WASHINGTON Expect the word "people" to be uttered nearly as frequently as the word "banks" if Rep. John J. LaFalce is running the House Banking Committee next year.
"We have to keep our eye on that ball and remember what were about helping people," the New York Democrat said in an interview on how the committee would operate if he were its leader.
"The economy exists for people," he said. "Whenever we pass financial services laws, we should be passing laws not primarily for the effect they are going to have upon different financial institutions and industries. We should be passing those laws primarily for the effect they will have on people and businesses."
Rep. LaFalce a 60-year-old, 13-term lawmaker who is a safe bet to be reelected is the presumptive heir to the committees chairmanship if Democrats win a majority in the House this November.
However, he is far from assuming that his party will win control. If I am chairman and that is a big if, he said to preface one of his comments. This election will go down to the wire.
Rep. LaFalce is not easy to peg, either. Though a strong consumer advocate, he also holds positions favorable to the banking industry. If George W. Bush calls himself a compassionate conservative, then Rep. LaFalce could be dubbed a pragmatic populist.
In determining what your agenda is going to be, you have to look to what youd like to do and then pragmatically at what you might be able to do, and try to fuse the two, he said. You want to use your time as productively as possible. On the other hand, certain issues are so important that you have to build momentum for them.
Not that Rep. LaFalce is afraid to confront the banking industry. He has pushed legislation to rein in lending and marketing practices and has some sharp words for top executives.
The industry has to clean up its act with respect to late payment fees, teaser interest rates, and marketing practices, he said. The CEOs have to become more cognizant about what is going on in their own institutions, what their own marketing and operations people are doing.
He has sponsored measures such as a White House-backed privacy bill that would require financial institutions to give bank customers a chance to block their data from being shared among affiliated companies and would prohibit the sharing of health-related information without the customers explicit consent.
To curb predatory lending, Rep. LaFalce has introduced legislation to expand the Home Ownership and Equity Protection Act, which would impose price limits and disclosure requirements on lenders making high-cost home-secured loans.
Among other things his measure would reduce the trigger level at which a loan could be categorized as high-cost. It would also restrict prepayment penalties and balloon payments and prohibit lenders from making loans without regard to the borrowers ability to repay.
Rep. LaFalce, however, is considered a pro-business Democrat who often supports the industry.
He vowed to make sure the rules implementing the Gramm-Leach-Bliley Act, which he worked for years to enact, are as flexible as possible so that financial services companies will be able to adapt to changing markets. The law was meant to be a liberalizing, modernizing law that enhances [banks] ability to compete, he said.
Unlike the current House Banking chairman, Rep. Jim Leach, R-Iowa, Rep. LaFalce supports letting financial holding companies engage in some commercial activities.
In the same vein, he said he sees a need to soften the Gramm-Leach-Bliley merchant banking rules, which could include a proposed 50% capital charge.
If regulatory interpretation is not true to the spirit and intent of the law, Congress may need to revisit some of its provisions, he said. Close oversight of implementation of this statute will be needed.
Returning to an idea he floated unsuccessfully in the late 1970s, he said he would look into creating a federal insurance commission that would regulate insurers operating nationally.
Now that there has been such an intermingling of financial products and services, and large segments of the insurance industry are seeking an alternative to the state charter, thats something we should examine, he said.
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