ILC's—A REVIEW of CHARTER, OWNERSHIP, AND
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ILC’s—A REVIEW OF CHARTER, OWNERSHIP, AND SUPERVISION ISSUES HEARING BEFORE THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION JULY 12, 2006 Printed for the use of the Committee on Financial Services Serial No. 109–106 ( VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00001 Fmt 6011 Sfmt 6011 F:\DOCS\HBA193.150 HFIN PsN: TERRIE ILC’s—A REVIEW OF CHARTER, OWNERSHIP, AND SUPERVISION ISSUES VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00002 Fmt 6019 Sfmt 6019 F:\DOCS\HBA193.150 HFIN PsN: TERRIE ILC’s—A REVIEW OF CHARTER, OWNERSHIP, AND SUPERVISION ISSUES HEARING BEFORE THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION JULY 12, 2006 Printed for the use of the Committee on Financial Services Serial No. 109–106 ( U.S. GOVERNMENT PRINTING OFFICE 31–535 PDF WASHINGTON : 2007 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00003 Fmt 5011 Sfmt 5011 F:\DOCS\HBA193.150 HFIN PsN: TERRIE HOUSE COMMITTEE ON FINANCIAL SERVICES MICHAEL G. OXLEY, Ohio, Chairman JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts RICHARD H. BAKER, Louisiana PAUL E. KANJORSKI, Pennsylvania DEBORAH PRYCE, Ohio MAXINE WATERS, California SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California NYDIA M. VELA´ ZQUEZ, New York FRANK D. LUCAS, Oklahoma MELVIN L. WATT, North Carolina ROBERT W. NEY, Ohio GARY L. ACKERMAN, New York SUE W. KELLY, New York, Vice Chair DARLENE HOOLEY, Oregon RON PAUL, Texas JULIA CARSON, Indiana PAUL E. GILLMOR, Ohio BRAD SHERMAN, California JIM RYUN, Kansas GREGORY W. MEEKS, New York STEVEN C. LATOURETTE, Ohio BARBARA LEE, California DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas WALTER B. JONES, JR., North Carolina MICHAEL E. CAPUANO, Massachusetts JUDY BIGGERT, Illinois HAROLD E. FORD, JR., Tennessee CHRISTOPHER SHAYS, Connecticut RUBE´ N HINOJOSA, Texas VITO FOSSELLA, New York JOSEPH CROWLEY, New York GARY G. MILLER, California WM. LACY CLAY, Missouri PATRICK J. TIBERI, Ohio STEVE ISRAEL, New York MARK R. KENNEDY, Minnesota CAROLYN MCCARTHY, New York TOM FEENEY, Florida JOE BACA, California JEB HENSARLING, Texas JIM MATHESON, Utah SCOTT GARRETT, New Jersey STEPHEN F. LYNCH, Massachusetts GINNY BROWN-WAITE, Florida BRAD MILLER, North Carolina J. GRESHAM BARRETT, South Carolina DAVID SCOTT, Georgia KATHERINE HARRIS, Florida ARTUR DAVIS, Alabama RICK RENZI, Arizona AL GREEN, Texas JIM GERLACH, Pennsylvania EMANUEL CLEAVER, Missouri STEVAN PEARCE, New Mexico MELISSA L. BEAN, Illinois RANDY NEUGEBAUER, Texas DEBBIE WASSERMAN SCHULTZ, Florida TOM PRICE, Georgia GWEN MOORE, Wisconsin, MICHAEL G. FITZPATRICK, Pennsylvania GEOFF DAVIS, Kentucky BERNARD SANDERS, Vermont PATRICK T. MCHENRY, North Carolina CAMPBELL, JOHN, California Robert U. Foster, III, Staff Director (II) VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 F:\DOCS\HBA193.150 HFIN PsN: TERRIE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT SPENCER BACHUS, Alabama, Chairman WALTER B. JONES, JR., North Carolina, BERNARD SANDERS, Vermont Vice Chairman CAROLYN B. MALONEY, New York RICHARD H. BAKER, Louisiana MELVIN L. WATT, North Carolina MICHAEL N. CASTLE, Delaware GARY L. ACKERMAN, New York EDWARD R. ROYCE, California BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma GREGORY W. MEEKS, New York SUE W. KELLY, New York LUIS V. GUTIERREZ, Illinois RON PAUL, Texas DENNIS MOORE, Kansas PAUL E. GILLMOR, Ohio PAUL E. KANJORSKI, Pennsylvania JIM RYUN, Kansas MAXINE WATERS, California STEVEN C. LATOURETTE, Ohio DARLENE HOOLEY, Oregon JUDY BIGGERT, Illinois JULIA CARSON, Indiana VITO FOSSELLA, New York HAROLD E. FORD, JR., Tennessee GARY G. MILLER, California RUBE´ N HINOJOSA, Texas PATRICK J. TIBERI, Ohio JOSEPH CROWLEY, New York TOM FEENEY, Florida STEVE ISRAEL, New York JEB HENSARLING, Texas CAROLYN MCCARTHY, New York SCOTT GARRETT, New Jersey JOE BACA, California GINNY BROWN-WAITE, Florida AL GREEN, Texas J. GRESHAM BARRETT, South Carolina GWEN MOORE, Wisconsin RICK RENZI, Arizona WM. LACY CLAY, Missouri STEVAN PEARCE, New Mexico JIM MATHESON, Utah RANDY NEUGEBAUER, Texas BARNEY FRANK, Massachusetts TOM PRICE, Georgia PATRICK T. MCHENRY, North Carolina MICHAEL G. OXLEY, Ohio (III) VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 F:\DOCS\HBA193.150 HFIN PsN: TERRIE VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 F:\DOCS\HBA193.150 HFIN PsN: TERRIE C O N T E N T S Page Hearing held on: July 12, 2006 ..................................................................................................... 