Bank CEOs Expect a Pro-Growth Shift in Regulation -- WSJ
July 20 2017 - 3:02AM
Dow Jones News
By Christina Rexrode
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 20, 2017).
U.S. Bancorp, the largest regional bank in the country, is
bullish on the regulatory outlook for banks.
In a call with analysts Wednesday to discuss second-quarter
earnings, CEO Andrew Cecere said expected changes to bank
regulation have "the promise to be conducive to growth."
"I just spent time in Washington last week and left very
encouraged by the open and productive dialogue that is taking
place," Mr. Cecere said.
Executives at Morgan Stanley, which reported second-quarter
earnings Wednesday as well, were enthusiastic about prospects for
regulation that would be more favorable to the industry. In a call
with analysts, CEO James Gorman expressed hope for simpler
regulation and lower corporate taxes to "allow U.S. banks to be
greater engines of economic growth."
Their remarks stand in contrast to those made by J.P. Morgan
Chase & Co. CEO James Dimon, who said last week that Washington
gridlock has so hamstrung the U.S. economy that "it's almost an
embarrassment" to be an American citizen.
While other banks want a lighter regulatory touch as well -- one
of the promises of the Trump administration -- they have focused
their recent remarks instead on Washington gridlock over health
care, trade policy, tax policy and other issues.
U.S. Bancorp suffered from sluggish loan growth at the beginning
of the year, but officials there said they expect loan demand to
bounce back a bit in the third quarter. They also said they expect
consumer lending demand to "remain fairly strong" for the rest of
the year.
In an interview, Chief Financial Officer Terry Dolan said he was
also optimistic about what policy makers in Washington could do for
the economy. "There's a very strong focus on how we move the
economy forward, how we're going to create jobs, what we can do
within the banking industry in order for us to help stimulate that
economic growth," he said.
Just last month, Mr. Cecere said a lack of clarity on tax
policy, trade policy, health care and infrastructure spending was
forcing corporate customers into a wait-and-see mode, wary about
expanding until they knew what to expect. Mr. Dolan said Wednesday
that the bank's large corporate customers are taking out loans for
small acquisitions, not capital expenditures or business
initiatives.
Darren King, the chief financial officer of M&T Bank Corp.,
based in Buffalo, N.Y., said in an interview Wednesday that
Washington gridlock was keeping corporate customers from taking
loans to grow their business.
"If you're in health care, it's uncertainty about the Affordable
Care Act," Mr. King said. "If you're in construction or heavy
equipment, it's uncertainty about whether we're going to have an
infrastructure bill."
Donald Trump's election in November sent bank stocks soaring,
with analysts expecting the new administration to pare back
Obama-era regulations and boost the economy with infrastructure
spending. Still, banks have been wondering if the Trump
administration's deregulation promises will materialize. It also
isn't clear if election-fueled optimism about the economy will
translate into higher loan demand.
Mr. Dolan on Wednesday noted the report the Treasury Department
released last month with proposals on remaking the regulatory
landscape as one of the reasons for his bank's optimism.
"If you go back a quarter or so, the Treasury was asking a lot
of questions and writing things down, but we didn't have a sense of
whether they were really listening and hearing us out," Mr. Dolan
said in an interview. He declined to say who Mr. Cecere had met
with in his trip to Washington last week.
Mr. Dolan also said that last month's stress-test results, the
first time where all the participating firms got passing grades,
signaled the Federal Reserve "is taking a different perspective on
capital levels in the industry."
Mr. Gorman, the Morgan Stanley CEO, expressed hope for a new tax
plan in particular. "U.S. corporate taxes are too high," he said on
the call with analysts.
Write to Christina Rexrode at christina.rexrode@wsj.com
(END) Dow Jones Newswires
July 20, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
M&T Bank (NYSE:MTB)
Historical Stock Chart
From Aug 2024 to Sep 2024
M&T Bank (NYSE:MTB)
Historical Stock Chart
From Sep 2023 to Sep 2024