[Public Papers of the Presidents of the United States: George H. W. Bush (1992, Book I)]
[January 24, 1992]
[Pages 145-148]
[From the U.S. Government Publishing Office www.gpo.gov]



Teleconference Remarks to the National Association of Home Builders

January 24, 1992
    The President. Thank you so much. And Mark, thank you for those very 
kind words. And I wish I were there in person, but from a distance, 
hello to Roger Glunt and Tommy Thompson and Martin Perlman and Kent 
Colton; Jay Buchert, your incoming president; and to all of you 
celebrating the golden anniversary of the National Association of Home 
Builders.
    I heard via the grapevine that we were promised a daytime fireworks 
display. So I will give this my very best shot, and after Mark's 
enthusiastic endorsement there, welcome there, I must say I've got a 
tough job

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to fulfill here.
    First, though, Barbara and I wanted to remind you that we're doing 
our part for homebuilding and remodeling, thanks to a little rough 
weather back in Kennebunkport, Maine. So we want to be a part of this 
rebuilding. But there's been more than a little rough weather in your 
industry. I heard what you said there, Mark, and I've heard it for a 
long time. Back in December, I met with Mark and Kent at the White 
House. And to you members there, let me just say we talked about the 
tough times you've experienced. These men were both very articulate. We 
agreed on the need for strong action to get this economy moving again.
    The housing industry has been hit hard. And you've been pinched by 
the credit crunch, hurt by first-time homebuyers forced by economic 
circumstances to defer their shot at the American dream and homeowners 
who have watched their equity erode.
    On the credit front, we've been working hard to get the message out 
to lending institutions and the regulatory community that sound banks 
make sound loans. And I am also pleased to see interest rates down, 
lower than they've been since the late seventies.
    There's a pent-up demand for new housing that promises a strong 
comeback, one that will bring homebuyers back into the market and have 
homebuilders working overtime. But no issue right now matters more than 
the state of our economy. Next Tuesday, I'm going to take my economic 
action plan to the American people in the State of the Union Message. 
And without tipping my hand today, I can say that some of the reforms 
that I want to see are geared specifically to get the housing market 
back on its feet.
    I pledged as President that we'd see an increase of one million in 
the number of new American homeowners, and I'm proud to say we've 
reached that goal. And I'm convinced our housing initiatives will help 
even more Americans reach their dream.
    One way we'll succeed is by breaking down the barriers to affordable 
housing. Jay and Roger served on my Advisory Commission on Regulatory 
Barriers. Many of the recommendations in what the Commission called the 
NIMBY report, Not In My Backyard, have been built into the 1993 budget. 
I'll be calling for prompt action by the Congress because it's even more 
urgent we get these critical reforms through Congress now. So count on 
it. I'm going to hit the line again, push hard to turn solid proposals 
into policy. And I hope I can count on your strong support to help me 
get the job done.
    As for the rest of my progrowth plan, you've got to stay tuned for 
Tuesday. But I can say right now, by way of a coming attraction, that 
any growth package worth the name should pass the following five tests: 
First, it must stimulate the investment necessary to create jobs. 
Second--and this points up the vital importance of your industry--it 
must bolster real estate values and increase home sales. And third, it 
must give Americans confidence that the costs of health care, providing 
for their kids' education, and raising a family will be affordable. And 
fourth, it must increase America's capacity to compete in the global 
economy. And then fifth and finally, it must control wasteful Government 
spending and bring the Federal deficit under control.
    So, please listen, and please hear me out in the State of the Union. 
I will avoid, and I'll be frank about this one, the quick political 
fixes that cause the deficit to skyrocket and cause long-term interest 
rates to go right through the roof. I'm confident that we have a sound 
plan, the best plan, to get this economy growing again. And I am 
absolutely certain that we will get this economy turned around. I plan 
to do what Mark says: Take that same leadership we used in Desert Storm, 
bring this country together, and get the job done. And I am sure that 
once again it is your industry, it is the housing industry, that will 
lead the way to a strong and steady recovery.
    So, good luck to you all. We've listened to your leaders. We 
appreciate the support from so many people there. And I am going to do 
my level-best to lead this country to a vigorous recovery.
    Now, I guess I'd better stop there and be glad to take some 
questions. And thanks for your hospitality.
    Q. Thank you, Mr. President. You are a

