2003

A Look at Legislators' Assets, Where They Sat

WASHINGTON, July 29 — Bankers complain that lawmakers favor credit unions on policy matters, but the latest congressional financial disclosures show that key House and Senate members give banks more of their business.

Each year lawmakers report the value of their assets, liabilities, and income in ranges of dollars. The 2002 disclosures were released to the public last month, and American Banker reviewed the filings of 20 Senate Banking Committee members and 21 prominent members of the 70-member House Financial Services Committee.

These lawmakers held deposits at a combined 53 financial institutions: 68% were banks, 11% thrifts, and 21% credit unions.

Though banks were the most popular option, the lawmakers practiced some diversification: 35% reported holding both credit union and bank accounts, while 21% used only bank accounts and 10% only credit union accounts.

The Congressional and Senate federal credit unions are among the more popular financial institutions, with 50% of the lawmakers holding accounts there, but more than 90% of those lawmakers also had deposits in at least one other financial institution.

Some preferred small banks such as Rep. Maxine Waters, D-Calif., who disclosed an account, valued at between $250,000 and $500,000, held by her husband at the $450 million-asset OneUnited Bank in Boston. She also held between $1,000 and $15,000 in an account at the Congressional Federal Credit Union.

For some lawmakers, two accounts did not suffice. Rep. Sue W. Kelly, R-N.Y., and her husband, for example, held deposit and cash management accounts, with a combined value of more than $150,000, at seven institutions: Bank of New York, Congressional Federal Credit Union, Fleet National Bank, Mahopac National Bank, Union State Bank, USAA Savings Bank, and Merrill Lynch & Co.

Sen. Elizabeth Dole, R-N.C., held accounts at five institutions and preferred to bank with larger companies. One is Bank of America, where she had a personal checking account valued at between $100,000 and $250,000, even though in last year's election B of A heavily supported her Democratic opponent, Erskine Bowles.

Sen. Dole might want to look into co-sponsoring a deposit insurance reform bill introduced by some of her colleagues on the Senate Banking Committee that is aimed at increasing the coverage limit, currently $100,000 per account. She and her husband, former Sen. Bob Dole, R-Kan., each held checking accounts that exceeded $100,000.

A few lawmakers also turned to thrifts for various services. Wilmington Trust was one of the most popular ones. Sen. Thomas R. Carper, D-Del., had a Wilmington Trust mortgage worth between $50,000 and $100,000 on a Washington rental property. And Sen. Dole held between $15,000 and $50,000 in Wilmington Trust accounts.

Rep. Barney Frank of Massachusetts, the ranking Democrat on House Financial Services, listed a mortgage of $50,000 to $100,000 — also from a thrift, Flagstar Bank — on his Washington residence.

Some Senate Banking Committee members, such as Sen. Jon S. Corzine, D-N.J., chose more exclusive facilities. The panel's wealthiest member, he valued his assets at between $96 million and $187.3 million, including an equity investment worth between $250,000 and $500,000 in a Chicago bicycle shop. He also had an uncommitted revolving line of credit worth $25 million to $50 million with J.P. Morgan Private Bank.

Senate Banking Chairman Richard C. Shelby, R-Ala., and Sen. Dole are next on the list of wealthiest committee members. Sen. Shelby had assets estimated at between $8.1 million and $34.4 million. His business interests have been the source of some controversy, as he is the chairman of Tuscaloosa Title Co., a title insurance company, where, according to his disclosure report, he held shares valued at between $1 million and $5 million.

Some news reports raised conflict-of-interest questions after Sen. Shelby opposed a plan backed by the Department of Housing and Urban Development that would reform home mortgage disclosures and could hurt title companies. A spokesman for Sen. Shelby told American Banker this year that it is "completely appropriate, indeed incumbent upon" the senator "to participate in such a debate."

The disclosures of House Financial Services members were often a little more mundane, with lawmakers often listing credit card debts.

Rep. Robert W. Ney, R-Ohio, listed a savings account at Congressional Federal worth less than $1,000 and credit card debts estimated at between $15,000 and $50,000 at MBNA Corp. and American Express Co.

If the filings were worth their weight in gold, some House members would be able to give Sen. Corzine a run for his money. House Financial Services Chairman Michael G. Oxley, R-Ohio, filed a 296-page disclosure, which was by far the longest of those reviewed by American Banker but 63 pages shorter than his 2001 disclosure.

The 2002 version consisted mostly of statements from Merrill Lynch, where he held accounts valued at approximately $160,000.

