A regional bank CEO says it’s the fault of Bank of America, JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley that small banks aren’t lending.
Bob Wilmers, the CEO of M&T Bank Corp, recently wrote a huge op-ed for Bloomberg about why subjecting regional banks to the same regulations that The Big Six face is killing the economy.
The Big Six need to be regulated more he says, because they’re the ones risking taxpayer money on speculative trading practices. Regional banks, however, shouldn’t have to face the same capital requirements, because they are the banks that lend to small business owners.
Problems he sees with “The Big Six:”
- “The largest and most profitable bank holding companies have moved away from traditional lending and come to rely on speculative trading in all types of securities, derivatives, credit default swaps, mortgage-backed securities and other, even more complex and exotic financial instruments — many of them associated with high leverage.”
- “Outsized, bonus-based executive pay.”
- “To pay for the cost of [operating The Big Six under the FDIC, Treasury, and the Federal Reserve], legislators and regulators have forced thousands of Main Street banks like the one I run to absorb a larger, more expensive set of regulatory costs, including higher capital and liquidity requirements. This threatens to deny small-business owners, entrepreneurs and innovators the credit they need and on which the economy relies.”
The punchline delivers a deadly blow that Wall Streeters will surely disagree with: “A new generation of regulation must now be applied to what has become a virtual casino. All the players must be included — Wall Street banks, investment banks and hedge funds. Complex derivatives and credit default swaps must be brought out of the shadows and into public clearinghouses, so that markets can know their magnitude and extent.”