TEXT OF INTERVIEW
Tess Vigeland: The banking industry, obviously, has been watching this bill closely and lobbying. So we turn to Scott Talbot of the Financial Services Roundtable for some reaction. Thanks for joining us.
Scott Talbott: Sure, my pleasure.
Vigeland: We have a bill. Tell us what the banking system is for and against at this point.
Talbott: We are for removing uncertainty. I mean, we have a new day here. And we have a new regulatory structure, which is stronger and better in most regards. We do have some concerns, obviously. A couple of the provisions -- namely the Volcker provision as well as the derivatives provisions -- will reduce the ability of the industry to lend and will reduce the industry's competitiveness on a global scale. And to a large extent, will reduce the banks' ability to help their customers manager their needs.
Vigeland: How does that happen? Explain to me how this bill reduces the ability of banks to lend.
Talbott: The bill limits the ways in which a bank can generate revenue, so that makes the bank weaker. Secondly, it increases the capital requirements, so in general while that's a good thing, some of these provisions we feel go a little too far, there's too much capital. And if the capital is sitting on the balance sheet, it's unable to be lent to customers for loans, and so it reduces the ability of the bank to lend.
Vigeland: I think a lot of consumers have watched what has happened over the last two years and said, "Look, the system -- how it was, where you had a lot of choice, where you could get a loan without proving you had income -- that all got us into trouble in the first place, so...
Talbott: Agreed. Could not agree more. And bad loans helped get us into this situation. And this bill requires banks to make good loans based on the borrowers' ability to pay. And we think that's the right standard, should have been in place a long time ago, and we support it going forward.
Vigeland: But what also got us into this trouble is that the banks couldn't bail themselves out because they didn't have enough cash on hand.
Talbott: This is a delicate balance, though. You want to increase the capital to protect against the risks of the activities the banks engage in, but you don't want to have too much capital sitting there on the banks' balance sheets and not out lending.
Vigeland: Scott Talbott of the Financial Services Roundtable, thanks so much.
Talbott: My pleasure, thank you.