nancial institutions, I am sorry-credit unions, S&L's, pay through the nose.

Mr. WYLIE. We ought to let the OMB Director know we have read the letter.

Chairman ST GERMAIN. We have read the letter and don't know what he is talking about. We would like it clarified.

Mr. McKinney.

Mr. MCKINNEY. I thank you, Mr. Chairman.

Time is running short since we have a housing bill coming to the floor. I am going to go back to the primer level to get a couple of points clear in the record which I gather you are going to have to pay for one of these days.

Do you receive any taxpayers money through the Government, Mr. Johnson?

Governor JOHNSON. NO.

Mr. MCKINNEY. Fine.

Do you receive any taxpayer money through the Government, Mr. Seidman?

Mr. SEIDMAN. No.

Mr. MCKINNEY. Do you, Mr. Clarke?

Mr. CLARKE. No, sir.

Mr. MCKINNEY. Do you receive any, Mr. Gray?

Mr. GRAY. No.

Mr. MCKINNEY. Do you have any, Senator?

Mr. JEPSEN. No.

Mr. MCKINNEY. Do you receive any, Mr. Lawrence?
Mr. LAWRENCE. No.

Mr. MCKINNEY. It seems to me with the basic interpretation of the law-by the way, the gentleman from Georgia, who tends to be a laissez faire advocate, and the gentleman from Connecticut, who is sometimes more confused than that, are both going to be voting for this legislation because of that idiotic letter from the Office of Management and Budget.

Isn't there a basic Federal charter to watch what is done with the taxpayers' money? There is nobody else that has money. We are aware of that. Isn't OMB's job, according to your understanding, Mr. Johnson, to supervise the expenditure of Federal tax revenues?

Governor JOHNSON. That and borrowed funds through the Treas

ury.

Mr. MCKINNEY. Mr. Seidman.

Mr. SEIDMAN. Yes.

Mr. MCKINNEY. Mr. Clarke.

Mr. CLARKE. Yes.

Mr. MCKINNEY. Mr. Gray.

Mr. GRAY. Yes, sir.

Mr. MCKINNEY. Senator.

Mr. JEPSEN. That is my understanding.

Mr. MCKINNEY. So, in other words, does OMB have any Federal or legislative or moral right to look into your affairs, tell you what to say, how many people to hire and so on and so forth? Is there anyone who thinks they do? You don't have to put yourselves in print because you may end up dead on Pennsylvania Avenue for all I know.

In other words, this is just simply one more power grab on the part of OMB to enter through a door that is not there, not their concern, not their interest, not their law, not their charter, nor anything else that comes from this body in the 16 years I have been here. Their interference has been magnanimously available on almost every inch of the Government. Gentlemen, that sounds like primer talk, but I am interested.

Now, another thing, since we are running short of time, you guys appear to me like a movie I used to take my kids to called the Bad News Bears. It fascinates me that the entry salary was $14,500 before you took it up. My son even makes more than that teaching in a private school and private schools don't pay.

You all must have employees from somebody in Fairfield County and New York. What do they live on-subway grates?

I am fascinated. I pick up the paper, and I see that a law school graduate working on Wall Street can start at $50,000 a year. So, let's follow this through. Mr. Gray, let's say you have trained the person for 5 years, and he knows what is going on and everything else. What are you paying him after 5 years of training?

Mr. GRAY. After 5 years, it would be approximately $25,000 to $30,000.

Mr. MCKINNEY. Mr. Clarke.

Mr. GRAY. That is what we would have been, we are not paying that now.

Mr. CLARKE. In the range of $32,000 to $35,000.

Mr. MCKINNEY. I know what you are paying now and I am embarrassed.

Mr. SEIDMAN. Same.

Mr. MCKINNEY. What do you suppose this skilled expertise and knowledge of the ins and outs of the intricacy of banking are worth to a banker?

Mr. SEIDMAN. Our people receive offers considerably higher than that on a fairly frequent basis?

Mr. MCKINNEY. About $50,000 a year don't they?

Mr. GRAY. Or more.

Mr. MCKINNEY. As I say, gentlemen, your testimony today, reminds me of the Bad News Bears on a beat up school bus going to play the Matson. There isn't any way you can win under the way it is going now. The biggest problem in the United States of America is laundering of drug money, which makes drug selling profitable, and we can't even get close to it. You have all talked about reports, and the chairman has asked you about reports. I think reports are wonderful, but guess what, there is nobody to look at the darn things, is there? I am sure your basements are full of reports that no human being has seen except the person that filed them. We have to do something about it, Mr. Chairman.

Chairman ST GERMAIN. Mr. Bush is Vice President and he has a task force on regulatory reform.

Mr. GRAY. Had.

Chairman ST GERMAIN. When did they wind up there? You were represented or were you indeed on it?

Mr. GRAY. I was on it.

Chairman ST GERMAIN. You were on it?

Mr. GRAY. Yes, sir.

Chairman ST GERMAIN. Can you recall how long ago you had your last meeting?

Mr. GRAY. The last meeting was

Chairman ST GERMAIN. Over a year ago, wasn't it?

