Date: 1991-10-31
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Chairman. I yield myself such time as I may consume. Mr. Chairman. earlier today. I voted for the rule on this bill. I did so reluctantly. I have great admiration for my friend and colleague. the gentleman from Texas . the distinguished chairman of the Committee on Banking. Finance and Urban Affairs. He has worked long and hard to bring this bill to the House. However. I cannot support the bill. H.R. 6 has farreaching implications for our Nations banking system and our Nations economic wellbeing. Nowhere will the impact of this legislation be more deeply and. most likely. more painfully felt than in rural America. Despite all the rhetoric on how this bill is better for consumers. this bill continues to take us down the road of fewer and fewer banks. This bill severely disadvantages our Nations rural banks and ignores the banking needs of rural America. Mr. Chairman. I agree that the time has come for a reexamination and reform of our Nations banking laws. The S&L crisis has highlighted the weaknesses and failure in our Nations regulation of financial services. H.R. 6 attempts to improve the health of our banking system. strengthen Federal oversight. and minimize over the long haul the taxpayers costs involved In restructuring our banking system But in doing so. this bill ignores the needs of smaller. locally owned banks and the valuable services they provide to our rural communities and American agriculture. Our rural communities and towns face two problems. First. we have Federal regulators who frankly dont care about the problems faced by small- and midsize banks. This bill ignores the fact that Federal banking regulators are effectively strangling the ability of small community banks to operate profitably. Mr. Chairman. for a moment. lets listen to a smalltown banker from Texas who is having to deal with this regulatory mentality. I received a letter from a small banker and this is what he wrote: Loss of community banks will greatly affect the opportunity provide banking services adequately throughout the State of Texas. Not even the large cities of Texas will be spared. You will find that more and more control and decislonmaking will be withdrawn from within the boundaries. of the State of Texas as both the East and West coast banks control the financial destiny of the State of Texas. We are told that all of this consolidation and mergers will improve the quality of banking services and lessen its costs. Trouble is. thats not what is happening in Texas. Let me continue reading from the letter from my friend and how he now has to handle the refinancing of a mortgage loan in Harlingen. TX: We find that all of the documentation and papers concerning the loan have been re.moved from the state of Texas and now reside in North Carolina. As a result. what would normally have been a fairly inexpensive and easy transfer has become costly and difficult for our customer * * * now [we] must wait weeks before the release papers are returned before we can actually perfect our lien. In the past. these transactions were completed within a matter of hours. or a day or two at the most. The Bush administration regulators keep telling us that "the market will take care of it." Putting small banks out of business is what they really mean. Just listen to what the Bush administrations regulators have said about banking regulation in recent years: "Deposit insurance should be abolished. Most banks would be better managed if owned by giant corporations such as IBM." That was said by Richard Breeden. head of the Securities and Exchange Commission. "I think 130 banks Is all America needs. and 12 giant banks could handle most of Americas banking today." So said William Taylor. the Chairman of the FDIC. "Bankers will have to merge. consolidate. or be failed in our new banking environment." These are the words of wisdom offered by Robert Clark. the Comptroller of the Currency. That brings me to my second major concern about this billinterstate branch banking. Yesterdays Wall Street Journal quoted the former Chairman of the FDIC. William Seidman. as saying Billrakis that 000 to 4.60 bmks will be closed over the next 5 to 6 years. Mr. Chairman. can you guess where many of these closures will occur? Most of those closures. Idare say. will be In rural areasJust -as they have beenIn the pa&. The bill does nothing to ensure that small. r ural communities in States like Texas do not become colonies to the Imperial banking powers We on the Agriculture Committee are -sensitive to the plight -f rural America. H.R. 6. as .reported by the House Banking Committee. was sequentially referred to the Committee on Agriculture for consideration of matters within our jurisdiction. That jurisdiction includes: The operation of -the Nations commodities exchanges. the extension of agricultural credit. rural economic development. .and the agricultural economy in -general. During our deliberations. the Committee on Agriculture adopted a number of amendments to H.R. 6 that addressed our concerns In an attempt to mitigate the adverse implications -of this bill on rural and agricultural lendir.g activities. The Agriculture Committee was able to reach agreement with Chairman (*Iosz&Liz of the Banking Committee and Chairman DINGELL of the Energy and Commerce Committee on amendments to: Ensure that the bills provision regarding the enforceability of netting contracts canmot be construed to override provisions of laws regulating commodities markets. ensure that the blrs financial privacy provisions do not hinder the -Commodity Futures Trading Commission in the pursuit of its law enforcement agenda. and clarify that deposit insurance assessment credits will apply to loans insured or guaranteed by the Secretary of Agriculture. These largely technical amendments were included in the Rules Committee print of the bill that is now before the House. I want to thank Chairman GONZALEZ and Chairman DINGELL -for their cooperation and their willingness to accommodate these amendments. Unfortunately. two other amendmenrts approved by the Committee on Agriculture were not included In the Rules Committee print. nor were they made in order under the rule. These amendments attempted to mitigate the adverse effects of the bill on our rural communities and financial market participants. These amendments would have: Required the monitoring of local lending activities of interstate branches operating in rural areas. and assured the maintenance of the status quo -with respect to the passthrough of deposit insurance coverage to omnibus accounts containing the funds