If You Ask Me: A Global Banker Reflects on Our Times

Wriston, Walter B.


The Big Rip-off


Do you feel the cost of regulating domestic banks outweighs the benefits?

It depends what you perceive the benefits to be. The banking system is losing more of its share of the financial market every sunrise. In 1946 we had 57 percent of the financial assets in the United States. Today we have 39 percent.

Of every seven credit cards outstanding in the country only one was issued by a bank.

So, the amount of regulation that's put against the banking system is disproportionate to the amount of business we're doing.

All you have to do is read a financial paper to see that General Electric Credit, or General Motors Acceptance, or Itel Leasing, or Sears, Roebuck or whoever is in our marketplace. Banks are losing ground because they're unable to compete effectively. For example, Sears, Roebuck has 26 million credit cards outstanding and there are 72 million families in America. So Sears has an account from one family out of every three. They own the largest savings and loan association in the country. They've got $9 billion in interest-paying accounts receivables.

Meanwhile, the regulators are arguing about whether a computer terminal is a bank.

I believe that most of the banking laws are now obsolete. They've been made obsolete by our competition and by modern technology. So, it's time to take a fresh look at the whole situation.

For example, we could not have bought the Marine Midland Bank, which had a rather bad year awhile back. That would have been illegal. Yet, the Hong Kong and Shanghai Bank can buy it. It doesn't make any sense. There is a bank in Pennsylvania that's not in too good a shape. The Mellon Bank would like to buy it and save the community, but they're prohibited by regulation from doing it. Maybe it'll be sold to a foreign bank. Yes, I think it's definitely time to take another look at the whole regulatory process and do a little cost-benefit analysis.

What's the first change you'd like to see?

The biggest rip-off the consumer has ever had is called Regulation Q, which means if you're poor, you earn 5 percent interest on your savings, and if you're rich you get 12 percent. Where are the consumer advocates? It's just incredible to me that this has been allowed to go on for years and years. There are a lot more savers in this country than borrowers, which is fine or we'd all be in trouble, and I think every saver is entitled to the best rate in the market, whether he's got a buck or a million bucks.

  • The document was created from a compilation of interviews and question and answer segments with Walter B. Wriston which was later compiled into "If You Ask Me: A Global Banker Reflects on Our Times" in 1980. The original speech is located in MS134.001.034.00018.
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 Title Page
If You Ask Me: A Global Banker Reflects on Our Times
I: Getting Down to Fundamentals
The Big Cop-out
You Can't Go Bail for Everyone
Risk Is What It's All About
II: Some Basic Ills of the Body Politic
Lincoln Wouldn't Have Made It
Unpredictable Is a Dangerous Country
The Pitfalls of Single-issue Politics
Expect To Get Zapped
The Perils of Legal Pollution
The Injustice of Our Tax System
Those Wonderful People Who Bring You Inflation
Stop the Presses
Silly Premises Lead to Nutty Conclusions
Easier Said Than Done
III: New York, New York
New York City Is Alive And Well
The Road Back
IV: Careers
Rx for Happiness
Good Forward Planning
Dull Job?
A Simple Matter of Survival
Making It at Citibank
What Fast Track?
No Hiding Place
V: Once Around the World Quickly
South Africa
China: A Matter of Timing
The Real Significance of Iran
Iran and the Money Markets
Fashions in Country-criticizing
VI: The Global Financial Scene
The Elusive Eurodollar
De Facto Payments Mechanism
Too Big To Move
The Foreign Exchange Game
They Can't Leave the System
Baskets of Money
Swiss Francs
The Value of a Dollar
Not a Loss Since 1897
A Rational View of LDC Loans
Free Trade Benefits Consumers
The Destructive Costs of Regulation
The Big Rip-off
A Real Entitlement
Can Regulations Prevent Bum Loans?
The Insidious Side of Controls
Competition in Regulation
VIII: The Shape of Things To Come
Not As Big As You Think
What Lobby?
Armageddon Is Late, as Usual
Some Simple Facts about Interest Rates
An Expensive Luxury
How Big Is Big?
What We Did Yesterday Won't Work Tomorrow
A Matter of Semantics
Unpredictable Is a Dangerous Country
Privacy: A Serious Problem
The Unseen Revolution
Things Are Going To Be Different
Take the Handcuffs off Everybody
The Gray Areas of Lending
No Mouse under the Rug
Thank God We Don't Have National Banking
Competition Keeps You Awake
Accounting for Loan Losses
Not a Utility
People Like It
Computer Frauds
Some Final Words on Responsibility
About the Author