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-- let's talk about this tax now that the president has laid out there a few moments ago it's -- McEnroe joins us bank research executive at Tower Group from Newton ascent.
Boy it's really can't call this anything else but attacks and only wanted to call it fee and some other things but.
It really is -- -- it seems like a punishment -- do you agree with that.
I do actually.
You know whether you're calling -- -- responsibility fee which I think is.
There are a couple of things going on here -- it's sort of a broad brush approach to a problem that's very complex as your previous.
-- -- -- -- And you know the second thing is that.
It it it's really part of a larger.
Very politically driven.
Approach to controlling the sources of revenue.
Available to a financial institution because.
If you look at the -- itself right fifteen basis points on the difference between assets and and tier one capital plots.
Over the next ten years.
You know that the top ten banks in the United States and I'm putting Goldman and Morgan aside for the moment.
But if you look at the commercial banks the top ten it's you know roughly about six billion dollars a year.
Now through the first three quarters of the year they made collectively about twenty billion dollars so certainly one could look at that say well they can afford it.
But if you add and the FDIC special assessments that are put in place last year you put in a 150 -- billion dollar com.
Permanent default fund that was passed as part of the consumer finance protection agency.
Legislation last month.
And you put in some other controls on in come specifically specified in the card act.
And potentially -- the pending or BNSF legislation.
All of these things are gonna severely constrained bank's ability to drive revenue profit.
And as a result there either gonna have to become very innovative in terms of where they're gonna find their revenue going forward or they're gonna have to cut costs.
But let's call a spade a -- they're not gonna pay this city they're gonna pass it right on down to us.
Well -- in certain respects I think that they're they're going to have to consider ways to do that but they're also gonna have to look at cost cutting.
-- there's a lot of of research that we've been doing it Tower Group that look at the reality that even today.
Banks of this -- are ours are facing very constrained budgets right the other number I think that's important for us to consider.
Is if you look at these top ten banks.
The provisions for loan losses that they've had to take on over the first three quarters of last year we don't have the fourth quarter numbers quite yet.
Numbers about a 120 billion dollars.
That's a guarantee against future loan losses were not certainly through the crisis in any way shape or form to this point in time we've got in social real estate.
Commercial and industrial loan performance is starting to erode and certainly we're not out of the woods in terms of credit cards.
-- so they're gonna have to look to cut costs they're gonna have to look to drive revenue and new ways and -- some of that cost is gonna have to be pushed onto the consumers well.
I would imagine also you don't go back to point about having to find innovative ways to turn a profit that.
On that would encourage more risk taking would you thanks.
Well you know out to the extent that they're allowed to do.
I think that a lot of the innovation that's going to have to com.
Indy in the industry itself is going to have to come through our client experience.
We believe that investments in the ways that banks treat their customers -- corporates as well as individuals it's going to have to continue to fall.
There are a lot of nontraditional.
Entering the marketplace.
That are creating new ways of doing business financially.
You know we're gonna have to look at channel investments we're gonna have to look at innovations and product.
I'll bundling to encourage people to do more business with a single institution all those things -- -- play and they're gonna have to be investments that support that.
There's just so many things wrong with this and so many levels but the biggest -- me is that.
Bet many banks -- forced to take TARP money that they didn't even wants.
And now they're gonna have to pay celibate but they paid it back they didn't they're supposed to do.
And never have to pay this fee on top of the ball when they want the money to begin a minute you wanna play -- this party.
That's right that's getting back to the point I made earlier about this being a very broad brush solution right.
There are many banks that are covered by this particular.
Fear attacks or whatever you want to call it.
It never got into some prime lending that did not do a whole all a lot of wholesale mortgage lending through independent brokers.
-- that were very conservative in terms of that types of underwriting that they get.
Nevertheless they're being assess the state.
Yet since it's just again it's wrong on so many levels to second drug bank -- executive at Tower Group out the new and -- stay warm thanks for being with us.
Thanks very much and.
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