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# Legislative Bulletin...........................................March 8, 2006

**Contents:**

> **H.R. 1053**---To authorize the extension of nondiscriminatory
> treatment (normal trade relations

treatment) to the products of Ukraine

> **H.Res. 673** --- Expressing support for the efforts of the people of
> the Republic of Belarus to establish a full democracy, the rule of
> law, and respect for human rights and urging the Government of Belarus
> to conduct a free and fair presidential election on March 19, 2006
>
> **H.R. 3505**---Financial Services Regulatory Relief Act

H.R. 1053---To authorize the extension of nondiscriminatory treatment
(normal trade relations treatment) to the products of Ukraine (Gerlach,
R-PA)

**[Order of Business]{.underline}**: The bill is scheduled to be
considered on Wednesday, March 8^th^, under a motion to suspend the
rules and pass the bill.

**[Summary]{.underline}**: H.R. 1053 would authorize the President to
grant normal trade relations ("non discriminatory" trade) treatment to
the products of Ukraine. The bill would allow the President to determine
that this provision in current law no longer applies to Ukraine (which
it does currently):

> Except as otherwise provided in this subchapter, the President shall
> continue to deny nondiscriminatory treatment to the products of any
> country, the products of which were not eligible for the rates set
> forth in rate column numbered 1 of the Tariff Schedules of the United
> States on January 3, 1975.

**[Additional Background]{.underline}**: Normal Trade Relations (NTR)
status amounts to reductions in tariffs on the products of said country
coming into the United States. Only a small handful of countries do not
currently enjoy NTR status in the U.S.

To read more about Ukraine, visit this State Department webpage:
<http://www.state.gov/r/pa/ei/bgn/3211.htm>

**[Committee Action]{.underline}**: In March 2005, the bill was referred
to the Ways and Means Committee and its Subcommittee on Trade, neither
of which took official action on it.

**[Cost to Taxpayers]{.underline}**: The bill would not yield any
savings to taxpayers since it does not *require* that the President
provide normal trade relations status for Ukraine.

**[Does the Bill Expand the Size and Scope of the Federal
Government?]{.underline}**: No.

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: No.

**[Constitutional Authority]{.underline}**: Though a committee report
citing constitutional authority is unavailable, Article I, Section 8,
Clause 3 grants Congress the power to regulate commerce with foreign
nations.

**[RSC Staff Contact]{.underline}**: Paul S. Teller,
<paul.teller@mail.house.gov>, (202) 226-9718

H.Res. 673 --- Expressing support for the efforts of the people of the
Republic of Belarus to establish a full democracy, the rule of law, and
respect for human rights and urging the Government of Belarus to conduct
a free and fair presidential election on March 19, 2006--- *as
introduced* (Shimkus, R-IL)

**[Order of Business]{.underline}:** The resolution is scheduled for
consideration on Wednesday, March 08, 2006, under a motion to suspend
the rules and pass the bill.

**[Summary]{.underline}:** H. Res. 673 would express support for the
people of the Republic of Belarus in the efforts to establish a
democracy. The resolution states the following findings, among other
things:

-   States that a precondition for the integration of Belarus into the
    Western community of nations is its establishment of a genuinely
    democratic political system.

-   Urges the government of Belarus to: 1) guarantee freedom of
    association and assembly, and, 2) meet its Organization for Security
    and Cooperation in Europe (OSCE) standards and commitments on
    democratic elections.

-   Urges the Belarusian authorities to ensure: 1) transparency
    procedures for the 2006 presidential election; 2) election monitor
    access; 3) multiparty representation on all election commissions; 4)
    media access by all parties and candidates; 5) freedom of
    candidates, members of opposition parties, and independent media
    organizations from government harassment; and 6) prosecution of
    election law violators.

-   Encourages the international community to continue efforts to
    support democracy in Belarus and urges countries such as Lithuania
    and other Baltic countries and Nordic countries to continue to
    provide assistance to nongovernmental organizations and other
    Belarusian organizations involved in promoting democracy and fair
    elections.

-   Pledges support to the Belarusian people, their commitment to a
    democratic system and creation of a free market economy, and their
    country\'s assumption of its place as a full and equal member of the
    Western community of democracies.

[**Committee Action**:]{.underline} H.Res. 6733 was introduced on
February 14, 2006, and referred to the Committee on International
Relations' Subcommittee on Europe and Emerging Threats. The resolution
was marked-up on February 14, 2006, and forwarded to the full Committee
by a voice vote, which took no official action.

[**Cost to Taxpayers**:]{.underline} The resolution authorizes no
expenditure.

[**Does the Bill Expand the Size and Scope of the Federal
Government?**:]{.underline} No.

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: No.

