February 3, 1999
COMMITTEE ON BANKING AND FINANCIAL SERVICES
Rule X, clause 2(d)(1) of the Rules of the House for the 106th Congress requires each standing Committee, not later than February 15 of the first session, to adopt an oversight plan for the 106th Congress. The oversight plan must be submitted simultaneously to the Committee on Government Reform and the Committee on House Administration.
The following agenda constitutes the oversight plan of the Committee on Banking and Financial Services for the 106th Congress. It includes the areas in which the Committee and its Subcommittees expect to conduct oversight during this Congress but does not preclude oversight or investigation of additional matters or programs as issues arise. The Committee will continue, as it has in the past, to consult with all relevant House Committees which may share jurisdiction on any of the subjects listed below.
Financial Institutions/Banking Practice/Consumer Protection Issues
Financial Services Reform. The Committee will review the need to modernize U.S. laws governing the financial services industry and how they can be updated to benefit consumers and make U.S. firms more competitive overseas. The Committee will also consider legislative proposals to repeal the provisions of the Glass-Steagall Act and the Bank Holding Company Act which prevent banks from affiliating with or owning securities firms, insurance companies and other financial entities. Appropriate subcommittees will conduct oversight applicable to regulatory actions.
Money Laundering. The Committee, the Subcommittee on General Oversight and Investigations, and the Subcommittee on Financial Institutions and Consumer Credit will hold hearings to review the enforcement of anti-money laundering laws. Among the issues that may be examined are the AKnow Your Customer@ regulation recently proposed by the Federal banking agencies, the vulnerability of private banking activities to money laundering, Department of Justice and Treasury efforts to coordinate surveillance and enforcement with foreign authorities, the problem of bulk cash smuggling, and the national money laundering and related financial crimes strategy submitted by the Administration pursuant to legislation enacted last year (P.L. 105-310).
Financial Privacy and Consumers. The Committee and the Subcommittee on Financial Institutions and Consumer Credit will address threats to the financial privacy of consumers and the adequacy of industry and governmental efforts to safeguard customer information against unauthorized access. As part of its review of financial privacy issues, the Committee may examine the consequences of the recently implemented European Union privacy directive for U.S. providers of financial services.
Year 2000. The Committee will continue to hold oversight hearings on the efforts of federal regulators and financial institutions to address the Year 2000 (Y2K) computer challenge to the nation=s banking and financial services industry and will consider legislation, if necessary, to help assure uninterrupted continuity of financial services during the century date change. In addition to hearings, the Committee will monitor agency and industry progress through review of ongoing quarterly reports from the five federal financial regulatory agencies. The Committee will focus in particular on the results of Year 2000 testing among banks, service providers, and other external parties, as well as on issues related to contingency planning, Y2K related legal liability, and the Year 2000 preparedness of the international banking and financial services sector.
Banks and Hedge Funds. The Committee and appropriate subcommittees will review the activities of banks in domestic and foreign capital markets, including their trading practices, policies for extending loans to hedge funds and other speculative groups, and methods for assessing and mitigating risk. The impact of computer-based trading and other technology-driven changes will also be studied to determine their impact on markets, bank operations and regulatory requirements. Finally, in the wake of bank losses in 1998 from credit transactions with such funds, the agencies= risk-based examination procedures for addressing lending to hedge funds will be reviewed.
Financial Institutions Examinations. The Subcommittee on Financial Institutions and Consumer Credit will review the General Accounting Office=s findings with regard to the inclusion of a risk-based component in safety and soundness examination programs. The GAO report is a follow-up to a prior report which was critical of the Federal banking agencies= examination performance.
Community Reinvestment Act. The Subcommittee on Financial Institutions and Consumer Credit will conduct an oversight hearing on the Community Reinvestment Act (CRA). The Subcommittee will consider the role of the CRA in today=s banking industry as well as changes that have occurred in the regulation with respect to small bank examination procedures for compliance with the Act.
Credit Unions. The Subcommittee on Financial Institutions and Consumer Credit will hold hearings on the National Credit Union Administration=s implementation of the Credit Union Membership Access Act of 1998. The Act came in response to the February 1998 Supreme Court decision which held that credit unions could not serve groups with different common bonds. The Act specifically authorizes multiple common bond credit unions, provides a framework for credit union growth, limits commercial lending, and establishes safety and soundness standards such as capital standards and annual audit requirements. The Subcommittee will review the NCUA rules implementing the provisions of the Act.
