ABA Banking Journal - November 2008 - (Page 19)

After the crisis Banking much room—or rope, depending on one’s starting point—the banking regulators will grant the organization. A relatively permissive period has just come to an end, with a jerk. Promontory’s David Gibbons notes that in the period before the crisis, some regulators clearly believed that something bad was coming, if trends they saw went unchecked and unlimited. But it took a long, long time, he points out, for any formal action to come out, in interagency form. In the meantime, top regulators jawboned in this or that forum, hoping to put their point across through oratory. This was seen in the areas of nontraditional and exotic mortgage instruments, home equity lines, and commercial real estate, notably. And when interagency documents were issued, what came out were not rules and regulations, but “guidance.” For Gibbons part, he wonders how things might have turned out if regulators had shut some forms of lending down Ripple effects from current loan issues are a concern. “We are actually not out of the woods on this” 2.0 —David Gibbons, Promontory Financial Group LLC two or three years ago. Going forward, Gibbons expects that regulators will tend to be more counter cyclical with credit than ever. They will have to be, if, playing off a 1980s regulator’s statement, they are to be able to take away the punchbowl before someone drowns themselves in it. “You need to have regulations with some supervisory teeth,” says Gibbons. This is not something he feels the system currently has. Analyst Bert Ely sees the regulators’ task becoming wider and deeper, with the outcome of congressional inquiry and their own revisiting of their role resulting in major regulatory restructuring. This will not only affect who regulates whom, but what is regulated. Such unregulated creatures as hedge funds and credit default swaps, won’t remain so for much BANKING 2.0: CREDIT continues on page 95 Subscribe at www.ababj.com ABA BANKING JOURNAL/NOVEMBER 2008 19 http://www.nationwide.com/livingbenefits http://www.nationwide.com/livingbenefits http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2008

ABA Banking Journal - November 2008 Contents Editor's Column Banking 2.0: Credit, Banking's Essence, Set for Rethinking Snapshot: The Few, the Proud, the Banks that Can Raise Capital Will Strong and Simple Banks Inherit the Business? Back to the Future ABA Resources ABA Chairman's Position Farm Lenders Must Take Care When Lending in Indian Country Pass the Aspirin Into the Breach Adventures Across A Century What the Future Holds, Post Crisis Paul Volcker: A Financial Legend Still Speaks Strong Ed Yingling: Weathering the Storm Dick Kovacevich: "Boring" Banking to Dynamic Financial Services Jim Culberson: Community Banking: What has Changed and What Shouldn't Walter Shipley: How a Chemical Reaction Helped to Mold Today's JPMorgan Chase William Isaac: Challenges and Opportunities Ahead for Banks A Hundred Years from Our Pages Eight Tech Innovations that Brought Banks into 21st Century Bank Cherokee: Third Generaton Marks 100th Year The First National Bank of Altavista: Railroad Gave Birth to a Town, a Hope Chest, and a Bank Rosedales Federal Savings and Loan Association: How a Friendly Game of Cards Turned into a 100-Year Mutual New Washington State Bank: Cooking Up the Next 100 Years Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2008

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