New Rules Expected to Spur More Bank Loans

THE JOURNAL RECORD, February 7, 1991 | Go to article overview

New Rules Expected to Spur More Bank Loans


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WASHINGTON (AP) - A Bush administration task force will soon unveil a package of regulatory changes intended to spur banks to start making more loans, Treasury Secretary Nicholas Brady said Wednesday.

Brady said the task force headed by Deputy Treasury Secretary John Robson had been working for months on changes that would ease the so-called ``credit crunch.''

``We have some specific, precise regulations that we have been looking at,'' Brady told members of the Senate Banking Committee who questioned him about the issue. He said the proposals should come out within the next 10 days.

The administration has been under heavy pressure from business executives who complain they can no longer qualify for bank loans because examiners are over-reacting to problems that caused the savings and loan crisis.

Brady said there was a continuing debate over whether the credit squeeze had been caused by overzealous bank examiners or by overcautious bankers.

He said the administration had decided it would do what it could to ensure that banking regulators aren't prohibiting credit-worthy customers from qualifying for loans.

Under Treasury's coordination, four federal bank regulatory agencies have been working on a common approach to ease the credit crunch, which some economists have blamed in part for causing the country's recession.

The changes being considered include easing appraisal rules so banks aren't forced to value real estate collateral at liquidation prices, allowing banks to keep on the books bad loans if some payments are being made and relaxing certain rules that prohibit banks from concentrating too much of their lending in one area.

Michael Boskin, chairman of the president's Council of Economic Advisers, said that if the changes aren't adopted the country risks seeing the sharp drop in real estate prices continue. …

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New Rules Expected to Spur More Bank Loans
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