[Pages H9770-H9773]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

FINANCIAL INSTITUTION CUSTOMER PROTECTION ACT OF 2017

Mr. LUETKEMEYER. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 2706) to provide requirements for the appropriate
Federal banking agencies when requesting or ordering a depository
institution to terminate a specific customer account, to provide for
additional requirements related to subpoenas issued under the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and for
other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:

H.R. 2706

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Financial Institution
Customer Protection Act of 2017''.

SEC. 2. REQUIREMENTS FOR DEPOSIT ACCOUNT TERMINATION REQUESTS
AND ORDERS.

(a) Termination Requests or Orders Must Be Valid.--

[[Page H9771]]

(1) In general.--An appropriate Federal banking agency may
not formally or informally request or order a depository
institution to terminate a specific customer account or group
of customer accounts or to otherwise restrict or discourage a
depository institution from entering into or maintaining a
banking relationship with a specific customer or group of
customers unless--
(A) the agency has a valid reason for such request or
order; and
(B) such reason is not based solely on reputation risk.
(2) Treatment of national security threats.--If an
appropriate Federal banking agency believes a specific
customer or group of customers is, or is acting as a conduit
for, an entity which--
(A) poses a threat to national security;
(B) is involved in terrorist financing;
(C) is an agency of the Government of Iran, North Korea,
Syria, or any country listed from time to time on the State
Sponsors of Terrorism list;
(D) is located in, or is subject to the jurisdiction of,
any country specified in subparagraph (C); or
(E) does business with any entity described in subparagraph
(C) or (D), unless the appropriate Federal banking agency
determines that the customer or group of customers has used
due diligence to avoid doing business with any entity
described in subparagraph (C) or (D),
such belief shall satisfy the requirement under paragraph
(1).
(b) Notice Requirement.--
(1) In general.--If an appropriate Federal banking agency
formally or informally requests or orders a depository
institution to terminate a specific customer account or a
group of customer accounts, the agency shall--
(A) provide such request or order to the institution in
writing; and
(B) accompany such request or order with a written
justification for why such termination is needed, including
any specific laws or regulations the agency believes are
being violated by the customer or group of customers, if any.
(2) Justification requirement.--A justification described
under paragraph (1)(B) may not be based solely on the
reputation risk to the depository institution.
(c) Customer Notice.--
(1) Notice required.--Except as provided under paragraph
(2) or as otherwise prohibited from being disclosed by law,
if an appropriate Federal banking agency orders a depository
institution to terminate a specific customer account or a
group of customer accounts, the depository institution shall
inform the specific customer or group of customers of the
justification for the customer's account termination
described under subsection (b).
(2) Notice prohibited.--
(A) Notice prohibited in cases of national security.--If an
appropriate Federal banking agency requests or orders a
depository institution to terminate a specific customer
account or a group of customer accounts based on a belief
that the customer or customers pose a threat to national
security, or are otherwise described under subsection (a)(2),
neither the depository institution nor the appropriate
Federal banking agency may inform the customer or customers
of the justification for the customer's account termination.
(B) Notice prohibited in other cases.--If an appropriate
Federal banking agency determines that the notice required
under paragraph (1) may interfere with an authorized criminal
investigation, neither the depository institution nor the
appropriate Federal banking agency may inform the specific
customer or group of customers of the justification for the
customer's account termination.
(d) Reporting Requirement.--Each appropriate Federal
banking agency shall issue an annual report to the Congress
stating--
(1) the aggregate number of specific customer accounts that
the agency requested or ordered a depository institution to
terminate during the previous year; and
(2) the legal authority on which the agency relied in
making such requests and orders and the frequency on which
the agency relied on each such authority.
(e) Definitions.--For purposes of this section:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' means--
(A) the appropriate Federal banking agency, as defined
under section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813); and
(B) the National Credit Union Administration, in the case
of an insured credit union.
(2) Depository institution.--The term ``depository
institution'' means--
(A) a depository institution, as defined under section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B) an insured credit union.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Missouri (Mr. Luetkemeyer) and the gentleman from Massachusetts (Mr.
Capuano) each will control 20 minutes.
The Chair recognizes the gentleman from Missouri.

