|ABA ANNUAL MEETING GENERAL SESSION|
Remarks by Edward L. Yingling, President and CEO, American Bankers Association
Monday, October 26, 2009
Thank you Arthur [Connelly, outgoing ABA Chairman], and thanks for your leadership and support during this difficult year; but thank you also for your service to our industry throughout your great career. Arthur, you have the appreciation of bankers across this country for a job very well done.
I don’t have to tell you that these are very tough times. We have come through the panic, but now we find ourselves dealing with a long, deep recession.
Unemployment is hovering around 10% and is likely to stay high for several years. Consumers and businesses are slowly wearing down – their rainy-day funds now disappearing.
And to go with the bad economy, we have our high deposit insurance premiums, ever increasing regulatory burdens, and examiners questioning our loans.
Yes, these are tough times indeed. But we will get through these times because the bankers in this room did what’s right. You were prudent lenders, and you served your communities.
You will get through this, and ABA will do everything it can to help you.
But while you work daily at the business of banking, you face two big challenges from the outside – challenges that will affect your bank – and our industry – for decades to come.
The first challenge is the most massive and complex legislation in seventy years. Indeed, I could talk about this bill for an hour, and still not cover all the issues it raises.
For over a year the ABA has publicly supported major reform, and many of our recommendations are contained in the Administration’s proposals. Yet this legislation will redesign the financial services industry and determine whether we can compete or not…….and Congress could get it wrong.
ABA has the broadest and most experienced staff of any trade association in Washington. You know we are working on this night and day.
But you – every one of you – must help. Many of you have, but I am calling on you today to do more.
Grassroots bankers have already made a huge difference. Recently, a high ranking administration official told me they were astounded by the strength of ABA’s grassroots community bankers…… but we have just begun.
Think of it this way – you know you have credit risk, and you work on it every week. But you have just as big a political risk, and you must work on it every week.
So I am asking you to write at the top of your weekly “to do” list two words – political risk. And I am asking you to promise here today to work on that at least once a week. Reform is badly needed, but it needs to be the right reform for our country’s future.
Now I want to turn to our second outside challenge – and it is a big one….the challenge, as Arthur just stated, of the misdirected attack on you in this room – the attack on traditional banking.
You know, a couple of weeks ago, the news was full of the one-year anniversary of the financial crisis – often it was referred to as the banking crisis.
Yes, a year ago, Fannie and Freddie were taken over; then the big one – Lehman’s failure; then AIG; then money market mutual funds had to be given a $3 trillion dollar guarantee. But what is interesting about this list – Fannie Mae, Freddie Mac, Lehman Brothers, AIG, and money market mutual funds – is that none of them were banks.
I know it makes you angry, and it should. Again, as Arthur pointed out –
• You did not make subprime loans
• You did not take big bonuses for products that later blew up
• You did not leverage yourself 30 to 1
• You did not give triple A ratings to toxic junk
• And, you did not bet your future on credit default swaps.
No, all you did was serve your community and try to make sound loans. And through the deepest recession in seventy years, you are still serving your communities and making as many loans as you can to creditworthy borrowers.
For me, the attacks can sometimes be personal.
I have been called all kinds of names by TV commentators, columnists, and bloggers. And there will be more to come. But that’s ok.
This type of negative discourse is, unfortunately, the way it is these days. But we will not be deterred.
And I know I speak for all of us at the ABA – and in your State Associations -- when I say we are proud to represent you in this room – proud to speak for traditional bankers who have done so much, and who will be the foundation for the future.
We have made progress in this debate. For example, many of you will recall President Obama’s first speech to a joint session of Congress last February. In that speech he lumped traditional bankers with Wall Street and non-banks – all under the heading “bankers.” That upset many of us. I wrote him a letter immediately pointing out how unfair that was, and how it would lead to mistaken policies.
Here is what President Obama said just five days ago: “These are the community banks who know their borrowers; who gave them their first loan; who’ve watched them grow from down the street – not from Wall Street.”
Yes, President Obama now sees the difference between bankers like you and Wall Street, even if those outside this hotel today do not. [Reference to protests during the convention by a group including members of a service union and consumer activist groups.]
We all need to keep speaking for traditional banking. We need to do it coolly and factually, but we need to do it. Because if we don’t speak for banking, others will.
We all, in our own small way, must be leaders for our industry, and for our country. We must point the way for a financial services industry of the future that is strong, stable, and fair to all.
Ronald Reagan said: A leader, once convinced that a particular course of action is the right one, must be undaunted when the going gets tough.
Well, our course toward a stronger financial system is right, and although the going is tough, we, as President Reagan said, must be undaunted.
So we must speak out and keep speaking out in every community across the nation.
But as we look to the future, there is something else we must do. In the future, we can never again let bad actors and bad policies create a financial disaster – a disaster that hurts not just banks, but people from all walks of life.
There were bad people and there were bad policies, and they clearly harmed our country. Good people lost their savings, their jobs, and their homes.
Most of this occurred outside traditional banking -- that is a fact. And we must never again allow anyone – anyone, anywhere – in the financial services industry to do such harm.
We are the leaders of the financial services industry, and from now on we must extend that leadership to all parts of the industry – from mortgage brokers, to Wall Street speculators – extend that leadership to ensure that bad actors don’t create the next crisis. So that from now on every bill, every regulation, that affects the financial industry in any way must be our business.
But there is something else we must do. Something closer to home. We must recognize that there have been some – a small minority – but some, within our industry who have not done the right thing. Some simply have not been fair to their customers.
A community banker from Ohio recently told me of his frustration that the differentiation between traditional banking and the bad guys has been muddled by the small minority in our industry who offered products that took advantage of people. He’s right. When that happens, we all end up paying the price.
In the future, when we see such unfairness, I believe we must address it and stop it.
Bankers – the true bankers -- you – have the trust of their customers and their communities because they have earned that trust. As one banker recently said, we must be guardians of that trust.
And that is what we must be. As we come through these tough times and look ahead, we must be guardians of that trust, and thereby restore public faith in our banking system.
John Wooden, the greatest college basketball coach of all time, said: It’s not important who starts the game, but who finishes it.
Well, others started this game. Traditional bankers, the ones who deserve that trust, must take it on ourselves to finish this game.
And finish it right – creating a strong, new foundation, based on traditional banking, that has the support of our customers and communities. We have months of hard work ahead of us to reach that finish.
But sometime soon –
• the noise will die down
• the economy will recover
• and our country will be on the move again.
And, bankers will lead the way.