Transcription:
Chana Schoenberger (00:06):
I'm Chana Schoenberger. I'm the editor in chief of American Banker and I have with me here are Washington Bureau Chief John Heltman to talk about the new season of Bankshot. Hi John.
John Heltman (00:17):
Hey Chana, how are you?
Chana Schoenberger (00:18):
Good, good, good. So this is all about economic populism and banks. Why are we looking at economic populism right now?
John Heltman (00:26):
That is a great question. So the title for season six is Buy the People, BUY, like to Purchase the People, a very delicious pun. And the conceit behind all of this is an exploration of how populism informs financial regulation writ large. And it's a very good topic because populism in some way or another does actually inform a lot of the impetus behind financial regulation. A lot of the calculus of how various aspects of monetary policy operates. Even the formation of whole agencies in the case of the CFPB is really informed by this idea that the financial system is a kind of just use the parlance of how populism works. It's kind of like the people versus an elite. The entire financial system in some ways is an elite, right? It is a sort of select who make important decisions about important things in everybody's lives.
(01:29)
And especially after 2008, there was a very visceral feeling that kind of trust that had been placed in this industry to make good decisions for the consumer, for the average American, and really globally the average person that they had abused that trust. And the response to that, the policy response to that in the form of the Basel three accords, Dodd-Frank, and of course elsewhere around the world, but we're American bankers. So we're talking about America here. A lot of that is informed by this kind of populism. And what has emerged over the last couple of years is that regulatory sort of response to this very significant crisis has been mostly kind left-leaning in its solutions and its kind of trappings. But more recently there's been a kind of right wing populism that in many cases kind of diagnoses the same kind of problems. It identifies the same issues, but forwards something closer to an opposite policy response to those issues. So framing it more like if democratic populism is the sort of financial system is the elite and the people need to hold the financial system accountable by way of government, the sort of right wing version is like the regulatory apparatus is the elite, and we need to hold them accountable to how they treat financial companies that in turn interact with us. So it is a slightly different framing, but how this plays out in the future, I think we'll have very, very interesting consequences.
Chana Schoenberger (03:06):
It's interesting too because when you talk to, especially community bankers and a lot of regional bankers will consider themselves to be community bankers with a really big institution. They think of themselves as the people. They consider that they have a very strong connection to the community, that they're very integrated into the community, that they really know the people or their frontline bankers really know the people they're lending to. They think this is a real advantage of their business model, but also they sort of think of themselves as being different from those big banks in coastal cities. So it's sort of almost, who do you consider the elite? Because one would say that a banker in a community is a member of the elite locally.
John Heltman (03:49):
Yeah. And I mean this is something that bankers are kind of in the middle in a lot of ways because of course, if you're one of the mega banks, your interactions will mostly be with supervisors, policymakers, lawmakers, very few are going to branches and hanging out with people and overseeing loans. Smaller bankers interface with people all the time and probably rightly feel like they have a pretty good sense of what community needs are. Ordinary people, on the other hand, don't interact with bankers all that much and don't really think about them all that much. And so except in a sort of abstract and kind of monolithic sense, like Wall Street is kind of a catchall for finance in a way that I think doesn't really do justice to the different categories of bank or the different bank conflicts that are quite significant indeed. But what's interesting again about this series is that every beat on our bureau has something to say about populism and has to say about how these institutions be it Congress, the Federal Reserve, the CFPB and other bank regulators. A lot of what the obstacles that they're trying to negotiate are between protecting people on the one hand, not pointlessly hurting banks on the other, staying within the confines of the law, which again is dictated by Congress, which is responsible to people. So it is kind of like a triangulating exactly how to navigate some of these issues is interesting. It is also changing as people's attitudes change.
Chana Schoenberger (05:27):
Interesting. Okay. So each of your four Washington reporters did an episode for this series. What are the episodes about?
John Heltman (05:34):
Alright, so the first episode is from Claire Williams, our congress reporter, and she is looking at populism as a sort of political movement and how it has evolved from 2008 Elizabeth Warren, her kind of political rise more or less coincides with the financial crisis making her debut on the Daily Show back in, what was it, 2010 or 2009, her kind of white paper putting out the idea of the ccf. PB was the onus of the beginning of the CFPB as it exists today. And that brand, she's not the only one with that kind of brand and what she focuses on, or she examines the reelection campaign for shared Brown senate banking committee chair, she brown running for reelection in Ohio, an increasingly red state whose other senator JD Vance is a good example of this kind of more right wing iteration of populism. So this is a Greek microcosm of this kind of populism on populism struggle.
(06:37)
And whether she brown, again, a sort of progressive member of the Senate can prevail in a otherwise increasingly Republican dominated state is a very interesting race to watch. Kyle Campbell, our fed reporter, examines monetary policy and how populism has informed the Federal Reserve's response to the financial crisis. But also more recently, this uptick in inflation and its efforts to make itself understood by people who have historically not really taken the time to understand the Fed, except as a sort of high tower black box of numbers go up and down. And that is a really centuries old struggle between people and the central bank in the United States is a very fraught history. And he talks to some really outstanding voices and thinkers in that space. Abra, our F-D-I-C-O-C-C reporters writing about Basel and how the sort of struggle about what is the appropriate level of bank capital is a sort of secular question that reasonable people can disagree about, but has become increasingly political and increasingly populist in its politics since the introduction of the Basel three endgame proposal last July.
(07:59)
Again, very, very interesting meditation on the issue of bank capital, how much capital bank should retain, but also how and whether this can be made into a sort of kitchen table issue. And then Kate Barry, our CFPB reporter, is looking at the CFPB, which is an interesting sort of modern iteration of taking populism as a concept and turning it into an actual federal agency. And that's something that has been tried before several times. They always end up getting eroded a little bit over time, like the FTC started off more strident and then got a little bit more captured really over time. And so whether CAPB can buck that trend.
Chana Schoenberger (08:41):
Interesting. Yeah, it's going to be a great series. Wonderful. So be sure to listen to this limited season of Bankshot, which is dropping in late March, 2024. If you want to hear more news and analysis of the banking world, go to americanbanker.com/subscribe From American Banker, I'm Chana Schoenberger, and thanks for listening.