Archive for the ‘wall street’ Category

One Voice - A Community Banking Voice

Friday, July 31st, 2009

There are some bankers that believe our industry would be better off politically with a single, unified voice.  One does not have to venture any farther than the halls of Congress to dismiss that belief as a tired old myth.

Who, after all, wants to shackle their hands and ankles to the “too big to fail” banks and their unregulated affiliates and subsidiaries and jump off the 14th Street Bridge into the Potomac?  But that’s precisely what some bankers and their trade associations would have you do; dismissing the efforts of the community banking lobby as nothing more than a “distraction” and chastising us for our divide and conquer mentality to protect our unique interests. They would go as far as making claims that a unified industry with a unified message is the only true way to move a political football.

Tell that to Barney Frank, Chairman of the House Financial Services Committee.  In a recent Washington Post article describing how community banks are central to the current regulatory reform proposal, Chairman Frank describes the big bank lobby this way:  “The larger financial institutions have the opposite of political clout today.  They’re radioactive. The only way the big banks can win is if they get the community banks to be their troops.”  And the Chairman is not unique in his views.  Texas’ Congressional delegation understands it too.  I know because I hear it in every office we visited in Washington this week and every time we make calls in the wake of this whole economic mess.  “You guys are the good guys in the industry,” they tell us.  “We would like to find a way to make sure we don’t disenfranchise the community banks as we debate this.”

The current Obama regulatory reform proposal is enough to scare the crap out of any of us.  All we need is another regulator to get a broad legislative mandate to regulate products and services in the name of consumer protection, relegating us to “cookie cutter” and “plain vanilla” products and services.  That proposal, courtesy of the unregulated “shadow” banking industry would translate into nothing more than socialized banking designed to eliminate customer convenience and choice while raising costs. That’s not how the greatest economic system in the world has evolved, nor how it will be strengthened in the future.  You can bet if we can carve community banks out from under this Consumer Financial Protection Agency, we damn sure will do it.

So don’t tell us to get in line and leave the lobbying to groups that have divided interests and hope that somehow you will fairly represent the interests of community banks.  We didn’t cause this mess and we are tired of helping the big banks clean it up in the form of higher regular and special FDIC assessments, suffocating new regulations and bad industry public relations.

We will continue speaking with one voice…a community banking voice.

Posted in Barney Frank, Consumer Financial Protection Agency, FDIC, ICBA, Independent Bankers Association of Texas, Texas Community Banking, bank regulators, community banks, special assessment, systemic regulator, too big to fail, wall street | No Comments »

Breaking Up The Behemoths

Thursday, April 23rd, 2009

“And David  strikes Goliath in the head with a stone from his sling; the Philistine fell on his face to the ground. “

It was music to all community bankers ears this week to hear three respected economists, one a 2001 Nobel prize recipient, tell a Joint Economic committee of Congress to break up the too-big-to-fail institutions and disassemble the oligarchy they have created.  I say Amen, too.

Breaking up the behemoth banks would mean recalibrating the disproportionate influence they have had on public policy.  Translated for community bankers…a bifurcated banking regulatory system just might be within our reach.  Community bankers are tired, and rightfully so, for paying for the sins of Wall Street in the form of higher FDIC insurance costs, and their owned tarnished credibility in the eyes of the general public and lawmakers.

There are obvious immediate benefits that will accrue to all community banks if Congress has the guts to set about a systematic plan to break up the big banks.  Deposits will funnel back to local communities where they were extracted and rightfully belong into the hands of the more than 8,000 community banks to be put to work for the local folks.  More money will be available for small business and consumers.

But perhaps the most significant benefit that could result from this is a reduction of the many hidden costs of regulatory burden…a burden that has most community institutions drowning in cesspool of paperwork.

Last month I heard one of the more sensible solutions to reducing the regulatory burden on community banks.  It was sensible to me because it is precisely what my colleagues and I have been advocating for the past ten years.  And, it came from a bank regulator no less.  He advocated that two charter types should be created; one a commercial charter for those institutions that choose to venture out of traditional banking services into exotic and risky product lines, and  a community bank charter for those institutions that wish to operate more on traditional banking product and service lines.  Each would be subjected to different regulatory and examination specifications proportionate to risk.

We are a long way from realizing the dream that one day community bankers would be rescued from over regulation…regulation that has largely been created thanks to the greed and corruption of the mega banks.  The testimony of  the three economists this week however was a good start.  It is nice to see that someone is hurling the stones precisely where they need to be hurled.

You never know when one just might bring the mighty behemoths down.

Posted in FDIC, Independent Bankers Association of Texas, TARP, bank regulators, default category, federal reserve, systemically important, systemically unimportant, taxpayer, treasury, wall street, zombie bank | 1 Comment »

Rearranging the Deck Chairs

Monday, March 23rd, 2009

By now, I should quit being surprised… surprised at anything the Treasury and the Administration might try to get this country moving again, and their attempt to restore troubled too-big to close (they have failed) financial institutions.  Today’s Treasury announcement of a new private/public partnership to package and auction  their problem assets is case in point.

I am struck by the irony of this announcement.  Is this not exactly what Treasury originally intended to do by creating the Troubled Asset Relief Program (TARP) late last year to clear the balance sheets of the too big to close?  That plan was abandoned almost immediately after its development for fear that purchasing troubled assets from banks would expose the Treasury and taxpayers to paying too low a price for their acquisition.  Instead they opted for direct investments in the banks themselves.

Now they design an almost identical plan with one exception…private investors will have skin in the game alongside the government and they have guaranteed a market price  by allowing for competitive bids by pension and hedge funds and other would be investors.

I commend the Treasury and Geithner for this initiative… in my view it was precisely what was needed all along, the way TARP was originally intended.  Apparently the Street likes it too.  Markets are wildly up in heavy trading today following the announcement.

Finally, we have an action by the Treasury that just might save (at least for now) the sinking ships.  And all along, all they needed to do was simply rearrange the deck chairs.

It is clear that Treasury will do everything in its power to save the too big too close banks.  And once it is evident that they have, let’s hope a future initiative will be to break those suckers up so they can never be too big to close again.

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Posted in IBAT, Independent Bankers Association of Texas, TARP, Texas Community Banking, taxpayer, treasury, wall street | No Comments »