCC. The substitute which Senator Daschle and we proposed at the outset of these deliberations did not extend the differential. We did not have this provision in there, and, therefore, we stuck with existing law which would have eliminated the differential at the end of this year. No compelling reason has been brought to my attention that would require us to reopen this issue and extending the differential. The thrifts have been performing their obligations under the Funds Act by paying the $4.5 billion one-time payment, plus the payment on their deposits, which is five times the payment the banks are paying under the BIF on their deposits. I agree with the amendment in striking the provision that would have carried the differential out for another 3 years contrary to the understanding and everyone's assumption on the basis of the 1996 law. Now, Senator Johnson will be offering an amendment which addresses the unitary thrift issue, and I think that is a very important amendment. He had, as part of that amendment, this particular provision with respect to the differential. I think it is very important as Members consider the Johnson amendment to understand that what he will be offering on the unitary thrift issue is in the context of this change, as well, with respect to the differential. Looking at the Johnson amendment on the unitary thrift, to be fair to Senator Johnson and what he was seeking to accomplish, one would have to keep in mind or take into account that part of his approach encompassed this FICO assessment differential which is now contained in the amendment offered by the chairman. Members, therefore, as they examine the Johnson amendment--and I will make that point later, as well--need to appreciate his effort to try to come up with what I call a balanced, well-thought-through, reasoned, balanced approach in trying to deal with these issues which are in some ways connected with one another. Senator Johnson was trying very hard to put together a balanced package. The adoption of this amendment makes it unnecessary to be in the Johnson amendment, which ought not result in perceiving that the Johnson amendment is in any way unbalanced. Because of its approach it essentially encompassed this proposal, as well. Let me turn to the antifraud provision that is in this legislation. At the outset, let me be very clear. The chairman referred to the privacy provisions of the Sarbanes bill. There are two Sarbanes bills on this issue. I want to be very clear about it. One was the substitute which we offered which contained within it the provisions of last year's bill on the Financial Information Antifraud Act. Separately, there is a bill that I have introduced along with Senator Dodd, Senator Bryan, Senator Leahy, Senator Edwards, and Senator Hollings, and a number of other colleagues have expressed a very strong interest in this legislation which is a much more comprehensive approach to the privacy question. That bill would give customers notice about how their financial institutions share or sell their personally identifiable sensitive financial information. We think it is an extremely important issue. Of course, the chairman has indicated that he also regards it as an important issue, and he made the commitment this morning that the committee would undertake a comprehensive hearing with respect to this question of financial privacy. I support the specific provisions in this amendment. I am pleased that we are considering these welcomed and much needed antifraud provisions. However, I have to underscore, again, they do not begin to address the larger issues of financial privacy and the need to give customers an informed voice in what is happening with their most confidential financial data. Some have called the amendment that is before the Senate a so-called privacy amendment, but I think it is more appropriate to call it an antifraud measure. What people are now talking about as a privacy issue really is much more encompassed by this separate bill, which I indicated Senators Dodd, Bryan, Leahy, Edwards, and Hollings have joined with me in introducing, and which many of our colleagues on both sides of the aisle have expressed an interest in. I know there are colleagues on the Republican side of the aisle, as well as on this side of the aisle, who are very concerned about the broader privacy question. This amendment prohibits the use of fraud to obtain sensitive customer financial data from a bank. The use of fraud, in order to get this data from a bank, clearly is something we need to shut down. That is obviously a desirable and appropriate provision. However, this proposal does not require financial institutions to safeguard customer data. This goes to when people use fraud to somehow get that customer data out of the financial institution. This amendment doesn't address the increasingly common situation where companies pay banks for sensitive information without the knowledge or consent of their customers. Unfortunately, few Americans know that under current Federal law a bank, stockbroker, or insurance company may transfer information about a customer's transactions or experience to a third party without notifying the customer that the information is being shared, or obtaining the customer's consent. Such information can include savings and checking account balances, CD maturity dates, security purchases and insurance payouts. Americans are becoming increasingly concerned about the issue. That is very clear. Last month, the American Association of Retired Persons published a survey finding in which 78 percent of the people surveyed disagreed with this statement. Here is a statement that was put to people which 78 percent