Year in Quotes: The Industry in Its Own Words

"Every time I think it can't get worse at Sovereign, they amaze me and it does - atrocious does not begin to describe it."
Nell Minow, the co-founder and editor of The Corporate Library, a governance research firm in Portland, Maine, after Sovereign Bancorp delayed its annual meeting as it battled with dissident shareholders. Jan. 5
"We could see a lot more [529] programs shifting to different providers in the next few years. The competition is stiff right now. There are a handful of companies that are bidding on any open contract."
Joe Hurley, the founder of Savingforcollege.com. Jan. 9
"These letters were not intended to expand, and do not expand, the authority of national banks to hold real estate. They also do not represent an erosion of the separation of banking and commerce. And they have nothing to do with real estate brokerage or preemption."
Comptroller of the Currency John Dugan, on decisions to allow three banks to own and develop commercial real estate projects. Jan. 12
"You have these guys who want to start a bank and build a Taj Mahal and have two nice branches. We like to see a CEO who has been in the business for 15 years and who on Saturday is out there cutting the grass."
Christopher L. Hargrove, the chief executive of Bank Professional Services. Jan. 17
"We are working hard to get there in '07. By implication, we won't be there in '06."
James Dimon, the CEO of JPMorgan Chase, on reaching a 20% return on equity. Jan. 19
"We have to balance our response to the victims with our mandate to make bona fide loans with some prospects of being paid back."
Former SBA Administrator Hector Barreto, answering charges that the agency was too slow in responding to victims of Hurricane Katrina. Jan. 20
"I wish we had a hedge fund fee structure. We don't get paid anything like hedge funds."
Ralph Whitworth, a principal at Relational Investors, rebutting Sovereign's description of his firm as a hedge fund. Jan. 25
"In the past we provided tools for active traders. Now we are working to understand and deliver for more long-term investment needs."
Randy MacDonald, the chief financial officer of TD Ameritrade. Jan. 27
The OCC's commercial development approvals "represent what many consider to be an expansion of national bank real estate investment powers, which, if left unchecked, will markedly increase the risk exposure of national banks and threaten the safety and soundness of the nation's banking system."
Thomas Stevens, the president of the National Association of Realtors. Jan. 30
"I don't think Wells Fargo or Bank of America will come knocking on our door, but I think small community banks that offer asset management could have interest and could benefit from this. I would imagine there may be some interesting opportunities with banks, but we don't want to create conflict for Zions."
George Feiger, the chief executive officer of Contango Capital Advisors, Zions Bancorp.'s wealth management arm, on outsourcing to other banking companies. Feb. 10
"Rewards have become a very big battleground for both acquiring new customers and keeping the loyalty of customers."
Rich Srednicki, JPMorgan Chase's chief executive for card services. Feb. 10
"I think the FDIC was slowly convinced that this is a model that cannot be done responsibly."
Peter Skillern, executive director of the Community Reinvestment Association of America, after learning that First Bank of Delaware had severed ties with payday lenders under pressure from the FDIC. Feb. 23
"It was a culture focused on increasing earnings growth ... by any means possible."
Randal Quarles, former Treasury undersecretary for domestic finance, on Fannie Mae. Feb. 24
"If we do not back up regulators' decision-making authority, as in this case with the OCC, we are in great danger of having Congress forced to step into every dispute. ... Micromanaging the financial services sector by Congress would be an abject disaster."
House Financial Services Committee Chairman Michael Oxley, R-Ohio, on the OCC's commercial real estate approval decisions. March 1
"We are getting out of insurance ownership, but we are not getting out of the insurance business."
Robert M. Mahoney, vice chairman at Citizens Financial Group of Providence, R.I. March 2
"If you have a problem, instead of coming after the industry, why not go after the banks that are doing things wrong?"
W. Everett Crawford, the CEO of First National Bank of Artesia in New Mexico, objecting to proposed commercial real estate guidelines. March 3
"Having a patent is one thing, but being able to enforce them is something altogether different."
