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Berman is telling banks to land but -- financial regulation they're required to keep a lot of cash on hand putting the banks between a rock and a hard place Scott Talbott is senior VP of government affairs for the financial services roundtable joining us now for how.
The finreg bill will affect us all Scott great to see you thanks for coming in appreciate it.
-- to be here now I understand you're.
You kind of like this bill even though a lot of people sell my got -- you got only the agencies in new bureaucracies we're gonna have to be dealing with why do you generally like it.
Ballistic that we like parts of the bill we like the fact that it will strengthen and modernize the regulatory framework he closed down those gaps in Italy in the regulatory system.
That in part allow some of this to happen.
Right now our regulators are somewhat silo and the creation of new systemic risk council all overseas bring all the -- together and oversee the entire industry.
Looking for trends that could cause systemic problem -- favor of that but Skype apparently talk yeah I've been talking a lot of small.
Businesses small banks in particular who say.
What the big guys are fine with -- they can afford the extra people in the lawyers -- -- accounts to accommodate the new regulatory authorities but we're gonna get crushed by this I've talked to at least five or six small banks.
Who say that the big guys to be OK the small banks will be -- how -- -- Well.
Yeah I mean I think a lot of the regulations are focused on the large banks that we will see an increase in regulatory compliance costs for the largest institutions and millions and hundreds of millions of dogs across the industry.
There are a number of carve outs for small banks.
That they're represented -- fought hard to achieve there will be increased cost -- them as well and so we have to be careful that we don't.
Lose a banker caught the bank to fail because of compliance costs that would be the worst case scenario out -- saying they say the carve -- went to the big guys we didn't get the carve outs I'm told by the smaller -- Yeah I don't see -- carve out for the large institutions when when everything is at least -- -- ten billion -- about.
Whether it's interchange but whether it's systemic risk but -- talking about a bank tax it's all focused on the large got to the ball with focus on the large have you added up how many new agencies and bureaucracies have been created as a result of this because or at least five that I -- Yeah I think that's about right -- the only merger consolidation we saw was merging the OTS into the SEC.
But yes this is a broad expansion of government power.
In the we also finance services and isn't that always attacks doesn't that always increase the -- that which you do business.
Yet -- will definitely increased regulatory costs compliance costs and -- -- and eventually legal costs as well.
And if you look at some of the provisions in Dodd-Frank -- -- decrease in revenue whether its derivatives -- proprietary trading.
Sort of seed bank profits get squeezed into a narrow margin you're going forward.
The sort of Armageddon that that we've been hearing some other some love from inside about what some people are worried that there's so much talk about banks not lending by the administration they may.
Somehow try to twist the arms of banks and get them to land do you know.
How that would work if it does.
Well it's a delicate balance.
Thankful always make a good loan to a qualified -- has the builder repay that will never change.
But we're seeing now is there's a lot of uncertainty about how much capital bank past the hole whether it's from dot francoeur -- three which is coming towards the end of this year.
It's -- banks are are worried about how much -- are going to need to hold.
Regulators are are are asking institutions to keep their capital levels high.
Banks are uncertain about -- future and that leads to higher capital we have higher -- called the good news is it strengthens the institution.
The downside is -- weakens the bank's ability to land.
The banks -- always make those good loans for right now we're in this in this sort of weird period we're waiting for the other shoe to drop but we know what that -- the capital requirements are going to be to get back to business.
Scott Talbott thanks for -- -- out for Scott appreciate Scott Talbott senior VP government affairs the financial services round trip round table good to see it.
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