In an interview with Banker & Tradesman, FDIC Chairwoman Sheila Bair addressed bankers’ concerns that they were being regulated to death, but maintained that market conditions – not compliance burdens – were the main drivers of consolidation in the banking industry.
Bair spoke on the issue at an event held by The Boston Club recently, but went into further detail during her one-on-one interview.
Bankers have bemoaned the increase in regulatory burdens in recent months, saying it occupies an enormous amount of their resources and predicting it will directly lead to more mergers within the industry. Bair acknowledged that it’s difficult to create simple, streamlined regulations, but said she disagreed that compliance woes were to blame for industry consolidation.
Mergers tend to go in cycles, Bair said, and it’s no surprise that an economic environment such as this would spur more consolidation in the industry. The wake of the savings and loan crisis in the late 1980s and early 1990s brought a similar situation, she noted.
Still, she encouraged bankers to continue a dialogue with regulatory agencies about their specific concerns. No one gets punished for speaking up, she said, and the agency has worked with banks in the past to refine regulations they found worrisome.
Bair also addressed concerns that the FDIC was being overly restrictive with regard to de novo banks. After years of approving dozens of new banks a year, the FDIC recently slammed the brakes on most would-be banks, approving only nine nationwide last year, including Newton-based First Commons Bank. Two have gained final approval this year.
Somewhat locally, New Haven, Conn.’s Start Bank, which is fully capitalized, expected to open its doors in October – but has yet to get final approval.
Analysts have accused the FDIC of being hyper-conservative in the wake of the financial crisis, not allowing otherwise sound de novo banks to get final approval. But Bair disagreed, blaming the economic environment and a simple lack of de novo banking applications. Any bank with a sound plan and enough investment capital will get the green light, she said.
Banks ‘Get It’
Bair’s speech was sponsored by The Boston Club, a network dedicated to advancing women into business leadership positions.
A lively question-and-answer session following her speech covered a wide variety of topics, including banking, the role of women in leadership positions and her own background.
Joseph V. Roller, president and CEO of the Cambridge Trust Co. and member of The Boston Club’s corporate advisory board, introduced Bair before her speech. In an interview afterwards, he was enthusiastic about the back-and-forth of the Q&A session.
“I thought it was lively, engaging, I thought [Bair] was candid in her responses,” he said.
Much of the event’s other discussions focused on the role of women in leadership positions. Local luminary Jay Hooley, president and CEO of Boston investment and corporate banking giant State Street Corp., opened with talk about the importance of recruiting female leadership.
JoAnn Cavallaro, principal of The Boston Club, highlighted a recent Boston Club study that revealed 41 of Massachusetts’ 100 largest companies have no women on their boards of directors. She encouraged attendees to support businesses with a strong female presence in top positions, and to stop patronizing “the ones who don’t get it.”
Roller added a positive note, though: Although those top 100 companies might not have strong female representation, many other companies, including his and other community banks, do include many women in their highest offices and boards of directors.
