Date: 1987-10-13
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. I rise in strong support of H.R. 2578. the Foreign Ownership of U.S. Banks Limitation Act. I wish to commend the gentleman from New York . and our ranking minority member. the gentleman from Ohio for their diligent efforts in this matter. Mr. Speaker. we have known for some time. at least since the mid1970s. that the Soviet Union has attempted to acquire control of United States banks. Control of such banks would give Soviet agents access to critical and confidential financial and other data of United States hightechnology firms. H.R. 2578 would amend the Change in Bank Control Act and other related banking statutes to require those who wish to acquire or charter a bank or savings and loan to disclose the nationality of those who would have direct or indirect control of the bank. It would require Federal regulators to disapprove of any proposed bank or thrift acquisition if the agency has reason to believe it would result in ownership .or control .by an individual or agents from a country with whom trade is now October 13. 1.987 restricted. The President. however. would have authority to grant exemptions from this restriction. The bill also provides for criminal penalties for up to 10 years imprisonment or $100.000 fine for failure to report the nationality of bank owners. It should be noted that in 1978 the Banking Committee reported and ultimately corrected to a great degree one of the most glaring gaps in the regulatory structure. which was the lack of control over transfers of ownership of banks and S&Ls between individuals or groups of individuals. The Change in Bank Control Act and the Change in Savings and Loan Control Act reported out of the Banking Committee and passed as titles VI and VII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 authorized banking agencies to disapprove changes of control of financial institutions within their jurisdictions. Its purpose was to prevent dishonest persons. especially those with a prior history of insider abuse or those with a criminal background. from gaining control of such institutions. More recently. the Change in Bank Control Act was amended by the Banking Committee and became law with passage of the Omnibus Drug bill. the AntiDrug Abuse Act of 1986. The Banking Committee. as well as the House Committee on Govemment Operations. found that vigorous enforcement of the 1978 act by the regulators was lacking. Last year. our concern was directed not only at those instances where incompetency may affect the safety and soundness of an institution. but we were deeply troubled by the possibility that organized crime and drug traffickers may acquire a financial institution and use it for unlimited money laundering operations. In response to our findings that indeed the regulators had not effectively enforced the 1978 act. the committee gave the regulators another opportunity and granted to them extensive additional powers. In an effort to keep the mobsters and other criminal elements in our society from taking over financial institutions. H.R. 2578 is a bill which is timely and responsive to the concerns of our Nation. However. unless the regulators vigorously enforce the provisions of this bill. as well as the provisions of last years omnibus drug bill. the abuses to the banking industry and the takeovers by undesirables will continue. As this committee stated in its report on the Comprehensive Money Laundering Prevention Act. the committee Is determined to see that the regulators enforce the provisions of the Change in Bank Control Act and other related statutes. Mr. Speaker. as I have stated in the past on the floor of this House. the committee will shortly undertake a comprehensive review of a number of outstanding issues. Among them Is the acquisition and merger of financial institutions in this country. including those acquired by foreign interests. as part of the Committees extensive overview of the U.S. banking system. In that regard. H.R. 2578 is a meaningful contribution to this overall effort.