D'Amato Outlines Views at Hearing on H.R. 10

Sen. Alfonse D'Amato, chairman of the Senate Banking Committee, has opened the Committee's hearing on H.R. 10 with the following prepared statement:

"The need for legislation to modernize the financial services industry is obvious—the existing legal framework is, and has been for some time, fundamentally outdated.

"The existing laws are part of the statutory framework built largely in the 1930's and just don't fit with the reality of today's financial marketplace. Whatever their original purpose and past success, the Glass-Steagall and Bank Holding Company Acts are basically anti-competitive in today's marketplace and inadequate for the needs of both providers and consumers of financial services. In addition, they expose the taxpayer, who backstops the federal deposit insurance funds, to unnecessary risk.

"There is also a larger, overriding national policy aspect to this debate. To ensure that the United States remains the world's financial leader, we must enter the 21st century free from outdated Depression-era laws.

"For far too long, Congress has been unable to act on comprehensive financial modernization legislation. In 1984 and 1988, this Committee approved, and the Senate passed by wide margins, legislation somewhat similar to the bill before us. The Committee also approved a bill in 1991, but these provisions were not considered by the Senate. Despite these efforts, Congress has never completed the legislative process.

"Predictably, in the absence of Congressional action, we have witnessed ongoing efforts by factions of the financial services industry and their regulators, assisted by court decisions, to achieve limited and piecemeal modernization with results that are often questionable from a legal, competitive and public policy basis. This is not the kind of competition Congress should encourage.

"This Committee—and, especially you, Secretary Rubin and Chairman Greenspan—are at an historic point in the debate over financial services. Last month, for the first time, the House of Representatives passed a financial modernization bill. I want to commend Chairman Leach and Chairman Bliley for their dedication and perseverance in this difficult but important effort. Granted, it wasn't a landslide vote. And this is not to say that the House bill is perfect or that some of the more contentious issues have disappeared. But H.R. 10 did pass the House and it is now before us.

"As a result, the Committee has a unique opportunity to discharge our responsibility to modernize laws, promote competition, better serve consumers and accomplish all of these goals without subjecting the taxpayers to undue risk.

"I feel strongly that we should not let this opportunity go by. Against the backdrop of rapid change in the financial marketplace, the House action on H.R. 10 provides a powerful incentive for us to identify and resolve any remaining issues and try to enact a bill this year.

"In my opinion, Secretary Rubin and Chairman Greenspan hold the keys to the passage of progressive and forward-looking legislation this year. Your differences on a few issues in H.R. 10 are now a matter of public record. While I respect your positions, I am concerned that this stalemate will foreclose further progress on this important legislation.

"As Chairman, it is my responsibility and intent to search for some accommodation on these and other outstanding issues raised by H.R. 10. I have already set aside my own modernization legislation—a bill I have introduced since 1987—in order to seek consensus and facilitate action in the Senate. I ask the two of you, and I ask my colleagues, to also look to the future, to roll up your sleeves and to try to enact a bill in this Congress.

"I know it won't be easy, but I also know it won't be any easier next year. It will never be easy.

"Representatives of the banking, securities, thrift and insurance industries will appear before us tomorrow. Next week, we will have Federal and state regulators, and consumer and community groups.

"I believe there is a broad enough consensus on the need for financial modernization and that we can succeed if all of us work together in elevating the public interest above more parochial concerns."