Date: 1987-11-04
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Chairman. I rise in opposition to the amendment of the gentlewoman from New Jersey. As chairman of the Committee on Banking. there is not a soul in this House that I will take a back seat to when it comes to discussing the reasons for bank failures. fraud. embezzlement. Money launderingmy God. .I am one who is responsible for the legislation that requires reporting of transactions of over $10.000 and of the amendments thereto in the recent past. I take a back seat to no one. I will tell you right now. a polygraph test will do nothing about money laundering. Mr. Chairman. the amendment we are considering would deny workers employed by financial institutions the protections contained in this bill. As a result. every person employed by a financial institutionand. I might add. that is a term which is quite broadly definedwould be accorded a lesser degree of personal privacy and a greater presumption of complicity than other workers. The amendment suffers a fatal flaw in that it makes no distinction between a bank president. whose actions can and have threatened the safety. and in some instances brought about the collapse of an entire institution. and an underpaid janitor or receptionist or a clerktypist. Over the past few years. the Banking Committee has conducted exhaustive hearings into the causes of the failure of a financial institution. Certainly economic factors such as the downturn in the agricultural and energy sectors have been a major cause. Just as important have been insider abuse and mismanagementsometimes criminal mismanagement. However. nowhere in our hearings did we find that polygraph testing of employees would have reduced bank failures or -reduced losses suffered by our deposit insurance fund. In the case of financial institutions. we would simply be fooling ourselves if we make bank employees the scapegoat. Instead. banks. and other financial institutions must initiate greater internal control. if needed. and Federal and State regulators must -use the powers Congress and State legislatures have given them to protect our Nations financial institutions. The bill before us today provides prudent exceptions which I support. In matters involving national security or in instances such as nuclear science. where the potential for disaster is great. balancing the public good against the privacy of an employee. it is clear that the potential risks to the public far outweigh the potential damage to an individual. However. the proponents of this amendment have not made a case that employees of a credit union. for example. many of whom are volunteers. mind you. they serve without pay. have any greater propensity for committting a crime than any other person. Nor have they been able to prove that any crime committed in a credit union by such as employee would be likely to have cataclysmic consequences. � I understand the concern of the gentlewoman from New Jersey. but I believe she has not provided sufficient justification to subject one class of workers to a lesser degree of personal freedom and privacy simply because they work for financial institutions. Nothing whatsoever has been shown that suggest that employees of financial institutions have any greater -opportunity for crime. or a greater disposition to commit crimes. Nor has it been shown that bank crime so threatens the public good that we must treat all bank employees as secondclass citizens and deny them their right to privacy. due process and the presumption of innocence. For these reasons I must oppose an amendment which would deny people an opportunity for employment or perhaps ruin a career based upon a polygraphs reading. and as has been stated here today. that is of very questionable value. Mr. Chairman. the problem with money laundering and banks that were fined by the Department of Justice was because that the principals. the executives in these financial. institutions. did not communicate to the employees what their duties and responsibilities were under the reporting requirements of legislation designed to protect our institutions from being used as laundromats for drug traffick ers. Again I repeat. Mr. Chairman. I take a back seat to no one on that one. because I have been in the forefront of that fight throughout. Mr. Seidman wrote in support of the amendment. frankly. what he should do is upgrade the supervision and regulation of financial institutions. rather than talk about polygraph testing if he wants to save money for the insuring fund. I will tell you. after my hearings. there is a lot of room for improvement there. Now. let me finish by saying this. If polygraph testing is so good. so efficient. so wonderful in the area of financial institutions. how come over a billion dollars. we were told earlier in this debate. was lost by employee fraud and embezzlement?