With 535 banks in Oklahoma, who could expect that each would be
headed by a chief corporate officer/financial guru capable of
managing a company?
Yet, the current banking environment in Oklahoma demands a lot
more of bankers than was once the case, H.E. "Gene" Rainbolt told an
Oklahoma City University banking law seminar last week.
"We come from a past where we had a monopoly - any idiot could run
a bank," he said. "In that environment, the less responsible a bank
was to community needs, the more profitable it was. Few management
skills were needed."
From the 1930s to around 1980, Rainbolt noted interest rate
fluctuations were uncommon and the economy yielded few surprises.
Since savings and loans were in a structured environment, he
added, they posed little threat of competition to banks. But with
the passage of the Garn-St Germain Act in 1982, the ground rules of
the financial services industry were either eliminated or radically
"With the current environment we went from boom to deregulation,"
Rainbolt declared. "Many more competitors were seeking the same funds
and seeking assets in which to invest those funds."
Added to that was the economic stimulus of the energy boom in the
early 80s, which Rainbolt said affected all Oklahoma bankers to some
"We reacted with the facts we had at the time," he said, "but the
result today is that limited opportunities to make a profit, plus
large loan losses, make us ask how and why we're going to survivein
"Congress has failed to deal with savings and loan regulation, and
there is no factor more disruptive to the banking industry," Rainbolt
He also called for added powers for banks in the areas of
insurance, real estate and brokerage services, while acknowledging
that their principal income remains centered in loans.
On a "micro" basis, Rainbolt said individual banks must emphasize
character: "We must have absolute integrity in the banking system
with no compromises. We must recognize our losses. We can't sweep
them under the rug, because the volume only grows."
Further, Rainbolt said banks must learn to strike a balance
between risk and reward.
"We're reaching a point where the economy may cause some banks to
fail," he said, "but in the banks that have failed so far, it was
mismanagement. We can destroy more people by lending than not
Cost control was the third ingredient prescribed by Rainbolt for
bank survival in the 80s.
"We're going to have to reduce staffs in banks, and be willing to
defend the positions we take to the community and to regulators," he
Rainbolt commended state legislators for passing a new,
liberalized branching law this month which makes it possible for any
bank in Oklahoma to acquire any other insolvent bank as a branch.
He also defended bank regulators in their role as examiners of
"I've seen almost no loans that have been criticized that
shouldn't have," he said, "and I've rarely seen a bank examination
where the condition of the bank was not worse than the examiners said
- Mary Beth Guard, general counsel to the Oklahoma State Banking
Department, told participants in the OCU banking law seminar that the
confidentiality of bank examination reports maybe clarified and
protected under a bill pending in the Oklahoma State Senate.
Senate Bill 502, authored by State Sens. Robert Miller, D-Beggs,
and Al Terrill, D-Lawton, and State Rep. Roy B. Hooper, D-Lawton,
would vest discretion with the Oklahoma Bank Commissioner to analyze
any subpoenas or other requests for bank examination reports, Guard
The commissioner would determine if the information sought could
be obtained through alternative means, she said, and would be
authorized to establish requirements to help maintain control of
confidentiality of the documents. …