Bankers bearish on local economy

Five of the area's top banking executives addressed a crowd of nearly 80 financial-services professionals at an April 1 forum sponsored by the Great Smokies chapter of The Risk Management Association. The event was held at the Asheville Area Chamber of Commerce in downtown Asheville.

Bankers' point of view: More regulation will likely translate into higher fees for customers, say bankers like Dana Stonestreet, president and CEO of Hometrust Bank. He spoke as part of a recent panel discussion sponsored by the Great Smoky Mountain Chapter of the Risk Management Association. Photo by Michael Muller

The panelists painted a bleak picture of the region's economic prospects for the coming months, asserting that new federal regulations meant to tighten oversight of the financial markets will be overly burdensome to community banks and, in the end, cost consumers more.

"Smaller banks don't have the resources and staff available to keep up with all the new paperwork," said HomeTrust Bank President Dana Stonestreet. "That means more banks could close, reducing competition and resulting in more job loss."

Taking pains to distance themselves from the largely unregulated "shadow banks" of Wall Street, these local executives all feared that while community banks weren't responsible for the nation's economic woes, they would ultimately bear the brunt of the reform. "More regulation means higher costs, which means higher fees … and consumers will end up paying for it," predicted Mike Willett, western regional president of BB&T. "Greater regulation will mean more restrictive credit and longer processing times for things like mortgages."

Dave Kozak, executive vice president of Asheville Savings Bank, talked about the "ripple effect" that increased regulation and tighter credit would have on the rest of the economy. He cited Bank of America's recent decision to stop covering debit-card transactions when a customer lacks adequate funds. "All the commerce that banks have facilitated over the years could come to an end," said Kozak. He also maintained that the local real estate market hasn't hit rock bottom yet. Asheville, said Kozak, was "late getting into this thing; we'll be late getting out." His colleagues agreed that our area could expect to see continued deterioration in home values over the next 12 to 16 months.

The news wasn't all bad, however. Willett, who also chairs the Chamber's Executive Committee, stressed that Asheville consistently ranks high on lists of top places to visit or to live, noting, "The things that make Asheville great are still here today."

Robby Russell, community banking market leader at Wachovia/Wells Fargo, and Pat Carver, area executive for First Citizens Bank, also participated in the forum.

For more information on the Risk Management Association's local chapter, contact Anita Silver (225-2021; e-mail: ASilver@bbandt.com).

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2 thoughts on “Bankers bearish on local economy

  1. Piffy!

    [b]Greater regulation will mean more restrictive credit and longer processing times for things like mortgages[/b]

    This is part of the problem with how people look at the recent bubble burst. IT wasn’t easy access to credit for working people that crashed the economy, it was the packaging of the associated loans into large schemes.

    If the outcome of this ‘crash’ is that the average independent contractor or small business owner cant get a loan to buy a home or start a business, then the little guy loses and the big banks and wall street hookititydoos win out yet again.

  2. Musoscribe63

    This is shocking! Let’s review: bankers are opposed to regulation of…banks. And even more shockingly, they got a receptive audience for that conservative message at the Chamber of Commerce. In other late-breaking news, the sun came up this morning.

    The piece didn’t give so much as a sentence to any sort of balance, such as “leading economists including Paul Krugman disagree” or something like that. If I want one-dimensional business reporting I can read the WSJ. Seeing this in MtnX = Disappointing.

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