On-line Banking. The Committee will review the findings of a study on electronic Aon-line@ banking being conducted by the GAO at the request of the Chairman. One of the areas under review is the security of Fedwire.
Community Development Financial Institutions (CDFI) Fund. During consideration of legislation to reauthorize the CDFI Fund, the Committee and appropriate subcommittees will review the Administration=s implementation of reforms in the CDFI program resulting from a comprehensive investigation by the Subcommittee on General Oversight during the 105th Congress into irregularities in the grant making process.
Microenterprise Lending. The Committee and the Subcommittee on Financial Institutions and Consumer Credit will review microenterprise lending initiatives, particularly legislation to expand the microenterprise role of the Community Development Financial Institutions (CDFI) Fund.
Mortgage Lending Credit Scoring. The Committee or appropriate subcommittees will review the role of the federal government in the rapid spread of credit scoring in mortgage originations to determine how housing opportunities for consumers are being impacted. Among the issues to be examined is the impact of credit scoring on borrowers who may not conform to standard definitions of AA@ credit, the methodology of credit scoring, and whether statistical data, used to identify AA@ credit, is unfairly biased towards one market segment to the detriment of other markets, such as first-time homebuyers, minorities, and immigrants.
Consumer Banking Issues. The Committee or appropriate subcommittees will review the Truth in Lending Act, including consumer leasing provisions, the issuance of credit cards, the status of rent-to-own, and subprime lending practices. In addition, the Committee will continue its review of the annual report on bank fees prepared by the Federal Reserve.
Financial Markets / Economic Issues
Derivatives. The Committee and Subcommittee on Capital Markets will review the derivatives markets and examine whether instruments traded by banks on futures exchanges as well as over the counter are adequately regulated and, as necessary, recommend changes in the responsibilities and statutes of the agencies charged with oversight of these markets.
Development of Economic Opportunities. The Subcommittee on Domestic and International Monetary Policy will review economic development programs under the Banking Committee's jurisdiction, including those programs administered by the Appalachian Regional Commission and the Economic Development Administration.
Reauthorization of the Defense Production Act. With the authority of the Defense Production Act (DPA) expiring on September 30, 1999, the Subcommittee on Domestic and International Monetary Policy will review the merits of extending the authority of the DPA.
Capital Formation. Despite the longest peacetime economic expansion in history, many urban and rural areas of the country have not gained access to the capital investment needed to spur job growth and economic development. The Committee and appropriate subcommittees will examine options for building a network of private investment institutions to funnel credit, equity, and technical assistance to businesses, non-profits, and families in these emerging markets. The Committee and appropriate subcommittees will also review the Administration=s New Markets Initiative and especially the proposals to create America=s Private Investment Companies (APICs) and to support New Markets Venture Capital Firms.
Federal Agencies / Agency Program Issues
Management/Reform of the Federal Reserve System. The Subcommittee on Domestic and International Monetary Policy will conduct oversight over the operations of the Federal Reserve System, including the System's role in providing financial services, management structure and consolidation of operations, use of technology, control and oversight mechanisms, budget process, pay and benefit levels, and systemwide strategic planning.
Management of the Nation's Money: Activities of the Bureau of the Mint and Bureau of Engraving and Printing. The Subcommittee on Domestic and International Monetary Policy will oversee the activities of these Treasury bureaus as they relate to the printing and production of U.S. currency and coins. The efficiency and productivity of Mint and BEP manufacturing operations will be reviewed. The financing and minting of circulating, as well as commemorative, coins will be studied.
Government Sponsored Enterprises (GSEs). The Subcommittee on Capital Markets, Securities and Government Sponsored Enterprises will conduct a comprehensive review of the three housing GSEs, including such topics as the regulation of their mission and safety and soundness, and the appropriateness of their mission-related and investment activities. In particular, the Subcommittee will examine the benefits of a single GSE regulator and more consistent regulation of all three GSEs. The areas to be covered include:
FannieMae and FreddieMac. The Subcommittee on Capital Markets will review the capital adequacy of both enterprises. In addition, the Subcommittee will evaluate their performance in meeting their affordable housing goals.
Federal Home Loan Bank System. The Subcommittee on Capital Markets will examine criteria for membership in the 12 Federal Home Loan Banks, as well as how members use advances.