General Leave

Mr. LUETKEMEYER. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days to revise and extend their remarks, and
include extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. LUETKEMEYER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, today the House will consider an amended version of H.R.
2706, the Financial Institution Customer Protection Act, legislation I
introduced in an effort to provide greater transparency and
accountability among banking regulators.
Over the past few years, members of the Financial Services Committee
and others in the House have expressed bipartisan concern surrounding
Operation Choke Point, the Department of Justice and FDIC-led
initiative that sought to separate legal businesses from financial
services they need to survive.
People may think Operation Choke Point is limited to payday lenders
or the banks serving them, but it is not. This initiative has spread to
many industries, including tobacco shops, pawn brokers, ATM operators,
even amusement gaming companies, to name just a few. Even attorneys and
third parties that serve these industries have been impacted.
The underlying problem here is significant. The Federal Government
should not be able to intimidate financial institutions into dropping
entire sectors of the economy as customers, based not on risk or
evidence of wrongdoing, but purely on personal and political
motivations.
This type of program sets an incredibly dangerous precedent that
shouldn't be permitted under any Presidential administration. There
needs to be a process in place to ensure that the banking regulators
have the ability to pursue bad actors, but not to punitively target
specific businesses or products that operate and are offered within the
confines of the law.
This legislation offers a straightforward approach to a complicated
problem. It simply dictates that Federal banking regulators cannot
suggest, request, or order a financial institution to terminate a
banking relationship unless the regulator has material reason beyond
reputational risk. It also puts in place the requirement that agency
management sign off on any account termination request or order.
The provisions contained in H.R. 2706 are so reasonable, in fact,
that the FDIC has already used its authority to put them in place.
Effective 2015, agency policy now requires supervisory staff to track
and document account termination recommendations. Such recommendations
must now be made in writing and not through informal suggestion. FDIC
regional leadership must be made aware of any such recommendation, and
the basis for such recommendation cannot rely solely on reputational
risk.
The original bill would have also struck the word ``affecting'' in
FIRREA and replaced it with ``by'' or ``against.'' I maintain that this
modest change would have helped to ensure that broad interpretations of
the law are limited and that the original intent of the statute,
helping to penalize fraud against or by financial institutions, is
restored.
Attorney General Sessions announced the end of Operation Choke Point
earlier this year, and we have noticed a dramatic decline in FIRREA
subpoenas resembling those seen during the height of the initiative.
The issues with FIRREA still need to be addressed, and while H.R. 2706
is not the opportunity to do that, I will continue to press for
reasonable reforms and clarifications of the law.
Within the banking agencies, these account termination requests are
still a significant problem. Just last week, I had a meeting with an
industry that has seen a rash of account terminations in Missouri,
Massachusetts, Rhode Island, California, Texas, and Wisconsin, to just
name a few of the States that have been affected. We have to restore
order, Mr. Speaker. Our goal should be to have more individuals and
businesses in banks, not forced from them.
Mr. Speaker, I remind my colleagues that the House has passed by a
voice vote two appropriations amendments prohibiting funding for
Operation Choke Point. Members from both sides of the aisle have
written letters and

[[Page H9772]]

talked to regulators about the dangers of such a program. This is a
very real issue and one that must be addressed.
Again, I want to emphasize that it is essential that DOJ and
financial regulators maintain the ability to pursue bad actors or
anyone they think could be a bad actor. This amended version includes
language offered by Ranking Member Waters to ensure that customer
account termination notices don't interfere with ongoing criminal
investigations. The checks and balances in this legislation would help
to ensure accountability among the regulators and would in no way
hinder the ability of any executive branch agency from going after
individuals or businesses suspected of fraudulent activity.
This legislation offers a responsible approach to curbing the
malpractice we have seen in Operation Choke Point. I want to thank the
many colleagues who worked with me on this legislation, in particular,
the gentleman from Washington (Mr. Heck), Chairman Hensarling, and
Ranking Member Waters for helping to get this considered on the
suspension calendar today.
Mr. Speaker, I urge my colleagues to support this bill, and I reserve
the balance of my time.
Mr. CAPUANO. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would like to thank the gentleman from Missouri (Mr.
Luetkemeyer), who has been a wonderful person to work with, and the
many members of the committee on our side of the aisle, particularly
Ranking Member Waters and Mr. Heck from Washington.

Mr. Speaker, I yield such time as he may consume to the gentleman
from Washington (Mr. Heck).
Mr. HECK. Mr. Speaker, I thank the gentleman for yielding. Most
importantly, I want to express and extend my gratitude to the gentleman
from Missouri. This has been a three-year journey for this particular
legislation; not uncommon in this environment. But it was a difficult
journey at times. At no step along the way did the gentleman from
Missouri ever waiver from his commitment to working as collaboratively
as possible, in a willingness to work to find a solution, and he did
just that, and I thank him for that.
Mr. Speaker, I also want to thank Ranking Member Waters for her
efforts, without which this bill would never even have made it to the
floor. I do believe that this bill is stronger as a consequence of the
amendments that we have made, the changes that we have made to it; most
importantly, those changes that will ensure that we do not interfere
with the important work of law enforcement.
I have been very up-front about this. From my perspective, my
interest in this bill grows out of my work on helping my State find
ways to make sure our State-regulated marijuana businesses have access
to banking services so that we can avoid the public safety risks that
arise from huge cash stockpiles building up at these businesses.
Sadly, we have already seen these risks materialize. Before, on this
floor, I had mentioned the name of Travis Mason, 23 years old, a Marine
veteran, working as a security officer at a retail establishment for
marijuana in Colorado, studying to become a law enforcement officer,
who was, a year ago last summer, shot dead by perpetrators who believed
that there was a stockpile of cash behind those doors.

