Today's Banking Environment Demands Management Skills
Wolfe, Lou Anne, THE JOURNAL RECORD
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 altered.
"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 degree.
"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 the 80s.
"Congress has failed to deal with savings and loan regulation, and there is no factor more disruptive to the banking industry," Rainbolt continued.
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 lending."
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 said.
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 institutions.
"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 itwas.". .
- 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 said.
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. …