Also in this playlist...
This transcript is automatically generated
Care bill barely dry congress now turning its attention to another big point of policy.
Financial regulatory reform the senate banking committee approving chairman Chris Dodd's bill along party lines yesterday it now moves to the full senate for consideration.
But your next guest says the Dodd bill fails to fix some critical issues joining us now from Washington.
The -- is the president and CEO of the American Bankers Association -- feeling good to see again.
What don't you like about what you know about the Dodd bill.
We support many parts of the Dodd bill and we are supporter of regulatory reform.
We have some concerns particularly about the consumer agency that has been proposed we do think it still.
-- two conflict between the safety and soundness regulator in the consumer regulator.
We would like -- too big to fail provisions to be even a little stronger than they are we frankly don't like the up front resolution on the fifty billion dollar fund because I think it will be read.
By the market as -- too big to fail -- But -- -- support generally their resolution.
Mechanism for too big of bell went like that concept of their being a systemic oversight group.
-- been so much talk about the lack of lending you've got some people blaming it on the banks got other people blaming it on people just not wanting to take out loans.
Will any incremental fee charged tax whatever you want to call it -- will that negatively impact lending.
Well certainly -- -- -- taking money out of the banking system that could be used for lending and in fact.
We generally safe from eight to ten times the amount of lending.
So if you take a million dollars out of a bank you could make eight to ten million dollars in loans and also we do have concerns about.
Increases and regulatory burdens particularly for community banks just in the consumer area for example.
The median bank in this country has fifty pages of consumer regulations and guidelines.
For every employed.
And yet these community banks didn't make any toxic sub prime loans and they -- engage in credit default swaps but they're gonna end up with hundreds of more pages of regulations and that's that's a concern about.
Having banks really serve their economy at this critical time.
But do you believe some form of regulatory bill will.
-- pass either this year or next year I think the odds are in favor of it passing this year.
One big unknown of course is what is going to happen in the summit with this reconciliation process on health care what is going to be the mood of the senate.
There are those in Washington that think the -- to be so bad that nothing controversial could pass but I think there's a good faith effort.
By all parties.
In the senate certainly on the part of the -- to see if we can't reach an agreement and get a good bill this year.
You know used to be when a bank failed it made news right every Monday morning we'd come in and say well Friday afternoon so and so banks -- you know I don't know that's good or bad and it's gotten off the headlines but it hasn't slowed down.
The number of bank failures -- how many more banks are going to fail before this is all over.
Well we don't know we think where he probably will have roughly the same pace for the rest of this year.
And then -- probably taper down fairly quickly.
It is important to note that -- for some of the banks in the country are still well capitalized.
And of course no consumers ever lost a penny in and the FDIC insured account.
But we're going -- -- the worst economy -- -- since the Great Depression.
And particularly in certain areas of the country where the economies.
In the dumps we're gonna have some more bank.
You know we we've been I was so we have even averaging about I'm about five to seven banks every Friday have failed and let's say well I don't know what we have a forty weeks about left in the year.
So -- would imply then that we're gonna see a few more hundred bank failures this year if we average that out you really that.
Not think that's maybe a little hard -- you see five to seven banks but there have been times for example that several of those banks are in the same holding company.
And are some weekends where you have.
One or two banks or even know -- but.
I can't predict the number but I think we're gonna continue to see about the pace we've seen her the last years so will quibble credit remains tight.
For the remainder this year.
Well it a lot of it depends on the unemployment rate quite frankly and they unemployment rate -- is.
It is not looking real good at this point.
Now -- you alluded to earlier loan demand is is very much down and when you look at the raw numbers you have to factor in the that loan demand is down that that businesses and consumers are not borrowing because of the state of the economy.
One issue we have is that loans could be more forthcoming.
But it frankly.
As even the president this -- the secretary of the treasury as recently said.
We do have a problem with a regulatory overreaction so that we have regulators coming -- to banks and saying.
I don't I don't care -- you you seem to be all right but I want you to raise more capital.
Well it's hard for those banks to raise capital in this market so the only way they can retire.
Capital ratio is in fact to shrink.
And then we have regulators come in and say well I know this looks like a perfect -- I don't want you making any more those kinds of loans.
And so we have to get the balance right with the regulators on margin we could have more lending the banking industry if we can accomplish that.
Edging -- president and CEO the American Bankers Association -- always a pleasure thanks for coming on the program sir thank you thank.
Filter by section