After I read the transcript and viewed the video clip of Mr. Lockhart’s remarks on CNBC’s “Squawk Box” in which he said, and I quote: “What we need is about 50 strong regional banks in this country, not 8,000 small ones,” I was reminded of an old story that I am sure many of you have heard.
A man walks up to the attractive, well-dressed lady at the high-society ball and says, “Would you sleep with me for $1 million?” The lady blushes, hesitates and says quietly, “Well, for $1 million, yes, I would.” The man beams and says, “Then would you sleep with me for $20?” The lady turns crimson and slaps the man hard and blurts out, “Certainly not. What do you think I am?” The man smiles and says, “Lady, we have established what you are; we are just haggling over price.”
That story crossed my mind when I heard Mr. Lockhart speak. Of course we all know Mr. James Lockhart, the former Director of the Federal Housing Finance Agency. Days before the government seizure of the housing GSEs, Mr. Lockhart assured the community banks that the GSEs were adequately capitalized and that the markets should not be concerned about their preferred-stock investments. After the GSEs were seized on a Sunday, in a move that shocked the financial world, Mr. Lockhart expressed no regrets that the actions of Treasury and his agency wiped out billions of dollars in community bank equity and directly caused the failure of several community banks—wiping out families and investors and damaging entire communities. Now we see why. Mr. Lockhart apparently has no use for 8,000 community banks and believes a 50-bank system would be far superior. Superior for whom, Mr. Lockhart?
Yes, this is the same Mr. Lockhart who spoke at our annual gathering of community banker leaders. And he spoke in glowing terms about how vital community banks were to our nation’s financial and economic infrastructure. Now, Mr. Lockhart reveals himself— Shakespeare called it “mouth honor.” Honor given in words, but not felt. Mr. Lockhart is nothing more than an elite opportunist. Unfortunately, Washington seems to attract such people, and then they move on to their cushy Wall Street jobs.
Newsflash for Mr. Lockhart—ICBA and community banks are not for sale at any price, because we know the true meaning of integrity, honesty and loyalty. Long after Lockhart is gone, community banks will endure because community banks are the very embodiment of entrepreneurial spirit in the nation. They are expressions of the self reliance that is engrained in our culture. Every community bank president, board member and customer should be enraged at Mr. Lockhart’s public remarks.
See for yourself. Click here to watch Mr. Lockhart’s appearance on CNBC’s “Squawk Box”.