Academic journal article ABA Banking Journal

Baptism by FSLIC

Academic journal article ABA Banking Journal

Baptism by FSLIC

Article excerpt

Baptism by FSLIC Day 1: Welcome to the House Banking Committee. Day 2: Help us solve the FSLIC crisis. New committee members, profiled here, have to learn a lot fast

Seven congressmen joined the House Banking Committee in January, and if they felt as if they had been strapped into a rocketsled, who could blame them?

In February the Administration introduced its broad, detailed plan to rescue the Federal Savings and Loan Insurance Corp. Proposals, counterproposals, and rumors have been flying since.

Subcommittee markup was slated to begin in early April on the House side, and estimates for the arrival of a final bill on President George Bush's desk range from an optimistic "before Memorial Day" to "mid-summer."

In recent years things didn't happen so fast at House Banking. But even when the FSLIC battle is over, new Chairman Henry B. Gonzalez (D.-Tex.) is said to be planning a packed agenda that will include a detailed look at a perennial burr for Congress, the independence of the Federal Reserve Board, as well as the question of new products and services for banks, and housing priorities.

Where do the House Banking freshmen stand on the issues? ABA Banking Journal talked to the members themselves, as well as to bankers and state bankers association officials. Our member-by-member report follows, Democrats first, Republicans second, in order of committee ranking.


Congressman James A. McDermott just recently finished reading Secrets of the Temple, William Greider's gigantic treatment of the Fed. The new representative of Washington State's 7th district finds himself wondering just how advisable an independent Fed is. "The events of the 1980s"--the Paul Volcker era--"were not good for this country," he says. Trade support crucial. McDermott has more than the recent past on his mind. The Democrat worries about the impact on this country's economy of the year 1992. That's when trade barriers will fall in the European Economic Community.

McDermott says he considers the nation's economic stability even more important than its military posture. Issues such as Export-Import Bank funding and the trade deficit drew him to the House Banking Committee.

He objects to past attempts to kill the Ex-Im Bank. Looking to 1992, he says the bank's assistance to exporters is more important than ever. Varied background. McDermott, 52, comes to Congress with a strong political background. He spent 15 years in the Washington State legislature.

McDermott is a psychiatrist by background and served two years in the Navy Medical Corps. During that time--1968 to 1970--he was chief psychiatrist at California's Long Beach Naval Station. Much of his work was with returning Vietnam veterans.

Bob Anderson, executive vice-president of the Washington Bankers Association and a personal friend, describes McDermott as a social issue liberal who is pro-business on economic matters. He praises McDermott as a coalition builder adept at striking compromises. Thrifts and housing. McDermott's overriding concern in evaluating solutions to the FSLIC crisis, the congressman says, is finding a way "to maintain good solid funding for home purchases by American families with the least expense for the taxpayer." McDermott leans toward the view that a separate thrift industry is still necessary.

Among other steps he believes Congress should take to encourage home ownership is allowing first-time home-buyers to withdraw individual retirement account funds for downpayments. New powers questions. McDermott has been doing some backgrounding on Glass-Steagall history. "I'm trying to educate myself before I come to any decisions," he explains. Jealous of the prerogatives of the legislative branch, he objects in principle to regulatory loosening of bank powers.


For many, the ultimate treatment of credit unions in the final FSLIC rescue package is a side issue. …

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