Statement on Signing Competitive Equality Banking Act of 1987
am today signing H.R. 27, the Competitive Equality Banking Act of 1987, which
recapitalizes the Federal Savings and Loan Insurance Corporation (FSLIC) and
makes a number of other changes in the Federal regulation of banking. From the
outset, our guiding principle in working with the Congress on this bill has
been to avoid a taxpayer bailout -- as was the case in both
I am signing this bill with the understanding that all of the provisions in titles III and IV are to be viewed collectively as working to protect both depositors and the insurance fund itself. For example, provisions relating to exit fees and the moratorium on leaving the FSLIC should not be interpreted in such a way as to undermine the FSLIC's rebuilding efforts. Unfortunately, while certain provisions of the bill should help the FSLIC sell large failing savings and loans to a variety of companies and draw needed capital to the industry, other provisions of title I may still handicap the FSLIC's ability to find purchasers for savings and loans in financial trouble. Counterproductive restrictions should not be imposed on potential acquirers of ailing savings and loans at a time when the FSLIC needs to attract new sources of private capital to offset its limited resources. I urge the Congress to revisit this issue now that the development of comprehensive financial reform is at the top of the legislative agenda.
am also opposed to the several extraneous protectionist provisions that were
added to this legislation. These provisions will deny consumers the services of
new limited-purpose banks. They will also place significant operating
restrictions on recent acquirers of limited-purpose banks and impose a
retrogressive moratorium on the ability of Federal bank regulators to authorize
new real estate, securities, and insurance products and services to consumers
other provisions of this legislation stand in the way of promoting competition,
lowering costs, and increasing efficiencies in the delivery of financial
services. While it is entirely appropriate to safeguard against conflicts of
interest and to require arms-length transactions among affiliates, restrictions
on the merchandising of consumer services and artificial limits on economic
growth are unwarranted. These new anticonsumer and
anticompetitive provisions could hold back a vital service industry at a time
when competition in the international capital markets increasingly challenges
Section 505 of this legislation exempts the Federal financial regulatory agencies from the apportionment requirements of the Antideficiency Act. The apportionment authority is, however, a critical tool assuring that all executive branch agencies remain accountable to the President for their financial operations. I am signing this legislation with the firm understanding that notwithstanding the provisions of section 505, the President retains his inherent supervisory authority under article II of the Constitution to ensure that all executive branch agencies are spending appropriated funds in accordance with law.
Section 103 of the legislation temporarily extends the 1933 Glass-Steagall Act restrictions on securities activities to State-chartered, nonmember banks for the first time, without any showing of public benefit. I note that this intrusion upon the longstanding authority of States to determine the proper activities for financial institutions under their supervision is inconsistent with other provisions of the bill, such as section 201(e) upholding State authority to regulate the insurance activities of State-chartered banks.
This legislation, while accomplishing the necessary recapitalization of the FSLIC without increasing the budget deficit, goes well beyond that central purpose and raises a number of issues that require further congressional attention. I look forward, therefore, to the comprehensive financial reform legislation that the Congress has pledged to present to me early next year.
Note: The President signed the legislation in a ceremony at in the Oval Office at the White House. H.R. 27, approved August 10, was assigned Public Law No. 100 - 86.