**[RSC Staff Contact:]{.underline}** Derek V. Baker;
[derek.baker@mail.house.gov](mailto:Derek.baker@mail.house.gov);
202-226-8585

H.R. 3505---Financial Services Regulatory Relief Act (Hensarling, R-TX)

**[Order of Business]{.underline}**: The bill is scheduled to be
considered on Wednesday, March 8^th^, under a motion to suspend the
rules and pass the bill.

**[Summary]{.underline}**: H.R. 3505 would make a variety of
regulation-reducing changes affecting the operations of financial
institutions and the federal agencies involved in regulating them.
Highlights of the bill are as follows:

[National Banks]{.underline}:

-   Allows a director of a national bank to be issued subordinated debt
    to satisfy the requirement that the director own shares in the bank
    (this provision has the effect of making it easier for a bank to
    convert from C-corporation status to S-corporation status).

-   Eliminates the requirement that bank directors must be elected by
    cumulative voting.

-   Simplifies the method by which a bank calculates dividends.

-   Gives the Office of the Comptroller of the Currency (OCC) authority
    to remove a person who engages in improper conduct from the banking
    business. Currently this authority is given to other federal banking
    agencies, but not the OCC.

-   Repeals the capital requirements a national bank must currently meet
    to establish an intrastate branch.

-   Allows a foreign bank to operate both a federal branch and a federal
    agency in the same state.

-   Allows national banks to choose various forms of business
    organizations that are not corporate, such as a limited liability
    company.

[Savings Associations]{.underline}:

-   Gives federal thrift institutions the authority (currently given
    only to national and state banks) to invest up to five percent of
    its total capital and surplus in an entity that primarily makes
    public welfare investments, (10 percent with Office of Thrift
    Supervision approval).

-   Allows federal thrift institutions to merge with non-thrift
    affiliates.

-   Eliminates the automobile loan asset limitation. Currently federal
    savings associations are limited in making auto loans in excess of
    35 percent of its total assets.

-   Exempts insurance agents representing a federal savings association
    in selling FDIC-insured certificates of deposit from registering as
    securities law agents under state law.

-   Eliminates the lending limit on small business loans and increases
    the lending limit on other business loans from 10 percent to 20
    percent of assets.

-   Increases the limit on commercial real estate loans from 400 to 500
    percent of the thrift's capital.

-   Permits a Savings & Loan holding company (SLHC) to charter a credit
    card savings association without being subject to new restrictions.

[Credit Unions]{.underline}:

-   Allows privately insured credit unions to apply to become members of
    a Federal Home Loan Bank.

-   Allows certain federal credit unions to lease federal land at no
    cost.

-   Permits credit unions to purchase investment securities.

-   Increases loan term limitations from 12 years to 15 years.

-   Increases the investment limit in credit union service organizations
    from 1 percent to 3 percent.

-   Excludes loans to non-profit religious organizations from the member
    business loan limit.

-   Exempts federally insured credit unions from merger notification
    requirements.

-   Redefines a credit union's net worth as the retained earnings
    balance of the credit union plus any amounts that were previously
    retained earnings of any other credit union with which the credit
    union has merged. (Same as in H.R. 1042, which passed the House by
    voice vote last year)

[Depository Institutions]{.underline}:

-   Removes the restriction on banks expanding through *de novo*
    interstate branching (where a bank expands into another state by
    establishing a new branch, not by acquiring another bank).

-   Sets a 30-day statute of limitations for banks and credit unions to
    challenge decisions by the OCC, Federal Deposit Insurance
    Corporation (FDIC), and the National Credit Union Administration
    (NCUA) to appoint a receiver.

-   Eliminates the authority of a state to prohibit an out-of-state bank
    from acquiring an in-state bank that has existed for less than five
    years.

-   Eliminates some reporting requirements relating to insider lending.

-   Permits thrifts to invest in bank service companies and bank to
    invest in thrift service companies.

[Depository Institution Affiliates]{.underline}:

-   Applies the current-law prohibition on cross marketing only to
    entities controlled by a financial holding company.

-   Permits finance companies in states with a constitutional usury
    ceiling to charge the same interest rates as national and state
    banks.

-   Provides savings associations the same authority that banks have to
    act as agents for their affiliated depository institutions.

-   Permits savings associations that are members of a depository
    institution holding company framework to act as agents for
    depository institutions that are affiliated with the savings
    association.

[Banking Agencies]{.underline}:

-   Expands interagency data sharing to all federal banking agencies.

-   Allows the post-approval antitrust review period to be shortened
    from 15 to 5 days if the Attorney General has agreed that the
    acquisition or merger would not have anti-competitive effects.

-   Prohibits a person convicted of a crime involving dishonesty or a
    breach of trust to participate in the affairs of an uninsured
    national or state bank and uninsured offices of foreign banks
    without FDIC approval.

