The good banker – National Consumers League

By Sally Greenberg, NCL Executive Director

One of the best brains on financial reform is, in my view, Joe Nocera. He writes for the NYTimes and is a frequent guest on NPR. Nocera recently wrote a NY Times piece about a man he calls “the good banker.” Why does this man, Robert Wilmers, CEO of M& T bank, earn Nocera’s respect? Wilmers is a unique critic of his profession. I find that folks in the business community that are capable of self-criticism are rare indeed; most want to ignore or overlook the bad practices that are perpetuated by their companies.

But Wilmers finds plenty of fault in the banking business and it bothers him that bankers have fallen to the “third worst profession” in the public’s mind. He says that much of the money banks earn comes from trading profits “rather than prudent extension of credit that furthers commerce.” We agree. Wilmers believes that derivatives helped bring about the financial crisis and should be regulated. We agree. He says that bank executives are wildly overpaid. Boy, do we agree with that. He says that the biggest banks, the Too Big to Fail Banks – were operating in an “unsafe business model.” We agree.

I’ve said in previous blogs that I wish banks would make money the old-fashioned way – extend loans at 6 or 7 percent and pay depositors 2-3 percent interest. But that’s not big bucks, so that business model – while still in use – is sidelined. Instead, banks use excessive fees – $39 overdraft charges, fees for going over your spending limits – often paid by those with the most limited incomes–the stuff that Elizabeth Warren calls “tricks and traps” – are used to make their executives rich. Or they trade in derivatives and earn big fees for the transactions.

Nocera notes that in 2007, the chief execs of the Too Big To Fail Banks made, on average $26 million. That’s more than double the compensation of the top nonblank Fortune 500 executives. Wilmers himself made $2 million, a great salary by any standard but reasonable relative to his performance (in 30 years he built the bank from a $2 billion operation to assets of $68 billion today).

Wilmers also believes that Glass Steagall Act – the Depression era law that separated commercial and investment banks – should never have been abolished. I couldn’t agree more. The repeal of Glass Steagall is one of the worst disasters of deregulation. Nocera quotes from Wilmers speech at his company’s annual meeting. He said he wants to find “ways to continue to attract deposits, make sound loans and grow in accordance with our historic credit quality standards.”  Someone should give this very unusual CEO an award!