washington business
“The business
climate has been
so tough the past couple of
years … that in order to survive a lot of businesses have had
to dip into their capital,” Pishue said. “They’ve been able
to sustain themselves, but they’re not bankable anymore.”
uncertain times
Layered atop the industry upheaval is a new array of regulations and happenings in the other Washington.
There’s a host of regulatory reform coming out of the
Dodd-Frank Wall Street Reform and Consumer Protection
Act. Passed in July 2010, the legislation has been touted as
the most significant change to financial regulation in the
U.S. since the Great Depression.
The bill itself is thousands of pages long and could result
in as many as 300 new banking regulations, industry sources said. Though focused on banks $10 billion or larger in
asset size, those in the industry are concerned that the rules
will trickle down to affect the smaller companies.
The legislation aims to encourage U.S. financial stability
through improving the accountability and transparency of
American Banking Association:
www.aba.com
Federal Deposit Insurance Commission:
www.fdic.gov
Washington Bankers Association:
www.wabankers.com
Washington Department of Financial Institutions:
www.dfi.wa.gov
36 association of washington business
the country’s financial systems. But Dressel, CEO of Columbia Bank, said it could have a negative effect on an industry
that is already highly regulated.
“It’s requiring a new level of reporting and managing of
the process, and yet not making a difference in preventing
an economic meltdown like the one we just saw,” she said.
As of this summer, regulators were still sifting through the
bill and few of the rules had actually taken effect. But banks
were already readying for the increased costs of complying.
For example, one part of the bill requires bank
employees who deal with mortgages to register with the
Federal Reserve. The cost: $203 per person. Columbia Bank
is spending thousands of dollars registering numerous people at each of its 101 branches, Dressel said.
The volatility in the stock market is another wild card
for banks. The wide swings in the market are more a symptom of economic issues, than a cause. But that instability
can pose a real problem for banks wanting to raise capital
through stock purchase programs.
“There hasn’t been a market for bank stock and the
concern about the economy going forward hasn’t helped
the situation,” said Bob Seiwert, senior vice president of
American Banking Association and head of the organization’s Center for Commercial and Business Banking.
Those national and global concerns definitely play out at
a state level. In August, Washington’s chief economist Arun
Raha said he was becoming increasingly pessimistic about
the state’s economic recovery and the potential for slipping
into a second recession.
Raha had forecasted that the state’s job growth would be
stronger in the second half of this year, but European debt
problems, U.S. budget wrangling and the subsequent S&P
credit downgrade will likely suppress the state’s recovery,
according to Raha’s economic report.
The state unemployment rate remains stubbornly
high — hovering around 9 percent. And the housing market is a mixed bag with construction of single-family homes
dipping, while the construction of apartments and multifamily units ticks up.
The report does have some bright spots: Washington has
added jobs for most of this year, and Boeing — one of the
state’s largest employers — is growing its workforce and
plans to increase production of its commercial airplanes.
“I think we still have a very fragile economy, nationally and globally,” said Vance, CEO of Heritage Bank. “The
flipside is that it continues to create opportunities for the
few well capitalized banks that came through the downturn even stronger.”