February 1, 2012

Cover Story

40 under Forty

Being this outstanding takes a lot of work, but our Forty Under 40 hon...Read More

Featured Articles

Around Utah

Top Legislative Issues We’re Watching

Sections

Spotlight
David Bradford

Spotlight
Robert Workman

Industry Outlook
Banking And Finance

Features
Urban Renaissance

Features
Still Open

Special Report
Healthy and Happy

Focus
Feeling the Pain

Executive Living
A Foodie Tour

Business Trends
Best in Show

EntrepreneurEdge
Stop that Tweet!

TechKnowledge
The Next Big Thing

Lessons Learned
All in the Family

Economic Insight
Utah’s Olympic Moment

Money Talk
The Right Fit

Legal Briefs
Google (B)AdWords

Players
Players

Article

Banking And Finance

Utah Business Staff

February 1, 2012

            The government is introducing the HARP program, which will allow those who have preserved their credit but have over 100 percent loan-to-value—even above the old threshold of 125 percent loan-to-value—the program will allow them to refi their homes on a select basis and take advantage of this low interest rate environment. That’s a positive thing. I think it’s personal income that repays loans in this world today, not value.

            We’re going to have another year in 2012 of foreclosures, although less than we experienced in 2011. But the lenders have turned the foreclosure valve back on now that the road seems to be cleared from a legislative standpoint on Robo-signing and MERS issues. So there will be that kind of supply out there.

 

Frank, what is your outlook on this year?

 

PIGNANELLI: Industrial banks are significantly the strongest of financial institutions in the country. I don’t want to cause any offense here, but we’re very strong. The outlook’s very good for all of the industrial banks.

            Of course the biggest issue for next year is the GAO report that will be coming out, which is required under Dodd-Frank. That’s going to tell us whether our industry is going to remain stagnant in terms of members of our association and chartered banks or whether we get a green light when the moratorium is lifted on commercial enterprises in 2013. So we are in a holding pattern, hopeful that the GAO report concludes based upon facts and not emotion.

      

Let’s focus on the consumer for just a moment. In your credit portfolios, are you seeing growth, or are you seeing people holding back?

 

SUTTON: One of the biggest drivers of business is consumer spending, and that involves a lot of credit. The problem right now is this is an area that is under tremendous legislative and regulatory pressure. The consumer lenders to a large degree are retreating to safe harbors. They’re unsure about what’s going to happen with the CFPB and legislation and things like that.

            The bank I’m involved with does nothing but consumer lending, and we see nothing but a lot of pain for the next while. We see a lot of our competitors getting out of the business because it’s not a core business, and you have to have a lot of infrastructure to support that kind of lending now. You’ve got to have big compliance teams, big internal audit staffs.

            So there’s a real contraction in consumer credit, and that’s impacting consumer spending. And until all those uncertainties get worked out and until that environment stabilizes, you’re not going to see the supply of credit really grow enough to stimulate consumer spending and drive the rest of the stuff.

 

HOWELL: We mostly focus on small business. But the area that we do touch a lot of consumers on is in the mortgage business, and in that area it’s very, very heavily regulated.

            If there’s any bright spot to that, we’ve found that a lot of lenders that were operating out of their basement can’t comply with the regulatory onslaught, and so they’re being driven out of that business. And it is coming back into the banks. Traditionally that’s been an area that the community banks have been active in.

            I was on the phone a little while back with some of the regulators, and there’s an admission, maybe not formally but informally, that a lot of these documents—for example, in the mortgage area—are incomprehensible to them. So there’s that uncertainty that we keep talking about because if there’s an error—and it may be just as simple as the address isn’t correct, one digit transposed—if there’s any kind of regulator that’s concerned about that, it can lead to catastrophic issues for the bank. So it becomes a really intense area of regulation.

            We’ve hired a lawyer to basically look over that area. That’s expensive for us, and so we have to have the volume to make that work. We don’t know quite where that’s going to end.

      

We had an astounding experience when Bank of America tried to impose a $5-a-month fee on debit cards. There was consumer resistance. We’re seeing extraordinary consumer sensitivity to fees. On the other hand, the reality is with near-zero interest rates, it’s really tough to offer consumer products, like checking accounts, for free. Are we going to see a fundamental change in consumer banking services?

Page 123456789
Utah Business Social
UB Events View All
SAMY Awards 2015Utah Business Event
Jan 23, 2015
Utah Business magazine along with Presenting Sponsor: Griffin Hill, Premier Sponsors: The Summit ...
Forty Under 40 - 2015Utah Business Event
Feb 26, 2015
Utah Business Magazine along with Presenting Sponsors: Kirton McConkie, BIG-D Construction and Ma...
CEO of the Year 2015 ... NOMINATIONS NOW OPEN!Utah Business Event
Mar 31, 2015
CEO of the Year Nominations end - January 7, 2015. Visit: www.utahbusiness.com/nomination_item...
Community Events View All
Create Success: Intellectual Property Protection for Growth Technology Companies
Dec 31, 2015
This is a presentation by Michael Best, a major national leader in the commercialization of Intel...
Inbound Marketing SLC: Focus on Ecommerce
Dec 31, 2015
Come learn from four ecommerce experts how to grow your business through inbound marketing. Regis...

info@utahbusiness.com  |  90 South 400 West, Ste 650 Salt Lake City, Utah 84101   |  (801) 568-0114

Advertise with Utah Business

Submit an Event

* indicates required information
* Event Name:
Price (general):
Website (if applicable):
Coordinator's Name:
Coordinator's Email:
Coordinator's Phone:
Venue Name:
Venue Address:
Venue City:
Venue Zip:
Event Capacity:
Date(s):
to
* Event Description:
  Cancel