Doing the Right Thing

My upbringing at home, at the military college I attended, as an officer in the Army and during my banking career infused in me the values I hold dear today—duty, honor, integrity, ethics. By following the meaning of those four simple words one cannot help but do what is right no matter the consequences or how difficult the path might be. The values upon which I base my life and career have always guided me through the most difficult times. Heroes whom I admire—such as Churchill, Lincoln, Jackson, Lee, Truman and Jefferson—all, at one time or another in their careers, chose the right thing, even though it was the difficult path, and in nearly every case they suffered personally for those decisions though history has proved them true.

In a letter to his son, General Robert E. Lee wrote, “Duty then is the sublimest word in the English language. You should do your duty in all things. You can never do more, you should never wish to do less.” Churchill famously said, “You have enemies, good! It means you stood for something, sometime in your life.”

Reasonable persons can legitimately disagree on issues and on different paths to resolutions of those issues, and in fact they should. That is the beauty of a democracy into which I was fortunate to be born. Our nation’s forefathers in their infinite wisdom wisely laid out a process for debate, robust conversation, checks and balances, and separation of power. But there was never disagreement over honor, integrity and ethics. I will never violate those codes, nor assume others whose views may differ from mine are acting in any way less than honorably.

Sadly, we live in a time where such assumptions can be naïve and perhaps dangerous. Personal attacks over public policy disagreements have no place in professional discourse. It is such personal attacks that are paralyzing Washington, D.C. Rather than having civil discourse on very tough issues, many now engage in the politics of personal destruction. And where that stops, God only knows. But it is hurting our ability to engage in meaningful discussion.

As long as those bankers who lead ICBA entrust me to represent the nation’s community banks, my staff and I will strive always to do the right thing for those for whom we are responsible. I will give my best effort to represent their interests as expressed by those volunteer bankers who govern this great association, no matter how difficult the path and no matter what attacks are made against the association or me personally. As my parents, my educators, my faith and most of all my community bank colleagues for whom I have the utmost respect have taught me over my lifetime and my career—it is never wrong to do the right thing. But it is almost always the most difficult path to take.

Wall Street Lobbyists and Cicadas

I have been in Washington for 10 years as CEO of ICBA, and I have seen everything from the Wal-Mart bank charter fight to the financial crisis and Wall Street bailouts of 2007-09 and everything in between. I have seen some nasty battles inside the Beltway, and I’ve even engaged in a few myself.

But with the momentum building for legislation to take on the too-big-to-fail problem once and for all, I don’t think I’ve ever seen so many lobbyists in this town. In fact, there are more Wall Street lobbyists swarming Capitol Hill than there will be cicadas buzzing around the Washington metro area this summer. With the weather warming up, it’s almost as if the blue suits and power ties are sprouting right up out of the ground.

I, for one, can’t blame them. The Terminating Bailouts for Taxpayer Fairness Act (S. 798), introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), has reignited the debate over the too-big-to-fail problem. The bipartisan legislation would implement higher capital levels on large financial institutions to address their government guarantee against failure—one of our nation’s most outrageous distortions of the free market system.

To limit taxpayer vulnerabilities, protect against future crises and level the playing field for community banks, the TBTF Act would set capital standards based on an institution’s size and complexity. The bigger the bank, the greater its systemic risk, the higher its capital rate. It’s as simple as that. Additionally, the legislation includes a variety of regulatory relief measures for community banks. These much-needed reforms, which range from expanding mortgage-lending opportunities under new regulations to supporting greater accountability in bank exams, will help offset some of the red tape that has bound Main Street because of the misdeeds on Wall Street.

But let’s not forget, the TBTF Act isn’t the only game in town. Several other members of Congress, from House Financial Services Monetary Policy Subcommittee Chairman John Campbell (R-Calif.) on the right to Sen. Bernie Sanders (I-Vt.) on the left, have introduced separate bills to take on the too-big-to-fail problem. Regulators such as FDIC Vice Chairman Thomas Hoenig and Federal Reserve Bank of Dallas President and CEO Richard Fisher have introduced their own plans, while newsmakers such as MIT economist Simon Johnson have identified too-big-to-fail as one of our nation’s greatest threats.

So with ICBA, community bankers, regulators, members of Congress, economists, consumer advocates and the American public supporting new measures to deal with the too-big-to-fail risk to our financial and economic system, there’s no wonder why Wall Street lobbyists are out in full force.

