[Public Papers of the Presidents of the United States: George H. W. Bush (1992, Book I)]
[June 24, 1992]
[Pages 1007-1008]
[From the U.S. Government Publishing Office www.gpo.gov]



Message to the Congress Transmitting Proposed Legislation on Credit 
Availability and Regulatory Relief

June 24, 1992
To the Congress of the United States:
    I am pleased to transmit for your immediate consideration and 
enactment the ``Credit Availability and Regulatory Relief Act of 1992.'' 
This proposed legislation will enhance the availability of credit in the 
economy by reducing regulatory burdens on depository institutions. Also 
transmitted is a section-by-section analysis.
    The regulatory burden on the Nation's financial intermediaries has 
reached a level that imposes unacceptable costs on the economy as a 
whole. Needless regulations restrict credit, slowing economic growth and 
job creation. Excessive costs weaken financial institutions, exposing 
the taxpayer to the risk of loss. Rigid supervisory formulas distort 
business decisions and discourage banks, thrifts, and credit unions from 
pursuing their core lending activities. In 1991, the Nation's banks 
spent an estimated $10.7 billion on regulatory compliance, or over 59 
percent of the system's entire annual profit. We cannot allow this 
unnecessary and oppressive burden to continue weighing down the consumer 
and business lending that will fuel economic recovery.
    The Credit Availability and Regulatory Relief Act of 1992 reduces or 
eliminates a wide range of these unnecessary financial institution 
costs. Among the significant changes that would be made by the bill are:

[[Page 1008]]

    Elimination of the requirement that banking agencies develop 
            detailed ``micromanagement'' regulations for every aspect of 
            an institution's managerial and operational conduct, from 
            the compensation of employees to the ratio of market value 
            to book value of an institution's stock;
    Enactment of a statutory requirement that the regulations of 
            the various Federal banking agencies be as uniform as 
            possible, to avoid the complexity, inconsistencies, and 
            comparative distortions that result from widely varying 
            regulatory practices;
    Reduction of audit costs, by returning auditors to their 
            traditional function of investigating the accuracy of 
            depository institution financial statements and eliminating 
            the costly and misguided expansion of their role over legal 
            and managerial matters;
    Alleviation of the significant paperwork burden imposed by 
            the Community Reinvestment Act on small, rural depository 
            institutions without exempting such institutions from the 
            substantive requirements to satisfy the credit needs of 
            their entire communities--coupled with creation of 
            incentives for institutions to reach higher levels of 
            compliance by streamlining expansion procedures for 
            institutions with outstanding Community Reinvestment Act 
            ratings; and
    Elimination of the requirement that the Federal Reserve 
            write detailed ``bright line'' regulations on the amounts of 
            credit that one depository can extend to another, thus 
            retaining the Federal Reserve's existing flexibility to 
            supervise the payments system without unduly inhibiting 
            correspondent banking relationships.
    These changes, and the others made by the bill, will result in 
significant reductions to the administrative costs of depository 
institutions--costs that are currently passed on to borrowers in the 
form of restricted credit and higher priced loans.
    I would like to emphasize that none of the bill's provisions will 
compromise in any way the safety and soundness of the financial system. 
The legislation makes no changes to those elements of the 
Administration's proposed supervisory reforms that the Congress did 
adopt last year. All existing capital standards will remain in force and 
will be neither weakened nor modified by the proposed legislation; the 
``prompt corrective action'' framework mandating swift regulatory 
responses to developing institutional problems will remain unchanged; 
and bank regulators will continue to have exceptionally tough 
enforcement powers.
    The legislation I am transmitting to you today is a broad and 
responsible solution to one of the major problems facing our financial 
system. The financial industry, the economy, and the public generally 
will benefit from enactment of this regulatory relief. I therefore urge 
the Congress to give high priority to the passage of the 
Administration's reforms.

                                                             George Bush

The White House,
June 24, 1992.