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“MY ADVICE TO THE PRIVILEGED ORDERS” mentioning the U.S. Dept. of Justice was published in the House of Representatives section on pages H6079-H6081 on June 16, 1995.
The publication is reproduced in full below:
MY ADVICE TO THE PRIVILEGED ORDERS
The SPEAKER pro tempore. Under the Speaker's announced policy of May 12, 1995, the gentleman from Texas [Mr. Gonzalez] is recognized for 60 minutes as the designee of the minority leader.
Mr. GONZALEZ. Mr. Speaker, serving in a body as unique as this is in the world, I believe the only such representative body in the world as our House of Representatives reveals, we still have the people exercising the ultimate decision as to whom they want to represent them in this most formidable and auspicious and important body known as our national legislative branch.
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It used to be that even though you have open and free elections, the limitations were of such a nature that the general citizenry in a given sector had not too much choice between candidates, to a certain extent perhaps it is true today because of the horrendous cost in campaigning in modern day American politics and the consequent power behind the power going to those who have the money, directly or indirectly.
I rise as one of the most privileged persons, not only in the United States, but I think in the world. I have said this often and from the beginning. In no other country would the likes of myself, with no particular economic recourse, social position, or the like, have won election in an entire county with the most formidable opposition that could be developed, well monied, well prepared, and as an individual with no particular economic resources, but having had the privilege of serving in varying capacities since youth, had been in intimate contact and association with every sector, not just of my own neighborhood, but the county.
That, again, happened because of unique circumstances. I was one of the so-called first breakthroughs in that area of the country. But even at that dim age, it was considered quite a startling event that the then county judge, also serving as juvenile court judge, would have picked me to head the juvenile court staff in that county at that time. That is quite a number of years ago. It was my first exposure to the public matter. The last thing I ever thought would be that I would be engaged in seeking public office. I grew up in the context of the world that is long gone past, and structured so differently from today that there is no way I could bring to today's mind and evoke that period of time.
I rise because there are very important things happening that the average citizen is not going to know about, even after they happen, until he feels the impact or the effect, if at all it becomes that noticeable. This has been the sorry fate for some decades now. Instead of this being the most deliberative, considered body, with debate, full-blown debate, that has not been the case for quite some decades.
If I were to be asked after all these years and all of this what is the thing you think, it isn't any great accomplishment or anything, but I think the greatest thing I would say is that I did stimulate and create the conditions for debate, where there would be no escaping and sashaying with fine toe dancing out of the issues.
Now, next week the Committee on Banking and Finance, as it is known now, is expected to mark up what euphoniously is called a regulatory relief bill. The number of that bill is H.R. 1362. I say it should be 1313, because it is sure going to be unlucky for the consumers if it gets enacted. It is equally bad for bank safety, believe it or not, and a disaster as far as public beneficial and creative policy is concerned.
Some of it, of course, like most things, makes some sense. There are parts of the banking statute that impose needless burdens, and we enacted legislation last year that repealed a pretty good substantial number of duplicative or needless or outdated regulations. We did that last year. But, unhappily, the bill that the Committee on Banking and Financial Services is about to take up is a grab bag of banking, lobbyist-driven excesses. As reported from the subcommittee, the bill guts important safety and soundness regulations, rips the heart out of basic consumer protection laws, and grants legal protection for careless and crooked bank officers and directors.
It is unbelievable, yet we have got it. I feel it urgent enough for me to take time on this day, where normally I would be preparing to go home, in order to bring the attention of my colleagues, including those who are members of the committee, about this.
In addition to that, as bad as that is, the bill effectively prohibits the Justice Department from enforcing fair lending laws, which took years of struggle for us to finally have enacted some time ago. Oh, the lobbyists are celebrating greatly, but the bank customers and the taxpayers, my advice is you better check your wallets. You are about to be fleeced.
Here is an example. Under this bill a customer whose credit card is lost or stolen has his liability jacked up tenfold, tenfold. If an ATM card is lost or stolen, the customer's whole bank account can easily be wiped out, with no recourse.
What this means is that credit cards are about to become far riskier to customers, so much so that they might want to tear up their automatic teller cards and rely on old-fashioned transactions with bank tellers. But many banks are raising their fees, so customers, if they can find a bank in their neighborhood, may find it too expensive to do that.
The bill makes it a whole lot easier for banks to engage in discriminatory practices. Can you feature that? After all of this ado over these years about antidiscrimination fights and please, thanks to one especially zany amendment, the Justice Department is barred from investigating fair lending cases.
Another provision wipes out laws that provide the information and the data that can provide lending discrimination. Fully 35 percent of lenders are exempted from the Home Mortgage and Disclosure Act. Therefore, under this bill, even if the Justice Department wanted to investigate a case, it would not have access to lending data.
And that is not all. The bill wipes out any kind of case built on desperate impact theories, cases that attack situations that look fair but are in fact discriminatory in their result. This means about the only way a customer could win a fair lending case is for the lending officer to say flat out, ``We do not make loans to your kind of people.''
Banks will have nothing to fear, or if they want to engage in discriminatory lending, they can do so, as long as they are not just absolutely blatant about it.
