A member of the Iowa Bankers Association’s board of directors predicts his industry will resist regulatory changes the Bush Administration is seeking. The U.S. treasury secretary announced Monday he wants to reshape the federal agencies which oversee U.S. financial institutions and give the Federal Reserve significant new powers.
"We have a very sound regulatory system in place now," says Jim Schipper, chairman of the board of directors of the Iowa Bankers Association. "A bank in Iowa has the choice, first of all, of being either a state-chartered bank regulated our a state superintendent of banking or a federally-chatered bank…and all banks are regulated by the FDIC if they accept FDIC-insured deposits."
Schipper, who is president and C.E.O. of American State Bank in Osceola, sees no need for change. "Each of the federal agencies does a very adequate job of supervising commercial banks from the standpoint of safety and soundness," Schipper says. "They all work together through an organization called the Federal Financial Institutions Examining Council. They get their heads together. They are consistent as far as their policies and guidelines and actions."
The treasury secretary is proposing creation of a new federal commission which would set new standards for mortgages, but Schipper suggests the entire banking industry shouldn’t be punished for the sins of a few "independent, freelance mortgage brokers."
"Most of this has been in other markets: southwest Florida, California, Arizona," Schipper says. "…Bakersfield, California in one year saw an average home value increase of 121 percent…We’ve been fortunate in Iowa that we’ve not seen that kind of a rapid run-up in home prices so we’re going to be comforted by not having the rapid fall-off of home prices which is causing a lot of the home mortgage problems that we’ve been reading about."
According to Schipper, Iowa ranks 39th in the country in home foreclosures. He says some rankings which show Iowa in the top ten in the number of homes in foreclosure don’t take into account that because of Iowa law, it takes at least a year to foreclose on a house so homes are in foreclosure proceedings longer in Iowa. In neighboring Missouri, for example, the process of foreclosure can be accomplished in as little a 30 days.