Washington Lambasted by Industry Execs
WASHINGTON - Several top banking and financial company executives blamed the Bush administration and Congress Wednesday for doing more to fuel their industry's crisis of confidence than to cure it.
The openly frustrated officials, members of an advisory group formed by the Securities and Exchange Commission, included John G. Medlin Jr., chairman and chief executive of Wachovia Corp., and Frank G. Zarb, a member of the Ford administration cabinet who is now chairman and chief executive officer of Smith Barney, Harris Upham & Co.
Mr. Medlin, whose North Carolina-based banking company is one of the industry's most profitable, said customers "aren't nearly as concerned about the confidence of banks and thrifts as they are with government."
He complained of "a public policy failure" by the executive and legislative branches of government.
"We don't have any positive leadership in Washington that says we have a good, positive financial industry," said Charles B. Stuzin, chairman and president of CSF Holdings Inc., a Miami-based thrift holding company.
"As hard as it is, this administration [must] pull itself together," added Mr. Zarb of Smith Barney, which is the brokerage unit of Primerica Corp. "We run the risk of some uncontrolled overreaction" by Congress, he added. "Overreaction tends to drive this place," he said of the capital, "and it is always negative."
The speakers are on the Market Oversight and Financial Sector Advisory Committee appointed in July by SEC Chairman Richard Breeden. At its first meeting, Mr. Breeden listened intently, deflected some criticism of the SEC, sparred with a panel member on whether the financial system has adequate liquidity, and challenged other members with questions.
The meeting, which lasted about three hours, remained cordial.
Mr. Medlin said Congress continues to load banks with rules that decrease profits. "What we are building up to is a system that tries to make everybody safe at a great cost to themselves," he said.
Robert H. Smith, chairman and chief executive of Security Pacific Corp., Los Angeles, said the public's confidence could be boosted if banks and other financial concerns disclosed more information about their present condition.
Robinson's Top Concern
"We have a circle of distrust and concern about what is going on in the industry," Mr. Smith said.
When asked what concerned him the most, James D. Robinson 3d, chairman and chief executive of American Express Co., mentioned the collapse of loan markets. "It is in everybody's best interest to have a broad, effective market," he said. "We don't have that now; we have a credit crunch."
Mr. Breeden aired his own frustrations, noting that such regulators as the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency enforce securities laws for certain public financial institutions. He said those responsibilities should be exercised by one agency - most likely his.
The existing system "simply makes no sense," he said. "It is an accident of history."
Other Panel Members
Other committee members at the meeting were: John C. Bogle, chairman and chief executive, the Vanguard Group Inc.; Richard H. Deihl, chairman and chief executive, H.F. Ahmanson & Co.; James T. Lynn, chairman and chief executive, Aetna Life and Casualty Co.; Valerie T. Morse, vice president of government affairs, American Express Co.; James S. Riepe, managing director, T. Rowe Price & Associates Inc.; Robert E. Rubin, co-senior partner and cochairman, Goldman, Sachs & Co.; and Robert C. Winters, chairman and chief executive, the Prudential Insurance Company of America.