Good afternoon. The Committee will come to order. Today, the Committee embarks on an historic effort to modernize the nation's basic laws governing the financial services sector of the economy so that our banks and our securities and insurance firms can better serve customers in the United States and remain world leaders in provision of financial services.

As we all know, there are complex issues involved in this legislation, the Financial Services Competition Act of 1997, and there will be differing judgments on major issues by members of our Committee. One thing we all may agree upon, however, is that Congress needs to reassert its Constitutional role in determining what should be the laws governing financial services, instead of allowing the regulators and courts to usurp this responsibility.

So that everyone is clear, it is my goal that we act to produce a bill that first of all gives greater choice and lower prices to the customers of financial services; second, protects the taxpayer; and third, is balanced between the various industrial and commercial interests.

The Committee Print before us today represents a melding of the three bills introduced by Committee members - H.R. 10, of which I am the chief sponsor; H.R. 268, which Ms. Roukema, the respected chairwoman of the Financial Institutions Subcommittee has introduced, and H.R. 669, which Mr. Baker, the equally respected chairman of the Capital Markets Subcommittee has sponsored - along with an approach of the Administration, which Secretary Rubin summarized in his testimony before the Committee earlier this month.

In my opinion there are seven major reasons for approval of the legislation before us:

1. To Better Serve Customers - The Committee Print repeals Sections of the Glass-Steagall Act of 1933 and the Bank Holding Company Act to allow for cross-ownership of commercial banks, investment banks and insurance firms. This would lead to increases competition and improved access to financial services by individuals and business, particularly small and medium sized businesses. Secretary Rubin has said "it would not be unreasonable to expect" that increased competitiveness in financial services will save customers $15 billion a year in reduced costs.
2. To Protect Taxpayers - The Committee Print prevents the so-called mixing of commerce and banking, which would spread the bank safety net to commercial and industrial firms. In addition, the proposal would limit the number of activities which a bank could undertake through a subsidiary with direct access to bank assets, while expanding activities by affiliated companies. The "loophole" allowing Unitary Thrifts to have powers superior to banks, including the ability to move aggressively into commercial activities, would be closed.
3. To Protect Consumers - While preserving the status quo within the state-federal regulatory framework, the Committee Print includes a number of new consumer protection provisions to ensure that the consumer knows which products carry federal deposit insurance and which don't. Additionally, the Community Reinvestment Act would cover the activities of new wholesale banks.
4. To Reduce Government - The Committee Print merges the national bank and savings and loan charters and closes the Office of Thrift Supervision, merging its functions with the Office of the Comptroller of the Currency. The Federal Reserve Board would continue to serve as the chief regulator of bank holding companies. An inter-agency National Council on Financial Services is given the authority to resolve certain regulatory disputes.
5. To Assist Small Businesses - The Committee Print would increase access to capital for small businesses by permitting banks to sell and underwrite securities. In addition, the Federal Home Loan Bank Board would be authorized to provide additional advances to small banks for loans to small businesses and community development projects.
6. To Improve the Economy - The Committee Print would increase competition and access to the financial services industry, as well as reduce costs in the industry, thereby helping to spur economic growth.
7. To Increase International Competitiveness of American Financial Services Firms - The Committee Print, by integrating the U.S. financial services industry and modernizing national laws, would allow American firms to continue to play a leading role in providing financial services around the world.

This proposed legislation is "win-win" for the public and private sector alike. It looks to the future financial marketplace by dramatically expanding opportunities for all. The need for updating our banking laws has never been greater, as new products and innovative approaches which were unimaginable in the 1930s are regularly being introduced today.

David Komansky, the chairman of Merrill, Lynch, in an op-ed piece in yesterday's Washington Post reminded us all of the importance of what we are embarking upon today. He said, and I quote, "If Congress doesn't act this year to reassert its proper leadership over our country's banking laws, the industry will restructure itself in a way that could diminish, rather than strengthen, our nation's leading position in the global financial services marketplace." Let me repeat that thought, we need to act so that the position of U.S. financial services firms in global trading is enhanced, not weakened. Financial services, after all, are a critical ingredient of the American economy, and in addition to making American commerce more competitive also represents export services opportunities in an increasingly sophisticated global trading environment.

Clearly, all elements of our dual banking system must adapt to the times in order to expand and thrive, or maybe even just to survive. In numerous ways, the bill before the Committee today will benefit small community institutions more than large regional and national ones.

For instance, as consumers are able to take full advantage of advancements in technology that will provide them with access to financial services and products thorough electronic means, the market shifts could be more pronounced that those found today and will have a dramatic impact on small, community banks. It is my view that only if a community bank can offer a full portfolio of financial products, as the bill before us today provides, will its viability be enhanced.

Furthermore, the bill includes provisions to open the Federal Home Loan Bank System to allow greater flexibility in advances to community banks, and to provide small banks with the explicit right to offer insurance products in all states, including those where they are currently denied.

Not every demand by every industrial group has been met, nor could or should they be. In the amendment process, there will be efforts to advance philosophical perspectives which may advantage one grouping or another. In this context, I would urge Committee members to be cautious. While the intent of the bill is to advance in a balanced way the public interest, in many cases amendments involve themselves in zero-sum games. For every winner there are losers.

Our goal should be to emerge from this process with a bill in which the big winners are the customers and the general public, those we are elected to serve. As we begin this markup, I'd like to note that last week one of the leading banking publications predicted there would be "chaos" when the Committee convened this week. It will be my objective, and I hope that of all the members of the Committee and the various staff members, to prove this wrong.

We will proceed on an orderly basis. The rights of all Members will be protected. The views of all Members will be respected. I recognize Mr. Gonzalez for his opening statement.