00:00:10.240 - 00:00:32.050

Mr President, Senator from Wisconsin. I ask unanimous consent. The quorum call be dispensed with without objection. Senator from Wisconsin is recognized. Mr President, What is the pending business? Depending businesses? Senate Bill 18 86. We'll get president today. The Senate begins debate on a major restructuring of our financial system.

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The Financial Modernization Act of 1988 repeals the provisions of the Glass Steagall Act that bar affiliations between investment banking and commercial banking firms. I'm delighted to report that the Committee on Banking, Housing and Urban Affairs has approved this bill by an overwhelming margin of 18 to 2.

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That margin of victory is all the more significant in light of the historic importance of this legislation. The impressive support for the bill reflects not only the fact that it is an even handed approach toward financial restructuring, but also the widespread and substantial benefits that it offers the nation's non financial economy.

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Mr. President, the bill is the culmination of many years of bipartisan work to modernize our financial laws. No one has been more steadfast in this effort than Senator Jake Garn of Utah are distinguished ranking Republican and for six years the committee chairman. I want to thank Senator Garn for his help and leadership on this historic legislation.

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There's no question in my mind that without Senator Garn strong support, this bill could never have been reported to the Senate. I would also like to thank the other members of the committee who have worked so hard to make sure that we reported out a bill.

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I'm grateful to them for their determination and their willingness to compromise on difficult and complicated provisions to create a bill that is fair and which represents significant progress. This bill promotes greater competition in the provision of financial services. New competition, especially in what has been a highly concentrated industry, will reduce the cost of raising capital for households, for state and local governments and for corporations.

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For that reason, many users of financial services support the bill. According to a survey conducted by our committee, 77% more than three quarters of the chief financial officers of the Fortune 500 corporations favor the repeal of the Glass Steagall separation between commercial and investment banks. The National Association of Manufacturers supports the bill, as does the National Governors Conference, the National Conference of state and local governments and the National Association of Home Builders.

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The homebuilders estimate in testimony before our committee that the increased competition in the market for mortgage backed securities could save the home buyer $1000 on $100,000 mortgage. Reducing the cost of capital will benefit all of us indirectly as well. A competitive and efficient credit allocation process will enhance capital formation.

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Greater capital investment will accelerate the modernization of American industry. You will enhance our ability to succeed in foreign competition, export and import. Competing industries will gather strength to reduce are dangerously high trade deficit. The Financial Modernization Act promotes the competitiveness and efficiency of US based financial firms as well.

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It enables them to provide a broader range of financial services and respond more flexibly to the competitive challenge of foreign financial firms in this increasingly global financial market. The fact is, Mr President, that the Glass Steagall Act has outlived his usefulness. Technological change, financial innovation and regulatory interpretation have already combined to perforate the barrier between commercial banking and investment banking created by the Glass Steagall Act of 1933 55 years ago.

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We need a successor to that legislation, one that reflects modern marketplace realities without compromising the safety of our banking system. The Financial Modernization Act. The legislation before us does exactly that. It allows more competition within a sound regulatory framework. The bill requires securities activities to be conducted through a securities affiliate of the holding company that is separate from the bank direct interaction of the securities affiliate, where the bank is limited by substantial Inter affiliate restrictions.

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The bill bars any back loans to its security affiliate, and any loan to an underwriting client for the purpose of supporting the security is underwritten. The holding company structure promotes safety and soundness and effectively prevents the conflicts of interest, the skeptics suggest could result when securities and banking activities are combined.

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Mr. President, the repeal of Glass Steagall has been endorsed by the very people who are responsible for maintaining the safety and integrity of our financial system. The Federal Reserve has endorsed the bill the Federal Deposit Insurance Company endorses the corporation endorses the bill. The Comptroller of the Currency endorses the bill.

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These are all the regulators of the banks that, as I say, have responsibility for the safety and soundness of our system. They endorse this bill, and the Securities and Exchange Commission also supports Financial Modernization Act of 1988. Of course, the SEC is the regulator and has a fine and well earned reputation as being a very competent and thorough and careful regulator.

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Moreover, the bill includes titles that protect the consumer by increasing disclosure requirements and preventing misleading advertising in connection with savings deposits, mutual fund investments and home equity loans. Mr. President, I believe that this bill will benefit the American economy and our financial system. The Senate can be the architect of progress.

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I urge my fellow senators to join our committee, and supporting is fine and fundamental active legislation. Mr. President, I would like a unanimous consent to submit for the record a more detailed description that builds origins, justification, content. I asked her to be printed as if read.

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That will be the order and I yield the floor Senator from Utah. Okay, Mhm. This president Mhm. Mr President has announced consent that the reading of a quorum call be dispensed with that objections so ordered. This president from Florida is recognized as president. I send to the desk amendment.

