FROM THE OFFICE OF PUBLIC AFFAIRS

March 11, 2005
JS-2305

The Honorable John W. Snow
Prepared Remarks
The Independent Community Bankers of America National Convention
March 11, 2005
San Antonio, TX

Thank you so much for having me here today; I hope you're having a terrific meeting. It's great to be in San Antonio.

I've come to you with a message from the President; let me read it to you before I begin.

I send greetings to those celebrating the 75^th anniversary of the Independent Community Bankers of America.

Our nation's economy is strong and growing because of the entrepreneurial spirit of our citizens. For more than seven decades, ICBA has supported community banks across our country and worked to promote excellence within the banking industry. America's community banks encourage local development, assist small businesses, and help individuals achieve financial stability and success.

As you celebrate this milestone, you should take pride in your accomplishments. I applaud ICBA members for helping our citizens plan for the future and make informed decisions about their savings. Your efforts contribute to the prosperity of our Nation.

Laura and I send our best wishes. Signed, George W. Bush.

It's an honor to have brought you that special message.

The very first thing I want to let you know about is that, once you get back home to your home office and computers, there is a new website you should check out: www.strengtheningsocialsecurity.gov.  This new site just `went live' today and is full of great information. It's designed to help Americans understand the serious problems that the Social Security system faces, and will provide constant updates on the efforts of the President and the administration to achieve meaningful, lasting, bi-partisan reform. One feature, for example, will keep a log of the trips that the President, Vice President, I and other cabinet members are taking to talk about Social Security with Americans like you from coast to coast. 

When it comes to budgets, income and outlays, sometimes it helps to see things presented visually. That's one of the things this site provides. It shows how our demographics are impacting the system and rendering it unsustainable. It lays out the President's principles for reform as well as supplying site visitors with a history of Social Security, from its creation.

I'll get into the topic of Social Security more in a moment, but want to start today by noting that, over the past two years, America's independent community bankers have been part of a phenomenal economic recovery and are helping to finance terrific economic growth. You are on the front lines, working closely with your customers to buy a new house or perhaps grow a small business. That's important work that has helped our economy prosper and has therefore made a real difference in people's lives.

Well-timed tax cuts, combined with sound monetary policy set by the Federal Reserve Board, led to this 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 equity lines of credit 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. 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 good news, the great news, is that the national dialogue on Social Security is terrific; it's the topic at lunch counters and kitchen tables, college dining halls and office water coolers all over the country. And as ideas begin to come forward, it's important to remember that reform of the Social Security system must be lasting, permanent, not just a temporary `band-aid.'

It takes courage to do more than patch up a system that affects every citizen's life. But it's what Americans expect of their leaders; they expect elected officials like the President and the Congress to really solve problems, not just tinker with them.

That's why the President has said that Social Security must be put on solid financial ground permanently, for the long haul. He believes that it would be an injustice to the American people if Washington, DC simply put a band-aid on the problem. Because then the whole country would be back at the starting line in a few years.

So if someone promises you a 75-year fix, I encourage you to read the fine print.  In 1983 we were promised a "75-year fix" – but 2 years later, the system was headed out of balance again.

I know that all of you born before 1950 know that nothing changes for you. You aren't going to be scared by ads, or misled by politicians. You know better than anyone how important it is to have a secure retirement, and you also want what's best for your kids and your grandkids… which is why we welcome your ideas on this issue.

The generations of current and near-retirees have an awfully important opportunity: to be the ones to usher in a new generation of shareholders in the American Dream. Our children and grandchildren have an opportunity we didn't have – an opportunity to own their retirement, a nest egg they could pass on to their heirs.

The creation of voluntary personal accounts is the element that makes the President's vision so different from a band-aid approach. They would change our children's financial prospects and give Social Security a future that won't need constant patching-up.

It's inspiring to imagine, and inspiring that 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?"

And that's the question Americans want to hear. It's why he encouraged this dialogue; he wants lots of ideas on the table. An open discussion with lots of ideas – not partisan politics – is the best way to accomplish the goal of securing the financial future of our children and grandchildren.

President Bush has established some basic principles. He wants a permanent solution, as I mentioned earlier, not a band-aid.

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.

The President has also said that he won't raise the payroll tax rate. Payroll taxes have been raised some 20 times since Social Security was established – and it has failed to 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.

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 – something you, as bankers, understand very well.

Albert 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.

For the life of me, I can't imagine why anybody would argue against young workers having the ability to invest and build a better retirement for their future. It costs the Social Security system nothing to do so, it will cost current and near-retirees nothing, it gives our children and grandchildren a better retirement, and it helps our country create a larger pool of savings. And as the President has said, the retirement security of our young people is too important for partisan politics. Why wouldn't we do this? I have not heard one good reason not to and I can't figure out why anybody would oppose it.

Furthermore, as former Democratic Congressmen Tim Penny and Charlie Stenholm wrote in an op-ed this week, "opposing personal accounts is not a substitute for offering a positive solution for dealing with the challenges that face Social Security." They went on to say, astutely, that they "believe that if Social Security were being created from scratch today, Americans would want to include a way to help everyone build up a nest egg." The President and I couldn't agree more.

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 observations we hear from consumers is their desire to 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. This is a real opportunity for you.

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.

While terrorist groups need enormous amounts of money to train, recruit, travel and essentially exist, September 11^th and the train bombings in Madrid taught us that relatively small amounts of money are needed to carry out actual terrorist attacks.  That's why it is so very important that we remain constantly vigilant, attacking tainted sources of funding while also creating systems that help prevent blood money from moving through our banks and financial system.   

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 to the spread of democratic values across the globe, these are historic times that we will look back on with the great sense that America saw what needed to be done and didn't shrink from the challenge. 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.