Bankers Oppose Regan View On Loosening Money Supply: Bankers Back Fed on Money Policy
SAN FRå£NCISCO;: Oct.: 4ÛÓThe chief sfokesman Û¢ for - Ani ef icaÛªs hanking industry today, strongly endorsed: the:4 Federal; Re-- serve BoardÛªs tight money; appears to be -a growingicorhHct -in .Wash: ington between .the Reagan- Administra-tionÛªs political-needs and the central bankÛªs anti-inflation; platform.</br></br>American Bankers Association President Lee Gunderson, asked about Treasury Secretary Donald-ReganÛªs suggestion that the Federal Reserve should loosen its money policy and thereby help bring about reduced interest rates, said, ÛÏIt is very important for the Fed to adhere to a goal of solid monetary policy.Û</br></br>If the central bank loosens its restraints at this time, Gunderson told reporters, ÛÏWe'd have concern ... it is easy to succumb to the idea of a quick fix,Û to bring interest rates down.</br></br>Gunderson, who heads a small bank in Wisconsin,'was responding to comments by the Treasury secretary in an interview with The Washington Post, published in Sunday's. edition. In that interview, Regan emphasized he was: not calling for an ÛÏeasy-moneyÛ policy, but said the Fed should assure ÛÏa sufficiency of money to enable the economy to recover nicely from its current flat period.Û .. At a news conference here, Gunderson said he is "not pleased Û_that we have to pass on the rates we mustÛ to consumers, small . businesses- andyfarmers in his community. But ÛÏto ease off .is not going to solve the . long-range^ problemsÛ that have built up ' over many years, he asserted.</br></br>The ABA chief, in contrast with Regan-said there is no need to shift policy now and that the Federal'Reserve should continue with all programs in place to restore some predictability to the economic future.