Office of Federal Housing Enterprise Oversight. The Subcommittee on Capital Markets will conduct oversight of OFHEO, which will include a review of the Office's risk-based capital model. The Subcommittee will also analyze OFHEO's examination procedures of FannieMae and FreddieMac.
Department of Housing and Urban Development. The Subcommittee on Capital Markets will review how effectively the Department discharges its responsibilities as the mission regulator for FannieMae and FreddieMac. HUD's oversight of the mission-related investment rule is of special interest to the Subcommittee.
Federal Housing Finance Board. The Subcommittee on Capital Markets will conduct oversight of the agency which oversees the activities of the Federal Home Loan Bank System, including the Board's supervision, budget, staffing, and organization.
EFT 99. The Committee and appropriate subcommittees will continue to monitor and, if necessary, hold hearings on the Treasury Department=s implementation of AEFT 99,@ which requires all social security, veterans, and other federal payments (other than tax refunds) to be made by electronic funds transfer (EFT) rather than paper check after January 1, 1999. The Committee will monitor the Department=s implementation of the regulations outlining the availability of waivers as well as proposals by the Department to create a new Electronic Transfer Account (ETA) by which federal beneficiaries who do not have bank accounts may begin receiving benefits electronically.
Oversight of Agencies and the Government Performance and Results Act. The Committee and the Subcommittee on General Oversight will review on an ongoing basis the operations and effectiveness of the federal agencies, both executive branch and independent, that fall within the Committee's jurisdiction. Specifically, the Committee will continue to monitor, in consultation with the GAO, the effectiveness of the strategic planning and annual performance planning requirements of the Government Performance and Results Act of 1993 (GPRA) in measuring performance at such agencies.
Reports of Inspectors General or Investigative Reports. The Subcommittee on General Oversight will review and, if necessary, hold hearings on the findings of investigations conducted by the GAO and the Inspectors General of agencies that fall within the Committee=s oversight jurisdiction.
Federal Reports Elimination and Sunset Act. The Committee will review the various reporting requirements affected by the AFederal Reports Elimination and Sunset Act of 1995@ (P.L. 104-66) and assess which reports currently prepared by agencies and departments under the Committee=s jurisdiction should be terminated and which reauthorized prior to December 1999.
HUD Management Reform and Organization. The Subcommittee on Housing will conduct a comprehensive review of the Department of Housing and Urban Development (HUD) reform and organization efforts, as outlined in its June 1997 A2020 Management Reform Plan@ and its strategic and annual plans developed under the GPRA. According to the latest GAO report, HUD has been making Acredible progress since 1997 in laying the framework for improving the way the Department is managed.@ However, according to GAO, the ultimate effectiveness of these long-term reforms is not yet evident since they are only in the early stages of implementation. GAO notes that HUD continues to be a Ahigh risk@ agency, plagued with Ainternal control weaknesses and problems with information and financial management systems.@ Moreover, GAO identifies many critical areas experiencing staffing shortages and other organizational problems where HUD oversight and responsibility are blurred and fundamental accountability and responsibility are ill-defined.
HUD Multifamily Housing-Portfolio Restructuring. The Subcommittee on Housing will follow-up on HUD's implementation of the FHA multifamily restructuring program (the "mark-to-market" program), as enacted in Title V of the FY1998 VA, HUD, and Independent Agencies Appropriations Act. The stated goals of the legislation are (1) to reduce the excessive costs to the federal government of continuing these contracts without causing widespread defaults by the owners of these Section 8 projects, and (2) to retain as much high quality housing as affordable housing as possible. Defaults would not only cause losses to the federal government (because the mortgages are federally-insured) but cause the loss of affordable housing and widespread displacement of current tenants. At the same time, a failure to renew below-market contracts at adequate levels may lead to widespread opt-outs from the affordable housing program, especially by owners of the most economically viable housing developments.
Under mark-to-market, mortgage debt is to be written down on FHA-insured projects receiving Section 8 project-based subsidies to levels sustainable by market-rate rents (a process known as "marking rents to market"); a low-interest rate second mortgage is provided for the difference between the old loan balance and the amount of the new or restructured first mortgage. This so-called "bifurcated-mortgage" approach is commonly used to restructure debt in the private sector.
Because of HUD's designation as a "high risk" government agency by GAO, the legislation created a separate office within HUD, the Office of Multifamily Housing Assistance Restructuring ("OMHAR"), to ensure that the mark-to-market program is properly administered. For the most part, under the mark-to-market legislation, the complicated financial restructurings will be conducted by state housing finance agencies. The subcommittee will review HUD's activities under the mark-to-market program, OMHAR's oversight of state finance agencies, and the overall implementation of mark-to-market to determine whether savings to the federal government are being realized, and to ensure that minimal displacement of tenants is occurring.
