Banks That Just Did Banking Are Okay

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Like the Canadian banks, banks that stuck to the business of basic banking and didn't chase after the latest exotica from Wall Street like a dog chasing a chew toy, are just fine.

At a recent conference held here by the Indiana Bankers Association, attendees said it over and over: our business is plodding and boring and we would not have it any other way.

“Banking should not be exciting,” said Clay W. Ewing, president of retail financial services at German American Bancorp, a community bank in Jasper. “If banking gets exciting, there is something wrong with it.”

It is an ethos squarely at odds with the risk-addicted style of megabanks, like Citigroup and Bank of America, that trafficked in the subprime mortgages and complex financial products that helped drive the country into the grimmest recession in decades.

I was recently watching a documentary on the 1929 crash, and having lived through first-hand the dot-com crash in 2000, its clear that this bubble pattern is part of what we do in America.

I sure remember tv pundits like Larry Kudlow in 1999 talking about how the business paradigm had totally changed, and I even confess as I was personally in the middle of it making more money than my experience dictated, I bought in to some of it. But the problem with this downturn is that its one thing for stupid dotcoms with Hollywood celebs on their board of directors to flame out (ours had Dan Aykroyd and Jim Belushi!), its a whole other for a giant bank or brokerage to crater.

We can't allow an industry like banking to get into as many areas as it did. I was in favor of the Clinton-era deregulation of the telecom industry and that just led to consolidation, ditto for the banks being deregulated. We have to balance between too much red tape and the free flow of capital, but the government has to be empowered and willing to be the bartender who cuts off the drinks way before our industries go swaggering out the door, fumbling for the car keys.