also surfering from some recent bad publicity, might not be as lucky as the chairman. Other committee members in tough battles: Reps. Stephen L. Neal, D-N.C., a subcommittee chairman; Stewart B. McKinney, R-Conn., and John Hiler, R-Ind. * New faces from the industry: Bill Grant, a Florida Democrat who for the last 14 years has been the president of the Bank of Madison County, Madison, Fla., seems likely to win a vacant House seat. Robert Neall, a commercial loan officer for the last four years with the Annapolis Banking and Trust Co., Maryland, is doing well in his campaign for a House seat despite being at a disadvantage in name recognition -- and in height. His Democratic opponent is Tom McMillen, a six-foot-eleven former professional basketball player. Bill Story, once a Bank of America employee, is waging an uphill battle for a Democratic seat from Colorado. On the Senate side, Idaho Gov. John V. Evans, a Democrat, who with his family has had an ownership interest in a few banks PAGE 3 (c) 1986 American Banker, November 3, 1986 there, is fighting incumbent Republican Steven D. Symms. GRAPHIC: Drawing, Drawings by Peter Kuper As we begin the task of implementing the Financial Institutions Reform, Recovery and Enforcment Act of 1989 it is essential that the FDIC be able to operate with absolute independence and without interference of any type from any direction. Please consider this letter to be a formal request from both our Committees to maintain careful records of any and all inquiries from any source concerning potential enforcement actions being considered by the FDIC. We further request a complete formal listing be made of all such contacts indicating the source of the contact, the stated purpose, any information requested or actions suggested to the agency, and any other pertinent information. These lists should be sent to our respective Committees on a weekly basis until further notice. We appreciate your giving this matter your highest priority. SHADOW FINANCIAL REGULATORY COMMITTEE Statement of Purpose and Membership The Shadow Financial Regulatory Committee is a group of independent experts on the financial services industry and its regulatory structure. The purposes of the Committee are: (1) to identify and analyze developing trends and ongoing events that promise to affect the efficiency and safe operation of sectors of the financial services industry, (2) to explore the spectrum of short- and long-term implications of emerging problems and policy changes, (3) to help develop appropriate private, regulatory and legislative responses to such problems, and (4) to assess and respond to proposed and actual public policy initiatives with respect to their impact on the public interest. The results of the Committee's deliberations are intended to increase the awareness and sensitivity of members of the financial services industry, public policy makers, the communications media and the general public to the importance and implications of current problems, events and policy initiatives affecting the industry. Members of the Shadow Financial Regulatory Committee are drawn from academic institutions and private organizations and reflect a wide range of views. The Committee is independent of any of the members' affiliated institutions or of sponsoring organizations. The recommendations of the Committee are its own. The only common denominators of the members are their public recognition as experts on the industry, and their preferences for market solutions to problems and the minimum degree of government regulation consistent with efficiency and safety. Mid America Institute for Public Policy Research University of North Carolina SPECIAL COUNSEL Emory University FRANKLIN R. EDWARDS Columbia University ROBERT A. EISENBEIS University of North Carolina at Chapel Hill JOHN D. HAWKE, JR. Arnold & Porter PAUL M. HORVITZ EDWARD J. KANE RICHARD J. HERRING KENNETH E. SCOTT SUPPORTERS INCLUDE MID AMERICA SARAH SCALFE FOUNDATION UNIVERSITY OF Statement of the Shadow Financial Regulatory Committee on Congressional Intercession with the December 10, 1990 Controversies in recent years concerning intercessions by individual members of Congress in the process of federal thrift supervision have raised serious questions about the propriety of such conduct. Particularly difficult is the question of when such intercession crosses the line between legitimate constituent service and impermissible attempts to affect the process of agency decisionmaking. the principal issue raised by the current "Keating Five" hearings before the Senate Ethics Committee. also played an important role in the Wright proceedings before the House Ethics Committee. This is In It In certain situations Congress itself has provided guidance that answers this question. Congress has by statute prescribed a procedure designed to ensure due process to parties dealing with a financial regulatory agency, there is a clear implication that members of Congress should allow that process to go forward without interference. supervisory enforcement proceedings, where the governing law affords an aggrieved party an opportunity for a hearing before a disinterested trier-of-fact, subject to ultimate court review, intercession by individual members of Congress is inappropriate. Similarly, in application proceedings, - 2 where judicial review based on the agency record is also possible, ex parte intercession should be viewed as inappropriate. Where an agency is exercising rulemaking powers conferred upon it by Congress, it must follow procedures for the formulation of rules set forth in the Administrative Procedure Act. Efforts to influence the rulemaking process outside the scope of those procedures may also be viewed as inconsistent with the scheme Congress itself established. Issues arising out of the process of bank examination may be viewed as especially inappropriate for congressional intercession. If bank examiners are to do their job properly, they cannot be subject to challenge by individual members of Congress acting on behalf of the institution being examined, while the examination process is going on. The procedure affords due-process protections to the institutions involved, and the responsible committees of Congress have ample oversight jurisdiction to assess the quality of supervision after the fact. To tolerate ex parte interference in the process by members of Congress and their staffs would ultimately weaken not only the process itself, but, more importantly, public confidence in the examination and oversight process. There are, to be sure, occasions on which representations from members of Congress to the financial regulatory agencies may be perfectly appropriate. Routine "status" inquiries, when not intended to communicate a coercive intent, are certainly within the realm of acceptable conduct, as are formal comments on proposed rulemaking actions. In all such cases, however, the agencies should make such communications a matter of public record indeed, Congress itself should insist on such a procedure. Such a disclosure rule would not only inhibit improper communication, but would bolster public confidence in the integrity of the regulatory process. |