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Clark will report the senator from Florida. Mr. Graham proposes an amendment number 1915 on page 1 93 Line five and serve the following before the semi colon, or that bank or sub subside bank or subsidiary is located in a state that has entered into a reciprocal or regional banking and agreement pursuant to state law permitting interstate banking between the state in which the bank or subsidiaries located, and the state where the operations of the bank holding companies subsidiaries are principally conducted for purposes of Section three D of this act and the state where such bank or subsidiary thereof is located, has authorized by language to that effect and not merely by implication.

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State banks controlled by state bank holding companies located in a state that has entered into such a reciprocal or regional interstate banking agreement to engage in insurance activities authorized by state law. Mr. President First, I would like to commend chairman of our committee Senator Proxmire in the ranking member Senator Garn, for the culmination of what has been many years of effort for major reform of our national banking laws.

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This is an issue which for too long has been left to other forces. And the strong leadership of Senator Proxmire and Senator Garn has brought us to the point today, Mr President, in which Congress can reassert its primary responsibility for shaping America's financial institution public policy.

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Mr. President, I would suggest that there are some fundamental principles that undergird this legislation. Two of those are the following. One is the elimination of ambiguity that it is the responsibility of Congress to reassert its policy responsibilities in an area which for too long has been taken over by economic entrepreneurs by state governments by federal and state regulators and others who have filled the void of congressional inaction.

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I commend the chairman of the ranking minority member of the committee for their special sensitivity to this importance of the elimination of ambiguity and the assertion of a clear congressional intent. A second principle, which is not only found in this legislation but it's also found throughout federal law, is that as it relates to insurance, the policy of Congress, the policy of Congress is that the decisions should be made at the state level.

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That is a decision that has been carried out in our antitrust law from the Federal Trade Commission and in portions of the legislation that we have before us today. I believe that is a sound policy because it recognizes the inherent state nous of the insurance activity.

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It recognizes the diversity of commercial, political, even historic and cultural traditions from state to state, and the fact that each state should be allowed to make judgments which best meet its particular circumstances. In carrying out that principle of allowing the states to decide insurance policy, I believe there are two principal things that we in Congress should be sensitive to.

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First, we should be sensitive to the unintended extension across state lines of policies relative to insurance, which would pre empt a state from the ability to make judgments within its boundaries. This legislation, Mr President, carries with it what is called the South Dakota loophole eliminator. This closes down a loophole, one that those who have served on this committee much longer than have I, I feel would suggest was not an intended one by Congress, but one which was found, discovered and acted upon and which had the effect of allowing states to have their ability to control insurance activities within their boundaries.

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preemptive. We have closed that loophole. We've also closed another loophole. The so called controllers loophole, which would have had the effect of expanding across state lines the authority of banks in smaller communities. Again, not an expansion which Congress had intended and and a decision which by this legislation is clearly without ambiguity, reasserting the congressional intent that states should decide insurance policy within their boundaries.

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There's a second aspect, in addition to avoiding unintended allowance of external determinations within a state for insurance. And that is that Congress itself should be careful about imposing its own will as it relates to what states ought to be doing with insurance that Congress should not inhibit the range of choice available to states.

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Mr. President High stand before you in somewhat of a an ironic position. 1974 while a member of the Florida State Senate, I and the majority of my colleagues voted for a state law, which is the policy of Florida today, which is that banks are prohibited from engaging in insurance except for credit life insurance, a very strict prohibition against banks, involvement, insurance.

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I supported that position. I strongly support the right of the state of Florida to have made that decision. Essentially, the issue is here today whether we are going to be faithful both to our principles of non ambiguity and our principal, that as it relates to states and insurance, that the Congress has made the policy and should be faithful to the policy that the states should decide.

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Mr President, the amendment, which I am offering today, is quite candid, A very narrow The bill provides that states will have the authority to extend insurance powers to most of the banks within a state. However, accepted from that and federally preemptive is a class of banks which are part of a bank holding company where the domicile, or principal place of business of that bank holding company is located in another state.

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The amendment, which I have offered, would alter that provision, which is in the bill today by providing that under these limited circumstances, what a state has entered into a reciprocal arrangement or a regional compact with other states. Under that reciprocal or compact arrangement, banks in one state are invited to do business in the other and vice versa.

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Second, where a bank holding company which has its principal place of business in a state which has been the subject of such a reciprocal arrangement that should the post state that is the state in which the banks of that bank holding company are located. Should it decide that it wishes to extend insurance powers to that group of banks, it will be allowed to do so.

00:14:55.340 - 00:15:24.560

I underscore the continuation of the policy that the states will decide what happens relative to insurance within their boundaries. This is not an injection of a federal policy that banks should have insurance policy insurance powers, and it is not an injection of any additional. Ah, encouragement, uh, as to what states should do.

