Date: 1981-12-16
Speaker: ST GERMAIN (democrat)
Chamber: H

AUl right. The second amendment provides a permanent exception for the Alaska USA Federal Credit Union. to Include within the field of membership the Alaska Native Corporations. The reason for this is that we a few years back gave this exception for a limited period of time. during which time It was hoped that these Alaska Native Corporations would be Instructed as to how to open their own independent credit unions. It turns out that It has been a little more difficult than anticipated to complete the training process. Second. I think everybody is aware of the fact that In this climate. openIng new small facilities of credit unions Is not the best idea possible. This has been cleared by the NCUA. and to the best of this Members knowledge. I am not aware of anyone who has any objection to It. Another Senate amendment relates directly to the mortgage SWAP program I Just described. Currently. FHLMC charges -banks. mortgage banks. and credit unions a onohalf of 1 percent sales fee to purchase mortgages. while the savings and loan associations and mutual savings banks that are members of Federal Home Loan Banks are not charged a sales fee by FHLMC. The Senate amendment would require FHLMC. beginning on January 1. 1082. to -impose any sales fee it might assess for the SWAP program uniformly on F\ideral Home Loan Bank members and nonmembers alike. I want to emphasize thp* t.fchange in the fee structure only to the FHLMC old mort. SWAP program. and not to the corporations other mortgage purchase ac-. tivities. The broader issue of the role of the secondary mortgage market. aiid the fees to be Imposed In that market. will be part of the Banking Committees comprehensive hearings on the FIRE discussion principles that will resume after the House returns next year. Another Senate amendment contains two changes in .the statutory provisions regulating Interlocking directorships between depository institutions and their holding -companies. Those provisions. originally adopted in 1978. generally prohibit Interlocks betwveen such institutions when they are In competitive :mlarkets. The law. however. provided grandfather rights to existing directors by- allowing affected individuals. to retain their interlocks -for a period of 10 years. Events In the .last 2 years highlight some -problems which have arisen with these proscriptions. Revolutionary changes are occutting in the nature -and structure of our financial system which may call Into question the framework established to eliminate possible conflicts of Interest Involving interlocks. In addition. high and volatile Interest rates have threatened an Increasing number of thrift Institutions necessitating supervisory mergers and acquisitions by other thrifts and by nonfinancial companies. As a result of those factors the Senate amendments would relax the restrictions on interlocking directorships by allowing a grandfathered di. -rector to retain interlocks even though his institution has been the subject of a merger or acquisition or other action taken to assure the continued compotitive viability of the underlying institutions. Ir. addition. the amendments would allow officials of nondepository institutions which acquire savings and loans to retain any directorships involving other depository Institutions that they held when the acquisition occurred until the expiration of the -original .10year period. These changes will allow time for thrift institution problems to be resolved without throwing unnecessary restrictions -in the way. Personally. I have serious concerns about these developments but. I realize that a balancing Is needed on this Issue. I would point out that the -committee will be examining this issue in more detail during our hear"ings on the "Financial Institutions in a *Revolutionary Era" document. One matter raised by that document Is the proper manner to handle conflicts of Interest and interlocking directorships of competing financial institutions given the magnitude of the changes occurring In the financial -marketplace. In addition. the document raises the Issue of whether savings and loan holding companies and bank holding .companies should continue to be treated differently in the future. I fully intend to review these matters when thesecond session convenes.