Still, Financial Services has its share of millionaires. Rep. Katherine Harris, R-Fla., a former Florida secretary of state and a co-chairwoman of George W. Bush's campaign during the controversial 2000 presidential elections, listed assets valued at between $11.5 million and $56.3 million.

Her filing said she made between $5,000 and $15,000 of royalties from publishing activities. Her office did not return calls inquiring about the source of these funds, but it is a safe bet they came from "Center of the Storm," her 2002 account of the disputed Florida vote tally that propelled Mr. Bush into the White House.

Another wealthy lawmaker, Rep. Carolyn B. Maloney, D-N.Y., listed $6.5 million to $22.9 million of assets. They included a 20% interest in Rose Hall, a residence that she and her siblings own and rent out in Jamaica that is valued at between $100,000 and $250,000.

Rep. Paul E. Gillmor, R-Ohio, was the third-richest member reviewed, with assets of between $5.7 million and $26.9 million. They were mostly stocks, including $15,000 to $50,000 of shares in Max & Erma's Restaurants Inc., an Ohio chain. Up to September 2002 he also owned stock in Cooker Restaurant Corp.

He was not the only lawmaker moonlighting as a restaurateur: Rep. Frank reported a 4% interest in Breadline Restaurant of Washington.

Though a majority of the lawmakers chose to bank with large, national institutions or with smaller ones in their home states, a few chose to bank out of state or even outside the United States.

Sen. Christopher J. Dodd, D-Conn., for instance, has been taking out mortgages on his cottage in Ireland; the most recent one with Allied Irish Bank was valued at between $100,000 and $250,000.

The 1978 Ethics in Government Act requires members of Congress and other government employees to file financial disclosures every year. Extensions may be granted. Sen. Robert F. Bennett, R-Utah, got a 90-day one, so he has until Aug. 13 to turn in his 2002 report.

1961

New Yorkers Plan to Save for the Future

NEW YORK, Feb. 20 — New Yorkers believe that they should be able to save at least 5% of their incomes, plan to save for future security or retirement, but frequently have to spend their savings for emergencies, a sampling conducted for Union Dime Savings Bank here reveals.

The bank sought to learn more about the thrift habits and attitudes toward savings of New York people.

The research study, a series of lengthy interviews with a selected group of 200 Union Dime savers and 250 of their neighbors, was conducted by National Analysts, Inc., Philadelphia.

New Yorkers want to save, and the majority, 58%, of those interviewed believe that those who fail to do so lack sufficient income or have large bills to meet, the survey showed.

On the other hand, 35% of the group think that people fail to save because they have no concern for their futures and "live up" their incomes. "Lack of will power" is ascribed by 17% of the group as the reason for non-saving, while 16% say non-savers "live beyond their means," it adds.

Half of those interviewed in the Union Dime survey think a family of four living in New York can save 5% of its total income. 30% think such a family can save 10% of its income. Of those who have had experience in saving at Union Dime more believe that 10% is possible than do their neighbors.

Two thirds of those queried believe that future security or retirement is the main purpose for which people save their money. This is the opinion of 73% of the Union Dime depositors and 61% of their neighbors.

Second in importance as savings goals, named by 47% of the respondents, are emergencies or the proverbial "rainy day." Other purposes, ranked according to the percentages of the group mentioning them, are: education 19%; major appliances 16%; and living necessities 14%.

Despite the prime importance ascribed to the goal of saving for future security or retirement, two thirds of the respondents say savings actually are spent for emergencies, "anything above and beyond regular predictable living expenses." 13% state that savings are spent for vacation trips.

Bank savings accounts are used by the overwhelming majority, 85% of those who actually are saving, 40% of those who have bank savings accounts have systematic deposit programs, 36% of the savers purchase government bonds, 24% buy corporate stocks.

Banking is by far the best known of the various ways or means of saving money. It was mentioned by 97% of the respondents, while stocks were mentioned by 40%, bonds by 32% and Government bonds by 28%.

The New Yorkers say that their selection of a savings method is influenced by the amount of interest paid on deposits. Interest rates were described as "very important" by 52% of the Union Dime sample group, as "fairly important" by 28%.

Union Dime, a mutual savings bank founded in 1859, has its main office at Avenue of the Americas and 40th Street and a branch at Madison Avenue and 39th Street. One of the largest savings banks in the country, Union Dime serves more than 150,000 depositors with total savings of nearly $500 million.

1970

Forcing Conglomerates Out of Banking Industry

WASHINGTON, Nov. 27 — A House-Senate Conference Committee has decided to place under a one-bank holding company bill all conglomerate corporations which own banks, in a move that probably will probably force most of them out of the banking business.

The committee rejected Tuesday a proposal which would have allowed conglomerates to continue owning a bank while expanding into other forms of business.

