George H.W. Bush: “I would welcome suggestions from you all after your meetings finish as to what in addition we might do. Let me say this.…”

“I would welcome suggestions from you all after your meetings finish as to what in addition we might do. Let me say this. First place, I think the regulators do have some responsibility. I think everyone would agree that we got into kind of a go-go period of excess over the past few years and some loans were made that should have been questioned at the time and that weren't. And we're paying an enormous price. I might say that I take some pride that not one single depositor has lost money, but it's taken an awful lot of money to bail out some questionable loans. What I'm about to say, I am not suggesting that the Government does not have some obligation in our regulatory authorities for the soundness of the banking system and the S&L system. I frankly think that there has been an overreaction. And we have gotten the Treasury to bring into Baltimore the other day well in excess of 500 regulators and tell them that what we're looking for is balance. What we're looking for is certainly not to go down the path that we went down before but to stop impeding progress and kind of putting a damper on this concept that good banks should make good loans. We have sent out bulletin after bulletin to the regulating community out there. I have convened meetings with the Chairman of the Fed, Bill Taylor; others from the various Agencies; the Office of Thrift Supervision, saying, let's find a reasoned approach. Frankly, I think the pendulum has swung at times too far over in terms of dampening the enthusiasm that these lending institutions sometimes should have, and that they're almost afraid in some areas to make loans. So, I hope that the programs we have in effect of trying to work for the balance is good. I'll be honest with you, we are encountering some resistance. The Office of the Comptroller head was held up, because they thought he was lightening up on the regulatory burden, by a couple of Senators who leaned over too far the other way in favor of labeling what we were doing as forbearance. In their view, that meant too little regulation. I've got to do a better job with Congress, getting them to understand that the excesses of regulation are bad. On a fundamental point, I am firmly--I am of the conviction that the lower interest rates have things ready now for a good recovery. At some point those interest rates definitely will translate into a much better situation for the homebuyer, for the developer. And some of that hasn't taken place because of what you're talking about. I think banks have taken the difference now and tried to strengthen their balance sheets. They're getting stronger, and I think that's probably a good thing. So, we will continue to struggle against this concept of overregulation. Some report to me arrogance on the part of some regulators, and we're trying very hard to sensitize these people. We will continue to work hard for a financial reform package that is long overdue. We've got to bring these banks and lending institutions, through a change in the law, back up now to 1992 and not have it back in the 1930's somewhere. We got stiffed by Congress on trying to get that banking reform bill through. And I'm going to try again on that one. I think that will help your industry very much. And again, the third point, less regulation, banking reform, financial reform, and then, of course, this whole concept of interest rates and inflation being down, setting the base for a sound recovery for this country. And I don't want to be accused of being too optimistic because there are still some very, very troubling signs around. But I believe that these things I've mentioned here will inevitably contribute to an upturn in this economy and an upturn in this industry that is absolutely essential. I believe that homebuilding will lead the recovery. It's not going to be a lagging industry. It will be a lead industry. I believe the ingredients are there. And I hope that the proposals I make in the State of the Union will guarantee, if I can get them through Congress, will guarantee the recovery will be right around the corner and not way down the road. Thank you again. And if there's another one, fine. Otherwise, I'll let you go back to work. But send the suggestions; if you have specifics, send them along, Jay.”