ABA President and CEO Frank Keating sat down on Wednesday with Canada's Business News Network to provide insight on President Obama's State of the Union Address.
President Obama addressed the nation on Tuesday, calling for tough crackdowns on big banks, endorsement of a loophole-free tax code and an increase on taxes for the wealthy.
Keating says that it is not a good idea to “demonize” banks and disagreed that big banks were the reason for the financial fallout in 2008.
“Most of the miscreant behavior in the fall of '08 and before were not the banks. They were the nonbanks, non-regulated, the mortgage brokers, the payday lenders, and obviously, Fannie and Freddie, the zeal to give mortgages to people with no job [and] no assets,” Keating said.
Another topic of discussion was the Volcker Rule, a provision of the Dodd-Frank Act that prohibits financial institutions from engaging in risky, speculative trading. The rule has taken criticism from foreign and domestic banks alike, as concern grows as to how or if the provision will affect foreign financial markets.
Keating has concerns that the Volcker Rule's intentions may be sweeping, affecting “justifiable, ordinary and obviously helpful” financial transactions, including futures contracts and money market operations.
Like many others, Keating worries that all the new regulations will have a profound detrimental effect on small community banks, and he hopes that the Dodd-Frank can be revised and improved.
“Unlike the New Testament, Dodd-Frank is not perfect and there can be room for adjustment, amendment and modification,” Keating said.
Keating also discussed the Consumer Financial Protection Bureau, expressing concern over the bureau's lack of oversight.
“The reality is that this is an entity with no real appeal, no oversight by the Congress, no board to control it, either reign it in or let it loose," Keating said. "There's no doubt consumers need protection but so do banks."