Mr. LEACH. Madam Speaker, I yield
2 minutes to my distinguished colleague,
the gentleman from Texas (Mr.
PAUL).
(Mr. PAUL asked and was given permission
to revise and extend his remarks.)
1998 Ron Paul 93:1 Mr. PAUL.
Madam Speaker, I thank the gentleman for yielding me time.
1998 Ron Paul 93:2 Madam Speaker, today I rise in support
of this bill. I do not support legislation
casually here, and have thought
this through. I voted against this bill
the first time it went through, and I
was one of a few. But it is a better bill
now than it was before.
1998 Ron Paul 93:3 I am a supporter of the free market,
and I do not believe you can achieve
equity by raising taxes and putting
more regulations on those who do not
have regulations and who do not have
taxes.
1998 Ron Paul 93:4 For this reason, I argued the case
that instead of equity being achieved
by taxing credit unions or making it
more difficult for them to survive with
more regulations, the best thing we
should do now is talk about at least
the smaller banks that compete with
credit unions, to lower their taxes, get
rid of their taxes and get rid of the regulation.
1998 Ron Paul 93:5 Precisely because we dealt with the
CRA function in the Senate is the reason
that I can support this bill. CRA
does great deal of harm to the very
people who claim they want CRA to be
in the bill. CRA attacks the small,
marginal bank that is operating in
communities that have poor people in
them. But if you compel them to make
loans that are not prudent and to make
loans that are risky, you are doing precisely
the opposite of what we should
do for these companies.
1998 Ron Paul 93:6 We should work to lower taxes, not
only on the credit unions, and lower
regulations. We must do the same
thing for the banks. We must lower the
taxes and get rid of these regulations
in order for the banks to remain solvent
and that we do not have to bail
the banks out like we have in the past.
But the regulations do not achieve
this.
1998 Ron Paul 93:7 This is a bill that I think really
comes around to achieving and taking
care of a problem and protecting everybody
interested. But I am quite convinced
that this is still not a fair bill,
a fair approach, because we have not
yet done enough for our community
bankers. We must eventually apply
these same principles of less regulations
and less taxes to the small banker.
Then we will provide a greater service
to the people that are their customers,
and we will certainly be allowing
the poor people a greater chance to
achieve a loan.
1998 Ron Paul 93:8 Since I strongly support the expansion of
the field of membership for credit unions and
was the first one in this congress to introduce
multiple common bonds for credit unions in
the Financial Freedom Act, H.R. 1121, I am
happy to speak in support of the passage of
H.R. 1151 here today. Having argued forcefully
against the imposition of new regulations
imposed upon credit unions, I congratulate the
senate for not increasing the regulatory burden
on credit unions in an attempt to “level
the playing field” with banks and other financial
institutions.
1998 Ron Paul 93:9 A better approach is to lead the congress
toward lower taxes and less regulation — on
credit unions, banks and other financial institutions.
H.R. 1151, The Credit Union Membership
Access Act, as amended by the senate,
takes us one step in the right direction of less
government regulation restricting individual
choice. We must continue on the path of fewer
regulations and lower taxes.
1998 Ron Paul 93:10 These regulations add to the costs of operations
of financial institutions. This cost is
passed on to consumers in the form of higher
interest rates and additional fees. These regulations
impose a disproportionate burden on
smallers institutions, stifles the possibility of
new entrants into the financial sector, and
contributes to a consolidation and fewer market
participants of the industry. Consumers
need additional choices, not congressionally-imposed
limits on choices.
1998 Ron Paul 93:11 The estimated, aggregate cost of bank regulation
(noninterest expenses) on commercial
banks was $125.9 billion in 1991, according to
The Cost of Bank Regulation: A Review of the
Evidence, Board of Governors of the Federal
Reserve System (Staff Study 171 by Gregory
Elliehausen, April 1998). It reports that studies
estimate that this figure amounts to 12 percent
to 13 percent of noninterest expenses. These
estimates only include a fraction of the “most
burdensome” regulations that govern the industry,
it adds,
“The total cost of all regulation
can only be larger . . . The basic conclusion
is similar for all of the studies of economies of
scale: Average compliance costs for regulations
are substantially greater for banks at low
levels of output than for banks at moderate or
high levels of output,”
the Staff Study concludes.
1998 Ron Paul 93:12 Smaller banks face the highest compliance
cost in relation to total assets, equity capital
and net income before taxes, reveals Regulatory
Burden: The Cost to Community Banks,
a study prepared for the Independent Bankers
Association of America by Grant Thornton,
January 1993. For each $1 million in asset,
banks under $30 million in assets incur almost
three times the compliance cost of banks between
$3065 million in assets. This regulation
almost quadruples costs on smaller institutions
to almost four times when compared to
banks over $65 million in assets. These findings
are consistent for both equity capital and
net income measurements, according to the
report.
1998 Ron Paul 93:13 We need to work together now to reduce
the regulatory burden on all financial institutions.
The IBAA study identified the Community
Reinvestment Act as the most burdensome
regulation with the estimated cost of
complying with CRA exceeding the next most
burdensome regulation by approximately $448
million or 77%. Respondents to the IBAA
study rated the CRA as the least beneficial
and useful of the thirteen regulatory areas surveyed.
We need to reduce the most costly,
and least beneficial and useful regulation on
the banks.
1998 Ron Paul 93:14 Let’s all work together now, credit unions,
banks and other financial institutions, to reduce
their regulatory burden. Credit unions
have demonstrated that fewer regulations contribute
to lower costs passed on to consumers
and greater consumer choice. Let’s extend
that model for banks and other financial institutions.
Notes:
1998 Ron Paul 93:1 through 1998 Ron Paul 93:7 were spoken on the House floor. The rest of this speech was inserted into
the Congressional Record as an extention of remarks.
1998 Ron Paul 93:1
Madam Speaker, I thank the gentleman for yielding me time. Here, Ron Paul thanks The Honorable James A. Leach of Iowa.
1998 Ron Paul 93:5
CRA does great deal of harm probably should be
CRA does a great deal of harm.
1998 Ron Paul 93:8
I congratulate the senate probably should be capitalized: I congratulate the Senate.
1998 Ron Paul 93:9
the congress probably should be capitalized: the Congress.
1998 Ron Paul 93:9
amended by the senate probably should be capitalized: amended by the Senate.
1998 Ron Paul 93:10
congressionally-imposed probably should br capitalized and not hyphenated: Congressionally imposed.
1998 Ron Paul 93:12
For each $1 million in asset probably should be plural: For each $1 million in assets.
