Banking Law

President Obama's big bank bashing bonanza rolled on today with his announcement that he's going to crack down on the proprietary trading activities of "Big Banks" and otherwise pin their ears back. The major stock indexes went into a funk as Big Bank stocks took a hit. On the other hand, one man's beat-down is another man's pick-me-up. In a video posted today by Fox News, a reporter whose voice could peel the paint from the hull of a guided missile cruiser interviewed Steve Trager, the CEO of regional bank Republic Bank of Kentucky, and Steve was honest in his appraisal that what's bad for giant banks might actually be good for community banks. On the other hand, Steve's comments about his fear of any new regulations applied poorly and how they helped drive all but the biggest banks and a plethora of mortgage brokers "with no skin in the game" out of the residential mortgage market are on the mark.

Also worth a listen is a brief segment of an interview with Warren Buffett on risk management (also posted today by Fox News). His assertion that every CEO ought to be the firm's chief risk officer ought to be stamped on the foreheads of every bank CEO in the country. On the other hand, as Buffett has so aptly demonstrated in his career, eliminating risk is not a reasonable goal, but managing it is. That is, you can't eliminate it entirely if you expect to make any money. That's something the politicians would be well served to keep in mind as they, once again, embark on the Quixotic adventure of making sure that financial failure "never happens again."