FROM THE OFFICE OF PUBLIC AFFAIRS

March 9, 2005
JS-2300

The Honorable John W. Snow
Prepared Remarks to the American Bankers Association
March 9, 2005
Washington, DC

Thank you so much for having me here today; I hope you're having a terrific meeting and are spending plenty of time on the Hill with your Congressional Representatives. They need to hear from you! You're a very important part of the free-market system that makes this great American economy so strong, and your perspective on financial policy issues is invaluable.

No one appreciates the role you play in the American economy, and our way of life, more than Don Ogilvie. I know he'll be leaving the ABA this spring, after 20 years of service as your CEO.

Don, you've had a distinguished career in both the public and private sectors, you've helped ABA become one of the leading associations in Washington, DC, and I wish you all the best in your future endeavors.

Don is leaving this group on a high note in many ways. Over the past two years, American bankers have been part of a phenomenal economic recovery and are helping to finance terrific economic growth.

Well-timed tax cuts, combined with sound monetary policy set by the Federal Reserve Board, have resulted in very good economic growth and, most importantly, continual job creation. The economy has created over three million jobs since May of 2003. And while job growth can never be fast enough for those looking for work, the steady pace of job creation has been an unmistakable sign of an economy that has recovered from very tough times, and is now expanding.

The evidence abounds: In addition to continued job growth, we've also seen new jobless claims decline and productivity continue to expand. GDP growth for 2004 was 4.4 percent. The unemployment rate is down to 5.4 percent - lower than the average rate of the 1970s, 1980s and 1990s. Inflation, interest rates, and mortgage rates remain at low levels. Homeownership rates are at record highs.

The people here in this room should be very proud of those numbers. Because you are very much a part of our country's economic recovery and strength. Whether it's home mortgages or small-business start-up loans, you are providing the capital that enables terrific, job-creating economic growth.

So I encourage you to keep up the good work at home. Here in Washington, DC lawmakers need to work on keeping the path clear and solid for an economic future that is as good, or better, than the present. To do that, we've got to keep taxes low. We've got to keep the homeland secure – that's something you're helping with and I'll talk more about that later. And we've got to save Social Security.

Social Security is sound for today's retirees, but the system must be fixed to keep the promise of Social Security for our children and grandchildren, period.

The President has courageously touched the "third rail of politics" and successfully engendered a national dialogue on this monumental issue. His leadership has been inspirational.

Today, the conversation on Social Security is taking place everywhere you go, every place you look. Over lunch counters, over breakfast and dinner tables all over America… the topic is Social Security reform. It's the front page story in virtually every newspaper. It's on the evening news. And it's there because of the President of the United States. It's there because of the courage that he's had to directly confront and deal with that "third rail."

We're really advancing on this issue, and ideas are coming forward. Neighbors and co-workers are talking about it; families are talking about it; Congress is talking about it. 

We've seen a clear shift in the course of the last month or so from the question: "Is there a problem?" to the question: "How do we fix it?"

The President has encouraged this dialogue because he wants lots of ideas on the table; our children's future is too important for partisan politics, and an open discussion with lots of ideas is a much better way to accomplish this goal.

President Bush has established some basic principles. He wants to preserve benefits for current and near-retirees while saving and strengthening the system for future generations. Specifically, Social Security will not be changed for those 55 or older (born before 1950). For the more than 45 million Americans who are currently receiving Social Security benefits, and those nearing retirement, benefits are secure and will not change in any way, period.

For future generations of retirees, the President believes an awful lot of hope lies in personal accounts – something that would allow younger workers to build a nest egg that they own and control, something the government could never take away from them, and that would tap into the great force of compound interest.

Einstein believed, and the President and I agree, that compound interest is one of the most powerful forces in the universe. It's why a personal account nest egg would have a real return on investment that is far better than the rapidly-weakening promise of Social Security benefits.

Finally, and very importantly, the President has said he won't raise the payroll tax rate. Payroll taxes have been raised by Congress time and time again since Social Security was established – and it has failed make Social Security solvent. Raising the payroll tax will harm our economy, hurt job growth and fail to achieve the President's goal to create a permanent fix for Social Security. Even the most resilient economy can be devastated by dramatic tax increases.

I know that this audience understands and appreciates what I'm saying here today. You understand the value of ownership, and how sound investments and savings lead to a financially independent future.

You've seen your customers improve their financial futures through the investment and savings products you offer.

Perhaps you are even offering your customers Health Savings Accounts (HSAs) – and if you aren't yet, I hope you consider it. It's something that I think has huge market potential, and is of particular interest to your small-business customers.

HSAs are really super-charged IRAs that put patients back in charge of their health care. They own it, they control it, they can leave it to their heirs.

It's a new option for health coverage that is good news for individuals and employers who are struggling with their health-care costs.

One of the most common complaints we hear from consumers is that they can't find a local bank that offers these accounts. So I am confident that the market is there for you and that consumers are anxious for you to add this to your product line.

HSAs are a critical step toward increasing the availability and affordability of health insurance for all Americans. They are also helping to put individuals in charge of their own health care… and that's something that is good news both for the American family and for the American economy as a whole.

The American economy also does well when our citizens feel a sense of safety and stability. In short: we must be secure in order to be prosperous.

And that's why, in today's world you, as bankers, are taking care of your customers in a new way. In addition to providing essential financial services, you also work with law enforcement and intelligence services every day in the war against terrorism.

While hatred fuels the terrorist agenda, money makes it possible. That's why the work you do, and the information you share with authorities, is a critical element in winning the war on terror. With every battle that we win, every terrorist or organization that we designate, we tighten the noose on terrorist financial networks.

I deeply appreciate the work you do in this area. I know that many of you here today are concerned about developments related to the Bank Secrecy Act, and I'd like to talk about that because it's important we work together on this.

Compliance with the Bank Secrecy Act is vital; we take it seriously, and information reported by your institutions under this Act is critical to the national security of our country and to our efforts to protect our financial system from the abuses of money laundering and other financial crime.  Your due diligence with respect to suspicious activity makes you the gatekeepers for entry into the financial system.

We hear your concerns about the need for consistent enforcement. I want you to know that I have asked Under Secretary Stuart Levey, Assistant Secretary Zarate and Director Fox of the Financial Crimes Enforcement Network to fully engage the bank supervisory agencies and the Department of Justice to ensure that the examination and enforcement processes under the Bank Secrecy Act are fair, consistent, and achieving the ultimate policy goals of the statute.

We have also heard and read your concerns about the ambiguities surrounding money service businesses. Upon my request, FinCEN convened a meeting here in Washington to begin to address issues relating to the banking of money service businesses. These businesses are key components of a healthy financial sector, and it is very important that they have access to banking services. This meeting was to help develop specific regulatory guidance that will assist your institutions in understanding this industry, its operations, the risks posed and the obligations your industry has relating to this industry under the Bank Secrecy Act.

Again, I want to thank you for the efforts you and your institutions have made in complying with the Bank Secrecy Act. We are aware of the efforts you are making and the monies you are spending to ensure compliance. The financial sector – particularly depository institutions – has led the private sector in assisting in the war against terrorism, and it is clear that you appreciate the fact that you are on the front lines. On behalf of the President, I want to thank you for your efforts, and I want you to know that we appreciate your good corporate citizenship here in Washington.

I believe that the best days lie ahead for this country… because we are resolved to make it so. From the war on terror to the salvation of Social Security, these are historic times that we will look back on as triumphant. I'm proud to be working for the President on each of these goals, and I'm looking forward to working with all of you as we protect America from terror and continue on a path of economic growth.

Thank you again; have a great meeting.