-   Removes the requirement that federal banking agencies demonstrate
    that an independent contractor "knowingly and recklessly" violated
    law/regulation or engaged in unsound practices before holding the
    contractor liable.

-   Authorizes the FDIC to impose civil monetary penalties of up to \$1
    million per day on any individual, corporation, or other entity for
    misrepresentation of FDIC insurance coverage.

-   Eliminates compensation limits for members of Federal Home Loan Bank
    boards.

-   Increases the term of Federal Home Loan Bank directors from three
    years to four years.

-   Requires a biennial report from each federal banking agency on the
    status of employment of minority individuals and women.

-   Allows banks with less than \$1 billion in assets (as opposed to the
    current-law \$250 million) to be examined by their regulators every
    18 months, instead of once every 12 months.

-   Directs the Federal Reserve Board to revise the Small Bank Holding
    Company Policy Statement on Assessment of Financial and Managerial
    Factors to increase the asset threshold for small banks to \$1
    billion (up from \$150 million).

[Other]{.underline}:

-   Directs the Treasury Secretary to exempt any depository institution
    from filing a CTR for a "seasoned customer." A seasoned customer is
    defined as a person that is incorporated or organized under in the
    U.S., including as a sole proprietorship, or is registered to do
    business in the U.S. The seasoned customer must have maintained a
    deposit account with that institution for at least 12 months and he
    or she must have engaged in "multiple" currency transactions.

-   Instructs the Treasury Secretary to work with the Financial
    Institutions Examination Council to reduce certain regulatory
    inconsistencies by establishing uniform standards and principles for
    examining financial institutions, including adopting a clear policy
    on resolving examiner-institution disagreements.

-   Directs the Treasury Secretary to conduct a study on the feasibility
    of developing improved electronic communications between financial
    institutions to help them better comply with the Bank Secrecy Act.

**[Additional Background]{.underline}**: A similar bill in the 108^th^
Congress, H.R. 1375, passed the House by a vote of 392-25:
<http://clerk.house.gov/evs/2004/roll069.xml>

**[Committee Action]{.underline}**: On July 28, 2005, the bill was
referred to the Financial Services Committee, which, on November 16,
2005, marked up, amended, and ordered the bill reported to the full
House by a vote of 67-0. On December 17, 2005, the bill was referred to
the Judiciary Committee, which, on February 15, 2006, marked up,
amended, and ordered the bill reported to the full House by voice vote.

**[Administration Position]{.underline}**: No Statement of
Administration Policy was released for this bill or its affiliated bill
from the 108^th^ Congress.

**[Cost to Taxpayers]{.underline}**: CBO reports that H.R. 3505 would
authorize \$4 million in FY2007. The bill would also increase mandatory
spending by an insignificant amount in FY2006 and by between \$1 and \$2
million over the FY2006-FY2010 period. Lastly, the bill would reduce
revenues by an insignificant amount in FY2006 and by about \$50 million
over the FY2006-FY2010 period.

**[Does the Bill Expand the Size and Scope of the Federal
Government?]{.underline}**: Generally, the bill would reduce federal
regulations, but in certain instances, it would preempt state law (see
below).

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: Yes, the bill contains
intergovernmental and private-sector mandates, as follows:

[Intergovernmental]{.underline}: 1) prohibits states from requiring
agents who represent a federal savings association to register as
brokers or dealers if they sell deposit products (CDs) issued by the
savings association; 2) places requirements on state regulators of
credit unions to review documents related to federal deposit insurance
and to provide certain information to

the NCUA; 3) extend certain preemptions of state laws related to mergers
between insured depository institutions chartered in different states;
4) preempts state laws that regulate certain fiduciary activities
performed by insured banks and other depository institutions; and 5)
provides that only certain bank supervisors may impose supervisory fees
on the bank.

[Private-sector]{.underline}: 1) prohibits interstate branching by
certain depository institutions controlled by commercial firms; 2)
expands the authority of federal banking agencies over insured
depository institutions and institution-affiliated parties with respect
to safety and soundness enforcement; and 3) restricts the participation
in the affairs of financial institutions of people convicted of certain
crimes or the subject of certain criminal proceedings.

**[Constitutional Authority]{.underline}**: The Financial Services
Committee, in House Report 109-356 Part 1, cites Article I, Section 8,
Clause 1 (general welfare) and Clause 3 (commerce clause). The Judiciary
Committee, in House Report 109-356 Part 2, also cites Article I, Section
8, but fails to cite a specific clause. House Rule XIII, Section
3(d)(1), requires that all committee reports contain "a statement citing
the *specific* *powers* granted to Congress in the Constitution to enact
the law proposed by the bill or joint resolution." *\[emphasis added\]*

**[RSC Staff Contact]{.underline}**: Paul S. Teller,
<paul.teller@mail.house.gov>, (202) 226-9718

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