The Administration supports H.R. 10, the Financial Services Act of 1999. The Administration has been a strong proponent of financial modernization legislation that would best serve the interests of consumers, business, and communities, while protecting the safety and soundness of the financial system. H.R. 10 would:
- allow affiliations among banks, securities firms, and insurance companies, thereby increasing the competitiveness of the U.S. financial services sector and giving consumers greater choice and lower prices;
- preserve the relevance of the Community Reinvestment Act by requiring that banks have and maintain a satisfactory CRA record as a condition for their affiliates or subsidiaries engaging in new financial activities;
- uphold a bipartisan compromise allowing financial services firms to conduct financial activities in the structure -- subsidiaries or affiliates of banks -- that best serves their customers, in a way that is best for safety and soundness;
- generally provide for the continued separation of banking and commerce.
The President has stated the importance of adopting protections to ensure the privacy of consumers' financial records. The amendment to be considered by the House would improve the bill by including new privacy protections, although it does not address all of the issues involved. The Administration will continue to pursue additional protections.
The Administration strongly opposes the medical privacy provisions of the bill. Unfortunately, those provisions would preempt important existing protections and do not reflect the extensive legislative work that has already been done on this complex issue. The Administration thus urges striking the medical privacy provisions and will pursue medical privacy in other fora.
The Administration strongly opposes the Barr-Paul-Campbell Amendment, which would seriously erode our ability to fight financial criminals and the drug cartels. The amendment would effectively eliminate suspicious activity reporting by financial institutions -- one of our most important tools in fighting money laundering and fraud. The amendment would mark a significant retreat in our fight against narcotraffickers.
The Administration strongly opposes the bill's Federal Home Loan Bank System provisions, particularly a provision that would allow each Home Loan Bank to cut its capital requirement in half and thereby effectively increase the System's taxpayer subsidy without any commensurate return in public benefits. In addition, the Administration believes that the System must focus more on lending to community banks and less on arbitrage activities and short-term lending that do not advance its public purpose. The Administration opposes granting the Federal Housing Finance Board independent litigating authority, which would be inconsistent with the Attorney General's authority to coordinate and conduct litigation on behalf of the United States.
The Administration strongly objects to the refusal to allow House consideration of Representative Lee's anti-redlining amendment, which would help deter violations of the Fair Housing Act. The Administration strongly supports the amendment.
The Administration is concerned that the bill would unduly restrict banks' authority to sell insurance, thereby diminishing competition and reducing choice for consumers.
Because of its commitment to maintaining a separation of banking and commerce, the Administration continues to favor a clear prohibition on existing unitary thrift holding companies selling their subsidiary thrifts to non-financial firms. Allowing such sales could lead to substantial non-financial ownership of insured depository institutions.
The Administration opposes section 154 because it could be seen as undermining principles of normal trade relations and national treatment, which could weaken efforts to negotiate further market access liberalization and expose U.S. firms to additional restrictions abroad.