Comment by Frank Rauscher on September 15, 2011 at 1:59pm

While the role of the CBA is to lobby for banks and try to self-regulate the industry, it is disappointing that these talking points are all that the CBA can currently muster (I was a member of the CBA board in times past).  On their website, the CBA has set a target for the their top banking award, "Joe Belew Award", to be based on "Job Creation" yet the talking points never referenced that fact. The best that he could say was that Wells Fargo was going to make $1 billion in small business loans - ONLY $1 billion?  From a top four deposit owning bank? Worse, the incoming chair of CBA  is from B of A - how many jobs are they going to create?-  minus 30-40 thousand?  Kind of like Jeff Imelt of GE send thousands of jobs to Chine while heading the Presidents job creation commission. 

It is up to the banks to show innovation and figure out a way to get credit into the hands of people that need it.  Credit stimulates the economy. And it only needs to be "responsible credit" and not "angel credit".

The primary product that banks have and that people need is credit- and that requires underwriting skill. Banks need to be hiring people with underwriting skill - not laying them off. 

 

Banks could argue to get rid of much of the regulation if they would adopt "Suitability" as a key attribute of their credit process. The banks do not want to do it because it means that they cannot abuse the customer. Interesting that Mr. Hunt talked about trying to get all the other financial lending intermediaries regulated - he should visit with the home mortgage side of the commercial bank where they have lobbied against the bank mortgage loan officers being regulated (licensed) the same way that home mortgage brokers are now being tested and licensed. The good news is that when a home mortgage broker fails the state license test, they can still get a job at "a bank"! 

 

Comment by David Ruggles on September 17, 2011 at 10:40am

EXCELLENT comments Frank!

 

Some people believe it was regulations that caused the financial crisis and the recession we are all living.  They are usually referring to the CRA as if lenders were forced to make risky loans.  Then there are others who believe it was the repeating blocking of attempts by RWers to regulate credit default swaps that caused the problem.  Statistics show that 85% of mortgages during the bubble were approved by NON CRA REGULATED lenders.  Even ultra conservative Jack Kemp knew that the CRA had nothing to do with the mortgage crisis.

 

http://www.youtube.com/watch?v=fWNQza4CMwI

 

Even the Fed reached the same conclusion.  It was Wall Street being able to junk into gold that allowed them to spread their MBSs all over the world.  Without credit default swaps, the AAA rating that allowed this to happen would never have happened.

 

So complaints about regulation might fall on some deaf ears. 

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