Clinton To Bankers: Lenders Be

IT IS A CURIOUS CONTRADICTION: THE FEDERAL Deposit Insurance Corporation reported last Tuesday that bank earnings hit a record $32.2 billion in 1992, even as bank lending declined. Armed with such statistics, President Clinton asked the industry to loosen credit strings, particularly for small businesses. To encourage the major lending companies to lend more, Clinton unveiled a package of proposals designed to prompt banks to extend loans more on the basis of track record and reputation than on collateral.

In a move that has the advantage of stimulating private investment without requiring public funding, Clinton also proposed a process that would ease both the challenge of questioning the judgment of federal bank examiners and the appraisal requirements on real estate offered as collateral for small-business loans. Bankers hailed the innovations. But some consumer groups remain wary of an industry that last turned regulatory relief into the S&L disaster.