Mr. GRAY. Probably 2 years ago. One and a half or two years ago. Chairman ST GERMAIN. Now, why doesn't OMB look at this? I assume there was money spent on that study, on regulatory reform. It has been 2 years and we ain't seen anything yet have we, Chairman Gray?

Mr. GRAY. No, sir.

Chairman ST GERMAIN. There has been nothing forthcoming?

Mr. SEIDMAN. We have received just a short time ago a very thick document from OMB which was a draft I gather of the report, and just glancing through it, I notice they took care of antideficiency and Gramm-Rudman-Hollings and everything by specifically including the regulatory agencies in that report. So they have already looked out for themselves for their view.

Chairman ST GERMAIN. Excuse me, but is this the Bush Task Force on Regulatory Reform?

Mr. SEIDMAN. Yes.

Chairman ST GERMAIN. I don't think the agency's part of that would agree that is just a draft, right?

Mr. SEIDMAN. It is out for comment.

Chairman ST GERMAIN. Out for comment. I am hoping you are going to have strong comments, those of you in the agencies, on that particular section. It is really 2 years? Hallelujah.

Mr. GRAY. Mr. Chairman, I may stand corrected.
Chairman ST GERMAIN. Could be a year-and-a-half.

Mr. GRAY. May be a little more than a year.

Chairman ST GERMAIN. A lot of pomp and circumstance when it was appointed and started up and so forth. I guess the Vice President is busy with other things. Mr. Leach.

Mr. LEACH. Like the majority of members of the banking community, I am very sympathetic to a more flexible approach on pay and salaries. I would like to ask a question relating to the cost to the public of loose supervision.

It is my sense that a loose supervision not only provides potential vulnerabilities to FDIC and FSLIC and credit union funds, but in addition, if there is any great scandal at the Federal Reserve Board in the 1970's, it was loose supervision that allowed the large banks to expand too greatly abroad. And that raises the whole issue; what is the cost to the public? And I think the cost to the public is likely to be most minimized with strong regulators that are well compensated and well paid.

Some of the testimony, particularly from Senator Jepsen, raises a second issue, that it is a little unseemly for a regulator to be offered a higher compensated job, particularly in the business which one is trying to regulate. When you lose your credit union regulators to credit unions, that means there is implicit thinking in the back of all regulators' minds they are about to have a job in the very institutions they are regulating. That is one of the greatest arguments for pay comparability, and it is something I think this Congress ought to be very sensitive to.

Now we all know that Gramm-Rudman-Hollings, is probably the best single governmental initiative for your institutions in the sense that if we don't bring down these deficits, sky-rocketing interest rates put the savings and loan industry in some jeopardy. In one sense, bringing down the deficit is the best thing that could happen now. The question is how to do it most appropriately.

Virtually every Federal programming initiative, from defense to the social areas, comes to us and says "To cut our program is penny wise and pound foolish." But it strikes me that you are suggesting to us that government-dictated private sector penny pinching could cause a good deal of public expenditures later. Since your funds derive, as the Senator from Connecticut points out, from the private sector I think is plenty of justification for greater flexibility in statutory language.

Now the staff, and we have a very wise staff, has written a whole series of questions. There are three or four I would like to raise just because I think they haven't been raised yet in this hearing, and they do bear on this bill.

The first is for Chairman Gray. On page 1 of your statement, you indicate that the Bank Board generally supports the thrust of the Carper-Lundine bill, but you do have reservations. At page 5, you go on to say "These provisions would diminish the Bank Board's flexibility in exercising its regulatory authority."

What are the provisions that diminish the Bank Board's authority, and what would you suggest to correct the bill?

Mr. GRAY. I would suggest a very small correction, and that is I would like the bill to make sure that the Bank Board, which is head of the supervisory apparatus, determine what the salaries and benefits for our examiners ought to be. I suppose I am always just a little wary about recommendations that become more than recommendations. In other words, we have made so much progress in just a year in terms of the numbers we have been able to attract and so forth, and I don't want anything that would take away from our flexibility and hinder our continued progress in this regard.

Mr. LEACH. If you have specific things, why don't you present them in writing?

Mr. GRAY. Yes, sir.

[In response to the request of Congressman Leach, the following information was submitted for the record by Chairman Gray:]

The Bank Board is concerned about the provision of the proposed legislation that would consolidate all federal financial institutions agency examiner training programs under the

Examination Council.

We are also concerned with the provision that would require us to take into account private sector pay scale studies conducted by the Examination Council in setting salaries for our examiners.

These provisions could unnecessarily and adversely effect our ability to achieve maximum efficiency. We would also note that the Bank Board as well as the other financial institutions agencies have unique activities and responsibilities that

require specialized training for examiners.

As we explained in our prepared statement, the Bank Board has already established examiner training and performance standards which are specifically tailored to meet the special needs of thrift institutions. Since we already have the necessary flexibility to oversee the examination function as a result of the transfer of our field examiners to the Federal Home Loan Bank districts, the Bank Board recommends that it be exempted from both of these provisions. We would also note that the other financial institutions agencies have similar concerns with these provisions.