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It merely removes what I consider to be an illogical prohibition on states in terms of their ability to treat all of the banks within their states those that they they have chartered, those that they have invited to come to do business in their states to treat all of the family equally if they choose to do so.

00:15:54.940 - 00:16:20.560

Why is this an important issue? This is an important issue, and it has gained importance since the last time Congress looked at this question. Several years ago because of the development of the regional banking systems. Mr. President, you and I both come from states which are participants in the southern regional banking system.

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Other members who are on the floor today are representatives of states which have other regional groupings. I believe that those regional groupings have served a very valid purpose. The purpose was to allow for the maximum number of options in the financial institution industry in the anticipation that we are moving towards a day in which there will be even fuller cross state relationships of bank.

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The reality is that in some of the regions, including the region, that the state of Florida participates in with the state boundary restrictions that it existed, there was very little opportunity for our financial institutions to reach a level of size, sophistication, uh, capacity to serve fully the needs of the expanding commerce within their states, serve fully the needs of the individual family and banking consumer within their states, and to be competitive in an increasingly global financial market.

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And so the means of helping to achieve that degree of capital intensification our region has been a series of reciprocal agreements within which states have invited banks to come and do business. My concern is that with the bill, as it's currently written, if the Florida Legislature were to decide, and I underscore the fact that in 1970 for it decided quite to the contrary, not to allow banks to engage in insurance, but that if we believe in the principle that it is the state which should make that decision and should the state decided to readdress it at some date in the future, the state Legislature would be faced with the anomalous situation that it could extend insurance powers two freestanding banks located within the state of Florida.

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It could extend insurance power to bank to banks, which were affiliated with the bank holding company that had its principal place of business in Florida. But it could not extend insurance powers to those banks, which it had purposefully for its own very legitimate purposes. Invited to come into the state, such as CN s bank from Georgia, N C N B First Union, Wachovia from North Carolina and probably other banks.

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As the regional process matures, it has only been within the last few months that, for instance, Alabama has joined the regional banking system in the South, and we now have banks in our state, which are in the situation of being part of a bank holding company, which has its principal place of business in Alabama.

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Those banks, uh, would be prohibited from the decision of the Florida State Legislature as to whether it wished to extend insurance powers to those bank. Mr. President. There have been some statements made about this amendment, which I would like to take a few moments to clarify.

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There have been comments that this amendment is a quote, interstate sale of insurance amendment. Nothing could be further from the truth. This amendment is consistent with the policy that states should decide that the federal government should not be involved in pre empting of that decision by interstate intrusion.

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The amendment clearly states that insurance would not be allowed to be sold on an interstate basis. Insurance would not be allowed to be sold in a neighboring states. Insurance would only be permitted to be sold in the state, which has authorized the bank sell insurance within the boundaries of that state.

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Mr. President, I believe that the movement towards regional banking agreements is healthy, is energetic and should be encouraged, not restricted. The needs and circumstances peculiar to each region are best served by a system which is sensitive to those differences as the Southeast has moved to do so and the states are the forum in which the determination should be made as to whether it is in the public interest of the citizens of that state, uh, to have various entities sell insurance.

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Mr. President, we are seeing the energy of natural financial markets developed. Now we here in Congress should do nothing to inhibit the development, which is very much in the nation's interest. Avoiding heavy handed federal restrictions offers the greatest chance for these positive developments to continue. Thank you, Mr President.

00:21:12.340 - 00:21:36.990

But the senator from from Florida healed. Senator yields. Mr President. First, I want to congratulate my good friend from Florida and I apologize for saying California, Mr Kennedy, over time there are over 25 million wonderful citizens of that state of California, and if they would like to be Floridians to we would invite them to sample the joys of Florida.

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Florida has every advantage in terms of climate, in terms of intelligence and in terms of having a in terms of having both senators, Democrats, especially, especially the last point. Now let me say to my good friend that that there's a very, very difficult quandary that the senator from Wisconsin is in his man as a co manager of the bill along with Senator Garn, because I would like to oppose amendments.

00:22:06.250 - 00:22:27.250

But the senator, I think, has made an absolutely clear case, a completely logical. What he's saying is that we have decided that the states will regulate insurance within their borders, and we make that principle about as clear and explicit as we can as we can, and that's been respected by the Congress for years.

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It's worked extremely well. All the senator is doing in his proposal is saying that that principle should apply. And if it's an outer state bank, it wants to sell insurance in the state of the state Legislature said Yes, you can sell in Florida or Wisconsin, and that should be the way this settled.

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Isn't that right, Senator? It's right, but it's even more restricted than you have stated the proposition because it would require an intermediate step that the state had invited that bank to come into its state. That is, the state of Florida has passed a law which says to the state of North Carolina, Your banks are invited to come to Florida on the condition that North Carolina will extend the same invitation for Florida banks to come into North Carolina.

