Community bankers sure are getting a lot of love in Washington lately. Just days after the FDIC's board of directors voted in late May to establish an advisory committee on community banking, legislation was introduced in the House that would create an assistant secretary for community financial institutions within the Treasury Department. The bill's passage is by no means guaranteed, but with a major battle on regulatory reform looming, community bankers relish the idea of having one of their own inside the Obama administration.
Rep. Dennis Cardozo, a California Democrat, is the bill's sponsor. He said that Congress must give small banks "special consideration for their unique role when devising national policies."
When L. William Seidman passed away on May 13, the industry lost one of its titans, as well an honest broker who had a penchant for self-deprecation. In a 2008 interview, the former FDIC chairman lamented his own role in creating the agency-rated collateralized debt obligation model to recoup bad S&L assets when he headed the Resolution Trust Corp. His staff found then that by packing CDOs of mixed risk in a securitization "tranch," the RTC could upgrade returns on bulk-bid assets by converting them to investment vehicles. "I can still remember thinking, at last, we've discovered how to turn lead into gold," he laughed. Seidman was 88.
