ABA Convention Coverage: Image & Opportunity

While the banking industry slowly moves to regain pre-crisis profitability, leadership at the American Bankers Association is calling on bankers to help restore the industry's pre-crisis image. Speakers at the ABA's annual convention, conducted Oct. 23-26 in San Antonio, Texas, told attendees that image is key to making gains on Capitol Hill and in the regulatory agencies – gains that will make it easier for the banking industry to more effectively serve the nation's economy.. ABA's 2010-11 Chairman, Steve Wilson of LCNB National Bank, Lebanon, Ohio, described a task force he created to come up with ways to bolster the industry's image. He said it developed a "tool box" which contains aids for bankers to communicate with employees, customers, community and media about the role banks play in their communities and in the economy. Although originally developed for ABA members, Wilson said association leadership feels so strongly about the importance of improving image that it has made the tool kit available to all banks, even non-members.. "My message was make sure the community knows what your employees and directors do for your community," Wilson said on the stage at the Henry B. Gonzalez Convention Center.. Wilson cited a Gallup poll that gauges image across various industries. Banking made gains in recent months, and Wilson said the task now is to "continue to move the needle.". "The stronger the reputation at home, the better the reputation in Washington and in your state capitols," he said. ABA members participated in more than 2,500 media interviews in the previous year, Wilson said, in an effort to set the record straight about the banking industry.. "We are the bankers in the largest economy in the world," declared 2011-12 ABA Chairman Albert Kelly, SpiritBank, Bristow, Okla. "It is up to us … to communicate all of the issues, how this economy was built." Kelly said bankers need to communicate to the public and to regulators about the importance of bank lending. He said that over-regulation is making it difficult for banks to perform their most fundamental function. "We can't stress test everything and we can't global cash flow everything," he said. "We have to come to a median common ground that makes sense.". Referencing convention appearances by FDIC Acting Chairman Martin Greunberg and FDIC Board Member Thomas Curry, Kelly said: "Both of these men recognize the importance of our industry, the importance of community banks, the importance of having a positive dialogue, not a gotcha environment…Gruenberg said he is going to reach out to community banks, and I am calling on us at the ABA to reach out and establish those relationships to make them better than they have ever been. It's a two-way street. We need to be on that street. We need to be respectful, we need to be enthusiastic.. "Our request to the regulators is to be respectful and enthusiastic back with us because what we need to do is work together to bolster this industry, so save these banks, not close them," Kelly said.. Repeating an ongoing ABA theme, Kelly said bankers need to show unity. "My view is if you denigrate one bank – large or small, competitor or non-competitor – you denigrate the industry. So my mission is to try and say, don't denigrate your fellow bankers. We have to stand united all the time," he said to applause. "That is what I hope and pray we will always do.". Frank Keating, speaking at his first convention since becoming ABA president/CEO in January, also urged bankers to "stand up for unity." Referring to his experience as leader of the life insurance trade association, Keating said life insurers fared well in the Dodd-Frank legislation because the entire industry spoke with a unified voice. He noted that bankers didn't do as well because part of the industry supported the legislation while other parts of the industry opposed it.. Keating said ABA will work to dismantle the "most obnoxious parts" of the Dodd-Frank Act. "I think we have a real shot at getting some of the agony taken away," Keating said. "Unity does that.". Former Comptroller of the Currency, Robert Clarke, speaking at a general session panel with former FDIC Chairman Don Powell, also spoke about industry unity. He referred to comments recently made by a Treasury Department official. "What do you mean people are complaining about Dodd-Frank?" Clarke quoted. "We carved out the community banks. We've got different rules for them. The independent bankers association was for it. What's everyone complaining about?". Clarke added his own comment: "This is what happens when the industry is not together.". Powell also stressed the importance of unity and urged bankers to focus on issues where there is industry-wide agreement. .Working with regulators. Kelly further articulated the ABA's agenda. In addition to working on issues surrounding