Pub. 5 2015-2016 Issue 1

18 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE “The government has spent its time punishing financial institutions rather than focusing on getting the economy moving again.” AMANDA AVERCH DIRECTOR OF COMMUNICATIONS COLORADO BANKERS ASSOCIATION “I t w a s g o v e r n me n t h o u s i n g pol ic ies t hat caused t he f inan- c i a l c r i s i s , and not h i ng e l s e .” Author and Arthur F. Burns Fellow Peter J. Wallison, succinctly summed up the conclusion of his new book, Hidden in Plain Sight: What Really Caused the World's Worst Financial Crisis and Why It Could Happen Again, for bankers at the 2015 CBA annual summit. Wallison, a dissenting member of the 2010 Financial Crisis Inquiry Commission, disagreed with the commission’s final report, which cited banks’ risk taking and lack of reg- ulation of the industry as the culprits of the 2008 economic crisis. That report gave rise to the Dodd-Frank Act. “The facts tell an entirely different story,” Wallison said, explaining not only his dissen- tion to the report, but the impetus to write his book. Wallison faults the federal government’s “demand for low quality mortgages” for caus- ing the economy to tank, noting in 2008, 76 percent of the subprime and Alt-A loans in the U.S. were held by FannieMae and FreddieMac. “It’s important to understand what caused the crisis (because) the way we look at the past is important for what policies we ultimately adopt,” he said, noting that the public’s and interested parties’ understanding of what happened will affect the full outcome of the Dodd-Frank Act. “If we don’t understand the cause, we’ll do it again, and we are doing it again,” he said, pointing to evidence that the U.S. government is again looking to reduce underwriting stan- dards as there is “always an interest of the gov- ernment to do so because it spurs the economy.” Wallison said that if there is any hope of reducing the impact of the DFA, knowledge- able people must push back against those who inaccurately blame financial institutions for the crash. “The Dodd-Frank Act has created economic problems causing harm today by preventing a V-shaped recovery,” he said. “The government has spent its time punishing financial insti- tutions rather than focusing on getting the economy moving again.” The economy is moving, though not at as speedy a pace as one might hope, confirmed Alison Felix, vice president and Denver branch executive at the Federal Reserve Bank of Kan- sas City. Americans have lower debt, higher wealth levels andmore discretionary income, she said. “That is not equating to growth yet, but consumers are saving that extra money they have,” she said. Bankers also learned during the summit that the ups and downs they’ve endured in recent history should give way to better times for their industry. “The good times and bad times help us figure out what works and what doesn’t, and Information at 2015 CBA Summit Leaves Bankers Hopeful