WASHINGTON - Democratic presidential hopeful Bill Clinton has given a nod of approval to the banking industry's wish to reduce burdensome regulation.
In a speech last week on small-business issues, the Arkansas governor pledged "a serious review of the regulatory practices" of the federal banking agencies. He said he would make sure that regulators do not inhibit bank lending to small businesses.
President Bush, who has already asked Congress to scale back a wide range of regulations, is expected to address the issue in a campaign paper soon, said industry sources.
The President will cite regulatory relief as the administration's highest legislative priority for the banking industry, according to a draft of the document obtained by American Banker.
In addition, President Bush will reemphasize his administration's support for industry modernization. But in an apparent bow to community banks and consumer groups, the statement adds that "states' rights and the special needs of local communities" should be respected.
Although not specific, the language appears to suggest that interstate branching legislation, for example, should be accompanied by safeguards to protect community banks and the credit needs of small towns.
The President's statement also warns that Gov. Clinton favors "radical government intervention into the banking industry for the avowed purpose of establishing a more |progressive' Community Reinvestment Act that will mandate levels of investment in local areas by banks."
The Democratic nominee's approach, he said, "will result in greater centralized economic regulation, increased governmental credit allocation, and more mandated programs, all of which will add to regulatory costs."
Echo of Primary Campaign
The Clinton statement echoed themes that were first sounded in the New Hampshire primary last winter, but have gone largely unheard since.
They suggested anew that he would place considerable emphasis on bank programs in developing an economic recovery package.
"It is his first statement on regulatory burden, and it clearly signals that he recognizes there is a problem," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, who has been vocal on the regulatory-relief issue.
At the American Bankers Association, chief lobbyist Edward L. Yingling said he was pleased with the statement, but added, "There's not much there. Obviously, they have gotten the message on regulatory burden. But he hasn't provided much detail."
Mr. Clinton's comments on bank regulation were directed primarily at the examination process and did not specify which, if any, regulations ought to be trimmed.
He said his regulatory review would encompass examination procedures and loan-classification standards.
In his speech at a mall in Clinton, Md., Mr. Clinton asserted that the paper work burden on small businesses ought to be reduced.
"A small business ought to be able to get a one-page form to comply with every requirement the federal government puts on it," he said.
S&L Crisis Cited
The Democratic nominee blamed the credit contraction on an "overreaction to the mess the government made of the S&L crisis."
But that reaction was misdirected, he said, since "loans to small businesses did not break the savings and loans in this country."
Mr. Clinton added, "We have small businesses in this country today that have never missed a loan payment" and that are not having their loans renewed.
He would ensure, he said, that regulators "are not encouraging banks that refuse to make good loans."
When he was campaigning in New Hampshire, Gov. Clinton and other Democratic candidates frequently attacked bank regulators, who were widely blamed by New England lenders and business interests for a credit crunch.