{time} 1715

Travis left behind a widow and, yes, three small children. He had a
set of twins. So part of what this bill will help is that there be no
more Travis Masons--no more Travis Masons. We are passing this bill, in
fact, in part to prevent another tragedy like that.
Now, Mr. Luetkemeyer and I worked together with the FDIC to provide
clarity to their banks, and I think the FDIC's financial institutions
letter of January 2015 was a key breakthrough for banks in Washington
State and others. It simply said for banks worried about customer
risks, like the Bank Secrecy Act and antimoney laundering--which is the
main concern, frankly, around marijuana businesses--the FDIC does not
expect them to avoid entire industries, but rather to make
determinations on a customer-by-customer basis.
This was assurance that Washington banks needed to begin providing
banking services to well-regulated, good-actor marijuana businesses. So
now a handful of Washington banks and credit unions are serving
marijuana businesses. Our State banking regulator is working closely
with the State marijuana regulator. Scores of Washington marijuana
businesses have set up bank accounts. We are getting cash out of those
businesses and into the financial system, where it can be monitored. We
draw down that cash stockpile. We reduced the public safety risk that I
talked about earlier. We have an improved public safety condition. It
is a model that needs to be spread to other States who have adopted, as
it were, expanded marijuana legislation.
I view this bill as codifying the FDIC's financial institutions
letter and expanding it to other bank regulators so that all lenders
can operate under this same principle: that we judge consumers
individually rather than by the industry they are in.
Let me repeat that: that we judge consumers individually rather than
by the industry that they are in.
Mr. Luetkemeyer has been dedicated to that principle for years. I
have been honored to work with him in this endeavor and I am pleased to
be at this point where we have broad bipartisan support for this
legislation.
Again, my hat is off to Mr. Luetkemeyer. To all of my colleagues, I
urge a vote in favor of this underlying bill, in favor of a more
balanced regulatory scheme, and a bill in favor of increased public
safety.
Mr. LUETKEMEYER. Mr. Speaker, I yield 5 minutes to the gentleman from
Indiana (Mr. Hollingsworth), who is a distinguished member of the
Financial Services Committee.
Mr. HOLLINGSWORTH. Mr. Speaker, I appreciate the opportunity to lend
my voice to an important piece of legislation. First, like others, I
want to thank everybody who has worked very hard on this legislation. I
know it is a matter of passion for many Members on both sides of the
aisle in solving this problem for consumers.
One thing I am constantly asked about in the district is: In a
democracy, why does it seem that the bureaucracy is in charge?
We keep coming back to this very same question with many pieces of
legislation here in the House. I am excited that we are going to
resolve some of that with this piece of legislation.
As was talked about earlier, what has been going on is that someone
can be excluded from the U.S. Federal banking system simply because
they are in an industry that might not have the best reputation. They
can be excluded from the Federal banking system. This is not something
that we take lightly. It is something that is very serious that we talk
about in terms of sanctioning North Korea, sanctioning Iran, and now we
are excluding U.S. businesses simply because they may be operating in a
certain industry instead of because of the activities that individual
business or that individual is actually in.
So this bill is really about looking, as my friend, Mr. Heck, said,
to the individual business and to the individual themselves and saying
whether they pose a national security risk, not painting with a broad
brush because of the desire of some in bureaucracy to exclude certain
industries from the banking system.
What Hoosiers talk about back home is how tired they are of electing
officials only to see bureaucracy drive their own agenda forward, not
the people's agenda forward. With this piece of legislation, we are
rolling some of it back and enabling those bureaucrats to provide an
annual list to Congress of the accounts that they have closed and why
they have been closed. It is that level of transparency and
accountability that a democracy demands.
I am excited to stand with so many other members of the House
Financial Services Committee and with so many Members, I hope, later
today on the House floor and say that we will deliver that
transparency.
Mr. CAPUANO. Mr. Speaker, I have no further speakers. Again, I would
like to repeat what has already been said: this is a classic example of
how this place is supposed to work. It takes a little time, but it
works out in a bipartisan manner and in a thoughtful manner and deals
with an issue that, though not important to some people, is very
important to a handful of people in this country to simply level the
playing field.

[[Page H9773]]

I want to, again, thank all of the people involved in this. It is
nice to be involved in a piece of legislation that I can be proud of
and that went through the process the right way and worked out the
right way.
Mr. Speaker, I yield back the balance of my time.
Mr. LUETKEMEYER. Mr. Speaker, I just want to reiterate that this bill
is about greater transparency and accountability among the banking
regulators.
The Federal Government should not be able to intimidate financial
institutions into dropping entire sectors of the economy's customers
based on personal and political motivations. It should be based on risk
and evidence of wrongdoing.
Our new AG has stopped this practice, and the FDIC has incorporated
many of the principles in this bill already into their standard
operating procedures. But the importance of this bill is to codify in
law for the regulators the guardrails that are necessary to keep this
from happening to protect our citizens from this and many other
activities by an overreach of the bureaucracy.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Missouri (Mr. Luetkemeyer) that the House suspend the
rules and pass the bill, H.R. 2706, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. LUETKEMEYER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.

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