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Florida did that. North Carolina did that Alabama did that Georgia did that. Tennessee did that. South Carolina did that and other states in the South and other groupings elsewhere in the country, because it was in the interest of the of those regions to develop a larger capital base.

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And what I'm saying is that once having invited these institutions to come and do business in the state now, we're about to say that they are going to be the red headed orphans at the table. Should that state decide to extend insurance powers because the state Legislature will, by act of Congress, be prohibited from extending the same authority to those group of banks, the invited banks that it has the authority to extend everybody else who's at the table.

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This is not the issue of whether banks should be allowed to engage in insurance As I've said, my state is clearly answered that question. No, the issue here is who should make the decision? In my opinion, the decision ought to be made by the States, and there is especially no logical reason to exclude from the state's authority to decide those very institutions that the state has has invited to come and do business.

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Mhm, I want to say to My good friend from Florida has made an absolutely devastating logical case, and it's going to be hard for the senator decide how to vote on this amendment. But very tense was present Senator from Connecticut before the chairman decides he's heard the devastating argument.

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One side. I want him to wait a few minutes and here the devastating argument on the other side of this of this issue. First of all, Mr Mr President, let me I did not take advantage of the opportunity at the outset to to join with my colleagues in a general observation about this legislation.

00:25:22.810 - 00:25:41.900

As has been noted, I think by others already. This was a product produced through a lot of hard work by an awful lot of people. Obviously none of it could have occurred without the chairmanship, being willing to allow for a free flow of ideas and exchanges over a period of days.

00:25:41.900 - 00:25:58.120

In fact, weeks, really. We started back some time ago to talk and begin trying to iron out a very complicated question, one that divided, uh, members of this body rather strongly on how we ought to approach financial institutions in this country. Stepping back even further, Mr.

00:25:58.120 - 00:26:23.960

President, the process really began about a year ago with the adoption of the moratorium legislation, which created the dynamic which made it possible for us to get to this moment at all. And certainly Chairman Proxmire deserves a great deal of credit for pushing and moving that process along to the point where we are here today debating one of the most comprehensive pieces of banking legislation or financial institutions legislation in many a year.

00:26:24.440 - 00:26:45.260

It would be I would be remiss, Mr President, if I did not also include in my comments reference to the distinguished ranking minority member of this committee and former chairman of this committee, Senator guard, who played no small part over the last six or seven years and trying to move a committee and move this body into the area and direction were generally headed here today.

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My colleagues as well it's difficult around here to get a quorum she's into with all the business people are engaged in the various other committee assignments, Mr President, but I I would like my colleagues, my other colleagues who are not on the Banking Committee to know that we had almost a 100% participation over several days in trying to iron out this particular bill, and that is no easy task to perform.

00:27:12.690 - 00:27:34.170

And the fact that so many members of this committee stayed actively involved in this debate, I think, contributed significantly to the fact that we were ultimately able to end up with an almost unanimous vote on this piece of legislation. Now again, Mr President, there are provisions in this bill which do not enjoy the full support of each and every member.

00:27:35.040 - 00:28:04.360

In fact, I have serious difficulties with a number of provisions, and I suppose I could stand up and extolled the virtue and the wisdom of arguments people might I might offer, but frankly, we tried to come out with something here that while it didn't please everybody was a product that we could all support, and then we would come to the floor and try and defend that product and not let it become unraveled out here, where every little amendment that people wanted to offer to improve their position a little bit more.

00:28:05.240 - 00:28:18.950

Mr. President, I'm fully aware, and I'm sure my colleagues will recall it was only a few years ago when we debated this issue and by almost a margin of 2 to 1. The provision which is today included in the committee product, was defeated by this body.

00:28:19.340 - 00:28:38.170

I have substantial margin of votes, but for the reasons that I'll go into briefly, we decided to take virtually that defeated product and make it a part of the banking bill. And for reasons that are very important from a substantive standpoint, I'll get to the point of my colleague from Florida's amendment in a second.

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But that product This particular bill includes provisions which do not enjoy the support of every single member of the committee. But it's the best we could do, and it's a giant step forward in this particular arena in area, and I'm proud to be associated with it.

00:28:53.660 - 00:29:29.760

and a part of it, and I frankly intend to oppose all events, no matter how appealing they may be to this particular senator to try and hold this product together. However, I would also say in all candor that if it does begin to unravel, then that commitment is no longer a binding and and I would assume that amendments are of all nature and all kind would be would be open for consideration, including the amendment that I prevailed on here only two years ago, which would come back and do what I think ought to be done if, in fact, we're going to follow the intent of this institution in the Congress over the years when it comes to the question of banking and insurance.

00:29:30.240 - 00:29:46.350

Certainly my good friend from Florida, my good friend, who is presiding at this particular moment come from a region of the country which, in their wisdom and I applaud them for their wisdom, established a regional compact for banking. We did the same thing, Mr President, in the New England area, and we think they've been tremendously successful.

