The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“FINANCIAL SERVICES COMPETITION ACT OF 1997” mentioning the Federal Reserve System was published in the Extensions of Remarks section on pages E950 on May 22, 1998.
The publication is reproduced in full below:
FINANCIAL SERVICES COMPETITION ACT OF 1997
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HON. SUE W. KELLY
of new york
in the house of representatives
Thursday, May 21, 1998
Mrs. KELLY. Mr. Speaker, with regard to my earlier colloquy with the Chairman on functional regulation which appears on page H3140 of the May 13, 1998 edition of the Congressional Record I would briefly like to quote from the report language from both the House Banking Committee and House Commerce Committee that further illustrates the intent of functional regulation of H.R. 10:
``An important aspect of this new framework is that it would incorporate functional regulation with the Federal Reserve serving as an umbrella regulator to oversee the new financial holding company structure. Securities affiliates would be required to comply with all applicable Federal Securities law . . . The Act would also provide that insurance affiliates be subject to applicable State insurance regulation and supervision.''
``Title I . . . expressly limits the authority of the Board of Governors of the Federal Reserve System (Federal Reserve Board) over the affiliates of financial services holding companies. These limitations are designed to facilitate functional regulation of the operative components of a financial services holding company. Specifically, the preeminent authority of the Securities and Exchange Commission (SEC or Commission) and the State insurance regulators over securities firms and the business of insurance, respectively, is preserved.''
``Section 113. Authority of state insurance regulator and Securities and Exchange Commission. This section limits the Federal Reserve Board's ability to require that an insurance company or registered broker or dealer provide funds to an affiliated bank if the State insurance authority or the SEC determines in writing that such action would have a materially adverse effect on the financial condition of the insurance company or the broker dealer. The Committee determined that this provision was necessary to make clear that the source of strength doctrine does not extend to securities and insurance affiliates of banks. The section allows the Federal Reserve Board to require the bank holding company to divest the bank within 180 days of receiving such notice from the State insurance authority or the SEC.
``Title III pertains to the regulation of insurance activities, particularly those of national banks, and sets forth appropriate standards for judicial review of regulatory insurance disputes . . . Subtitle A specifically provides for the functional regulation of insurance. The Committee's purpose in the first part of Subtitle A is to reaffirm the McCarran-Ferguson Act and require State licensing for insurance activities.''
I would like to thank the Chairman and his staff for their assistance and agreement with this language as for the intent of functional regulation in H.R. 10.
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