Almost half (48 percent) of bankers believe overall financial reform will not be effective in detecting broad risks to the financial system and preventing or reducing the threat of a future taxpayer-funded bailout, according to Grant Thornton LLP’s 18th Bank Executive Survey, conducted in conjunction with Bank Director magazine.
"Though we hear the majority of bankers commenting about the challenges Dodd-Frank imposes on institutions, they are agreeing that they see some positive impact," said Nichole Jordan, national banking and securities industry leader at Grant Thornton. "The positive impact they refer to includes increased attention towards risk management and compensation frameworks that reward executives for long-term performance rather than short-term gains."
Only 39 percent of bankers believe that financial reform will be effective and of those, only 1 percent believe it will be "very effective" and 3 percent believe that it will be "effective." The remaining 13 percent of respondents think it’s too soon to tell.
Despite the concerns regarding Dodd-Frank and increased regulations, the survey shows a resurgence of optimism about the nation’s economy. Bankers’ optimism has more than doubled since the last survey, with 39 percent reporting that they feel that the economy will improve in the next six months, compared with just 15 percent in August 2010. Only 9 percent believe that the economy will get worse, down from 25 percent in August 2010.
"It is a time of major change for the banking industry," says Jordan. "The survey reveals increased optimism, albeit cautious at times. And as the economy recovers, one of the greatest assets of any bank is confidence – confidence from consumers and regulators, and confidence within banks themselves to jumpstart hiring. Banks will have the opportunity in the coming months to help shape not only their own recovery, but that of the economy as a whole."
With nearly one-third of bankers (32 percent) reporting that they plan to increase hiring in the next six months, it is clear their optimism has spread to that arena as well. The numbers of bankers saying that they plan to decrease hiring has remained stable at 16 percent.