1 Appendix: July 12, 2006 ..................................................................................................... 69 WITNESSES WEDNESDAY, JULY 12, 2006 Alvarez, Scott G., General Counsel, Board of Governors, Federal Reserve System ................................................................................................................... 16 Douglas, John L., partner, Alston & Bird, LLP, on behalf of the American Financial Services Association (AFSA) ............................................................... 55 Hillman, Rick, Director, Financial Markets and Community Investment, United States Government Accountability Office .............................................. 22 Johnson, Arthur C., Chairman and CEO, United Bank of Michigan, on behalf of the American Bankers Association (ABA) ..................................................... 57 Jones, Douglas H., acting General Counsel, Federal Deposit Insurance Cor- poration ................................................................................................................. 18 Jorde, Terry, Chairman, President/CEO, CountryBank USA, Cando, ND, & Chairman, Independent Community Bankers of America (ICBA) ................... 53 Leary, G. Edward, Commissioner, Utah Department of Financial Institutions 20 Sutton, George, former Commissioner, Utah Department of Financial Institu- tions, on behalf of the Securities Industry Association (SIA) ........................... 51 White, Lawrence J., Professor of Economics, Stern School of Business, New York University .................................................................................................... 58 Wilson, Michael J., Director, Legislative and Political Action Department, United Food and Commercial Workers International Union ........................... 60 APPENDIX Prepared statements: Bachus, Hon. Spencer ...................................................................................... 70 Carson, Hon. Julia ............................................................................................ 74 Clay, Hon. Wm. Lacy ....................................................................................... 76 Gillmor, Hon. Paul E. ....................................................................................... 77 Matheson, Hon. Jim ......................................................................................... 78 Alvarez, Scott G. ............................................................................................... 80 Douglas, John L. ............................................................................................... 94 Hillman, Rick .................................................................................................... 106 Johnson, Arthur C. ........................................................................................... 138 Jones, Douglas H. ............................................................................................. 148 Jorde, Terry ....................................................................................................... 170 Leary, G. Edward ............................................................................................. 185 Sutton, George .................................................................................................. 197 White, Lawrence J. ........................................................................................... 211 Wilson, Michael J. ............................................................................................ 223 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Letter to Hon. Spencer Bachus from Office of Thrift Supervision ............... 229 Letter to Hon. Barney Frank and Hon. Paul Gillmor from American Bankers Association ...................................................................................... 231 Letter to Hon. Barney Frank and Hon. Paul Gillmor from America’s Community Bankers ..................................................................................... 233 (V) VerDate 0ct 09 2002 17:15 Feb 05, 2007 Jkt 031535 PO 00000 Frm 00007 Fmt 5904 Sfmt 5904 F:\DOCS\HBA193.150 HFIN PsN: TERRIE VI Page Issue of Consumer Finance Law Quarterly Report ....................................... 234 Letter to Hon. James A. Leach from Board of Governors of the Federal Reserve System ............................................................................................