Like the cicadas that burrow out of the ground every 17 years, the lobbyists are beginning to swarm as Washington heats up. The problem is that the lobbyists are louder and make an even bigger mess. So I encourage community bankers everywhere to make sure their voices are heard in Washington so Congress will not let the Wall Street hired guns once again maintain the too-big-to-fail status quo. With so much at stake, it’s time for Main Street to grab the flyswatters.

Are you ready to join us?

Surprise, They’re At It Again

In the latest news from the “color me unsurprised” department, JPMorgan Chase is reportedly under investigation for manipulating energy prices and lying under oath about the scheme. According to The New York Times, the Federal Energy Regulatory Commission is considering whether to pursue regulatory actions against JPM for charging California and Michigan $83 million in excessive payments that had a harmful impact on energy markets, not to mention the taxpayers of these states. Further, a top executive at the megabank is believed to have lied to investigators about her knowledge of the shady transactions.

I don’t know about anyone else, but I’m about as shocked as Claude Rains was to find gambling at Rick’s Café in Casablanca. The only difference is that the rest of us aren’t picking up any winnings—we’re all losers on this deal. The only winners here—the high-stakes gamblers at JPMorgan—are the same people who brought us the financial crisis and Great Recession just a few short years ago. And I mean literally—these are the same exact people. The executive accused of lying to investigators helped develop the credit default swaps that played a role in tanking the markets back in 2007 and 2008.

Of course, these are just the latest revelations of underhanded dealings at the nation’s too-big-to-fail firms. The Times reports that regulators also are investigating JPMorgan’s use of faulty documents in pursuing lawsuits against delinquent credit card customers, while separate investigations are focusing on the megabank’s role in the Bernie Madoff Ponzi scheme. Meanwhile, regulators continue investigating whether global megabanks colluded to rig Libor interest rates to maximize profits.

And let’s not forget the Senate Permanent Subcommittee on Investigations report that found that JPM used federally insured deposits to fund a portfolio of complex financial instruments used for risky trades that resulted in billions of dollars in losses. The report also found that JPM misinformed investors, regulators, lawmakers and taxpayers about the “London Whale” trades and actually hid $600 million in losses.

In other words, there is no lack of evidence that the too-big-to-fail financial firms pose fundamental risks to our global financial system. These institutions, which enjoy a taxpayer-subsidized funding advantage over community banks, are not only incentivized to take outsized risks with the understanding that taxpayers are there to bail them out if their gambles don’t pay off. They also know that the worst thing that will happen to them is the acceleration of an enormous severance package.

I was a community banker for 25 years. If even one of these transgressions had happened on my watch I would have been stripped clean of everything I owned and publicly hung out to dry on Main Street just before they hauled me off to the state penitentiary. Too-big-to-fail institutions are making a mockery of our nation’s lawmakers and regulators. It is time to restore discipline to our financial system. This is the United States of America, a nation founded on laws, principles and equality.

No wonder lawmakers are pushing the TBTF Act (S. 798) to implement higher capital levels on the largest megabanks to address their too-big-to-fail market distortions and to ensure they can pay off their own debts if they go bust. Taking on the too-big-to-fail problem head on is the only way to end this relentless string of arrogant abuse by our nation’s largest financial firms. And we need to do it now before we get it wrong again, because next time will be too late.

Main Street Heroes

Last week, Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) showed that they stand with Main Street America by filing a bill that does something real and meaningful about the anti-free-market government policies that have taken root in this nation in the form of “too big to fail” and “too big to jail.” And standing right with them is Sen. Jeff Sessions (R-Ala.), another Main Street hero who is standing up for true free market capitalism, a free market economy, and this nation’s Main Street banks and small businesses.

By cosponsoring S. 798, the TBTF Act, these senators are making a statement that they will not be bullied or intimidated by those whose interests are to keep our nation’s free markets anything but free. Like Teddy Roosevelt, who busted up the power of the trusts a century ago, these senators understand that markets run by oligopolies are not really free. So when others were intimidated, they stood up to the big money oligarchs and demanded that they put their own capital at risk, not the taxpayers. Capitalism is about capital—not taxpayer subsidies.

Sen. Sessions stood tall last week with Main Street heroes Sens. Brown and Vitter to say enough is enough. ICBA and the 7,000 community banks we represent nationwide witnessed who the true Main Street heroes are in the U.S. Senate. We urge all senators to stand with Main Street America and support S. 798.