Banking Law

Newly appointed Colorado Banking Commissioner Steve Strunk has spent over 36 years being an actual banker, which is about 36 more years of banking experience than that possessed by--oh--say--Sheila Bair, for example. Despite that handicap, it appears that Steve might be my kind of guy. In a recent interview with the Denver Business Journal, he gave every indication that he's a no-nonsense, straight-talker, which is why he's probably going to do well at the state level and why he'd be pretty much a fish out of water in the rarefied air within The Beltway.

The entire interview is worth a read, but his answers to the last two questions especially stand out.

Q: A lot of bankers feel that federal regulators have been heavy-handed over the past year and a half, requiring them to raise capital ratios, reduce loan portfolios and take other actions that have led to their making fewer loans to small businesses that need it. Do you agree or disagree?

A: When we are experiencing good economic times, some federal politicians attempt to put a chokehold on bank regulators. During the Clinton administration, Eugene Ludwig, who was head of the OCC, was given explicit instructions for the national bank examiners to lay off the nationally chartered banks, so that the economy could run.

When we get into difficult economic times, like we?re experiencing right now, our national politicians either run for the hills and say nothing, or they advocate more regulation to grandstand with the public that they had nothing to do with causing the economic downturn and they will make regulations that will promote economic development. Really, neither position is helpful.

We have sufficient bank regulation and regulatory guidelines on the books. If bankers had adhered to bank regulations and listened to bank regulators, the banks would not be enduring such severe difficulties.

Q: Do you have any thoughts on the two financial reform bills working their way through Congress [House bill sponsored by Rep. Barney Frank, D-Mass., and Senate bill sponsored by Sen. Chris Dodd, D-Conn.]?

A: I think those are a perfect example of federal politicians trying to grandstand with the public, and say that increased regulation will protect the public and promote economic development. If you go back and look at Barney Frank?s comments from a few short years ago, when he was requiring national banks to make home loans to everybody that could breathe regardless of the credit quality of the borrowers, it?s preposterous that our federal politicians are proposing increased regulation.

There are a lot of difficulties that have occurred in our economy and there?s a lot of finger-pointing going on, but increasing regulation isn?t going to promote better behavior by the banking industry. There are sufficient regulations on the books, as I said earlier. If bank regulators had enforced these regulations, and if bankers had adhered to both the letter and the spirit of the law, we wouldn?t be in the position that we?re in.

Any regulator who believes we've already got enough laws and regulations on the books and that what we need are banks that adhere to them and regulators who enforce them, and who appears to be less than enamored with national politicians who either "grandstand" or "head for the hills," can't be all bad. I wonder if Barney Frank will invite him to tea the next time he's in D.C.?