William Randle, the CEO of Synoran LLC, explaining why he sold four patents to DataTreasury Corp., which has built a business model around suing banks for patent infringement. March 6
"I help the CEO and COO sleep at night. They are off running the bank, and I'm overseeing the areas of risk."
John James, director of corporate risk management at Bancshares of Florida. March 7
"We needed ... to push harder against the banks that have been slow to respond to the advisory bulletin."
Steve Cross, director of supervision at the Federal Housing Finance Board, on a proposal to raise retained earnings at the Home Loan banks. March 10
"This is the new First Data. Everything we do inside First Data is geared to the transaction processing industry."
Ed Labry, the president of First Data's commercial services division, explaining the company's restructuring. March 15
"There seems to be a disconnect between sellers' perceived value of their portfolios and what buyers see coming around the corner. In a rising rate and default environment, buyers are taking a more conservative approach, and sellers are still bullish on their prospects."
Eric Friedman, a partner at Skadden, Arps, Slate, Meagher & Flom LLP in New York. March 20
Larger banks are not always interested in serving ... [the small-business] market. They like their loans to have at least six zeros."
William R. White, the CEO of Dearborn Federal Savings Bank. March 23
"Beware of this modern-day Trojan horse. No one believes that Wal-Mart will stick to its business plan and stay out of retail banking."
Terry R. Jorde, the president of CountryBank USA in North Dakota and the chairman of the Independent Community Bankers of America. April 11
"Wal-Mart is absolutely committed not to engage in branch banking. In fact, we expect the charter, if approved, to include conditions to prevent Wal-Mart from opening bank branches."
Jane J. Thompson, the president of Wal-Mart Financial Services. April 11
"Good corporate governance will not allow us to continue funding the multimillion-dollar voluntary housing programs until we are in a position to know the full extent of our retained earnings shortfall and the negative impact this proposed regulation would have on our business model."
Charles "Bud" Koch, the chairman of the Federal Home Loan Bank of Cincinnati, on his decision, in light of the retained earnings proposal, to end a program designed to help victims of Gulf Coast hurricanes. April 21
"Everyone always asks, 'When do you see the big rush?' I don't think there's a big rush in place [in M&A], but there's activity going on. There's books coming in regularly now, but the pricing still does not seem to make a lot of sense to us. We've looked at a couple of transactions, and from a geographic point of view they made sense to us, but ... from a financial point of view didn't make any sense."
James E. Rohr, the chairman and CEO of PNC. April 27. (On Oct. 9, PNC announced a $6 billion deal for Mercantile Bankshares of Baltimore.)
"You hear a lot of anecdotal examples of why ... [currency transaction reports] might be burdensome or not useful, but I haven't seen an empirical study from the banking side that would really substantiate exactly where the burden falls and how we can best address it."
Fincen Director Robert Werner. April 28
"I believe in starving the losers and feeding the winners. We'll continue to invest in places that give us the most growth opportunities."
Christopher M. "Kip" Condron, the CEO of Axa Financial and Axa Equitable. May 3
"Although the bill does not include everything we want, it includes many important provisions."
OTS Director John Reich, on regulatory relief. May 5
"Mission became a little bit of a shield against criticism, and that is not what it should have been."
Daniel Mudd, the CEO of Fannie Mae. May 9
"We have given up on trying to predict just when the regulatory agencies will act."
David G. Hanna, CompuCredit's chairman and CEO, on the FDIC's delay in approving ILC applications. May 10
"If there is no ROI for the banks, why would they pay to develop this infrastructure? This project is dead on arrival."
George Thomas, executive vice president at The Clearing House, explaining his opposition to merging the automated clearing house system and check imaging networks. May 12
"With Check 21, we can convert all our items into images, but we can't reach all endpoints. With ACH, we can reach all endpoints, but not all items are eligible for conversion. Is there some way to make those systems converge?"
Danne Buchanan, executive vice president with Zions. May 17
"We are the only major card issuer to predominantly utilize a spend-centric model."
