Former FDIC Chairman (and current Chairman of Fifth Third Bancorp.) Bill Isaac gave a no-holds-barred interview to Infosecurity.com's Tracy Kitten last week, in which he had some harsh words for Dodd-Frank in general and the Durbin Amendment in particular. Among the high points to me were the following:
- We could very well be on the verge of a double-dip recession "because we just have a dearth of political leadership in this country right now...We've lost confidence and the government is doing nothing to restore it."
- The Durbin Amendment is "pure and simple, special-interest politics."
- "I think the Durbin amendment is really a terrible precedent," Isaac says. "It weakens the banking industry at a time when we need it strong, and the folks who supported the Durbin amendment should be ashamed of themselves."
- "I'm really quite concerned about our community banks. The community banks, I think there are some 7,000 right now, that are below a billion dollars in size. They are quite threatened because of this, mainly because of the Dodd Frank Act. The regulatory requirement has just made life miserable for the smaller banks. The regulatory burdens of hundreds of new regulations that are going to be thousands and thousands of pages long, it's just overwhelming for a community bank to try to comply with all of that."
- "One of the major flaws in Dodd Frank from the community bank perspective is that it eliminated trust deferred as a source of capital...That was not well-thought at all, and I think that counts and ought to be repealed for the small banks."
- "I believe Dodd Frank is the worst piece of financial legislation in history, but I'm afraid I can't go back to a thousand years. I'm old, but not that old. I can't say in history. I can say it's the worst piece of financial legislation in modern history."
There's much more there, and I'd encourage community bankers to read it all. Even if you don't agree with everything Bill has to say, I've always respected the fact that he's one of those people who tells it to you as he honestly sees it. Like former Kansas City Federal Resrve Bank chief Thomas Hoenig and current Dallas FRB chief Richard Fisher (someone who can occasionally be as wrong as rain), you have the feeling that the man doesn't worry about whose backside might be chapped by something he says, which at the top of the food chain in a heavily-regulated and often heavily-politicized business like banking, is a rare trait.