There was an economic meeting in town yesterday and I have a few comments on what was said.
Asleep for 35 years:
A banker with 35 years of experience shared his views on the economy Tuesday with local finance industry professionals and accountants
James Lokey is Rabobank N.A.’s president of community banking and the chairman of the California Bankers Association.
In remarks he prefaced as personal, Lokey said consumer confidence needs to improve and the financial industry is on sound footing.
“Eighty percent of the banks, primarily the commercial banks, had nothing to do with the subprime mess,” he said, speaking to a gathering at Seven Oaks Country Club.
My comments - This has never been a subprime problem. This is a massive credit bubble. Credit in all forms...Residential mortgages, Commercial mortgages, credit cards, CDS, CDO's, SIV's, etc... To say that 80% of the banks are ok because they didn't do subprime only goes to show this guys is asleep and I think he represents a lot of bankers. Many could not see this crisis coming and they still have no idea why it happend.
The banking industry in general is well capitalized, Lokey said, and consumer confidence would be much stronger had the majority of commercial banks told
Uncle Sam, “Thank you very much, we do not need your money.”The economy
is in trouble, in part, because consumers aren’t spending.
My Comments - The banking industry is in no way well capitalized. They (Bush/Paulson) thought the TARP would solve this problem...sorry, didn't work. When these banks need more capital next year, this guy will need to eat his words! Consumers can't spend as much because banks are tightening credit as they are hoarding their capital! Credit is tight for car loans, home loans (non-GSE) and business loans...just look at the Fed's loan officer survey.
“Bakersfield is in great shape,” banker Bart Hill said. “The economy’s coming back.”
My Comment - Then why did you just take a significant charge to earnings for loan loss reserves?
“I think we have a ways to go before we turn the corner,” said meeting attendee Floyd Cogdill, director of student services at National University’s Bakersfield campus.
My Comment - Agree.