the payments system and capital levels, Kelly said ABA will work for improvements in the examination process. Bankers, for example, should be able to challenge enforcement orders through channels separate from those that issued the order. And, Kelly said exam reports should come back to bankers quicker. "How about 60 days?" he asked, noting that it can sometimes take up to a year to get a report.. Kelly said changes need to be made in municipal finance laws, and he said ABA will continue to fight efforts by credit unions to expand their business lending authority.. Clarke, who was Comptroller from 1985-1992, lamented the confrontational relationship between bankers and regulators. "Regulators need to calm down a little bit," Clarke said. "They need to ask themselves whether they really need to do what they are doing. Enforcement actions should be for bankers who don't get it, they should not be issued to please the inspector general.". Clarke also said examiners should work to establish more consistency from exam to exam. He cited a frustrating example where examiners changed their expectations for calculating the loan loss reserve from one exam to the next. "There needs to be predictability," Clarke said. "That comes from leadership. It comes from the top.". Powell, FDIC chairman from 2001-2005, was a banker in Texas in the 1980s. He acknowledged operating for a time under an enforcement order signed by Clarke. "I didn't think we'd get through the recession of the late 1980s, but we did," he said. If bankers focus on the fundamentals – having sufficient capital and competent directors – and they do what is best for the customer, "we'll get through this.". "This too will pass," Clarke concurred. "Those with this attitude will be the survivors.". Clarke speculated that the November 2012 elections may bring some relief. .Examples from the trenches. In a separate general session panel moderated by former Federal Reserve Board Governor Mark Olson, a community banker from Kansas described some of his challenges. Craig Meader, chairman and CEO of First National Bank of Kansas in Waverly, said limited resources prevent his $69 million bank from offering some of the services offered by larger financial institutions. While mobile banking is the talk of the industry trade shows, he said that with 500 likely customers, it is simply cost prohibitive for his bank to offer it. "We offer internet banking," he said. "It is not as convenient as mobile banking, but it is what we have to offer.". Any deficiencies the bank may have on the technological front, however, it makes up with boots on the ground, Meader said, referring to his service-oriented staff of 24. Two of those people are devoted to compliance, which Meader said is one of his biggest concerns. When asked what he worries about, Meader said "who is going to punch us in the head to prevent us from serving our customers.". But Meader said bankers need to stand up to regulators. "They are our customers, not the OCC's," he said. "Being able to take care of my customer is my biggest concern.". Other issues that concern Meader:. • Finding good securities to buy with a flood of deposits. • A low interest rate environment, at least through summer of 2013. • Checking accounts, on which he expects to phase in some fees over the coming months.. With a new regulatory emphasis on cost-justification for fees, Olson noted how much more difficult it is to raise fees today than it was in the late 1970s and 1980s.. Jim Rohr, chairman and CEO of PNC Financial Services Group of Pittsburgh, brought the perspective of a larger player to the panel discussion. He said branching remains an important part of his bank's strategy, even while it continues to make investments in electronic means of service delivery. He noted the biggest users of the internet are two important customer segments – people under the age of 30 and older than 70.. The price caps that the Federal Reserve has put on debit card transactions as a result of the Durbin amendment concerns Rohr. He said the hit to revenue will be substantial. It will be particularly noticeable because the opportunity for income in other areas of the business is limited. "If interest rates were six or seven percent, we wouldn't be so concerned," he said.. Earlier, Keating noted the ABA's efforts with the Federal Reserve to increase the cap to essentially 24 cents per transaction from the originally proposed 12 cents. Rohr acknowledged the significance of that effort, even if an earlier legislative effort to delay implementation of the Durbin amendment failed.. Rohr also identified regulatory burden as a serious issue, although he commented that "the pendulum does swing on regulatory issues." He added, however, that he expects the current swing to be "with us for a long time." Working with regulators is important, Rohr said, noting that "the regulator is undefeated."