Sign New York Banking Living Will Fast

Industry sign banking new york living will now

what is the one question you think that Jamie Dimon and these other executives should be prepared for that they may not be we're that they're not prepared for yeah what do you think the adil left-field question will be well I I think what is your adolescent for them well let me give you my best answer let me give you the best answers and questions from each side so I think terms of Congress asking bank CEOs I think they can legitimize these hearings with one data point and that is this decade savers have lost out on a half a trillion dollars of interest due to lower interest rates that are in response to the financial crisis so if you're moaning about being here in terms of the seven bank CEOs there's been a wealth transfer historic wealth transfer from savers to others and that's due to the banks and the crisis so I think that's the best argument that direction the best way what is it what's the answer to that there's no good answer that's just well that's why you're here I mean so therefore let's make sure it doesn't repeat again and I think the banks can respond saying we are the strongest we've been in a couple decades and there's one metric that sums that up more than anything else and that would be the Bank bond spreads over Treasuries have declined from 700 basis points down to 100 basis points so mr. congressman mrs. congressman I know you're worried about the health of the financial industry but I have one trillion dollars of bank bonds that beg the difference that's the basically we're almost as safe as buying a US Treasury bond well 100 bases yeah right more risk do you think they are safe enough to undo some of the restrictions on living wills because that's one of the things that's on the table now look the regulators did a great job and Jamie Dimon in the CEO letter says regulators should take a victory lap and he's absolutely right but the response to the financial crisis was a little haphazard it was needed it was appropriate but now you can do a look back do not sacrifice safety and soundness one iota but you can certainly improve the efficiency of it you can certainly improve the transparency of it and what does that mean I don't but come back to living wills because because the entire premise of getting rid of too big to fail is reliant on this living will idea there is now a move afoot by the Fed to make the living wills a little less rigorous well I think you need to allow big banks to fail I mean that's the whole point you could almost write a book about too big to fail no it's a night but this is a very serious issue the reality is if you had one of the biggest banks fail it's not a good scenario so you need to prevent that from happening the first place so this is more of a thought experiment at this point because you're not having one of the top three banks fail and everything be okay having said that I mean you've doubled capital you've tripled liquidity over the last decade you have the Fed stress test the banks are strong enough to absorb not just one financial crisis but two financial crises so it's just a thought experiment how much of your bullish case on banks today is about regulation coming down zero zero we have zero in our earnings models about regulation coming down and now look you do have the the Trump appointees and charge the bank regulatory agencies there are there is some potential for some deregulation but we're not relying on that one bit do you have in in any scenario a scenario in which regulation increases with a house controlled House Financial Services Committee with hearings like we're going to have today we saw Maxine Waters confront senator secretary minutiae and it was very testy I mean it's a different environment now there's headline risk Wow I saw that exchange that was remarkable I think the importance of today's hearings is that you know sound bites have the potential to turn into policy that has the potential to turn into legislation and then regulation so I think this could be a sign of what potentially is to come after next year's presidential election please weigh in on Warren Buffett's comments over the weekend regarding Wells Fargo and the next CEO of that company he made the comment that it might be advantageous not to look to a traditional executive from wall street from the Goldman Sachs and JP Morgan's of the world but maybe to look to other places in corporate America in large part because of the pressure that's coming from Washington well I will not address comments related to Wells Fargo specifically but let's look Wall Street is not Wall Street is not Wall Street you have seven banks testifying today so Bank America JPMorgan and Citigroup by the numbers if everybody cares about the numbers they're more Mainstreet than Wall Street surprised now clearly Goldman Sachs Morgan Stanley's more Wall Street and then you have Bank in New York and State Street which people don't really understand who they are they're basically a bankers bank all right so when you talk about Wall Street all Wall Street's not the same oh and by the way JP Morgan they were a source of strength during the financial crisis so don't paint the whole industry with one brush if you look at the testimony there's 67 pages of testimony that was released yesterday you look at the testimony and you know Citigroup of Morgan Stanley they're talking about how strong they are after coming back from the crisis and that's right because both of those banks almost failed in our opinion okay that's right and then you look at JP Morgan though they're not talking about like their strength they're talking about quote inclusive growth they're talking about being a partner with you know a lot of constituency so you know don't feed the whole industry with one brush Wall Street it's not Wall Street it's not Wall Street it varies well will the catalyst be for bank stocks you know what you have the greatest earning stability and over two decades you have the strongest balance sheet rate mic and you could have said that last quarter in the quarter before and is still it didn't really move the needle well look I mean every quarter every year every few years the banks don't mess up is another justification for a revaluation of bank stock so for the first time in my career going into this year we recommend all five of the wholesale banks to Citibank America JPMorgan Goldman Sachs and Morgan Stanley our favorites are Citigroup and Morgan Stanley first time ever by the way where were these hearings you know in 2005 in 2006 when I was I was kicked off from being on your show at that time and I was kicked out of Bank CEO meetings and you know all that stuff we were they hear and I actually called up the SEC when I was fired at the early part of last decade where are the hearings then where is everybody then so now you're having hearing from the industry's stronger than it's been in decades but I think it's fair because savers have paid so much I think it gives a sight into what might happen over the next couple years but the industry is doing fine even with this justified look back you you