Frank Newman, the Treasury's under secretary for domestic finance, said the Clinton administration is unlikely to endorse any package of sweeping banking legislation.
The disastrous fate of the Bush administration's omnibus bank bill in 1991 (Congress turned it into the onerous FDIC Improvement Act of 1991) is the reason no sweeping package of reforms will be supported by the new administration.
"We want to try to keep focused," Mr. Newman told me last week when I visited his high-ceilinged, wood-floored office the size of half a basketball court to talk about banking issues.
The former B of A bigwig cautiously offered me scraps of information on topics ranging from interstate branching to the regulation of parallel banks.
Keeps His Cool
My first impression of Mr. Newman was that he's not an off-the-rack kind of guy. On a day when both the temperature and the humidity hovered near 100 and everyone else appeared as if they had slept for days in their business suits, he looked like a stand-in for the Duke of Windsor.
He's also not an off-the-cuff sort of guy. Although the interview was "on the record," he declined to let me tape it, despite my objection that Skippy the chimp's penmanship is more legible than mine.
Even then, with guaranteed deniability of everything he was about to say (owing to the inadmissibility of my handwriting as evidence), he was more cautious than most of the politcos I have encountered here in Gossip Central. But then again, he's new to this town.
Dancing the Dance
His response to my question about interstate branching was typical. I asked him whether the administration was for it or against it.
"Interstate branching needs to be addressed," he said. "One bill has been introduced. We're going to need to comment on it."
And what, I asked, is the offical opinion?
"There is no official administration position on the need for the bill. My own inclination is to ask, |Why not?'"
Why, he asked rhetorically, does this country alone have such restrictions?
He said big banks and small banks "do well" side by side in his home state of California, and he saw no reason it would not happen elsewhere.
He quickly added that community banks have an important role in the community and that he would not want to promote a scheme that would "put them off the face of the earth."
He envisions a world where big banks achieve economies of scale through branching and small banks serve their communities, which he says would be analogous to supermarkets and local groceries (which I didn't get because there are no small groceries where I live).
In my book, all of the tap dancing above equates to YES, WE SUPPORT INTERSTATE BRANCHING. But in the world of politicspeak, it means they are thinking about it and nothing more.
I asked him how he will handle Ken Guenther and the Independent Bankers of America, both strongly opposed to interstate branching.
"If the sole purpose in opposing interstate is to protect a narrow interest, I can't support that argument. If there's a genuine issue that local communities won't be served by lending institutions, then it's legitimate."
To me that sounds like a compromise might be in the offing.
We talked about securities powers for banks and Glass-Stegall. Mr. Newman said the Securities Industry Association's proposal to lot security firms own banks if banks can deal in securities "seems reasonable if there are appropriate protections."
I asked if the administration would introduce legislation to roll back some of the banking industry's regulatory load. He said no.
But he said the administration would try to suggest some modifications. That's a lot less than was hinted at right after the election. As I recall, a council of regulators was supposed to propose specific rollback legislation.
I also asked Mr. Newman about statements in The New York Times a couple of weeks ago, attributed to him, that the administration might be inclined to make nonbank banks subject to the same fair-lending laws that apply to banks.
He said there is no formal plan, but that it is something he'd like to think about. (His press aide said The Times had misinterpreted his remarks somewhat.)
He said it would be impossible to apply the laws to money-market mutual funds, but that something might be required of other mutual funds if it appeared that savers were going to make them the long-term resting places for their funds.
At the end of an hour of my pecking and scratching, his secretary came in with a piece of paper. He looked at it, excused himself, and said it was something he had to see to right away.
"Pretty smooth," I thought to myself. I returned to the office and began the arduous task of translating Skippy the Chimp's notes into English.