Dingell issued the following statement:

"The responses to my questions confirm my worst fears about H.R. 10. Major changes to this legislation are needed to ensure fair competition and protect the taxpayer and investor.

"Far-flung financial conglomerates that own and operate insured banks must be adequately supervised. We cannot repeat the S&L debacle with its $150-billion taxpayer bailout. Securities sales must be regulated by the SEC and the business of insurance must be regulated by the States. Bank regulators are not acceptable proxies for either and do a particularly poor job of protecting investors.

"The Banking Committee's thrift title is a `Molotov Cocktail.' Under its provisions, a thrift that converts into a bank would continue to have all of the rights, powers, privileges and immunities that it had as a thrift and its activities would be grandfathered. Thrift holding companies would be authorized to own national banks, with the power to engage in any activity, whether financial or commercial, and their national bank subsidiaries could acquire other banks by merger. The title repeals the limits on credit extensions to their commercial affiliates and would allow previously-prohibited overdrafts against the Fed. The thrift holding companies under H.R. 10 would have vastly superior powers to financial holding companies or the new investment bank holding companies, and would not be subject to the prudential safeguards applicable to other holding companies. Further, Section 316 expressly circumscribes the regulatory authority of banking regulators over these `superbanks' for three years. This makeshift incendiary mixture is a threat to the safety and soundness of our financial system."

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NOTE: Copies of the responses can be obtained by phoning the Commerce Committee Democratic Staff Office at 202-225-3641.

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