00:29:46.350 - 00:30:00.860

In fact, I worked with the chairman on those particular that particular concept and offered the amendment on regional banking back a number of a couple of years ago, which established that spawning ground, if you will, to the point where we're going to get very quickly to full interstate interstate banking.

00:30:02.040 - 00:30:23.620

The insurance provisions of this bill, as I mentioned a moment ago, were hard fought compromise. One not reached easily, and I have long held. And again this is going to come as no surprise to the members of the committee or to the members of the body as a whole that state chartered banks that become part of the bank holding companies should be governed by the rules established for bank holding companies.

00:30:23.630 - 00:30:44.460

Who established those rules We did. If you're going to form a bank holding company, you have just bought in to a federal creature, this is not something that states created. We created the bank holding companies under the Bank Holding Company Act. When we did that, we permitted certain activities and by implication prohibited others.

00:30:44.840 - 00:31:09.990

That's what we did. You like it or not. That's the federal law. That's the law. And there's a long standing policy on that particular question. In the case of insurance specifically, such activities under the Bank Holding Company Act were very tightly LTD largely to the sale of credit related insurance and insurance activities for small holding companies into service small towns.

00:31:10.110 - 00:31:24.950

And those provisions are written in it. The same rationale, Mr President, that establishes restrictions for the holding company logically must apply to all its parts. You can't just be selective and decide you're going to take some and reject others. Either it's the law or it's not.

00:31:25.840 - 00:31:44.170

Moreover, to permit state chartered banks to avail themselves of the federal bank holding company structure and to secure, I might point out Mr President, tax and branching advantages and then turn around and suggest that they are state creatures for purposes of getting insurance powers from state legislators is to play both ends against the middle.

00:31:44.640 - 00:32:09.350

It just wasn't intended that way, and that's that's That's the fact. The substance now again, whether or not members think that the bank holding company should or should not have limited those powers is a legitimate question. But you can't there and be selective about the part you like in the part you don't try to apply it here on the other hand, Of course, some have argued that states should be free to set the rules for all state chartered banks operating in their states whatever they want to do.

00:32:10.040 - 00:32:32.060

In the banking bill of 1984 as I mentioned a moment ago, my approach was adopted by the Senate, however, when the House took no action. Of course, the legislation died at the end of that session. This time, the members of the Banking Committee devised a very hard fought compromise that I mentioned earlier that will let states set the rules for state chartered banks that are part of the bank holding companies.

00:32:32.130 - 00:32:54.770

If the holding company's principal place of banking business is located in that state, let me step back for a second. There is nothing nothing nor has there ever been, which prohibits a state chartered bank from selling insurance if the state legislature of that state wants to let those state chartered institutions engage in those powers or activities.

00:32:55.540 - 00:33:12.670

But when that bank goes out and forms a holding company, then they have bought into our process, and under those circumstances, the states don't have the right necessarily to decide what a bank holding company can do because we created bank holding companies, not the individual states.

00:33:13.640 - 00:33:31.160

The federal government controls bank holding company activities and to the extent we have allowed states and state banks to engage in those activities has been because the federal government has chosen to allow them to do it. That's the only reason at all. It's very important that members keep that distinction in mind.

00:33:31.640 - 00:33:48.820

There's nothing in the in the in the law and this bill it says to a state, If you want to let your state chartered banks sell insurance or anything else, you've got the power to do so and no one is depriving you of that activity. You engage in bank holding company activities.

00:33:48.830 - 00:34:05.670

You just crossed the line, you crossed the line, and that's a distinction that cannot be blurred or lost in all of this. But what we did here was go a step further because that was virtually the amendment that was offered by our former colleague from the state of Washington, Senator Gordon and others.

00:34:06.440 - 00:34:26.460

And so this time around we said Okay, look, if in fact you've got a bank holding company with the state chartered institution and the state Legislature in that state wants to allow them to engage in those activities. Okay, it was not intended was to open up the process and allow banks that are chartered or the principal place of business in one state.

00:34:26.470 - 00:34:41.970

Come on and inquire that bank and engage in those activities. Now you do. I presume everyone knows that we're about months away, maybe weeks away from full interstate banking in this country. So regional compacts be there in the Southeast or the Northeast are going to disappear.

00:34:42.540 - 00:35:00.360

It's not going to be just a question of an Atlanta bank doing business in Florida or a Hartford bank doing business in Boston. It's gonna be a New York bank doing business in Birmingham. It's gonna be a San Francisco bank doing business in Chicago or to Chicago Bank doing business in Wisconsin.

00:35:01.240 - 00:35:21.790

So we're gonna have full interstate activities. And that becomes an important consideration when looking at the question of whether or not you want to allow these out of state businesses principally located in those states to come on into another state engaged in those activities. So, Mr President, I feel that this on the substance, uh, we have gone a major step forward.