Kenneth I. Chenault, the CEO of American Express Co. May 17
"We find it intriguing at the moment to see so many of the Wall Street firms seeking to find mortgage origination capacity to feed their ... securities businesses at a time when mortgage origination volumes may fall."
Douglas Flint, group finance director of HSBC. May 17
"These guys want to control volume. They're looking at ... the number of companies that have been severely wounded, and they believe if they can pick up a company [cheaply] and 'fix it,' they can get control."
Marc Geredes, the president and CEO of Lownhome Financial, on Wall Street's interest in originators. May 17
"I find the analytical work [by Wall Street] extremely disappointing, and on the other hand, the personal stuff extremely emotional."
Herbert Sandler, the former CEO of Golden West, in the days following its deal to sell to Wachovia. May 19
"The time has come to move to the next stages of implementing Basel II."
Federal Reserve Board Chairman Ben Bernanke. May 19
"People can talk about these things for a long time, but the impetus to actually move legislation is usually something that scares people."
Oliver Ireland, a partner at Morrison & Foerster LLP, on hedge funds. May 22
"I couldn't recommend going public at this point."
W.A. "Bill" Loving, the president of Pendleton Community Bank, expressing frustration with Sarbanes-Oxley regulations. May 24
"We are probably critically incapable of dealing with that issue right now. ... So the action moves to the regulatory side of the equation."
Rep. Oxley, on whether a bill to restrict ILC ownership could pass. May 25
"You'd better not have a vanilla model, because I don't think there are that many people lining up for vanilla."
Kevin Eichner, the president and CEO of Enterprise Financial Services. June 6
"Several major banks that should have been ready and willing and able to handle money-services business decided to just not service that segment of the industry."
Maryland Commissioner of Financial Regulation Charles Turnbaugh. June 12
"Golden West is a thrift in name only, and you have to just put aside all of your preconceived notions about what a thrift is when you talk about Golden West."
G. Kennedy Thompson, the CEO of Wachovia, defending its deal to acquire Golden West, which was not received warmly by Wall Street. June 15. (The deal closed in October.)
"Given his equity stake in the company already, do you really need to give that much more shareholder equity to keep him happy and attached to the company?"
Rich Ferlauto, director at the American Federation of State, County, and Municipal Employees, on Countrywide chairman and CEO Angelo Mozilo's pay. June 14
"How is it you were not aware of any of these practices? Did you ever question how the company could achieve such stable earnings?"
Senate Banking Committee Chairman Richard Shelby, R-Ala., questioning Mr. Mudd on Fannie's accounting scandal. June 16
"It's a milestone, but in some respects it's eerie. To go two years without a single [bank] failure makes one worry that more could be coming up. The law of averages will pertain here."
Karen Shaw Petrou, the managing partner of Federal Financial Analytics. June 23
"A Federal Home Loan bank can be wrong, but we have heard from every Home Loan bank and every trade association. They can't all be wrong."
John von Seggern, the president of the Council of Federal Home Loan Banks, on opposition to the retained earnings proposal. June 27
Merchants such as grocery stores have "gone from indifference to 'Please enter your PIN.' "
Dennis Racine, vice president of debit and credit card portfolios at Chittenden, explaining how merchants are steering customers to debit instead of credit. June 27
"I have talked to members of the Home Loan banks who think the Finance Board is creating a problem to solve a nonexistent problem."
Rep. Barney Frank, D-Mass., on the retained earnings proposal. June 29
"It's critical for the future of this agency and the future of the two enterprises that we get legislation."
OFHEO Director James Lockhart. July 7
"We're not trying to time the absolute bottom of the market. We're building a business we're going to be in for decades. ... We have too big of an institutional sales and trading business not to be a major player in mortgage-backed securities."
Phil Weingord, head of global markets for the Americas at Deutsche Bank, explaining its deal for MortgageIT Holdings. July 13
"It's a tough year, and it has been a lousy quarter. We can point to the flat yield curve, the economic environment, and the fiscal crisis in Puerto Rico, our main market, but I consider these just excuses."
