BANKER UPDATE: CHAIRMAN SPENCER BACHUS IN SUPPORT OF INCREASED FDIC COVERAGE LEVELS
At 7:37 pm on Tuesday, May 21, the House of Representatives began considering H.R. 3717, the Federal Deposit Insurance Reform Act of 2002. The bill was passed by the House the following day by an overwhelming 408-18 vote.
This is what Rep. Spencer Bachus (R-AL), chairman of the House Financial Institutions subcommittee and the bill's floor manager, had to say during Tuesday's floor debate:
"… the Federal Reserve and the Treasury would tell us that people have an opportunity to open multiple accounts… . Well, I ask my colleagues, Mr. Speaker, I ask the Members of this body, When people sell their home, how many of them go out and establish three bank accounts and deposit that money in three different accounts? Experience tells us that almost no one does that, and when they deposit it, when they deposit that $200,000 or $300,000 in a bank account and that bank fails, they lose two-thirds of their life savings.
"Retirement accounts, $150,000, $200,000, not unusual. How many people go out and establish multiple IRA accounts? Well, I think we know the answer to that. The AARP has strongly, in fact, they have urged a greater increase in coverage than we give, because people do not run around all over town establishing one account here, another account there, another account there; and they should not have to do that.
"They should not have to rely on a couple of large financial institutions of this country that have come in here and battled against this bill, and they have said we do not need over $100,000; but those same companies and the Financial Services Roundtable that has represented their interests have come up here and told them they do not need $100,000. Those same companies that were on this hill lobbying against an increase were going out and buying six or eight banks and advertising $800,000 worth of coverage, bankrupting the funds; and then they had the audacity to come up here and oppose this bill and oppose our efforts to stop their raid on the FDIC.
"Thank goodness in committee, thank goodness in subcommittee and thank goodness in the morning when we vote on this legislation we will pass it, and we will stop the abuse that we have seen in the last couple of years on free riders … .
"… Certainly they have gimmicked the system. They are getting a free ride. They are paying nothing; and they are going to communities like the communities in South Dakota, like communities in Alabama, communities all over the Nation, and they are saying we will offer $700,000 worth of coverage; and then they and friends and supporters that they have at the Federal Reserve and the Treasury are coming over here and telling us to do something about these free riders but do not do anything about the free riders which would interfere with a free ride, do not do anything which allows the community banks to increase coverage … .
"Well, the marketplace is demanding it. The marketplace is getting it. The free riders have gone out and gotten an increase in coverage, and it is absolutely ludicrous for us to let this continue to go on."