00:35:22.340 - 00:35:38.660

We could have argued that if they form a bank holding company, they're out. That's what we said the last time. That's what this body said the last time it addressed the issue. But we compromised and went a step further. We said, All right, you want to form a bank holding company in that state?

00:35:38.660 - 00:35:56.460

Is that as long as that's where that bank really is fine, we'll allow that if the state legislatures wanna let them do it. But having opened up the door that far, then have people come running in and saying Now listen, once you've done that, then you ought to open up the whole thing and allow principal place to banks with a principal place of business in another state to come on and take advantage That as well.

00:35:57.240 - 00:36:19.090

Mr President, let me make it clear that what we're talking about here is also a one way street. Another point my colleagues ought to consider. We're being asked here about what insurance power states can give the banks. The banks would like those insurance powers, but we're not talking about here today is authorized in the States to give insurers banking powers.

00:36:20.030 - 00:36:39.480

As such, the bill and the amendments really one sided. In this particular case, the bill what we try to do with securities powers and banking powers was to create a two way street. We said to the banks will let you get involved in some of those securities activities, But we got to tell you some of those securities firms now also going to be involved in some of those banking activities.

00:36:39.490 - 00:36:54.260

You can't just have it all year. One way my good friend from Florida offers an amendment that says You ought to let those states decide whether or not banks can have insurance powers not included. His amendment is whether or not insurance businesses can also become banks.

00:36:54.730 - 00:37:07.110

If you're going to create some equity here, it seems to me that has to be addressed, and it's not. Secondly, Mr President, we got to recognize that regional compacts, as I mentioned a moment ago, are one step in a very major step on the road to interstate banking.

00:37:07.270 - 00:37:30.010

Thirdly, unlike the provisions of s 18 86 the bill before us that addresses the need for firewalls between banks and their security affiliates and we did a very a great deal of work. My colleague from Illinois, our colleague from Michigan, a colleague from Tennessee and Maryland fought very hard in the notion of firewalls between these activities.

00:37:30.340 - 00:37:44.630

There's nothing in this amendment that creates any kind of a firewall at all or firewall at all. So a bank gets insurance powers. They go crazy with it locally, you know who's gonna pay for it. It won't be the state it does. It's the f D I.

00:37:44.630 - 00:37:59.890

C. It'll be us who paid for it. So there's no firewalls to protect against those kind of problems. Exactly what happened with the SNL industry? Of course. A few years ago, when we allowed states to go crazy with the S and l business, they got into trouble, not because of anything we did.

00:37:59.890 - 00:38:13.200

They got into trouble because the states allowed them to do too much. Who pays the bill? We paid the bill. So by extending these insurance powers without any kind of firewalls, we really run the risk of having the United States government through the f. D. I.

00:38:13.200 - 00:38:47.650

C. Pay one healthy price. If they decide that they're going to get involved in activities that could jeopardize. Of course, the sound is and safety those institutions. As you can see, uh, Mr President, this is anything but a simple question of states' rights. It's far more complicated than just whether or not a state can allow a bank located someplace else to do insurance business in there in the state that the Legislature has approved that activity, it involves equity as well as a distinct federal interest and ensuring that such activities are conducted in a very safe and sound a manner so as to protect the federal deposit insurance system.

00:38:48.020 - 00:39:09.750

Mr. President, for those reasons, with all due respect, because I've chatted with my colleague from Florida and my colleague from from North Carolina who also feels very strongly on this issue as well that I would hope this amendment be rejected. I want to emphasize to you, the insurance industry in this country has moved.

00:39:10.220 - 00:39:30.360

We're not here today arguing the same provisions that I could make a case for politically that we prevailed upon only a couple of years ago. We have moved forward, and my hope would be that my colleagues here would accept that, uh, that movement is a sound step affair one that what we've done in this bill makes some sense and reject this amendment If it's offered for a vote, Mr.

00:39:30.360 - 00:40:12.650

President, I yield the floor senator from Illinois. Okay, but well, you want to go ahead and speak. Um, Mr President, I am rise with some degree of reluctance to discuss this issue because I really don't have a dog in this fight. I don't feel terribly strongly concerning the precise issue before us.

00:40:12.650 - 00:40:58.390

And I think I should say at the outset, Illinois does belong to a regional compact and there are financial institutions in my state that would support, I think, with enthusiasm, the position of my friend from Florida. I'm sorry. I can hear you fellas coffee. On the other hand, I think what we have to recognize here is that, without any reference to this precise issue involved, what my friend from Connecticut has said is very true.

00:40:58.400 - 00:41:31.160

This is, in fact, a very fragile and a very delicately structured compromise that was agreed to by a substantial majority of the Banking Committee, Democrats and Republicans by an 18 to vote. After several days of intense negotiations and very, very hard bargaining, and everybody gave a little in the course of those discussions.

