Mr. Chairman, Ranking Member, and Members of the Rules Committee, I appreciate this opportunity to appear before you today on the subject of financial services reform. As you know, I have come before you many times on this matter over the years in a spirit of bipartisan cooperation on this legislation. As you know, in the last Congress I worked with Members on both sides of the aisle to produce legislation that could find a consensus in the House, and I stand ready to do so again.

The Committee on Commerce exercised its duties properly in considering this legislation by reporting it on time. As we bring this legislation to the floor, real and legitimate differences of opinion about many of its provisions remain. These are, as you know, not partisan differences. My simple hope and recommendation is that the Rules Committee will allow these issues to be given a complete and fair airing before the full House.

Specifically, I urge the Rules Committee to make in order amendments pertaining to several particular issues.

The first of these concerns the question of whether financial institutions should conduct additional activities in an operating subsidiary or in a separate affiliate.

The Rules Committee Print adopts the bank operating subsidiary model for expanded nonbanking activities like securities underwriting and merchant banking, rather than the model that requires such activities to be conducted in separately-capitalized and functionally regulated affiliates of holding companies. This approach is supported by the Department of the Treasury, and opposed by the Chairman of the Federal Reserve and the Securities and Exchange Commission.

I will not at this time enter into a discussion of the history of banking and monetary policy in this country, with its prodigious scandals and continuing economic convulsions and recurring panics prior to the enactment of Glass-Steagall. I will simply observe that in its consideration of H.R. 10, the Commerce Committee unanimously adopted the separate affiliate model. Chairman Bliley has requested that an amendment be made in order to restore that model. I would urge that his amendment be made in order so that the House can debate this important consumer and taxpayer protection issue. I would observe that last year, when the affiliate model was base text, the Rules Committee allowed the proponents of operating subsidiaries to offer and debate their amendment. I would request the same courtesy for Mr. Bliley this year. The issue is larger and graver than a mere turf war between committees or branches of the Government.

Let me briefly touch on a few other areas of important concern.

The Commerce Committee voted by voice vote on a privacy provision offered by Paul Gillmor and amended by Ed Markey. The amendment received strong support from Members on both sides of the aisle. The committee’s amendment should be made in order under the rule. When a committee to which a bill is referred has adopted an amendment, at a minimum, the Rules Committee should honor the right of that committee to present its recommendations to the House for consideration. To do otherwise is an insult to this institution.

This amendment does nothing more than to preserve the consumer’s right to say "no." It should be obvious to anyone that an individual’s most private information should not be bandied about town or around the globe without permission. Rather than trying to find out "what the banks can live with", I suggest we find out "what the people want".

I therefore strongly urge you to make in order the committee amendment to be offered by Representatives Markey, Barton, Inslee, Stupak, and myself.

During the consideration of the bill, the Commerce Committee adopted on a largely party-line vote, unlike the financial privacy vote, a provision that purported to deal with confidentiality of medical information. At the markup, concerns were expressed that the amendment, which had not been circulated in advance, could actually reduce medical privacy.

Since that markup, we have heard from many organizations, including patient groups and physicians, who have expressed concerns about the provision. The provision, which may preempt stronger state laws, has so many exceptions that companies could disclose sensitive medical records to just about anyone. There are no restrictions on what the recipient of this information could do with it.

My colleagues Representatives Condit, Waxman, Towns, Markey, and I have have presented your committee with two sensible alternatives. One would strike the provision and the other would incorporate the true medical privacy protections found in H.R.1941, as they relate to institutions covered by this act.

Representatives Hill, Pomeroy, Shimkus, and I request that two amendments on insurance be made in order. One amendment would preserve the coverage of important state insurance laws over all insurance transactions whether conducted by a bank or an insurance agent. The Committee Print will result in the preemption of over 1700 state insurance laws, leaving consumers with no comparable protections.

The second amendment would require that, if an insurance transaction is not covered by state insurance laws due to preemption, the institution should clearly inform the consumer that those protections do not apply due to preemption.

By a separate letter to you I have explained a relatively technical amendment which I would like to be made in order to restore a provision adopted by the Commerce Committee creating an exception to securities regulation for certain private placements by banks. The amendment is designed to protect investors while avoiding costs to smaller banks.

Mr. Chairman, I appreciate your time and the Committee’s consideration of my requests.