disagreed with: Current Federal and State laws are strong enough to protect your personal privacy from businesses that collect information about consumers. Mr. President, 78 percent disagreed with that statement. In other words, they did not think that current Federal-State laws were strong enough to protect their personal privacy. Ninety-two percent of the respondents in this AARP survey said they would mind if a company they did business with sold information about them to another company. At the start of this Congress I introduced S. 187, the Financial Information Privacy Act of 1999 to which I referred, in which Senators Dodd, Bryan, Edwards, Leahy and Hollings joined. That bill will give customers the right to be told before their banks sell or share their account balances, their CD maturity dates, their credit card purchasing history and other sensitive financial information. It will give them the right to object to the sharing of this information. Think of the kind of information now that has no restraint upon it in terms of it being shared or sold. I think it is clear that most people have no real understanding or appreciation that this takes place and would not want it to happen. S. 187 has received strong support from leading consumer and privacy advocate groups. This is an issue that is high on the President's agenda. Just this week, the President unveiled a plan for financial privacy and consumer protection in the 21st century. This plan would require institutions to inform consumers of plans to share or sell their financial information and give the consumer the power to stop it. In his radio address, the President said he was ``working to give you the right to control all the information on whom you write checks to, what you buy on your credit card and how you invest. We want to prevent anyone from encroaching on your privacy for their profit.'' In conclusion on this issue, first of all, let me again indicate my strong support for the provision that is before the Senate which seeks to stop the use of fraud to obtain a consumer's confidential financial information. That provision was in the bill we brought out last year. It was in the alternative which was offered earlier. We welcome the chairman's willingness to place it in the bill that is before the Senate. However, I do want to note that this very limited amendment does not solve the serious problem of customers not knowing what is happening with their account balances, CD maturity dates and other transaction and experience information, and not having a choice as to whether this sensitive personal financial information is circulated to other companies. This issue has the potential of being a controversial issue. I also think it has the potential on which a consensus can be worked out between protecting the consumer interest and the assertions which the financial institutions are making with respect to the burdens that might be placed upon them or how it would inhibit them from conducting legitimate financial activities. That is something which needs to be carefully worked through, so I particularly welcome the indication by the chairman that we will hold hearings on these very important issues and undertake to develop real solutions to the growing problem of financial privacy. I think it is extremely important that we undertake that task. It is helpful this morning to have this indication and this commitment that the committee will do so. Mr. President, I had indications earlier there were some Members on this side who wanted to address this privacy question, and I think we would give them a brief period to follow through on that indication of interest. If not, I would be prepared to move to a vote on this amendment.

Mr. SARBANES

Mr. SARBANES. The court found the government liable for breaching its contracts by not permitting the thrifts to count goodwill and capital credits toward regulatory capital requirements after the enactment of FIRREA. There had been a specific undertaking in the S&L cases that those goodwill arrangements could be counted and, in fact, they wouldn't have taken over the failed thrifts had they not been able to do so. It is vastly different from the situation that we are confronting here. There are no specific contracts here that promise acquirers of thrifts that they could sell them to commercial companies or that the law governing permissible thrift affiliations would never change. Prohibiting unitaries from affiliating with commercial companies is no different than many prohibitions the government legislatively imposes on industries each year with no financial liability to the government. The difference with the supervisory goodwill cases couldn't be clearer. Those cases were based upon contract law. No contracts are involved in the unitary provisions of H.R. 10. No guarantee was made by anyone that these affiliations with a commercial firm could continue and the government is entitled, in order to achieve important public policy objectives, to make reasonable changes. I submit to you that this is one such reasonable change in order to ensure that the dividing line between banking and commerce remain firm. All of the people have told us about the dangers of mixing banking and commerce. From the Fed, Alan Greenspan says: Failure to close this loophole now would allow the conflicts inherent in banking and commerce combinations to further develop in our economy and complicate efforts to create a fair and level playing field for all financial service providers. Secretary Rubin has echoed those comments, as has Paul Volcker and many other distinguished commentators. Mr. President, I reserve the remainder of our time. How much time is remaining?