00:41:32.110 - 00:42:19.320

Now let's talk about the insurance question. The compromise that was ultimately adopted on the insurance question said that we would address the South Dakota problem by using the garden solution, that we would close the controllers loophole and that we would negotiate a grandfathering agreement. Okay, now, the question of negotiating the grandfather in agreement took some time because there were a good many people that ultimately had to be considered for grandfathering.

00:42:22.600 - 00:42:52.140

But the important problem that occurred at the end of the discussions, Mr President, was it my friend from Florida, I think, in all fairness to him, had not understood precisely what we were discussing when we talked about the garden solution because, quite frankly, that was a compromise that had been agreed to when we passed the 1984 bill.

00:42:53.300 - 00:43:25.950

So at the very end of the negotiations, I think in fairness, I might say it was probably perhaps the last thing that we discussed. This particular problem that we're dealing with now cropped up again. Um, it was my understanding, and I think the understanding the members of the committee that my friend from Connecticut and my friend from Florida would discuss the possibility of finding some kind of a solution to that particular problem at a later date.

00:43:26.100 - 00:43:50.930

Obviously, they have not been able to accommodate each other's different and distinct points of view about this subject. But the fact is that the compromise achieved in the committee in all fairness to the senator from Connecticut, is the insurance compromise that we have in the legislation before us now.

00:43:53.800 - 00:45:02.390

Now for the members who aren't on the floor. But I'll come over here later and vote. Let me say this. We have been on this question now for years. We passed a bill in 1984 that was not taken up in the House. We passed a kind of a simple bill last year for the only purpose of getting to the place we are now to get the substantial legislative results we have at this point in time, and in every one of those processes, you have big banks, little banks, thrifts, insurance agents, real estate agents and all of the other important economic groups in this country that come into play and into Contra into a contentious controversy when we deal with this kind of legislation now, notwithstanding all of that difficulty, Mr President, notwithstanding all of those groups, many of whom were in complete disagreement, we were able to fashion a piece of legislation.

00:45:02.390 - 00:45:30.920

Mr President, that came out of committee 18 to 2. If we can pass that legislation on the floor of the United States Senate by a substantial majority, reflecting the substantial majority view of the committee, we can send a vehicle to the House that ultimately will result in a strong piece of legislation that will be significantly important for advancing the interests of the financial institutions in the financial community in this country.

00:45:31.990 - 00:45:51.710

Now, nobody believes that the bill that we passed here will pass the house in this farm. Candour requires me to say that I think every member of the committee would believe that the bill that passes the House will be something less then we have in the bill we have here in the Senate.

00:45:52.390 - 00:46:22.240

So I think it's terribly important that we maintain the that we maintain the integrity of the committee position. The chairman has about 11 amendments on a list at his desk right now. At least one of those amendments, Um, an amendment by my friend from Ohio, um, his substantial support and has to do with the cashing of government checks.

00:46:24.080 - 00:46:45.380

There are other amendments there that have some appeal to many of us. I think if we start to amend this bill, we are going to end up with a bill we're going to have difficulty with. And I think the senator from Connecticut should be taken at face value when he says if this amendment is adopted, he has other amendments.

00:46:46.980 - 00:47:12.290

Now, what kind of other amendments does the senator from Connecticut have? Well, I'm here to tell my colleagues he has amendments that were adopted here before amendments that had appealed to a majority of this chamber before. When we dealt with the senator from Connecticut in committee and fairness to him, he was dealing not from a position of weakness but from a position of strange.

00:47:16.580 - 00:47:41.430

The senator had one before, and in that compromise that took all those long hours well into the night for several days. And may I say, Mr President, all my years in public service, in every honourable accommodation I've ever been involved in. I've never seen more people fully playing in the game.

00:47:41.440 - 00:48:01.090

Every member of the committee was there. We had those meetings in the chairman's office. Sometimes every chair was full. Not only a quorum, but a unanimous, a complete attendance and a unanimity of opinion. When we arrived at these agreements. I don't want to open this flood door again.

00:48:01.100 - 00:48:31.780

We've done that work. We saved our other colleagues, the other 80 of them. The fatiguing problems that we met in committee so we can visit this again. Mr. President, this issue isn't done or dead are laid aside forever. The distinguished senator from Florida can offer a bill.

00:48:31.780 - 00:48:54.580

I may vote for it. He can offer an amendment to some subsequent legislation of less importance. But I think on this bill, this will be the first test. Sadly, maybe the First Amendment offered by my dear friend from Florida has the most appeal to some of us.

00:48:55.170 - 00:49:17.590

But that is the basic test. Whether having achieved a compromise and an accommodation of honor that 18 of the 20 members can sign off on, we can stand here on the floor, not withstanding. It may have some appeal to us to the contrary notwithstanding, and vote for a motion to table to retain the integrity of the committee accommodation.

