Bank executive: We're regulated enough already, thanks

Charlotte ObserverJune 25, 2010 

Bank executives had mixed feelings about the financial regulation overhaul on Friday, with most saying that it was well intentioned but also worried about its effect on their businesses.

All agreed that there was still plenty of uncertainty about what the bill will really mean. The historic legislation, which came together at 5:39 a.m. on Friday in a key congressional committee, leaves many of the details for regulators to work out. The bill is headed for a full Congressional vote next week and is expected to pass.

The bill is the most transformative for the banking industry since the Great Depression, and is counted as a victory for President Obama, who has pushed for stricter rules since he came to office after the financial system teetered near collapse. The legislation creates a new federal agency to police consumer lending, sets up a warning system for financial risks, forces failing firms to liquidate and maps new rules for instruments that have been largely uncontrolled.

John Medlin, the retired chief executive of the former Winston-Salem-based Wachovia Corp., called the bill "largely political theater," helping lawmakers score points with voters while hurting consumers and businesses.

"Politicians want to look like they're beating up the banks," said Medlin, who hasn't been an active player in the industry for a decade. "If anything, they should be relaxing some of the regulation. We have more regulation than we need already."

Medlin said he expects the bill will mean less available credit because of new restrictions on making mortgages and other loans. He also expects banks to pass additional regulatory expenses on to customers by raising the cost of loans and other services.

He's skeptical of giving more power to the Federal Reserve, noting its poor track record in containing the excesses of the mortgage industry during the housing boom. He was glad to see the disbanding of the Office of Thrift Supervision, which monitored troubled institutions such as Countrywide Financial, IndyMac and Washington Mutual.

Paul Stock, executive vice president and counsel for the North Carolina Bankers Association, said his group is still sifting through the roughly 2,000 pages of the bill.

"Our concern is, the bill is gigantic, and so many things will only really be clear after regulations are written," Stock said. "We'll do our darndest to figure out what's in it and how to comply with it and at the same time how to get the economy rolling again. It's going to be a daunting challenge."

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