GERRI: A CRIMINAL INVESTIGATION
AS TO HOW LAUDABLE THE COUNTRIES
BANKS WERE IN THE CRISIS.
BUT ARE THEY REALLY TO BLAME?
THE EDITOR AND CHIEF OF AMERICAN
BANKERS.
I'M GOING TO START WITH YOU.
THERE IS CONVERSATION TONIGHT
THAT THE BANKS ARE GUILTY OF A
CRIMINAL VIOLATION.
IT STILL DOESN'T SOLVE THE
MACROECONOMIC PROBLEM.
>> I WOULD SAY THAT A CRIMINAL
INVESTIGATION, IF IT WAS A
SCANDAL IS GOING TO BE HELPFUL.
I THINK IT COULD HELP REINSTALL
SOME OF THE INTEGRITY IN THE
BANKING SYSTEM.
PEOPLE FEAR CRIMINAL
PROSECUTION.
>> WHAT IS IT A CRIME?
THEY CREATED A MARKETPLACE WHERE
PEOPLE ALL OVER THE COUNTRY
COULD PUT THEIR MONEY IN.
IS THAT A BAD THING?
>> OBVIOUSLY THEY WERE TRYING TO
CREATE A BANKING CENTER.
GERRI: IT REMINDS ME DURING THE
UNITED STATES DURING THE
FINANCIAL CRISIS.
THE GOVERNMENT GOT INVOLVED, THE
BANKS DID THINGS THAT WERE
WRONG.
AND BIG DISCUSSION ABOUT BANKS.
I BELIEVE THAT IT WOULD BE
DIFFICULT TO BREAK THESE THINGS
UP AT THIS POINT.
DO YOU THINK IT'S A GOOD IDEA TO
REDUCE THEIR SIZE?
>> SUDDENLY OUR FINANCIAL SYSTEM
WAS THREATENED.
IT IS A QUESTION OF TWO
INTERCONNECTED.
NOBODY KNOWS ALL OF THE RISKS IN
OUR SYSTEM.
IT IS TOO COMPLICATED AND THE
REGULATORS CAN GET THEIR ARMS
AROUND IT.
GERRI: THE ATTORNEY GENERAL SAID
IN FRONT OF A LOT OF PEOPLE,
THAT HE CANNOT REGULATE THESE
THINGS.
IT IS IMPOSSIBLE FOR HIM TO
BRING IN PROSECUTION.
IT SEEMS TO ME THAT IT WOULD BE
IMPOSSIBLE TO MAKE THE BANKS
SMALLER AS WELL.
>> IF YOU TRY TO MAKE IT
SMALLER, THEN YOU ARE GOING TO
HAVE TO NEED TWICE THE
REGULATORS TO INVESTIGATE AN
AUDIT AND REVIEW TWO DIFFERENT
THINGS INSTEAD OF ONE BANK.
THE GOVERNMENT IS OUR HE
STRETCHED.
GERRI: THE LAST THING WE NEED IS
MORE REGULATION.
THE PEOPLE THAT ARE TAKING IT
ARE THE SMALL BANKS.
THEY CAN'T BEAR THE SCRUTINY OF
ALL THESE NEW REGULATIONS.
>> ABSOLUTELY.
THE PROBLEM IS THAT THE SMALL
BANKS GO BY THE WAYSIDE AND THEY
ONLY HAVE ABOUT 10% OF THE
DEPOSITS.
BUT THEY HAVE 40% OF THE LOANS
OF SMALL BUSINESS.
THAT IS WHERE THE GROWTH COMES
FROM.
GERRI: WHEN YOU REMEMBER
JPMORGAN AND ALL THE PROBLEMS
ASSOCIATED WITH THEM.
DC THAT IS A THREAT TO THE
SYSTEM?
WAS THIS JUST SOMETHING THAT
PEOPLE GOT UPSET ABOUT BECAUSE
DOLLAR FIGURES ARE SO BIG?
>> I THINK THERE IS NOT ENOUGH
SUPERVISION AND COMPLIANCE IN
THESE BROKER-DEALERS AND THINGS.
IF THERE IS NOT ENOUGH STAFFING
-- AND THEY ARE NOT WELL
RESPECTED.
THEY ARE NOT AS WELL-PAID AS THE
HIGHER UP BANKERS.
SO NOBODY LISTENS TO THEM.
THIS IS A HUGE PROBLEM.
GERRI: ALL WE HAVE DONE IS
HIGHER COMPLIANCE PEOPLE FOR THE
LAST DECADES.
>> TO BREAK UP THE BIG BANKS
DOESN'T MAKE SENSE.
DO WE WANT THEM TO ONLY BE USING
THEIR BANKS?
>> IT IS A POWERFUL FIGURE.
WHEN YOU HAVE SO MUCH POWER AND
SO MANY FRIENDS AND LOBBYISTS IN
GOVERNMENT, IT IS HARD TO GET A
STRICT REGULATORY SYSTEM.
THEY ARE ALWAYS TRYING TO EASE
THE REGULATION.
>> TOO BIG TO FAIL IN JAIL AND
REGULATE AND TAKE ON
POLITICALLY.
THAT IS AN ISSUE.
BUT IT DOESN'T MEAN THE BREAKING
THEM UP AND GOING BACK TO WHERE
THEY WERE IN THE 70s, THAT IS
NOT THE ANSWER.
>> WELL, UNFORTUNATELY, YOU
DON'T ALWAYS HAVE TO THINK UP
GOOD TIMES AND GOOD POLICIES.
SOMETIMES THERE IS A LAG OF A
FEW YEARS.
GERRI: YES.
>> I DON'T THINK ANYONE IS HAPPY
WITH.
