The Reagan administration today announced its opposition to any additional financial aid for the nation's savings and loan industry.
But Treasury Secretary Donald Regan said the White House would not oppose legislation permitting either interstate or interindustry takeovers of failing thrift institutions.
Regan, in letters to House Banking Committee Chairman Fernand St Germain (D-R.I.) and Senate Banking Chairman Jake Garn (R-Utah), said, however, that the administration would not consider any financial relief "other than utilization of existing insurance funds" for failing savings institutions.
St. Germain, after hearing from Regan earlier in the day, announced he was abandoning efforts to push an emergency aid bill proposed by federal bank regulators. That bill would permit interstate takeovers and would allow the Federal Deposit Insurance Corp. to pump extra money into failing institutions by establishing a $3 billion line of credit with the Treasury.
Reaction to the announcement at the annual convention here of the Metropolitan Washington Savings and Loan League was varied. The chiefs of the industries two major trade associations said the issue was not over and predicted there would be other legislation. But the president of the savings league said he did not mind the demise of the legislation.
In a statement released in Washington this afternoon, St. Germain said "there appears to be little or no reason to proceed to discuss assistance legislation for the thrift industry in the context in which it has been proposed by the Federal Reserve and other depository institutions regulators."
Regan said in a later statement that "the administration continues to monitor closely the problems of the thrift industry and is evaluating proposals to seek an appropriate solution to the industry's problems." But he said the administration "would oppose additional lines of credit for Treasury borrowing." He said federal banking regulators already have enough authority to handle thrift-industry problems.
St Germain's action marks the second time this bill, drafted by banking regulators, has failed to get even to the hearing stage. On Wednesday, St. Germain held a closed-door meeting with Federal Reserve Board Chairman Paul Volcker and other members of Congress in an unsuccessful effort to salvage the bill.
Even Federal Home Loan Bank Board Chairman Richard T. Pratt apparently had backed away from his initial support of the regulators bill and had said Thursday he was seeking "meaningful" additions to the bill to give S&Ls supplemental powers. While St. Germain stated he stood ready to try again, Pratt issued a statement today saying the best route to follow would be a reduction in regulatory burdens for S&Ls and the creation of innovative products to meet consumer needs.
Rollin D. Barnard, president of the U.S. League of Savings Associations, said "I hope there will be new legislation to do what this particular piece failed to do -- give the insurance agencies [the Federal Deposit Insurance Corp. and the Federal Savings and Loan Insurance Corp.] very definite rules" by which mergers could be arranged across state and industry lines. This is not the end of the issue; nor do we want it to be the end."
Richard S. Lawton, president of the National Savings & Loan League and chairman of Washington-Lee Savings and Loan of Alexandria, said he would like to see an expanded bill to give some regulators some of the powers they want and give thrifts some additional asset and liability powers.
James L. Harris, president of the Metropolitan Washington Savings and Loan League, said he doesn't regret the demise of this legislation so long as some other action is taken to help thrifts.