Barney Frank on Bank Regulation

House Financial Services Committee Chairman Barney Frank responds to questions regarding upcoming bank regulation, the Obama plan, and the future of the Fed.

 

 

In a January 27th interview with the Financial Times, House Financial Services Committee Chairman Barney Frank responded to questions regarding upcoming bank regulation, the Obama plan, and the future of the Fed.  The whole clip is worth watching, but this quote encapsulates Frank’s long-term goals for depository banks:

I wish banks had fewer ways to make money than lending.  One of our problems today is that lending does not appear to be a high priority for money-making activities for a lot of banks.  There’s trading, other things that they do, overdraft fees, etc., to extent that those are curtailed and people can be driven to lending, that’s a healthy thing.

One of the lessons of the past recession is that when banks are forced toward a more traditional and conservative banking model, they are competing in a realm where credit unions have an advantage.  Credit unions have shown the ability to operate on a tighter net interest margin. If upcoming regulation is geared toward shifting depository banks toward more of a lending model, this is an opportunity for credit unions to seize market share.  I am reminded of SECU (NC) CEO Jim Blaine’s quote from the August 24 issue of Business Week:

Commercial banks can do what we do—they’d just have to relearn the lending business.

 
 

Jan. 29, 2010


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