Public Papers - 1991 - May
Letter to Congressional Leaders on Banking Reform Legislation
Dear Mr. Chairman: (Dear Representative:)
As the Committee on Banking, Finance and Urban Affairs moves forward with legislation addressing banking reform, let me reiterate my strong support for the Administration's proposal to modernize the Nation's financial system. I applaud your Committee's bipartisan decision to use this comprehensive proposal as the foundation for Committee action before the end of June. My Administration stands ready to work closely with you in every stage of this process.
I believe the time has come to address the fundamental problems of our banking system. We must have a comprehensive legislative solution to fuel economic growth through stronger, more competitive banks -- ones that are better able to lend to customers in good times and bad. Without comprehensive reform the economy is exposed to the potential of future credit crunches. This is why the Administration has proposed such broad-based reforms.
The decision of your Committee to reject a much more narrow approach was the right one. A bill that would merely recapitalize the Bank Insurance Fund and make minor changes to the law would be shortsighted. We must fix the fundamental problems in the banking industry, not just fund them. If the Congress fails to adopt a broad-based solution along the lines I have suggested, we may have to face another recapitalization of the insurance fund. This additional exposure of the Bank Insurance Fund imposes risks on savers and taxpayers that no one can seriously desire.
We have taken the first step toward comprehensive reform by laying a broad-based proposal before the Congress. You have taken the second step by agreeing to take up this proposal in your Committee. Let us now work together to craft the broad banking reform legislation that this country needs.
Note: Identical letters were sent to Representatives Henry B. Gonzalez and Chalmers P. Wylie, chairman and ranking member of the House Banking, Finance and Urban Affairs Committee; and Frank Annunzio, chairman of the Financial Institutions Supervision, Regulation, and Insurance Subcommittee.