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dbucfan

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: April 28, 2010, 10:16:49 PM

Reform will hurt banks
POINT OF VIEW LEAVE TRADITIONAL COMMUNITY BANKS ALONE
BY DOUG TIPPENS     4 Comments
Published: April 28, 2010
Most Oklahomans have heard about "financial reform” being hotly debated in
Washington. We’re being led to believe this effort is solely directed at Wall Street.
We’re told it will end our unofficial national policy of banks being "too big to fail.”
They say the reform will protect consumers from the bad guys who caused the collapse
of the housing market.

It isn’t. It doesn’t. It won’t. And it has huge implications for Oklahoma’s Main Street
businesses and consumers.

Everyone agrees that financial reform is necessary. We all watched in amazement as
the cataclysmic meltdown of some of the largest financial firms in the United States
nearly toppled our economy in September 2008. But how many traditional community
banks in Oklahoma caused the problems? None.

So why would Oklahoma bankers oppose the financial reform bill pending in the
Senate? Simple: As presently drafted, the bill doesn’t end "too big to fail” and would
increase the costs and reporting obligations of traditional community banks and their
customers.

For example, the creation of the consumer protection bureau applies to traditional
community banks and their customers, but it exempts entities regulated by the
Securities and Exchange Commission. In other words, it applies to every bank, savings
bank and credit union in Oklahoma, but lets the bad guys skate. This is wrong.
It’s the "non-banks” and securities firms that brought us all of the gimmicks that
should be the focus of this new agency, but they are exempt from the reach of this new
agency.

Most Oklahomans have heard about "financial reform” being hotly debated in
Washington. We’re being led to believe this effort is solely directed at Wall Street.
We’re told it will end our unofficial national policy of banks being "too big to fail.”
They say the reform will protect consumers from the bad guys who caused the collapse
of the housing market.

It isn’t. It doesn’t. It won’t. And it has huge implications for Oklahoma’s Main Street
businesses and consumers.

Everyone agrees that financial reform is necessary. We all watched in amazement as
the cataclysmic meltdown of some of the largest financial firms in the United States
nearly toppled our economy in September 2008. But how many traditional community
banks in Oklahoma caused the problems? None.

So why would Oklahoma bankers oppose the financial reform bill pending in the
Senate? Simple: As presently drafted, the bill doesn’t end "too big to fail” and would
increase the costs and reporting obligations of traditional community banks and their
customers.

For example, the creation of the consumer protection bureau applies to traditional
community banks and their customers, but it exempts entities regulated by the
Securities and Exchange Commission. In other words, it applies to every bank, savings
bank and credit union in Oklahoma, but lets the bad guys skate. This is wrong.
It’s the "non-banks” and securities firms that brought us all of the gimmicks that
should be the focus of this new agency, but they are exempt from the reach of this new
agency.

Moreover, the Senate proposal adds 27 new or expanded types of regulation to more
than 17,000 pages of regulation with which traditional community banks struggle to
keep up every day.
 
One of the most egregious sections is the "skin in the game” provision. It mandates
that banks originating home mortgage loans must keep 5 percent of the loan on their
books. Commercial banks can’t put 30-year, fixed-rate mortgages on their books
because it is impossible to match the bank’s deposit pricing with such long-term
assets. More importantly, it was precisely this mismatch of assets and funding that
caused the collapse of the savings and loan industry in the mid-’80s.
If commercial banks in Oklahoma are forced to exit the home mortgage business, it
will mean fewer options and higher costs for consumers.

It’s curious that Fannie Mae and Freddie Mac aren’t covered by this legislative
proposal, considering that they were front and center of the nation’s mortgage crisis
and ensuing financial meltdown. The reason is simple: The government wants to
control the mortgage business, much like it now controls student loans.

All of this places Wall Street and Main Street at odds. We think Wall Street and its
executive bonuses, complex derivatives, credit default swaps and collateralized debt
obligations need reform. Our country’s financial structure needs review so our country
doesn’t experience another crisis. But what we also need is to leave traditional
community banks alone to help Main Street recover.

Tippens is president and CEO of Bank of Commerce, which has served Canadian
County for nearly 30 years.

\"A Great Coach has to have a Patient Wife, A Loyal Dog, and a Great Quarterback. . . . but not necessarily in that order\" ~ Coach Bud Grant

bucsense

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#1 : April 29, 2010, 09:33:26 AM

What's odd to me is Obama thinks mainstream Americans blame Wall Street for our collapse, when most of the informed know our past leaders in Washington basically forced the banks into mortgage loans that could never be paid.

Carter initiated it, Clinton reinforced it, Bush sent out a warning, the Federal Reserve created cheap money for those loans, and here we are.

Let's print some more phony money.

John Galt?

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#2 : April 29, 2010, 12:10:53 PM

Has Congress ever reformed anything correctly? Seems like every reform has just led to the "rich getting richer".  The HC reforms has insurance and big Pharma popping champagne corks. A banking reform will just have Goldman and BoA dancing in the streets, just like they did when Glass-Steagall was "reformed".

No matter how inglorious the failure, Congress loves to repeat itself.


dbucfan

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#3 : April 29, 2010, 06:02:29 PM

Not one time John Galt? Congress repeatedly has gone in the wrong direction - I wonder when and if they will find out they are out of their league - as well as beyond their scope.

\"A Great Coach has to have a Patient Wife, A Loyal Dog, and a Great Quarterback. . . . but not necessarily in that order\" ~ Coach Bud Grant

kevabuc

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#4 : April 30, 2010, 11:16:54 AM

Not one time John Galt? Congress repeatedly has gone in the wrong direction - I wonder when and if they will find out they are out of their league - as well as beyond their scope.

Long term you guys are absolutely correct, however, there was a brief period of about 15 years that Clinton and the Republican led Congress did successfully reform the welfare system.

Sadly, the Stimulus Bill erased all that.

\"The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled.\" -Cicero. 106-43 B.C.

John Galt?

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#5 : April 30, 2010, 01:19:20 PM

Not one time John Galt? Congress repeatedly has gone in the wrong direction - I wonder when and if they will find out they are out of their league - as well as beyond their scope.

Long term you guys are absolutely correct, however, there was a brief period of about 15 years that Clinton and the Republican led Congress did successfully reform the welfare system.

Sadly, the Stimulus Bill erased all that.


So they got 1 right. 1 win. They are the St. Louis Rams of politics. Time to draft an entirely new congress and all 50 states are on the clock.


dbucfan

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#6 : April 30, 2010, 01:24:15 PM

Not one time John Galt? Congress repeatedly has gone in the wrong direction - I wonder when and if they will find out they are out of their league - as well as beyond their scope.

Long term you guys are absolutely correct, however, there was a brief period of about 15 years that Clinton and the Republican led Congress did successfully reform the welfare system.

Sadly, the Stimulus Bill erased all that.
And they lost track of continued effort required to downsize other 'entitlement' programs - and move folks to work rather than relying upon the good will (read as vote buying) by the Federal Government. 

\"A Great Coach has to have a Patient Wife, A Loyal Dog, and a Great Quarterback. . . . but not necessarily in that order\" ~ Coach Bud Grant
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