HUD Federal Housing Administration (FHA) Single Family Appraisal Process. The Subcommittee on Housing will review FHA=s single family appraisal process where lenders are permitted to select appraisers to assess the property value of homes insured by the agency. In the 105th Congress, the Subcommittee received a GAO report that identified several structural or administrative weaknesses in the FHA appraisal system that could undermine the fiscal integrity of the agency=s insurance funds. HUD, itself, identified two problems in the appraisal process: (1) HUD Field Offices were not implementing internal quality control procedures; and, (2) women and minority appraisers were locked-out of the lender selection process. While HUD implemented administrative reforms on June 1, 1998, there is a concern that the reforms are inadequate to protect the insurance funds. A more detailed GAO report is due during the Spring 1999 session that will provide the foundation for the Subcommittee oversight review.
Minorities and Homeownership. The Subcommittee on Housing will review and monitor homeownership rates, particularly for underserved markets, e.g., minorities, inner-city neighborhoods, and women. While the overall homeownership rate is approximately 67%, the average homeownership rate for African Americans is in the 40th percentile and Hispanics register, in some communities, as low as the 20th and 30th percentile. The Subcommittee will examine the possible causes and effects of this homeownership disparity in an attempt to fine-tune government policies, practices, and incentives that may preclude successful lending and ownership.
Flood Insurance. The Subcommittee on Housing will review the National Flood Insurance Program (NFIP) relating to the agency=s implementation of reforms mandated by the Riegle Community Development and Regulatory Improvement Act of 1994. A policy issue in the 106th Congress will involve the flood insurance program=s repetitive losses. The term Arepetitive losses@ refers to properties insured under the NFIP that continuously suffer flood damage and cause numerous claims over a period of years.
Y2K and HUD. The Subcommittee on Housing and Community Opportunity receives quarterly reports from HUD on the Department=s efforts to address Year 2000 (Y2K) computer date problems, which could cause computers to either shut down or generate incorrect data. In response, the Subcommittee has been in contact with HUD=s Team 2000 technical staff regarding Y2K configuration management, audits, outreach, and contingency planning. The Subcommittee is also reviewing HUD=s progress in encouraging Year 2000 compliance among the thousands of business partners who work with and rely on HUD=s programs. In addition, the Subcommittee plans to hold a hearing to help raise awareness about the computer date problem in housing and real estate, not only in relationship to HUD as an agency but to our communities as a whole.
Rural Housing Prepayment. The Subcommittee on Housing will review the rural multifamily rental program and specific housing laws that prohibit owners from prepaying the debt on their government-financed mortgage loans. The ban on prepayment, which locks owners into the full term of the loan, may provide a disincentive for private investors to sponsor multifamily rental development for rural low or very-low income tenants.
CDBG/HOME Oversight. The Subcommittee on Housing will review the Community Development Block Grant (CDBG) program and the Home Investments Partnerships Act (HOME). The Subcommittee will assess the effectiveness of CDBG and HOME funds in providing community development opportunities in low- and very-low income neighborhoods. The Subcommittee is concerned about potential abuses of the program, possibly stemming from statutory provisions that loosely define eligibility requirements and uses. Additionally, the Subcommittee is interested in a CDBG componentCSec. 108 Loan GuaranteesCthat leverages or uses up to five years of CDBG funds as a guarantee against default. According to recent GAO reports, HUD staff exercise little, if any, oversight over the loan guarantee program, with different levels of success depending on the HUD Field Office.
Chicago Housing Authority. The Subcommittee on Housing will conduct a field review of the Chicago Housing Authority on reform initiatives of that troubled housing authority as a follow-up to hearings three years ago prior to HUD=s takeover of the agency. The Subcommittee will review and assess the reforms implemented by HUD management that were designed to reduce vacancies and crime, provide building maintenance, and develop tenant opportunity programs.
