Chase Manhattan Bank chairman David rockefeller today predicted that the big international banks "will need to slow down" their loans to lesser-developed countries to help them finance their growing deficits, largely caused by oil imports.

He therefore urged a four-point program of actions by governments to take up the slack so that there is an adequate supply of public international credit."

At the same time, Rockefeller, in a speech to the Economic Club of New York, broadly defended foreign lending practices of U.S. banks and attacked the news media for "scare stories" about bank loan problems which he said undermined public confidence in the banking system.

He alluded in particular to a January 1976 story in the Washington Post that both Chase Manhattan and Citibank were on the comptroller of the currency's problem list, as well as to similar stories in the New York Times and other publications.

Responding to recently expressed concerns "that banks have dangerously overextended themselves in making foreign loans to chronic debtor countries," the head of the country's third largest bank said the role of the banks in foreign lending and in financing the deficits of foreign governments "is far more complex than the alarming headlines or glib statements would have us believe."

Rockefeller noted that most of Chase's international loan activity is short-term in nature and is used to finance commercial trade and private business, that about 70 per cent of Chase's foreign loans are made to industrialized countries, and that loans to lesser-developed countries are largely accounted for by credits to the so-called "high-or medium-income" nations such as Brazil and Mexico with "comparatively little" to low-income countries such as India and Pakistan.

The program Rockefeller urged to backstop bank lending should include "enlargement of existing public credit lines or guarantees. . . increased public credit flows to each of the major classes of borrowing nations. . . extension of these credits subject to rigorous conditions that assure domestic policies which promote efficient adjustment and. . . a substantial part of the funding should be obtained from" the Organization of Petroleum Exporting Countries.

Federal Reserve Board chairman Arthur Burns last week similarly told a congressional panel that U.S. banks "must not and cannot continue lending" to the poorer countries at the rate they have been doing in the past few years, and he said the "time has come" for surplus-rich, oil-producing countries to serve as the bankers to the underdeveloped nations.

"New loans to governments for straight balance-of-payments purposes will still be taken up by banks," the Chase Manhattan chairman said, "But I believe lenders will be increasingly selective and cautious in adding such credits to their portfolios. Certainly that is our posture at Chase."

Rockefeller, in a speech text that was made available, said "there is no denying the fact that banks loans to LDCs as a group have expanded significantly since the oil price increase in the winter of 1973-74," noting that the exposure of U.S. and other foreign banks to these countries has increased from $39 billion to $77 billion in three years.

But he pointed out that "the capacity to service debt also has been increasing albeit at a slower rate," with LDC exports advancing by nearly 65 per cent during this same period.

The ability of these countries to earn foreign exchange "lies at the heart of the LDCs ability to meet debt obligations," Rockefeller said. Touching on the question of what happens if a specific country gets in trouble on its loans, he told the group:

"The normal remedy for LDC's in trouble is not default. Nor does it generally mean even debt moratorium. More usually, it involves a refunding or rescheduling of debt. Obviously, banks prefer not to reschedule, but even when they must, such action neither impairs bank capital nor decreases bank earnings. Again, this critical point seems largely to have been overlooked in the current dialogue."

He conceded that "some LDCs have performed better than others" and that "bank debt to a number of these countries has been expanding at a rate that should not -- and cannot -- be sustained."

Rockefeller said "this does not mean that loans to these countries at present are excessive; nor that banks, need bailing out." But he said a slowdown in such lending is now required, as well as the development of "public policies" to correct the balance-of-payments problems in both industrial and less-developed countries that have given rise to the increase in international lending.

He criticized West Germany and Japan for not taking sufficient steps to stimulate their economics and increase imports in order to reduce their trade surpluses, and he criticized the U.S. for "failing miserably" to develop an energy policy that would reduce oil imports and "cut down the OPEC surplus."