Federal Reserve Board Chairman Paul A. Volcker said yesterday that takeover efforts directed at Conoco Inc. and other major companies suggest that "we may have a contagious mania" at the moment, in which some commercial banks' loan commitments "may have been put together too quickly."
But Volcker denied a suggestion by Joint Economic Committee Chairman Henry S. Reuss (D-Wis.) that more than $20 billion in lines of credit being advanced by banks for takeover purposes had dried up loan availability for others, leading to a rise in interest rates.
Marathon Oil Co. yesterday announced the latest in a series of big loans to oil firms, either for acquisition purposes or for defense against a takeover. Marathon said it is lining up $5 billion of credit through U.S. and foreign banks headed by Chase Manhattan, an unusually large amount since Marathon is among the smaller of the nation's 20 largest oil firms.
Volcker's cautionary words on the banks' loan commitments were the first to indicate that the central bank is keeping an eye on the financial market implications of proposed mergers. The "burst" of takeover commitments, he said, "raises questions and concerns in several directions." He mentioned possible antitrust complications, "banking prudence" and the impact on total credit availability.
On the other hand, he pointed out that at this point, many of the lines of credit were duplicative, and some portion may never actually become loans. In general, Volcker said, "there is not a lot of speculative lending in the commodity markets" as there has been at the end of 1979.
In response to questions by committee members on other issues, Volcker:
Strongly urged congressional support of financial commitments to the World Bank and other financial institutions regardless of the resolution of the current argument relating to human rights violations. Congressional Democrats have threatened to vote against appropriations, because the Reagan administration has freed U.S. executive directors to vote for loans to countries with regard to their record on human rights violations. Volcker said that U.S. participation in the multilateral lending process was of overriding importance.
Again sharply criticized the so-called "All-Savers" bill, designed to allow savings institutions to sell a special tax-exempt certificate to savers.