Richard L. Carrion, the chairman and CEO of Popular. July 17
"For the purposes of coming to some kind of agreement on GSE legislation, I think we have to consider the possibility that the ... [new regulator] might provide some emergency stability to the GSEs to make extra purchases during times when the housing market can be in distress."
Mr. Bernanke, on his willingness to compromise on GSE legislation. July 20
"It's like, why we buy Polo shirts instead of Target no-name shirts."
Patrick Adams, the founder, president, and CEO of T Bank in Dallas, on picking a national charter instead of a state one. July 21 on AB Texas
"It tightens my cheeks. They don't know anything about the mortgage business, which makes them a dangerous competitor."
Mr. Mozilo, on Wall Street firms' buying originators. July 26
"The progress ... has been modest and uneven among the banks."
Finance Board Chairman Ronald Rosenfeld, assessing Home Loan banks' efforts to boost retained earnings. July 28
"Pretty much every applicant will pull out, and it will be a long time before any new applicant comes in."
George Sutton, an attorney for five companies with pending ILC applications, after the FDIC announced it was putting a six-month moratorium on approvals. Aug. 2
"The ICBA staff is taking a position in opposition to the professional judgment of all the major banks in America ... and is presenting a straw-man concern ... that has no credibility. ... I am absolutely astonished that the ICBA would be lining up with the Internet gambling lobbying group to block this legislation."
Rep. Jim Leach, R-Iowa.The measure was enacted Oct. 13. Aug. 7
"These companies got into the market fast, but now they are about to find out that this [health savings account] market is going to grow past them."
Terry Hunter, the chairman and CEO of ConnectYourCare. Aug. 10
"The government has an obligation to provide answers. I'm very mindful that we have these pending applications, and a number of them have been pending for quite some time. I know there's been some cost, and people deserve an answer."
FDIC Chairman Sheila C. Bair, on Wal-Mart and other pending ILC applications. Aug. 11
"The soft landing is sort of like the white whale - much rumored, rarely seen."
John Kriz, managing director for real estate finance at Moody's. Aug. 14
"Many of our members do not wish to have their checks converted."
Arlene S. Chapman, senior consultant to the Association for Financial Professionals, discussing a new ACH format to convert corporate checks. Aug. 14
"Very possibly there are some banks that have done it, but clearly they have not done it in such a blatant way as some of the other firms."
Prof. Erik Lie of the University of Iowa, on backdating stock options. Aug. 21
"We believe that OCC should have acted more quickly and forcefully to require Wells to strengthen its [Bank Secrecy Act] compliance and that OCC's failure to take formal enforcement action against Wells sent the wrong message to the banking industry about OCC's resolve to ensure that banks comply with BSA."
The Treasury Department Office of Inspector General, on the OCC's handling of Wells Fargo's anti-laundering compliance. Aug. 24
"I fret about some of the implications of our global connectedness and the sheer size of some financial institutions and their new products. And I worry that some homeowners don't really understand their new and not-yet-fully-tested mortgages."
Jack Guynn, in his farewell speech as the Federal Reserve Bank of Atlanta's president. Aug. 24
"It was a very sweet business, to say the least, while we had a steep yield curve and generous financing conditions. It's not going to be that easy anymore."
Peter Fisher, managing director at BlackRock and a former Treasury undersecretary. Aug. 30
"There are really only a small number of firms that can say today that they are pretty comfortable with their strategic positioning."
William Harrison, the chairman of JPMorgan Chase. Aug. 30
"Size means nothing and you've got nothing if you only are big and can't produce and can't execute. ... If you can't grow organically on a consistent basis, I don't care how big you are. You are not going to make it."
Mr. Thompson of Wachovia. Aug. 31
"One premise that has not been proven, and I'm not a big believer in, is that you need to be a nationwide company to be a survivor. But what you have to be is very strong and with good market shares in the markets that you choose to operate in geographically."