00:49:18.570 - 00:49:38.460

What's the use of wasting all that time? What's the use of dealing with all these issues at the committee level? If you can't bring to the floor something that you want to defend on the floor as a product of quality Now I will say in any public place that this is a product of quality.

00:49:38.540 - 00:50:05.270

This is a very fine bill. This is a bill that advances the economic interests of the financial market, places in America by leaps and bounds. And shall we over one small question involving a few banks in America held in holding companies under regional compacts. Change this whole concept.

00:50:05.280 - 00:50:29.490

We have said here that the state Legislature of Illinois, which is now dealing with this problem, Mr President, the president of the Illinois State Senate, is the sponsor of the legislation to give powers the banks, and we're saying you can still do that in Illinois. You can do it in Florida, you can do it in Connecticut, you can give that power at the state level and in the holding company you can if it's domiciled in your state.

00:50:30.160 - 00:51:05.710

Now that's a pretty advanced concept and a reasonable one and and and retains the concept of state rights. So here's all I say. In conclusion, the chairman of the committee and the ranking member who was chairman for many years have dealt with this problem so long that, you know, I can't even remember the number of years I think I said earlier, 475 witnesses, 85 days that we've dealt with this three times in the short eight years I've been here.

00:51:05.720 - 00:51:28.500

We were in the middle of this contest between all these different, diverse economic interests in America, everyone of which, you see, when you go back home and speak the rotary and exchanging the Kiwanis Club, sitting at the same table with you all the time, and we finally resolved it and you want to do violence to it in the first vote here, I don't think that makes any sense.

00:51:28.500 - 00:51:43.560

And again, I say, in conclusion, I don't have any dog in this fight, But this bill is a good bill and I care about the bill, and we ought to save the bill, and for that reason, with reluctance, I suggest we have to reject the senator's amendment if we want to save the bill.

00:51:43.570 - 00:52:00.480

Otherwise, I got to make a speech in a minute against my friend from Connecticut when he gets up with his amendment, and I'd rather be saved. Uh, that fight he being the only other member of the Democratic freshman class in 1980 we try to avoid controversy as often as possible.

00:52:01.500 - 00:52:26.560

I thank the president. Mhm president. I I have before I have a senator from Utah. Has the floor, Mr President, I rise in support of the amendment, Senator from Florida. Having said that, I will have to vote against it. I will explain myself, and I don't need to explain myself very long.

00:52:27.350 - 00:52:49.270

Every member of the Banking Committee has heard my speech so many years, so many different times about states' rights and the opposition to the so called dot amendment. I propose closing the South Dakota loophole back in 1984. Senator from Connecticut. I have gone through this battle.

00:52:49.850 - 00:53:09.680

Both of us could give each other's speech over and over again. We know it so well, so There's no point in repeating it here now, other than to say the senator from Florida is absolutely right in substance. I agree with what he is trying to accomplish and commend him for bringing this issue up.

00:53:10.350 - 00:53:33.480

However, having said all of that after Fort nearly 14 years in this body, six years as chairman of the committee. When I listened to more than 20,000 pages of testimony in hearings over and over again, the distinguished senator from Pennsylvania said, Please, Senator, quit. Mr Chairman, quit calling so many hearings on this issue.

00:53:34.150 - 00:53:58.470

There is no doubt that everybody knows every facet of this issue. So despite the fact that the senator from Connecticut and I still are completely opposite Poles on this issue, what the senator from Illinois has just talked about is very important. We have come to an agreement, taken a lot of time and a lot of work from a lot of people.

00:53:59.150 - 00:54:17.660

And even though I would like to change some of the provisions of this bill, including the compromise that was made on insurance, I will not The senator from Connecticut and those who support his side are operating in good faith and indicated that the compromise would hold and they would not offer amendments.

00:54:18.040 - 00:54:34.260

And those of us on my side of the argument made the same commitment. So although I agree on substance, I do intend to do everything I can to keep this bill intact. This has been said many times today in 18 to vote in the Senate Banking Committee is not insignificant.

00:54:35.040 - 00:54:53.740

That is a major achievement, and our most difficult task is still ahead of us in dealing with the House of Representatives, and everybody knows what a difficult process that has been. Even in 1984 when we passed a bill 89 to 5 in this body, the House wouldn't even go to conference with us.

00:54:54.540 - 00:55:16.590

So it is important that we keep this bill intact. So I reluctantly must oppose the senator from Florida, even though he's absolutely right on the issue and also make the further comment that in order to keep this bill intact, I will oppose any amendment that is brought up to this bill today so that we can send it to the House and the strong negotiating position as possible.

00:55:16.850 - 00:55:20.670

I yield the floor. Mr President, the senator from Pennsylvania,