ABA Banking Journal - November 2008 - (Page 4)

Editor’s Column WILLIAM W. STREETER Editor-in-Chief Banking JOURNAL ABA USPS-544-030 NOVEMBER 2008, VOL. C, NO. 11 Editorial and Executive Offices: 345 Hudson Street, New York, N.Y. 10014-7115 Phone: (212) 620-7210 Fax: (212) 633-1165 E-mail: ababj@sbpub.com Internet: http://www.ababj.com Published monthly for the American Bankers Association by Simmons-Boardman Publishing Corp. and copyrighted 2008 by ABA; Edward L. Yingling, President, 1120 Connecticut Ave., N.W.,Washington, D.C. 20036, (202) 663-5000. Title registered in U.S. Patent Office. With the exception of official Association announcements, the American Bankers Association disclaims responsibility for opinions expressed and statements made in articles or advertisements published in ABA Banking Journal. Visiting with history IT WAS THE MIDDLE OF THE afternoon and he had a cold, making the familiar rumbling voice even deeper. With his still-tall frame filling a large desk chair, Paul Volcker, glanced at the list of questions he was holding and asked his guest, “Why did I agree to do this?” The guest—yours truly—couldn’t answer his question as to why he agreed to do an interview for our 100th anniversary issue, but was grateful that he had. “I’m 100 years old,” Volcker rumbled, “so that makes sense,” he said. Not quite. He’s only 81. After the interview, as I passed by the massive granite edifice of an old J.P. Morgan building, I thought, “I was just speaking with a man who could have placed a call to Lew Preston, Morgan’s CEO at the time, who would certainly have taken his call. By his words or actions, Volcker could complicate, simplify, thwart, or stimulate Morgan’s business plans and those of every other bank in the country and most businesses. Heady stuff being a Fed chairman. For all that, Volcker retains a modesty that wears well. He also has the same sense of duty and resolve, the same insight that he had at the Fed. As well as a deep respect for the institution. As mentioned in the article about him (p. 60)—part of our special 100th Anniversary Section—I had a second chance to visit with the former Fed chairman during an October press briefing for a Group of Thirty study that he had shepherded. During the briefing he was asked what he thought of the flurry of “muscular actions” taken by current Fed chairman Ben Bernanke to deal with the rapidly developing credit crisis. Said Volcker, “He deals with this as best he can in a very adequate way given the limited powers [he has] and the pressure he is under. I admire what 4 NOVEMBER 2008/ABA BANKING JOURNAL all of these people are doing.” In the interview, when I asked him how he dealt with the intense criticism that followed from his 1979 decision to let interest rates float to double digit levels in order to break inflation, he responded with the word “conviction”— the conviction that you had correctly analyzed the situation and could convince other people to go along with you. Conviction is that elusive attribute that sits delicately balanced between arrogance and diffidence. History has shown that Volcker’s conviction was justified. As we say in the article, his actions were “the equivalent of taking a scrub brush” to the U.S. economy to rid it of inflationary expectations. That phrase came from a story told to me by my father, who, as a young man, had been a counselor at a Boy Scout camp. One day a young boy had fallen and driven gravel into his knees. A compassionate man, my father began to carefully pick out the gravel piece by piece, trying not to hurt the lad any more than he could help. A senior counselor, seeing this, showed him a better way. He took the boy’s knee firmly in hand and with a brush removed all the gravel with a few vigorous strokes. The pain was intense, but over much more quickly. Volcker’s tough measures were similar, and he persisted when many counseled taking a more gradual approach, because he believed only worse trouble would come from halfway measures. The same principle could apply in another area today—wringing out “debt expectations.” Volcker has said for some time: we have been spending beyond our means. The government can, and should, help ease the pain of the correction, where possible, but should not seek to reignite the same forces that brought us to this pass. bstreeter@sbpub.com Editor-in-Chief Executive Editor Senior Editor Editorial Assistant Art Director Associate Art Director Art Production Manager Contributing Editors Leslie T. Callaway Lucy Griffin Mark Kruhm Orla O’Sullivan Advisory Committee Jeffrey S. Owen Production Director Circulation Director Publisher William W. Streeter bstreeter@sbpub.com Steve Cocheo scocheo@sbpub.com Lauren Bielski lbielski@sbpub.com Andrea Rovira arovira@sbpub.com Wendy Williams wwilliams@sbpub.com Phil Desiere pdesiere@sbpub.com Todd M. Blanchard tblanchard@sbpub.com Ed Blount Nancy Derr-Castiglione Karen Holliday Bill Orr Lisa Valentine Edward L. Yingling Virginia Dean Mary Conyers-Brown mbrown@sbpub.com Maureen Cooney mcooney@sbpub.com Gus Blumberg gblumberg@sbpub.com Subscriptions: Call 1-800-895-4389; or write to: Subscription Dept., ABA Banking Journal, P.O. 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ABA Banking Journal (ISSN 01945947, USPS 544-030) is published monthly by Simmons-Boardman Publishing Corp., 345 Hudson St., NY, N.Y. 10014-4502. Periodical Class postage paid at New York, N.Y. and additional mailing offices. Canada Post Cust. #7204564; Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2; Agreement #41094515. POSTMASTER: Send address changes to ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010. Subscribe at www.ababj.com http://www.ababj.com http://www.nexis.com 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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