This provision, in my book, makes the bill unacceptable on its own. But the bank lobby grab bag bill gets even worse. Bank officers and directors whose bank fails, mind you, here are banks, bank owners and directors who fail, either through incompetency or crookedness or what have you, will have the taxpayer pick up the tab. They will have a whole lot less to worry about under this bill. It is a rollback to what we have for years fought so much against in the past.
The Government will have to accept settlement offers or run the risk of having to pay the legal costs of the defendants. Defendants are given new defenses that the courts have refused to accept. A bank president with a bad business judgment gets off scot-free, because under this bill stupidity is made a valid defense against liability.
Oddly enough, if you can say that anything more could be odder, the vast new protection this bill grants the bank insiders come from the very party that regularly ridicules the Government for not recovering more money from the crooks and the incompetents who raided banks throughout the wild days of the eighties.
You would think that the party of rugged responsibility, and that is my opposition party, the so-called Republican Party, would want to demand that bank officers and directors be responsible. But far from it. They are making it far easier for incompetence and outright hooligans to rob a whole new generation of banks and customers.
One idea the Republicans had was to exempt the whole new class of banks from the requirement that the bank audit committee actually be independent and objective, not the captive management of management and insiders. But an outside audit committee is only required for a big bank, those of $500 million resources or more.
Thankfully, we may be able to preserve this protection. It sounds like a small thing, but the eighties taught us that a bank that does not have an independent audit committee has very little protection against a crooked management. If the majority changes its mind, the opposition party, and insists on gutting the independent audit committee requirement, my friends and fellow citizens, you better get ready for a fast increase in the number of banks that are robbed from the inside by their own management.
Inside robberies would be made easier by yet another provision of the bill that remains in place, a huge new increase in loans permitted for insiders.
Now, banks used to be chartered for a reason. In fact, that is still the basic law. This was the exact and single- minded purpose for the chartering of a bank. Public need and convenience. Those were the words of the statute as enacted originally. Public need, convenience, or necessity.
One thing you would like to have is a bank that makes loans to the community. We have a very simple law, and, incidentally, the banks hate it, to try to target that, the Community Reinvestment Act. Banks hate the idea of having to show that they are doing a service to the community. The administration has responded to legitimate concerns about complexity in compliance with community reinvestment. So a new regulation is now in place that should make life a whole lot simpler for everyone.
But lo and behold, the banks did not want a regulation that is sensible or easy to live with. They do not want anything that requires them to show they are serving the customers.
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So the bill now in the Committee on Banking and Financial Services, true to lobby demands, would exempt 90 percent of all banks from having to comply with the Community Reinvestment Act at all and renders the law, consequently, meaningless and useless for the rest.
Still other parts of this nefarious bill apparently will enable banks to change their charges and fees without prior notice, without any notice, just arbitrarily. This, of course, will make banks one of the few businesses in the country that do not have to tell customers about price changes. It is absolutely unbelievable to me, a child of the depression era in which we saw, felt, and suffered the excesses of the banks then that are now being put back in. So I think anybody who knows me knows exactly that this is what I would be doing today.
Banks already do not have a list price on their main product; that is, loans. Most loans are tied to a prime rate number, but guess what, the great majority of loans are made well above or well below that price. Favored customers pay below the posted rate, but small businesses pay more, lots more. Of course, since there is no meaningful disclosure law, bank customers have a hard time finding the best deal. It is about to get harder for bank customers to know much about price changes or other bank services as well, check processing, credit card fees or whatever else, because this pending bill apparently strips away requirements that such price changes be disclosed.
Another provision of this bill wipes out any meaningful disclosure about interest payments on customer deposits. So when you understand this bill, you discover that the customer loses any ability to easily find out who offers the best deal on deposits and who offers the best deal on services. The customer also suffers huge new liabilities in the case of credit card or ATM loss or fraud. The bank regulatory relief bill may deny some lobbyist some way, a wish or a hope, but it is their relief bill still. I cannot think of a lobbyist that the bill leaves unhappy.
I have been around here some time, privileged to have been so by the constituents in the 20th Congressional District of Texas for a good period. Since my special election in 1961, to be precise. So I have been here long enough to know that whenever there is a feeding frenzy like this, it is the poor folks out on the beltway who will end up crying and gypped and stolen from.
No matter how you look at it, this legislation will make it difficult or impossible for customers to know what a bank is charging for loans and services. This is incredible to me, a child of that period of time in which it was obvious that the suffering demanded that there be regulatory imposition. And here, now, has moved full circle. So that it is impossible for customers to know what a bank is charging for loans and services and close to impossible to avoid huge losses in credit card or ATM card frauds, virtually impossible to win a case involving discrimination and very much likely to be paying more for bank fraud and mismanagement, which are bound to increase, of course, thanks to the way this bill shreds safety and the soundness requirements.
When this legislation reaches the floor, it will be called regulatory relief. A better name is, customer grief bill. The lobbyists and the special interests have run amok, and if this bill is enacted, it will be a sad day for the customer and the taxpayer. Instead of making up this bill next week, the Committee on Banking and Financial Services would be better advised to tear it up and to start all over.
I wish somehow and, in fact, pray that something happens in the interim in that we can prevail and perhaps do so. But the reality is that the chances of that happening are minimal and, therefore, I am reporting to my colleagues here on the record so that nobody can say that nobody told them so.
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