Under a compromise plan, a multi-product corporation owning a bank would be permitted to expand only in bank-related fields.

It is likely that most would shed their banks before accepting such a restriction. The conglomerates are expected to be allowed up to 10 years to sell their banks.

The House-Senate conference committee for the past week has been drafting the final version of a proposed law to control expansion of one-bank holding companies.

The decision to junk the exemption for conglomerates now owning banks was part of a package adopted tentatively late Tuesday. The conferees will resume negotiations Wednesday, Dec. 2.

The tentative agreement also includes a new definition of the kinds of operations to be permitted all bank holding companies, multi-bank and one-bank firms.

The delicately phrased, 150-word paragraph, released Tuesday by the committee, represents the most important Congressional action this session in the banking field.

The committee still has not decided the type of criteria to be used in exempting some conglomerates from the new law.

It is considering two standards — one based on the date the company acquired the bank, and the other on its asset size.

The committee of House members and Senators had been appointed to work out a compromise one-bank holding company regulatory bill.

It is working from two drafts — one approved by the House, which the holding companies consider highly restrictive, and a Senate-passed bill favored by the industry.

The conferees early in the negotiations dropped what the holding companies considered the most onerous provision of the House bill — a section containing a laundry list of restricted activities for banks.

The conferees also are likely to turn down another provision considered by the companies to be unrealistically harsh. This is a requirement that the firms divest all non-bank subsidiaries picked up in the last 4 years.

The tentative agreement adopted this week also includes a provision intended to prevent banks from forcing customers to purchase a bank service as a condition for getting a loan.

The conferees also went along with a Senate proposal to authorize the minting of 150 million silver dollars to bear the likeness of former President Eisenhower.

The bill also would accomplish the over-all objective of placing the Federal Reserve Board in charge of regulating the expansion of one-bank holding companies. At present only those companies with two or more banks are regulated by the Fed.

The proposal to excuse conglomerate-owned banks from Fed control was part of a section in the Senate bill which would have exempted 82% of the nation's one-bank holding companies.

The other firms affected are the smaller, traditional one-bank holding companies. Most were formed within the past 25 years. In most cases, banking is the dominant activity. A few of these banks also are owned by universities, single-product corporations, labor unions and other groups.

These probably will be allowed to keep their banks, although details still remain to be worked out by the House-Senate conference committee.

While all portions of the bill affect the banking industry, it was the new standard for bank holding company acquisitions which this week occupied the closest attention of bank lawyers and industry leaders.

Presently, the 1956 Bank Holding Company Act, in its Section 4-C-8, directs the Fed to approve only acquisitions involving activities "which are or are to be of a financial, fiduciary, or insurance nature and which the Board after due notice and hearing, and on the basis of the record made at such hearing, by order has determined to be so closely related to the business of banking or of managing or controlling banks as to be a proper incident thereto."

The compromise 4-C-8 drafted by House and Senate negotiators this week generally incorporates this language, although it drops from the sentence the words "financial, fiduciary or insurance."

But it adds a second sentence to this section which reads:

"In determining whether a particular activity is a proper incident to banking or managing or controlling banks, the Board shall consider whether the performance by an affiliate of a holding company can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices."

The effect of this change was being debated this week among those who had opposite views on the question of bank expansion. Both sides claimed the new language supported their position.

Bank holding company lawyers generally were pleased with the compromise version. They praised the decision to eliminate the words "financial, fiduciary and insurance," arguing that these were restrictive.

But, most of all, the companies felt that adding the second sentence would give the Fed the discretionary authority to allow the companies to do more than is permitted under present law.

It was pointed out that on more numerous occasions, the Fed had indicated it would like to liberalize the standard for bank holding company acquisitions, but that it could not do so because of wording in the existing statute. Bank lawyers believe that the second sentence in the proposed new section will give the Fed the green light to let down some of its barriers.

The Fed also is under some pressure to ease its requirement in this regulatory area because it is considered one of the reasons why some banks are dropping their membership in the System.

Those who favor keeping a tight leash on bank holding company expansion also argue that the new language will achieve their goal.

They noted that the first sentence in the new section retains all of the original phrasing which has served as the basis for court decisions restricting bank operations.

In this argument, special emphasis is given to the phrase "closely related to banking … as to be a proper incident thereto" which is in the present statute and will continue under the change.

Those who contend that the compromise paragraph is restrictive also refuse to accept the argument that the sentence added gives the Fed greater discretion in ruling on bank holding company expansion.

They content that, actually, this sentence sets up another test which the companies will be required to meet as they begin to push out their investment boundaries.