of futures market customers. Unfortunately. the Committee on Agricultures repeated attempts to work with Chairman GOozatzz on a possible compromise to resolve these matters were unsuccessful. As reported by the Committee on Banking. Finance and Urlan Affairs. section 308 of H.R. 6 is designed to inhibit banks from using interstate branches as deposit production offices. Section 308 estalMisher a standard for local lending by Interstate branches and required a review by the appropriate bank regulatory agency of any br.anoh which failed to meet that -standard. If the regulator finds that the branch was not reasonably meeting the credit needs of the community. the regulator is required to close the branch. The Agriculture Conmittee amendment to section 308 would have expanded the provision to provide for a specific standard to trigger the review lor interstate branches opened In rural areas. The amendment would have allowed for the monitoring of the Impact of interstate branching on the availablity of loan capital to rural borrowers by outofstate banks. Without the amendment. these banks will be able to escape this review without showing that they are meeting the credit needs of rural areas. Members of the Agriculture Committee believe this is a modest require2nent for banks to be permitted to open interstate branches in rural areas. It would require no more than that a bank which is granted such a Privilege reasonably -meet the credit needs of the rural community In which the branch is located. We believe that this standard would have complemented the Banking Committees section 308. Our amendment would be -prudent check on the atility of outofstate banks to use new interstate branching -authorities to drain -rural areas of the financial resources which are so important to "the agricultural economy and to rural development. Unfortunately. the failure of the Rules Committee to make the amendment in order have deprived the House of the opportunity to vote on this modest but important protection for .rural communities and rural residents across the country. Mr. Chairman. the amendments to H.R. 6 offered by the Committee on *Agriculture may be considered relatively minor in the context of the bills main purposes. However. we believe these amendments are necessary for ensuring that the interests of rural America are heard -in this debate. Mr. Chairman. I am disheartened by the inability of the House to consider these amendments by the Comnttee on Agriculture. For these and several other more serious reasons. I must oppose passage of this bill. Between what ttie Federal regulators want to do and what this bill allows them and the big banks to do. we are writing the death warrant for our Nationrs small banks. Yes. banking law reform is needed. But this bill falls short. This bill does not create a level playing field that alows the entire banking community a chance to operate and make a profit. Instead. this bill continues to drain the economic life out of Tural America. Our farmers cannot afford to stay in business because we -keep cutting the budget for our farm programs. Our children are forced to move to the trafficcongested cities and suburbs to find Jobs that rural America doesnt offer. Now we are effectively closing down our small rural banks. With passage -of this bill. we might as well *turn off the lights in rural America. Mr. Chairman. I want bank reform legislation. I want to see our banking industry strong and profitable. But I cannot support H.R. 8. This bill drives a stake Into the economic future of rural America. Mr. Chairman. there are many stories that I can tell the Members about how the regulators are running wild. They are closing banks. I can almost attest to the fact that sometimes it is because they do not like the color of the bankers eyes. They are writing up banks for reasons that one could not imagine. Even the Federal Reserve will not allow two smal banks to merge because some customer or some director had a loan at that bank. and it just cost them thousands of dollars to hire a lawyer to have to go and explain what the situation is. and then they say. "Well. we were just mistaken." but they have cost the small bank several thousands of dollar. The horror stories are there. I do not know about the big cities. I do not have access to that information. Iamn only telling the Members about the small communities throughout rural America. and I am explaining what the regulators are doing and what the rules and regulations are doing. The quotes I gave the emben from people who have been In control give us an ominous sign of. what is to happen. What happens if the banks of rural America go down? America goes down. because we can rebuild our cities should they be destroyed. but what comes from the land cannot be replaced. Members have heard me say that it all begins where we produce the food and the fiber in this country of ours. There could not be big banks in the big cities. there could not be manufactured items. and there could not be any other things that we produce unless we have the food down there In rural America. I was asked during the consideration of the farm bill by one of my colleagues from one of the big cities. "Hey. how can I explain to someone in innercity Detroit that I voted for this bill so you .can give money to farmers not to plant?" H +89 08 I said. "Look. I havent got time to explain that. but all I want you to do is tell the people in Detroitno farmer. no pickup. Thats what you tell the people in Detroitno farmer. no pickup." What do you tell the people in the Innercity? "No farmer. no food." That is what we are talking about. Farmers do not have their own resources to do the farming. There has to be some borrowed money. and the farm economy depends in great part on these rural banks in rural America. With all due respect and with the love. admiration. and respect that I have for the Rules Committee. I say they should have given the Members of the House the opportunity to make the decision. and they should have allowed us these amendments. They say that it was a tough fight but it was within their Jurisdiction. Truthfully. I do not know. it may or may not have been. but I think that the House merited at least the opportunity to take a look at these amendments. Otherwise we will- be driving another nail in the coffin of rural America. and when rural America goes. everything else goes. Mr. Chairman. that is the reason why I am not able to support H.R 6. Mr. Chairman. I am submitting herewith a more detailed description of the Committee on Agricultures amendments to H.R. 6. as follows: Aa muNmENTs ADOPTED BY THE COMMITTEE ON