ACTION ON LEGISLATION
Money Laundering
HR 3886
The House Banking Committee was expected to approve legislation today to crack down on money laundering.Introduced March 9 by House Banking Committee Chairman Jim Leach and ranking Democrat John J. LaFalce, the International Counter-Money-Laundering Act of 2000 would give the Treasury secretary authority to identify countries or overseas financial institutions with weak anti-money-laundering policies or to target suspect types of international transactions.
Such formal designation would trigger different requirements depending on the situation, ranging from special reporting mandates for U.S. financial institutions doing business with suspect foreign banks to barring institutions from opening or maintaining correspondent accounts for these entities.
The bill was written largely by the Clinton administration; Senate Banking Committee Chairman Phil Gramm opposes it.
Internet Gambling
HR 4419 The House Banking Committee also was expected to approve a bill today that would prohibit the use of credit cards and other bank-issued payment instruments to pay for or collect winnings on Internet gambling. Bank instruments that would be included in the ban are: credit cards, debit cards, electronic funds transfers, checks, and bank drafts. The Internet Gambling Funding Prohibition Act was introduced May 10 by three banking committee members: Chairman Leach, ranking Democrat LaFalce, and Rep. Richard H. Baker.
Farm Aid
HR 2559 Congress on May 25 passed compromise legislation that would provide $15 billion for farm aid and higher crop insurance subsidies. The House approved the bill on a voice vote, and the Senate adopted it 91 to 4.Under the legislation, farmers would get $8.2 billion of increased subsidies through 2005 to reduce their crop insurance costs. Subsidies were significantly raised for farmers who buy higher levels of crop insurance. The balance of the package, $7.1 billion, is to directly aid farmers who have suffered from bad weather and low prices; most of this money is to be distributed by Sept. 30.
Bankruptcy Reform
S 625, HR 833 The roller-coaster prospects for bankruptcy reform legislation are on the upswing again as Republicans and Democrats move closer to a compromise.Negotiations between House and Senate lawmakers have been led by the staffs of sponsors Sen. Charles E. Grassley and Rep. George W. Gekas. Many details remain sketchy, but sources said that banks and other financial institutions with less than $250 million of assets would be exempted from a requirement to provide a toll-free number for credit card customers who want to know how long it would take to pay off their balances based on the minimum monthly payment.
Lawmakers met this week to confront some of the remaining disputes, such as whether to prohibit someone convicted of attacking an abortion clinic from filing for bankruptcy to evade paying fines or court judgments. Also in dispute are proposed changes to a federal law that protects debtors from being harassed by creditors.
Senate Republicans - who have been unable to broker a deal with Democrats on unrelated provisions - still must forge agreement on the bankruptcy piece and tie it to other, faster-moving legislation.
Whether the White House will support the compromise is unclear. The administration has threatened to veto the House bill and said any compromise must preserve the Senate bill's consumer-protection items.
The Senate approved its bankruptcy reform bill Feb. 2 on an 83-to-14 vote. In May 1999, on a vote of 313 to 108, the House passed a stricter version.
Digital Signatures
HR 1714, S 761 Compromise digital signature legislation could be voted on as early as next week.The legislation would make contracts signed online as legally binding as paper contracts, and it would permit financial services companies to make mortgage and other disclosures required by consumer-protection laws electronically instead of on paper.
House and Senate Republicans on May 15 offered a compromise that leaned heavily toward the House version favored by the banking industry. It would permit electronic delivery of required disclosures, provided that consumers affirmatively give consent, are given a "clear and conspicuous" statement of any fees and the right to change their minds, and are given an explanation of computer requirements for getting and saving records of the information.
Democrats and the White House demanded more consumer protections in a counteroffer, many of which were accepted.
However, before the bill goes to either the House or Senate floor, Senate Banking Committee Chairman Gramm is seeking several changes also sought by the financial services industry.
For example, the industry considers too onerous a provision that would require it, when someone consents online to receiving electronic disclosures, to run a test to determine whether consumers have the proper computer hardware and software to get the disclosures.
The Senate approved its legislation Nov. 19. The House on Nov. 9 voted 356 to 66 for its bill.
Interest on Reserves
HR 4209 The House Banking Committee approved a bill on May 17 that would let banks earn interest on mandatory reserves held at the Federal Reserve. The Bank Reserves Modernization Act of 2000 was introduced by Rep. Sue Kelly, R-N.Y. An amendment successfully offered by committee Chairman Leach would require that interest be paid from the Fed's surplus account.Rep. LaFalce, the committee's ranking Democrat, tried to attach an amendment that would have required banks to offer low-cost transaction accounts to unbanked people in order to collect interest on their Fed reserves. Rep. Leach excluded it as nongermane. Rep. LaFalce introduced this same proposal in a separate bill May 11.
PENDING LEGISLATION
Interest on Business Checking
HR 4067, S 576 Legislation that would let banks pay interest on business checking accounts remains on the Senate floor, stalled by Sen. Richard H. Bryan, D-Nev., who wants to tack on a privacy-related amendment. Meanwhile, Sen. Richard C. Shelby, R-Ala., and Sen. Charles E. Schumer, D-N.Y., have been negotiating on whether to postpone the bill's effective date to give small banks more time to prepare. The provisions are part of a larger regulatory relief bill.The House on April 11 approved legislation introduced by banking committee Chairman Leach and Rep. Jack Metcalf, R-Wash., that would let banks pay interest on business checking accounts three years after its enactment. To appease bankers who oppose making these payments, the implementation date was set two years later than in an earlier proposal.
The House and Senate bills would expand sweep accounts in the interim. The bills would increase the number of withdrawals that corporate customers could make per month from sweep, or money market deposit, accounts to 24, from six.
NEW LEGISLATION
Medical Privacy
HR 4585 House Banking Committee Chairman Leach introduced legislation June 6 that would restrict the sharing of medical records among financial institutions. Under the bill, insurance companies could not transfer personally identifiable medical records to bank or other affiliates, or to third parties, unless customers affirmatively consent, or "opt in." Nor could a bank use such records to decide whether to grant a loan without the applicant's express permission. Consumers also would have the right to review and correct their medical records.
Deposit Insurance
HR 4467, S 2589 Rep. Joel Hefley, R-Colo., and Sen. Tim Johnson, D-S.D., introduced legislation in mid-May that would double deposit insurance coverage, to $200,000. Coverage levels would be adjusted every three years based to keep pace with inflation as measured by the consumer price index.
