Inside Financial Services

Cam Fine Needs To Get Over The Big Banks

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Cam Fine, head of the Independent Community bankers of America didn’t much like Jamie Dimon’s letter to shareholders:

In a recent message to shareholders, JPMorgan Chase chief executive and chairman Jamie Dimon wrote that many large banks had “no problem” navigating the crisis, whereas many smaller banks failed because of it. . . . Not only did most of the massive Wall Street institutions survive, Dimon notes, but JPMorgan Chase itself graciously paid roughly $8 billion in Federal Deposit Insurance Corp. assessments in recent years to help pay for the resolution of the smaller banks that couldn’t hack it. . . .

Now that these megabanks are back on their feet and bigger than ever thanks to their government bailouts, they continue to reap the benefits of taxpayer support. As the Government Accountability Office confirmed last year, Wall Street firms continue to receive a tangible funding advantage over smaller institutions thanks to their too-big-to-fail government guarantee. . . .

Ridiculing the smaller financial institutions that have to answer to the free market — that do not enjoy an absolute taxpayer backstop against failure — is beyond hubris. It shows a complete unwillingness to accept responsibility. It shows that Wall Street, infantilized by privilege, has learned nothing from what it wrought in those panic-stricken months in 2008 and 2009 and in the years of economic doldrums that have followed. [Emph. added]

I continue to be mystified by Fine’s habit of vilifying the big banks. Big banks and community banks have a more interests in common than not, after all. If Fine had realized this and made common cause with big banks in lobbying Congress when Dodd-Frank was being considered, perhaps the final legislation wouldn’t have placed quite as large, and ruinous, regulatory burden on the banking industry—a burden that small banks in particular are ill-equipped to shoulder. As for big banks’ “too-big-too-fail government guarantee” that Fine complains about, if that’s such a competitive advantage, why are institutions twisting themselves in knots to be rid of it? (For that matter, smaller banks have several advantages of their own, such as exclusions from the Durbin amendment and CFPB oversight.)  Oh, and the bailout. The large banks didn’t seek it or need it. It was forced on them whether they wanted it or not; the money was quickly repaid with interest. And if that bailout didn’t happen, the resulting lack of depositor confidence in the system would have been so pervasive that many more smaller banks would likely have failed than actually did.

Cam Fine seems to resent the fact that big banks even exist. That’s nuts. The financial system is best served by having large, broadly diversified financial institutions that can serve large, global clients. (If, in Cam Fine’s dream world, there were no big U.S. banks to do the job, those big clients would simply give their business to big foreign banks.) Nor is he right to complain about a “recession created by Wall Street.” The recession came about as the result of the bursting of the housing bubble. Small banks, by doling out all those loans to homebuilders, inflated that bubble every bit as energetically as the big banks did. That’s why so many smaller banks failed after the housing market collapsed.

As I say, I don’t get what Cam Fine’s problem is. Community banks have successfully competed against the big banks for years even without his whining, and will keep on doing so. Cam ought to find another scapegoat.

What do you think? Let me know!

9 Responses to “Cam Fine Needs To Get Over The Big Banks”

  1. Wyld Byll Hyltner

    Citi didn’t need it? Wachovia couldn’t have used it? Interesting conclusions.

  2. ETO

    When are the mega banks going to be held accountable for the crimes (assisting citizens evade taxes, money laundering, willful violations of BSA, foreign exchange rate fixing, LIBOR rate fixing, etc.) for which they were charged hundreds of billions of dollars last year? The silence is deafening–not a peep from the stockholders or even the activists.

    Let’s talk about something constructive for a change.

    • Open

      honey the reason they anliaze and talk bad about what women wear its because at that moment they are not thinking about you, they re to busy thinking to stick a cock up there mouth i hate faget all the way to the end they even get you in trouble at the office if they can..i would send them all to Sauda Arabia so they can become men but as they say BORN QUEER DIE QUEER

  3. thomas brown

    Without going into detail, i find ETO’s response interesting because it assumes the buyer of any financial services product has NO PERSONAL RESPONSIBILITY. Fraud is wrong but a buyer who makes a bad decision is another thing. Why pay Starbucks prices? This next presidential election will be all about PERSONAL RESPONSIBILITY versus a government who makes decisions for us

    • ETO

      You’re onto something. If enough customers of these big banks actually boycotted them there would be nearly immediate behavioral change. It would help the community banks too.

  4. JRG

    “The large banks did not need to be bailed out” are you serious?

  5. william c mitchell -- retired commercial (not investment) banker

    Cam Fine, does not seem to have a clue about the fall out from the Community Reinvestment Act. Much of what happened, making uncollectible loans, were the result of complying with that legislation. There is need for a graduate student to examie and write about the consequnces.

    WCM, long retired commercial, not an investment, Banker.

  6. Grahito

    Would you happen to have any fiamly photo’s that were taken in Sterling that you would be willing to share? I live in Sterling and am interested in the history. Any photo’s that also include buildings are of interest.I remember your Aunt Francis and Uncle Dugan and Butch, they lived down the road from me when I was growing up.

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