David Daberko, the chairman and CEO of National City. Aug. 31
"We are just at the beginning of what I would call a price war in our industry, as the bigger competitors are less happy about losing market share over free stuff. We have seen in the last 18 months what I think is a meta-change with the bigger banks. In our market area, the big banks did not lead with price competition until recently, and little banks did well because big banks didn't want to give up the profitability and were willing to give up market share. Now they've flipped. They are not willing to give up market share, and therefore fundamental efficiencies become more critical."
John Allison, the chairman and CEO of BB&T. Aug 31
"I think we will have to do another merger of equals." It "might be with a bank with a similar market cap, or it might be with an insurance company - or it might be an investment bank."
Mr. Allison. Sept. 1
"It's not like we are selling steel; there is a real customer interaction that occurs, both in the branch, on the Internet, over the phone. When you interact with the customer as often as a bank does on an issue that is as important as money, I don't think it is a commodity at all. There is real brand equity in the client experience of these financial services companies."
Sallie Krawcheck, chief financial officer of Citigroup. Sept 1
"Everybody is focused on consolidation one institution at a time; long before that, the relevant consolidation will have happened. In the national business, it is one product at a time."
Richard Fairbank, the chairman and CEO of Capital One. Sept 1
"It looks like we have a flawed regulation."
Geoff Bacino, board member at the Federal Housing Finance Board, on the retained earnings proposal. Sept. 7
"Quite frankly, I don't understand why you need six banks between Pittsburgh and Topeka."
Mr. Rosenfeld, on Home Loan bank consolidation. Sept. 8
"Disclosing interchange fees ... provides the merchants what the bank has to pay to the bank of the cardholders for the transaction, and that puts them in a position of greater knowledge for negotiation."
Joshua Peirez, MasterCard's president of global public policy, on its plan to publish interchange rates. Sept. 8
"There is full visibility of pricing within the Visa system. Retailers do know, and always have known, the price they pay to accept Visa cards."
Visa, on why it would not follow MasterCard and publish interchange rates. The company reversed course in October. Sept. 8
"You have to have an exit strategy. Investors are banking on it."
Nigel Harrison, the CEO of FC Holdings, on rebuilding after selling his previous company to Wells last year. Sept. 13
"We have a very clear position, and we think it's a well-reasoned, sustainable position, and I don't really know what the administration's position is."
Sen. Paul Sarbanes of Maryland, the Senate Banking Committee's senior Democrat, on the GSE reform stalemate. Sept. 14
"If we were to eliminate payday lending altogether, who fills that niche, because the need remains."
Sen. Tim Johnson, D-S.D. Sept. 15
"The guidance issued by the banking agencies, if confirmed, would lead to the elimination of the small bank as a viable institution."
Rep. Sue Kelly, R-N.Y., a member of the House Financial Services Committee, on proposed guidelines restricting commercial real estate portfolios. Sept. 15
"The Midwest economy has been a lot of things, but 'robust' is not a word associated with it."
David L. Trautman, the president of Park National, on the Ohio company's deal to buy a banking company in Florida. Sept. 18
"Folks have been so quick to rush things to India, but the controls just haven't been implemented. There hasn't been the time."
Mark Lobel, a partner in the advisory practice for PricewaterhouseCoopers, warning abuot security policies at foreign outsourcing providers. Sept. 20
"Over the past two or three years have lenders used adequate underwriting standards, or did they get so loose with their money that significant numbers of borrowers are going to default unless they can sell in the current environment - rising interest rates, less equity in their homes?"
Sen. Jim Bunning, R-Ky. Sept. 21
Option ARM borrowers "have never in their lifetime seen values go down. The concept is alien to them. So that's what we're dealing with."
Mr. Mozilo of Countrywide. Sept. 21
"As a son of a banker and a guy who's just been in the lending industry for 22 years, I just have to sit back and say, 'You've got to be kidding me. Do we all believe this?' "
Patrick Flood, the chairman and CEO of HomeBanc Corp., responding to defenders of option ARMs who cite the borrowers' high credit scores. Sept. 21
"The changes - which would apply only to U.S. banks - reduce the risk-sensitivity of the accord and place U.S. banks at a competitive disadvantage compared to foreign banks and, currently, to U.S. investment banks. They also significantly increase the cost of implementation."
