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The House in Committee of the Whole House on the State of the Union had under consideration the bill (H.R. 10) to enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, and other financial services providers, and for other purposes:

• Ms. JACKSON-LEE of Texas. Madam Chairman, today I rise to voice my opposition to the structured rule to House Resolution 10, the Financial Services Competition Act of 1999. This rule stifles debate on critical issues from the modernization of the financial services industry. Forty Amendments offered by the Democrats, including my own, which addressed issues of redlining, stronger financial and medical record privacy safeguards and community lending were not made in order by the Rules Committee.

• I support the idea of updating the rules that our nation's financial service institutions operate under to bring their activity in line with the realities of life in today's America. With that said, I believe that in our rush to modernize financial services, we are overlooking critical issues that the Democrats sought to address through the amendment process.

• The Republicans failed to make in order Representative BARBARA LEE's anti-redlining amendment. Currently, CRA applies to only banks and thrifts. Representative LEE's proposed amendment would have required insurance companies and their affiliates to remain in compliance with the Fair Housing Act. Interestingly enough, this provision was included in the Banking Committee version of H.R. 10.

• H.R. 10 allows virtually unlimited access by organizations such as insurance companies, employment agencies and credit bureaus of a patient's medical records. Under these provisions, patient information could be disclosed or even sold to the highest bidder for reasons that have nothing to do with the health of the patient. This will threaten the confidential relationship between a doctor and the patient--an essential component of high quality health care.

• Similarly, the rule prohibited a discussion on creating parity between large and community banks with respect to sharing protected information. Large banks rely on sharing customer information with affiliates and subsidiaries, while smaller banks rely on the transfer of information between third parties.

• The amendment offered by Representative MARKEY would have preserved the meaningful consumer financial privacy protections adopted on a bipartisan basis in the Commerce Committee. H.R. 10 will greatly accelerate mergers, creating huge money centers with access to once-confidential information about millions of customers.

• The Commerce Committee, in a bipartisan manner, adopted a compromise approach to financial privacy by giving consumers an across-the-board ``opt-out''--the ability to stop information from being disclosed to third parties and affiliates. H.R. 10 only permits consumers to opt-out of third party information sharing. Financial institutions are still free to share consumer information with their affiliates and subsidiaries.

• Madam Chairman, the structured rule prohibits discussion of the lack of sufficient protections for the privacy of an individual's medical records. This bill allows virtually unlimited access by organizations such as insurance companies, employment agencies and credit bureaus of a patient's medical records without the patient's consent or knowledge. Under these provisions, patient information could be disclosed or even sold to the highest bidder for reasons that have nothing to do with the health of the patient. This will threaten the confidential relationship between a doctor and patient--an essential component of high quality health care.

• Under the bill, Madam Chairman, health insurers could compel individuals to allow their medical records to be sold or disclosed to employers, direct marketing firms and others. While the bill technically requires individuals to consent to such disclosures, the consent process can and will be coercive. Insurers could refuse to provide health insurance to individuals who fail to provide blanket authorization for disclosure. Faced with such a choice, individuals will have no option but to sign away their privacy rights.

• The amendment offered by Representative CONDIT and others would have stripped Section 351 from the bill in order to prevent this erosion of medical privacy. Section 351of H.R. 10 purports to protect the privacy of medical records. In fact, it would do just the opposite by allowing a major invasion of consumer privacy.

• Among other things, Section 351 would allow health insurers to sell health records, would preempt state privacy laws and would allow insurers to effectively coerce disclosure ``consent'' from consumers. This would have prevented by the adoption of the Condit Amendment.

• I also oppose the rule, because it failed to contain my amendment which would have directed the Comptroller General of the United States to conduct a study of the extent to which the lack of availability of a full-range of financial services in low- and moderate-income neighborhoods has resulted in an undue reliance in such neighborhoods on check cashing services which impose a fee equal to 1 percent or more of the amount of a transaction.

• This report would have also assessed to what extent check cashing services are regulated and audited by Federal, State, or local governments to prevent unscrupulous practices and fraud. This amendment would have also reviewed to what extent owners and employees of check cashing services are licensed or regulatory screened to prevent the inflitaration of elements of organized crime.

• According to the National Association of Check Cashers, the industry cashes about 200 million checks a year, totaling $60 billion, and earned more than $1 billion last year. The number of check cashing outlets in the United States has nearly tripled about 6,000 compared to about 2,150 in the mid-1980s.

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• Banks are hard to find in the inner city, and I am sure that this fact has contributed to the presence of check cashers in the inner city. In the City of Houston 23 establishments are listed as offering check cashing services to poor or moderate income Houstonians.

• It is estimated that 12% of the population in this country does not have a checking account. Resulting in one in every 13 U.S. households not having a bank account. This percentage is growing with the escalation of banking fees and the closing of full service bank branches.

• In the state of Texas a low-income family may spend more than $200 a year in checks cashing fees.

• Currently, no national law guarantees access to banking services for all Americans. Illinois, Massachusetts, New Jersey, New York and Minnesota require banks operating with their boarders to offer basic checking accounts with minimal fees for consumers making a limited number of transactions.

• Some check cashing services offer short term credit called a payday loan to customers who are in need of cash. A customer writes a check for one amount and receives a lower amount in return. The check casher in turn agrees to hold off cashing the check until payday. A customer can choose to ``roll'' the check over by paying another fee to extend the loan, a process that can become extremely costly over time.

• A class-action lawsuit in Tennessee describes a borrower who renewed cash advance loans 20 to 29 times. One plaintiff ``rolled over` loans 24 time in 15 months, borrowing a total of $400 and paying $1,364 while still owing $248. The allowance of this amendment would have made sure that the reform of our nation's financial service industry includes benefits to all Americana.

• Madam Chairman, H.R. 10, the Financial Services Act of 1999, represents a historic moment for America. I am supportive of a bill that would update our Depression era banking laws. Indeed, according to the Treasury Department, financial services modernization could provide as much as $15 billion annually in savings to consumers. Modernization will create a streamlined, one stop shopping with comprehensive choices for consumers.

• I must state in no uncertain terms that notwithstanding the potential benefits that H.R. 10 represents for consumers, the structured rule prohibited dialogue on the key issues of redlining, financial and medical record privacy and community lending. Accordingly, I strongly oppose the rule. It is my desire that these important issues will be revisited in conference.

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