Mondale's and Hart's Views Similar on Financial Issues; Front-Runners Concerned about Deficit, Tax Reform
Kahn, Ephraim, American Banker
WASHINGTON -- More than 500 Democratic delegates are up for grabs in tomorrow's primaries and caucuses, where former Vice President Walter F. Mondale and Sen. Gary Hart of Colorado are the recognized front-runners.
Also at stake -- should a Democrat win the White House this year -- are economic policies and key appointments that could directly affect the financial services industry.
At this stage in the political process, candidates are concerned with firing voters' imaginations and stirring their hearts rather than issuing specific proposals on financial industry issues -- issues many voters consider arcane. But policy statements from the leading candidates can give financial industry officials some idea of their philosophies.
For example, when Mr. Mondale was told that banks pay taxes at an effective rate of 2.7%, he said that as President, he would "get some answers and end these abuses."
Last July, Mr. Mondale told a savings and loan conference that "it's time to stop and take a look at [the] deregulation fever that hit this country a few years ago."
Deregulation, he said, might alter an essentially balanced financial community. "It would be tragic," he added, "if we came out of [this era] and found the S&L industry so changed that the crucial and scared function it performed is nonexistent."
As a senator, Mr. Mondale served on the Banking Committee from 1965 to 1972. He s remembered for his interest in housing programs and the liberalization of East-West trade, rather than in banking issues.
As for Sen. Hart, some of his proposals advocate making capital held by financial institutions more easily available to new ventures.
Among his ideas: authorizing regulators to permit higher interest rates on loans that carry higher risks; setting up a federal on state loan-loss-reserve program to insure a negotiated percentage of commercial loans; broadening the Community Reinvestment Act "to stimulate productive business investment"; and wider use of state economic development innovations and training programs for entrepreneurs.
Sen. Hart also has proposed modifications that could have a big impact on trust departments: He favors more "imaginative investment behavior" for pension funds, in part by revising the statutory standards and goals for pension fund management.
In general, there is agreement by Mr. Mondale and Mr. Hart on economic policy and philosophy. Both give high priority to dealing with the federal budget's structural deficit and both would restrict defense spending and allocate the money saved to social programs.
Both also favor tax reform, but they would go about it in different ways. Both also would take steps -- some very different ones -- to end American products' disadvantages in foreign markets.
Here, briefly summarized, are some of their stated positions on banking and finance matters.
Federal Reserve Policies. Mr. Mondale said: "We must strike an accord with the Federal Reserve Board to accommodate long-term sustainable growth with civilized interest and an accommodative policy."
Mr. Hart said he wants to have the monetary authorities "return to their former focus on interest rates."
Mr. Hart opposes scrapping the Fed, but he thinks "we should trim its independence by requiring it to conduct monetary policy in greater harmony with fiscal policy, so both work to achieve noninflationary growth. …