The Price Of Regulator 'Irrationality'
ORLANDO, Fla.- Ken Proctor of Cornerstone Advisors cited what he called "signs irrationality on the parts of regulators on the last 12 months, especially in writing off credits. "On the whole they do seem to be turning up the heat on the credit side. I don't get a great deal of comfort out of Federal Reserve exams; I don't think they have a clue what's going on in banks."
Jeanne Capachin of IDC Financial Insights noted that while banks are being criticized for being too conservative, businesses continue to put off hiring new workers, preferring to conserve cash. "Until the economy improves and they feel more confident, they are ignoring all the signals that they should be investing and hiring. The malaise that is affecting the economy is keeping them from doing what they need to do."
Two Factors To Keep In Mind
Aite Group's Gwen Bezard urged financial institution execs to keep "two things to keep in mind. One, is the macro situation about the economy. No big tide is going to lift all our boats. But at the micro level, what is our message? Is it that the economy sucks, therefore our business will suck. Or do we take the massive change in the economy and regulatory environment seize upon those to reinvent our business? There is a lot of innovation going on in financial services if you look broadly. I follow the payment space and we are going through an unprecedented wave of innovation."