Monetary Policy Issues
Federal Reserve=s Conduct/Implementation of Monetary Policy. The Committee will hold hearings on the Federal Reserve Board=s semi-annual reports on the conduct of the nation=s monetary policy. The Humphrey-Hawkins Act requires these reports no later than February 20 and July 20 of each year. No Committee has a greater oversight obligation than the Banking Committee with its jurisdiction over the Federal Reserve
Board and its conduct of monetary policy. In this regard, the combination of a more disciplined fiscal policy promulgated by Congress and the continued prudential stewardship of monetary policy by Chairman Greenspan has produced the longest peacetime growth in modern times. Given many economic and financial difficulties globally, however, it is important to understand how these problems could affect the U.S. domestic economy and how monetary policy simultaneously interacts with both domestic and international objectives. Whether or not there continues to be a legislative mandate for regular Congressional review of the Federal Reserve's conduct of monetary policy, it is the Committee=s intent to require the Chairman of the Board of Governors to report regularly on the state of the economy and the Federal Reserve=s policies to sustain economic growth and promote the fullest credible employment of the American work force.
Counterfeiting. The Committee, principally the Subcommittees on Domestic and International Monetary Policy and General Oversight, will review the Administration=s efforts in detecting and combating the counterfeiting of U.S. currency in the U.S. and abroad. The Subcommittee on Domestic and International Monetary Policy will review the problem of commercial check counterfeiting, including the Treasury Department's ongoing efforts to redesign U.S. currency in order to deter counterfeiting and facilitate readability by the visually impaired.
Future of Money: Electronic Commerce and Payment Systems. The Subcommittee on Domestic and International Monetary Policy will continue to assess the domestic and international implications of new innovations in electronic money and electronic payment systems, including smart card technology. Among the issues the Subcommittee will examine are soundness, security, privacy, access to new electronic payment methods, eligibility criteria for issuing new payment methods, competing government regulation, and threats posed to critical infrastructures such as the payments system.
International Financial Issues
Assets of Holocaust Victims/Nazi Gold. The Committee will continue to monitor and, as appropriate, hold hearings on the progress of the Administration and other governments in resolving questions surrounding the disposition of Holocaust victims= assets B including bank accounts, works of art, and insurance B which were confiscated before, during, and after World War II.
International Monetary Fund Reform. The Committee will review and hold hearings on the annual reports to Congress from the Secretary of the Treasury on the International Monetary Fund. Pursuant to sections 606 and 613 of P.L. 105-277, such reports are to include information on efforts to reform the architecture of the international monetary system as well as on progress (if any) made by the U.S. Executive Director of the IMF in influencing the IMF to adopt certain policies and reform its internal procedures.
Russian/Global Financial Crises. The Committee will conduct follow-up hearings on the status of the financial crisis in Russia and the impact of IMF assistance and reform initiatives in addressing that crisis. The Committee will also monitor the ongoing impact of the financial crises in Southeast Asia, Japan, Brazil, and elsewhere on the U.S. economy.
Reform of the International Financial System. The Subcommittee on Domestic and International Monetary Policy will conduct oversight of efforts by the Treasury Department, international financial institutions, the Bank for International Settlements, and other international authorities to address weaknesses in emerging market economies and the international financial system and architecture which were exposed following the Asian financial crisis. The Committee will include in its review the efforts of the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation in their international bank supervisory discussions of improving previous international accords on bank capital standards.
U.S. Contributions to the International Financial Institutions. The Subcommittee on Domestic and International Monetary Policy will review U.S. participation in, and the effectiveness of U.S. efforts to reform, the International Monetary Fund, World Bank Group, and the regional development banks. Highlights of the U.S. Treasury Department's likely authorization request to the Banking Committee for fiscal year 2000 include roughly $1.6 billion for a replenishment of the World Bank's "soft loan" facility, known as the International Development Association (IDA-12).
Impact of Global Financial Crisis on Eximbank's Lending Policies and Portfolio. The Subcommittee on Domestic and International Monetary Policy will examine recent trends in the cost and composition of the U.S. Export-Import Bank's (Exim) financing and review how Exim is responding to conditions in Asia and other developing markets.
European Monetary Union. The Subcommittee on Domestic and International Monetary Policy will examine the ongoing impact of European Monetary Union on the U.S. and world economy, as well as international financial markets.
Trade in Financial Services. The Subcommittee on Domestic and International Monetary Policy will review Administration efforts in the World Trade Organization (WTO) services negotiations (which would include financial services) to be held in 2000, to attain open and non-discriminatory financial markets on a global scale. These negotiations will likely include e-commerce. The Subcommittee will assess whether the WTO negotiations, based on the General Agreement on Trade in Services, secure real market access and full national treatment for U.S. financial service providers.