The Arizona Banker - Jan/Feb 2013 - page 4

4
A
S
BUSINESS BECOMES MORE DEPEN-
DENT ON POLITICAL DEVELOPMENTS
AT THE NATIONAL AND STATE LEVELS,
OUR NATIONAL AND STATE BANKING
associations will necessarily need to become
more involved in politics. This seems logical
enough, but the events at the end of last year,
that seem to be continuing through this year,
underline and put an exclamation point on
this reality.
As I have said in this space before, the
business world has been gripped by politi-
cally induced uncertainty for several years.
We have been waiting for clarity on mul-
tiple fronts which we thought we would get
from the election: from the permanence of
the Affordable Care and Dodd Frank Acts
to the duration of the Bush tax cuts, to
name just a few. While the election an-
swered some of these questions, our elected
representatives at the federal level are show-
ing us the downside of divided government:
political paralysis.
On the “fiscal cliff” in particular,
having demagogued the issue all year,
they found themselves beyond the dead-
line with no agreement. So they allowed
tax rates to rise on the wealthy and they
postponed the draconian spending cuts
known as “sequestration” until March.
That roughly coincides with a national
default on our financial obligations if
the debt ceiling is not increased. It’s also
when the stopgap funding for the federal
government expires, threatening another
government shutdown. So, while we have
temporarily averted the “fiscal cliff,”
it looks like we’re headed into a “fiscal
perfect storm.”
As we proceed down this path, the bank-
ing industry has much at stake. We have
a zealous, and partially new, regulatory
estate charged with implementing the
Dodd Frank Act – the largest regulatory
reform legislation in the history of U.S.
banking. We have new “Basel III” capital
standards that, while written for inter-
national banks, our regulators intend to
apply industry-wide, encompassing even
community banks.
Add to that the new rules on mortgage
lending hitting just when the housing
market is beginning to recover. We can
also expect a concerted effort from Con-
gress on reforming Fannie and Freddie.
Finally, and this is not an exhaustive list,
the credit unions will be back on the Hill
this spring with their campaign for ex-
panded business lending, leveraging their
tax advantaged status to directly compete
with us on rate.
Closer to home, in Arizona we are
continuing to see misguided populist
bills that would be problematic for our
industry and the broader economy. We
faced down several attempts at “eminent
domain” legislation which would have
had the state seize billions of dollars in
mortgage paper in order to “fix” the
underwater mortgage problem. We saw
a state bank proposal aimed at providing
much needed capital to the un-credit-
worthy. Finally, and this is also not an
exhaustive list, we saw an attempt to
make commercial loans non-recourse.
If these experiences teach us anything
it is that managing our political risk is
Government Relations Is
Not a Spectator Sport
Q
President’s Message
| continued on page 7
In 2012 our bankers
met often with
members of our
congressional
delegation, both
here in Arizona and
in Washington. Our
bankers were also a
pervasive presence
at the Arizona capitol
last year, largely –
and successfully –
playing defense
By
PAUL HICKMAN
, President & CEO
A MESSAGE FROM THE PRES I DENT
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