Advocacy: It’s Important
By Lindsey R. Pinkham
While not as time-consuming as waiting for the budget to be voted on in Hartford in the waning hours of the 2005 session of the Connecticut General Assembly, the CBA’s annual two-day Washington visit is of equal importance. Visiting with legislators and their staff, the leadership of the regulatory agencies and representatives of the three national banking trade associations proved to be worthwhile again in 2005. While the Connecticut delegation was smaller than in past years, the Connecticut/Massachusetts/Rhode Island bankers associations’ combined delegation numbered 33 in total.
There’s the Bus
For those who have experienced the D.C. trip in the past, the phrase “there’s the bus” is an all-too-familiar reminder that the delegation is keeping to its busy meeting schedule. Meeting, bus, meeting, bus – two days of jam-packed schedules that test both the veteran and first-time visitor to our nation’s capitol.
D.C. – Day One
Our first “official” meeting was with Congressman Barney Frank, D-Mass., a frequent visitor with our combined delegation. The congressman was his usual candid self, discussing important issues such as security breaches, Basel II, GSE reform, tax reform and his efforts, along with those of Rep. Mike Oxley, R-Ohio, to champion legislation allowing national banks to enter the real estate brokerage business if they so desire.
Our next event consisted of a panel presentation featuring four excellent panelists: Floyd Stoner (ABA), Charlotte Bahin and Bob Davis (ACB) and Steve Verdier (ICBA). Each provided their take on the many important regulatory and legislative issues currently being debated in Washington. Issues addressed by the panel included the possibility of tinkering with SOX and CRA for the benefit of smaller institutions, to BSA’s ongoing zero-tolerance issue, FDIC deposit insurance reform (a topic discussed annually, unfortunately), GSE reform and CURIA, the unpopular legislation proposed to help the credit union industry.
Our first bus trip of the day took us directly to the U.S. Treasury where we met with Don Hammond, acting undersecretary for financial institutions policy and Mario Ugoletti, director of the Office of Financial Institutions. Top three on their list include GSE reform, the situation with defined benefit plans and the resulting negative impact on the Pension Benefit Guaranty Corp. (PBGC). In our discussions, we were reminded that there has not been a fundamental revision of ERISA in 20 years. They provided insight into the administration’s three-pronged solution to the funding shortfalls: better funding, better plan disclosures and the introduction of risk-based premiums to help erase the PBGC deficit.
FDIC Director Thomas J. Curry hosted the delegation’s lunch meeting. The former commissioner of banks for the commonwealth of Massachusetts was warmly greeted by those in his home state’s delegation. We were joined by several of the agency’s directors including Michael J. Zamorski, director of the Division of Consumer Protection and Supervision and Alice C. Goodman, director of the Office of Legislative Affairs. In her remarks, Goodman noted that she had just left a Capitol Hill hearing on regulatory relief. Other hot legislative issues include data security breaches and deposit insurance reform.
Zamorski, a frequent speaker on our trips to the FDIC, addressed several important issues, including the soon-to-be-released interagency BSA examination guidebook; the agency’s concerns over Basel II and burgeoning competitive issues associated with lowering capital standards for big banks; and the agency’s growing concern over interest-only mortgages and HELOCS. He advised that the combination of these two products, and the potential for a real estate bubble in certain portions of the country, have made many regulators anxious.
Before ending the first day of visits, the group split into two, half meeting with House Financial Institutions Committee Chairman Mike Oxley and the rest meeting with OTS staff. Oxley, a strong supporter of industry, touched on the majority of issues raised previously by his democratic colleague on the committee, Barney Frank.
Meanwhile, at the OTS we met with Rick Riccobono, acting director; Scott Albinson, managing director for examination, supervision and compliance policy; and several other senior staff members. As always, Rick Riccobono is a gracious host and insightful commentator. Like Goodman at the FDIC, he too had just returned from the Hill where he was a panelist at the hearing on regulatory relief. He provided some interesting insights into the EGRPRA relief effort being championed by FDIC Vice Chairman John M. Reich. He advised that the OTS is working with his federal counterparts on correspondence to New York Attorney General Elliott Spitzer, requesting he stay out of their review of HMDA data. In regard to Basel II, he is hopeful that the recent study results (the fourth quantitative impact study, or QIS4) would slow the banking agencies from their rush to adopt the international accord. He advised that “this is the wrong time to be monkeying with capital ratios.” With the group’s encouragement, he provided insights into his agency’s efforts to lead the CRA reform effort in Washington.
Day Two in the Capitol
A busy Friday schedule started with a visit to the Federal Reserve and a meeting in the Open Markets Committee’s beautifully adorned conference room. Roger W. Ferguson Jr., vice chairman of the board of governors, provided his insights into the current shape of the U.S. economy, noting that the Gross Domestic Product is likely to end up at 3.5 percent for 2005, that labor/jobs reports have been “chippy but reasonably good this spring” and the consumer confidence level is very good. He also noted that, currently, the Board of Governors believes that monetary policy will remain accommodating for the foreseeable future and they will remain vigilant regarding inflation. Issues to be concerned with include the size of the U.S. deficit and a growing mood of protectionism in Congress. He advised that “the ongoing flat yield curve is a global phenomenon, not just a U.S. one. It is reflective of a new age of global markets that we are just beginning to understand.”
On the policy side, the vice chairman cautioned about the implications of a housing bubble and commented on the need to improve personal savings rates, that the GSEs need a strong regulator and, finally, Basel II. He advised that “it is important for bank regulators to reach a consensus on both Basel IA and Basel II, as Congress is watching this issue very carefully.”
The final visit for some, who had airplanes to catch, was with Andrew Card, President Bush’s chief of staff. He was accompanied by Kevin Wersh of the Presidents’ National Economic Council. Card regaled us with delightful stories of two of the president’s most recent trips abroad, a trip early in 2005 to the Baltic states and his most recent trip to Russia. In regard to the latter visit, Card noted “I never thought I would see an American President witness, in person, a Russian military parade in Red Square.” The passion Card has for this country is powerful.
Wersh then provided a look into the administration’s future fiscal plans and viewpoints on the economy. Like others in the past two days, we heard of the need for social security reform, a lowering of the U.S. budget deficit and continued job expansion. Wersh noted that the administration sees continued economic expansion into 2006.
For some, the 2005 visit was over; for those with late flights, it was off to the OCC for a visit with Acting Comptroller and General Counsel Julie L. Williams. As anticipated, Williams addressed several preemption issues, including New York Attorney General Spitzer’s attempt to intervene in the review of HMDA data and the new interagency BSA exam guidebook.
Join Us Next Year
This trip, along with other less formal visits to the nation’s capitol by CBA members and staff, helps to develop and maintain strong relationships with senior executives at the regulatory agencies, members of Congress and their staff. A visit similar to this one has been tentatively scheduled for June 7-9, 2006. Join us – We hope to see you there.
Lindsey R. Pinkham is senior vice president and secretary of the Connecticut Bankers Association.