WASHINGTON -- President Clinton has scheduled a Rose Garden ceremony Thursday to unveil a community development bank plan that apparently would not provide incentives for existing financial institutions to participate.
The most recent draft of the President's legislative proposal would provide $382 million over four years, but only for institutions primarily engaged in community-development lending -- a category that would exclude most banks and thrifts.
President Clinton is also expected to direct the bank and thrift regulatory agencies on Thursday to come up with a new approach to the Community Reinvestment Act stressing "performance over paperwork."
Criticism from Bankers
A number of bank groups invited to the ceremony criticized the White House plan for excluding their members from the financial incentives.
"We're very concerned that they will not work through existing commercial banks," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.
Mr. Guenther said his group won't oppose the plan, though.
"Right now, the name of the game is to try to change the administration's position," he said. After Thursday, he added, the effort will shift to Capitol Hill where lawmakers may be more sympathetic.
Invitations to Industry
The White House has invited a number of industry groups to attend Thursday's announcement, including the American Bankers Association, the IBAA, and the Savings and Community Bankers of America. Although the White House had previously scheduled other tentative dates for the announcement, industry sources said they expect this one to hold firm.
Edward L. Yingling, director of government relations for the ABA, also expressed dismay that most commercial banks would be ineligible for financial incentives. But he applauded the administration for agreeing to work through existing financial institutions, rather than try to build a new network of development banks.
In his campaign, President Clinton had talked about creating a network of 100 community development banks along the lines of Chicago's South Shore Bank.
"We're very pleased that their approach is built on the existing system," said Mr. Yingling.
Some congressional aides said the development bill could move very quickly through the House. One senior aide who works on banking issues said the bill would likely be taken up by the full House Banking Committee, rather than any of the three subcommittees that have shared jurisdiction.
The Senate is a different story. Sen. Alfonse M. D'Amato, R-N.Y., has advocated an approach that would give commercial banks CRA credit for investing in a development banks. Because of Senate rules, the Democratic majority may be forced to give some consideration to Sen. D'Amato.
However, interest groups involved in community development are staunchly opposed to the idea of giving commercial banks any kind of financial incentives to participate.
"The money should go where resources are scarce, and banks have access to other resources," said Deepak Bhargava, banking lobbyist for the Association o Community Organizations for Reform Now.