From a 6-page memo sent by Citigroup, JPMorgan Chase, Wachovia, and Washington Mutual to the Senate Banking Committee on Basel II. Sept. 26
"Explain the types of benefits banks expected. How large must the capital reduction be for Basel II to be most effective?"
Sen. Shelby. Sept. 27
"We called our local federal agency, and their response was, 'Call me back when it's a million-dollar problem.' "
Dave Cullinane, chief information security officer for Wamu, on the difficulty in getting law enforcement agencies to investigate fraud complaints. Sept. 27
"We're saying, 'Start slowly. Make differences in the premiums small. With experience, you'll realize the incentives that are created, and you can propose changes to improve the system.' "
James Chessen, chief economist of the American Bankers Association. Sept. 29
"We are really surprised that banks are this far down the curve on unified managed accounts."
Jean Sullivan, managing principal at Dover Research. Sept. 29
"It would be very difficult from my vantage point for anyone to meet a client's needs and offer solutions without adopting an open architecture platform."
James Dunigan, chief investment officer of PNC. Oct. 6
"With this new structure, we will be able to focus not only on the needs of financial institutions ... but also on merchants and consumers."
John Philip Coghlan, the president of Visa U.S.A., on its plan to go public. Oct. 12
"The recent controversy surrounding industrial loan banks appears to be driven largely by fears, trade association politics, and agendas that have little to do with facts."
Susan E. Carroll, the president of Morgan Stanley Bank in West Valley City, Utah. Oct. 13
"I don't know what more the OCC could do to get it across to our field examiners that they shouldn't be stopping banks from taking on these MSB accounts. Examiners generally follow the orders they get from headquarters. ... I don't know what more we can do from headquarters."
Dan Stipano, the OCC's deputy chief counsel. Oct. 16
"I just grit my teeth."
Charles O. Prince, the chairman and CEO of Citi, on speculation that he wants to acquire a large European competitor. Oct. 20
"We still think the consumer is in really good shape. You've got an economy that's still creating jobs" and boosting jobs. "That's just not a recipe for having issues with the consumer."
Kenneth D. Lewis, the chairman, president, and CEO of Bank of America. Oct. 20
"If they want to kill community banks, then take away commercial real estate lending."
Diane Casey-Landry, the president of America's Community Bankers, on a regulatory proposal to crack down on the business. Oct. 23
"There's a silver lining to a flat-yield, low-volatility environment, and that is that you can position yourself exactly as you want at a relatively low cost."
Alvaro G. de Molina, the CFO of Bank of America. Oct. 23
"Bank of America has a history of making first moves that have become standard industry practices."
Madhavi Mantha, senior analyst at Celent of Boston, on B of A's plans to shake up the mortgage market.
"The biggest change, clearly - and it's a change that will continue to happen - is the consolidation that really began in earnest in the 1990s. ... And that was driven by the fact that size and scale and leadership position in your businesses would create more value."
Mr. Harrison, reflecting on his retirement from JPMorgan Chase. Oct. 27
"I can talk, and I can sell. I am not just window dressing here."
John Layfield, senior vice president at Northeast Securities, on athletes-turned-investment-advisers. Oct. 30
"January really isn't a good time; April would be better."
Rep. Frank, urging the FDIC to further delay any decision on ILC applications. Oct. 30
"Our members believe very strongly that there's no justification for a [deposit insurance] |premium increase at this time under any circumstances."
Steve Bartlett, the president of the Financial Services Roundtable. Nov. 1
"I feel your pain. But long-term, this is really the best for everyone in terms of the long-term stability of the deposit insurance system."
Ms. Bair, at an FDIC board meeting approving premiums. Nov. 3
"Democrats understand the importance of the financial services community, and banking is very important to our economy, and people have an access to capital."
Rep. Maxine Waters, D-Calif., after her party gained a majority in the House. Nov. 8