White House Says Regulators Wrongly Took Policy Sides

The White House conceded Thursday that federal regulators improperly tried to drum up support among bankers for the Clinton administration’s opposition to Republican financial legislation.

The effort was attributed to a miscommunication, and White House officials insisted that they never intended for the regulators--who are supposed to remain isolated from partisan wrangling--to work on behalf of administration policy.

“This is something we take seriously. It’s incumbent on us to be clear, and we take responsibility for that,” said White House Press Secretary Joe Lockhart, who added that it was also the responsibility of the regulators to recognize limits on their activities.

“But there was nothing here intended,” he said. “There was no effort here from the policymakers at the White House to direct any regulators to do anything.”

The conflict originated after an interagency meeting at the White House to discuss implementation of the Community Reinvestment Act, which Senate Republicans had sought to kill as part of a bill overhauling banking regulations. President Clinton is a strong supporter of the CRA, which steers investment to impoverished communities.

After the meeting, there were instructions sent to the Treasury Department about how to generate support for the CRA. And those instructions were mistakenly communicated to regulators at the Office of the Comptroller of the Currency.

“I think there was one, you know, particular communication with Treasury that it’s my best guess was misinterpreted at OCC and inappropriate contacts were made,” Lockhart said.

In defense of the OCC workers, Lockhart said that anyone who was at the meeting or received a summary of the meeting could have “read that we were looking for them” to defend the CRA. “But that was not our intent,” he said.