The Credit Crunch Czar Gets an Earful of Advice
Hoping to enlist a little help from above, a group of bankers met with Treasury Deputy Secretary John Robson last Thursday.
Their goal: Get the Comptroller of the Currency to count as capital certain intangible assets, such as the premiums that banks pay for core deposits or credit card portfolios.
The bankers argued that such a regulation would increase bank capital and spur lending.
Being the administration's credit-crunch czar, the bankers figured, Mr. Robson is interested in anything that will encourage banks to make more loans.
"I think Robson is sympathetic, but I think he has a problem with the agencies," said the bankers' hired leader, Steve Roberts, former right-hand man to Paul Volcker who now runs KPMG Peat Marwick's financial institutions business here.
Spice for Recovery Recipe
Administration officials, including President Bush, have said repeatedly that bank lending is the ingredient missing from a recipe for recovery.
Five large banks were represented at the meeting with Mr. Robson, including units of Security Pacific, Chase Manhattan, Chemical Banking, Manufacturers Hanover, and Mellon Bank.
These five, plus another nine banks, have formed a coalition that sent a letter this month to Treasury Secretary Nichilas Brady, with copies to all the agency heads, seeking to get this rule adopted.
Mr. Roberts was not optimistic. Don Kooken, Security Pacific's chief financial officer and vice chairman, told Mr. Robson that this rule would do more to free up credit than any of the other initiatives the administration has launched so far.
But Mr. Robson "didn't react," Mr. Roberts said. "It's clear he was not ready to take up the flag and run with it."
The bankers argued that counting these intangibles as capital would also accelerate industry consolidation and help the Resolution Trust Corp. fetch higher prices for thrift deposits.
The OCC began work on this regulation last December and has since been joined by the Federal Reserve and the Federal Deposit Insurance Corp.
The Regulators contend that these intangibles do not count as capital because they have no identifiable cash flow.