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``take charge'' kind of President, and you have been a tremendous asset 
to this country and the world. We, the homebuilders, support you 
continuously. Your remarks are excellent, and we are ready for you to 
take charge in this State of the Union. And we're going to go hand-in-
hand down the path with you to try to get your programs implemented. We 
think it very, very important that housing leads this economy back to 
the great state that it was before. And we think that together we can do 
this.
    The question I have, Mr. President, is: NAHB has suggested a number 
of proposals to stimulate housing-led economic recovery, including a tax 
credit and use of IRA's for first-time homebuyers and reinstatement of 
passive losses and capital gains tax. Is there any hope that any of 
these will be included in your State of the Union?
    The President. Hey, listen, I will not be betraying any secrets to 
say that the answer to that question is a resounding affirmative. I hope 
you'll let me off the hook if I don't respond to each and every one of 
those points, but I think you're going to be happy with the message in 
that regard.
    You have known, and I don't say this as targeting what I'm going to 
say, but you've known of my commitment to capital gains. I've been hit, 
as you know, for a capital gains tax cut as a tax cut for the rich. It 
isn't any such thing. And families benefit. I'm worried, Barbara's 
worried about the decline in the American family. One thing that 
strengthened it is owning their own home. One thing that puts some value 
under a person's home is a capital gains differential. And so I am 
committed on that one, and you can bet that that's going to be there.
    The others, I think you'll be happy; I'd like to stop right there. 
But the reason I give you encouragement, without going into which I will 
accept and can propose and won't propose, is that these initiatives that 
you've talked about here, it's not a quick fix; it's not something 
that's going to just spread money around in a political year. They will 
stimulate investment. And that's what--there's a crying need for 
investment and savings in this country. And let me just say 
philosophically, I feel very comfortable with those initiatives that you 
have outlined there. But you'll have to excuse me if I don't give away 
absolutely everything that's going to be in this message.
    Q. Mr. President, you talked just a moment ago about the credit 
crunch, and we truly appreciate your personal work on behalf of the 
credit crunch and all of the work that has been done in that area.
    In the meetings I've attended in the last couple of days here with 
all of the builders that have gathered, we're now confident that the 
economic stimulus package will contain provisions to let housing lead 
this economy forward.
    I think the big concern here is: Will the credit be available for 
the builders to then build those homes? And the feedback we're getting 
from the builders here today, Mr. President, is that despite our 
combined efforts, you working hard, your administration working hard, 
and us working hard, the banks and examiners still aren't getting the 
message out according to the builders.
    Is there anything that can be done more, Mr. President? Is there 
anything else we can do to get this message out? Our fear is that 
without it, we're not going to see an economic recovery. And as you said 
so well, sound banks should make sound loans now.
    The President. I would welcome suggestions from you all after your 
meetings finish as to what in addition we might do.
    Let me say this. First place, I think the regulators do have some 
responsibility. I think everyone would agree that we got into kind of a 
go-go period of excess over the past few years and some loans were made 
that should have been questioned at the time and that weren't. And we're 
paying an enormous price. I might say that I take some pride that not 
one single depositor has lost money, but it's taken an awful lot of 
money to bail out some questionable loans.
    What I'm about to say, I am not suggesting that the Government does 
not have some obligation in our regulatory authorities for the soundness 
of the banking system and the S&L system. I frankly think that there has 
been an overreaction. And we have 
gotten the Treasury to bring into Baltimore 
the other day well in excess of 500

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regulators and tell them that what we're looking for is balance. What 
we're looking for is certainly not to go down the path that we went down 
before but to stop impeding progress and kind of putting a damper on 
this concept that good banks should make good loans.
    We have sent out bulletin after bulletin to the regulating community 
out there. I have convened meetings with the Chairman of the Fed, Bill 
Taylor; others from the various Agencies; the Office of Thrift 
Supervision, saying, let's find a reasoned approach.
    Frankly, I think the pendulum has swung at times too far over in 
terms of dampening the enthusiasm that these lending institutions 
sometimes should have, and that they're almost afraid in some areas to 
make loans. So, I hope that the programs we have in effect of trying to 
work for the balance is good.
    I'll be honest with you, we are encountering some resistance. The 
Office of the Comptroller head was held up, because they thought he was 
lightening up on the regulatory burden, by a couple of Senators who 
leaned over too far the other way in favor of labeling what we were 
doing as forbearance. In their view, that meant too little regulation. 
I've got to do a better job with Congress, getting them to understand 
that the excesses of regulation are bad.
    On a fundamental point, I am firmly--I am of the conviction that the 
lower interest rates have things ready now for a good recovery. At some 
point those interest rates definitely will translate into a much better 
situation for the homebuyer, for the developer. And some of that hasn't 
taken place because of what you're talking about. I think banks have 
taken the difference now and tried to strengthen their balance sheets. 
They're getting stronger, and I think that's probably a good thing.
    So, we will continue to struggle against this concept of 
overregulation. Some report to me arrogance on the part of some 
regulators, and we're trying very hard to sensitize these people. We 
will continue to work hard for a financial reform package that is long 
overdue. We've got to bring these banks and lending institutions, 
through a change in the law, back up now to 1992 and not have it back in 
the 1930's somewhere. We got stiffed by Congress on trying to get that 
banking reform bill through. And I'm going to try again on that one. I 
think that will help your industry very much.
    And again, the third point, less regulation, banking reform, 
financial reform, and then, of course, this whole concept of interest 
rates and inflation being down, setting the base for a sound recovery 
for this country.
    And I don't want to be accused of being too optimistic because there 
are still some very, very troubling signs around. But I believe that 
these things I've mentioned here will inevitably contribute to an upturn 
in this economy and an upturn in this industry that is absolutely 
essential. I believe that homebuilding will lead the recovery. It's not 
going to be a lagging industry. It will be a lead industry. I believe 
the ingredients are there. And I hope that the proposals I make in the 
State of the Union will guarantee, if I can get them through Congress, 
will guarantee the recovery will be right around the corner and not way 
down the road.
    Thank you again. And if there's another one, fine. Otherwise, I'll 
let you go back to work. But send the suggestions; if you have 
specifics, send them along, Jay.
    Q. Thank you, Mr. President, for taking time out of your busy 
schedule. Ladies and gentlemen, let's give the President of the United 
States a great thank you.
    The President. Good luck to you all.

                    Note: The President spoke at 3:34 p.m. via satellite 
                        from Room 459 of the Old Executive Office 
                        Building to the National Association of Home 
                        Builders annual convention and exposition in Las 
                        Vegas, NV. In his remarks, he referred to the 
                        following association officers: Mark E. Tipton, 
                        immediate past president; Roger Glunt, first 
                        vice president; Tommy Thompson, vice president 
                        and treasurer; Martin Perlman, a past president; 
                        Kent Colton, executive vice president; and Jay 
                        Buchert, president.