Interest rates should decline between now and the end of the year because it seems as if the money supply is contracting, Chase Manhatten Bank Chairman David Rockefeller told reporters attending the American Bankers Association convention here.
Rockefeller emphasized the problems of inflation in his address to the ABA this morning. Not surprisingly, he differed from Treasury Secretary G. William Miller in his emphasis on federal spending as the main cause of inflation.
The 12,000 participants at this year's ABA convention have heard much from their main speakers on the problem of inflation. But most of them also are very concerned about the effect on their business of the major changes now taking place in the banking industry.
Many of the smaller sessions here focus on such problems as check storage for the new NOW (negotiated order of withdrawal) accounts, which are to start nationwide next year and will give interest on checking accounts; or productivity in banking; or portfolio and cash management in the aftermath of recently enacted banking decontrol measures.
A contrast to most of the sessions and their participants was provided this afternoon outside the convention center at a rally, sponsored by the National People's Action, a neighborhood advocacy group, and including other Chicago community groups.
"America is in a state of disaster while our political and economic leaders continue to plunder the remaining resources of this land," said a statement by Gale Cincotta, NPA chairwoman. She was unable to make the opening address at the afternoon session of the ABA on the subject of community reinvestment, after failing to join the rally, because the boat on which she sailed to the lakeside convention center was unable to dock.
The ABA was described as one of the "nation's most powerful anti-neighborhood lobby groups" by the rally's organizers. The bankers' session was to discuss the effects on banks of legislation to encourage investment in poorer communities.
There was some hoopla at this morning's opening session, with the Hinsdale Marching Band, from a local school, rousing the participants before Mayor Jane Byrne opened the session. "America the Beautiful" was played to a film of scenes from American life.
Rockefeller was asked by reporters at a press conference later this morning whether he would serve as Treasury secretary in a Reagan administration -- he is due to retire next April -- but he said he could not answer such a question unless and until such a request were put to him.
In his speech to the bankers, he urged them to spread the word that inflation must be brought under control and that spending on "entitlements," such as Social Security benefits, could not go on rising.
He defended private banks against the administration's charges that interest rates are too high. The federal Reserve Board is bearing too much of the burden of containing inflation, he said.
Rockefeller also talked about the importance of the International Monetary Fund and the World Bank today. He said that the commercial banks, which had done the bulk of the recycling of funds from surplus to deficit countries after the 1973-74 oil price explosion, could not play such a big role this time around.
"I see the IMF and, to a degree, the World Bank as being crucial," he said. He supported the idea that the fund should borrow money directly from the private money markets if it could not raise more cash elsewhere, but said that it is extremely important that the IMF should continue to impose policy conditions in return for lending money.
He said it is essential that the people appointed to the agencies should be responsible and have a firm financial background. The president of the be responsible and have a firm financial background. The president of the World Bank, Robert McNamera, is resigning next summer.