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Bush says he did not spark big drop in stocks

Published Nov. 17, 1991|Updated Oct. 14, 2005

President Bush on Saturday dismissed any suggestion that his call earlier in the week for banks to lower credit-card interest spooked Wall Street into its biggest one-day drop in two years. "Not at all," Bush told reporters who pressed him on the question. Market analysts surveying the wreckage of Friday's 120.31-point plunge in the Dow Jones industrial average, nearly a 4 percent drop in values, had suggested that a surge in Senate enthusiasm for legislation to cap credit-card interest at 14 percent provoked a broad decline in bank shares and frightened traders into dumping holdings in the worst market decline since a 190.58-point slide on Oct. 13, 1989.

Later Saturday, Secretary of Housing and Urban Development Jack Kemp, perpetually reported to be on the verge of resigning from the Bush Cabinet over economic policy disagreements, dumped full blame for the market debacle on the Senate's apparent willingness to try to ease consumer credit by regulating the cost of money _ a move that in the past has had the opposite effect of drying up credit and making a weak economy still weaker.

Kemp, speaking on CNN, carefully tried to separate Bush's unfocused musings last Tuesday about lower consumer interest rates from the Senate push later in the week to regulate those rates.

"The point is the president, as does Jack Kemp, everybody, wants to see interest rates on mortgages and on long-term T-bill rates and on credit card interest rates come down, and the president said he wants them to come down," Kemp said.

"That's a far cry from the action of the United States Senate, which was counterproductive and counterintuitive, because any cap or credit controls, as Jimmy Carter tried in the early 1980s, causes a shortage of credit," Kemp said, referring to the credit crunch in 1980 that caused a recession.

Instead Kemp blamed the market plunge on the move by maverick New York Republican Alfonse D'Amato to legislate an interest cap.

Reporters who followed Bush from Camp David, Md., to an early morning golf round at Ijamsville, Md., about 20 miles south of the presidential weekend retreat at Camp David, raised Wall Street questions as Bush arrived at the golf course and again on departure.

"We'll see what happens Monday, but there's no reason to get all concerned," Bush said as he arrived. Later, when asked about the credit-card interest cap, Bush dismissed the issue, then sought to minimize the import of the market jitters, just as he has regularly expressed confidence that the weakening economy is recovering from the recession that began in July 1990. "The fundamentals are all right," he said.

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