Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 1, 1991 TAG: 9103010800
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The administration, zeroing in on a shortage of credit it views as a prime cause of the economic slump, has been prodding regulators to issue the changes since President Bush summoned them to a White House meeting in November.
Four agencies - the Federal Reserve, the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. - planned to release and explain the new rules today.
The credit-crunch package is one of the few actions the administration is advocating to combat the recession. It has dismissed most Democratic proposals, such as government public works programs, as unwise measures whose effect would come too late in any case.
Many members of Congress have been pressuring banking authorities to move swiftly. Lawmakers from New England, where business people are complaining they can't get loans, have been particularly active.
The new rules do not take effect for 45 days, but Rep. Joseph Kennedy, D-Mass., suggested at a hearing Thursday of the House Banking subcommittee on financial institutions that they be triggered immediately.
Critics, however, worry that the government may be going down the same road it took early in the savings and loan crisis: using accounting gimmicks to hide institutions' weakness.
Rep. Jim Leach, R-Iowa, said the rule changes are "not nearly as egregious as the forbearance applied to S&Ls." But, he warned, "You can't mask bank problems through changes in regulation. . . . It puts the FDIC [deposit insurance] fund in greater jeopardy and makes a taxpayer bailout more likely."
The regulators defend the rules as a conservative and more accurate way of gauging banks' financial condition and caution supporters such as Kennedy not to expect immediate dramatic effects on bank lending.
by CNB