KeyCorp CEO Sides Against Breaking up Biggest Banks

The nation's largest banks have another supporter, though this one remains eager to compete against them.

"I don't think it is a mistake to allow" for banks with $1 trillion or more in assets, Beth Mooney, the chairman and chief executive of KeyCorp (KEY), said during an event in Cleveland Thursday night hosted by Beta Gamma Sigma, an honor society for business school graduates.

"Big is not bad," she added when asked to comment on calls by Sandy Weill, the former Citigroup chief executive, to break up the nation's largest banks. "It is a function of can you manage your risk, can you understand your business model, and can you be transparent enough."

Rather, Mooney said regional banks may have the ultimate advantage going forward, given many of the rigors large and small banks face to comply with the Dodd-Frank Act. "Every businessperson looks to see where they can gain a competitive advantage," she said in response to a question about the two-year-old legislation.

"I'm suddenly liking being a regional bank," Mooney said. "We don't have some of the complexities in our business model that Dodd-Frank is trying to regulate. … [Dodd-Frank] has created a different playing field. My reaction is let's suit up and get on with the game."

Mooney fielded questions after accepting the honor society's 2012 Business Achievement Award. While her prepared remarks focused on diversity and inclusion in leadership, attendees also asked her to discuss several key topics of concern for the banking industry.

"I still think good business principles rule, and there are many large, complex corporations in this world that do good for their communities [and] do good for their clients," Mooney added in defending too-big-to fail institutions. "And I think banking is no exception."

Regarding Libor, Mooney said she believed reforms were needed, though she disagreed that the global interest rate benchmark must be scrapped. "I think there is a way where there can be an intervening process to ensure the integrity" of Libor, she said.

"I think that to unwind Libor as a global interest rate benchmark would be incredibly difficult," she added. "I would urge people to look at a way to give it oversight to ensure that it is a good rate and that it hasn't been manipulated for trading purposes. … Not to mention that it is in all our loan documents."

Mooney also noted that it would have been wrong for legislators and regulators to have passed on reforming the financial services industry, though she opined whether Dodd-Frank goes too far. "We are an industry that needed reregulation and needed more boundaries," she said. "Are these boundaries too far reaching? Will they be too difficult to implement? I think some of that will be true."

Mooney became the chairman and CEO of the $86.5 billion-asset KeyCorp in May 2011.

Mooney's speech largely focused on her ascent to becoming the first female CEO of a top-20 U.S. bank. "There is an extra responsibility to being the first … and I feel that responsibility every day," she told 90 attendees and more than 600 people watching via Webcast.

As for banking? "I believe our industry is absolutely important and vital to this country," she said. "There will not be a recovery without a strong and stable banking industry."