Paul Rodeno is president and CEO of Security Business Bank. He has more than 20 years of experience in business and retail/private banking at all levels, and has served in a variety of senior management positions during the last 15 years.
What are your thoughts on the role of government regulation in your industry? How big a role should it play?
While government regulation is important to the health of our industry, it's the breadth of the regulation that's the great debate.
Giving the government increased regulatory powers and emergency authority to manage another crisis will help to restore confidence in the markets. The downside of instituting regulations now, in the midst of the financial recession, is the tendency to over-regulate and stunt re-growth. The worry is that the pendulum will swing too far.
Is change needed? How much blame for the financial crisis would you lay on the backs of regulators?
Yes, change is needed.
The workings of AIG offer an example of an organization that took on massive risk, selling large amounts of credit default swaps without properly covering their positions. And because it was a non-bank provider, AIG was subject to very little government oversight. So in that instance, regulation might have been an ounce of prevention.
Credit default swaps and other complex financial instruments, especially when implemented by unregulated entities, changed the rules or risk and helped trigger the global recession.
What are your thoughts on Obama's proposed regulatory reforms? What did you like? Was there anything you didn't like?
I think the proposed reforms are on the right track. I agree with empowering a supervisory body with overseeing the financial system as a whole.
Along those lines, I'm also concerned about the creation of a standalone consumer protection regulatory agency. While consumer protections are important, I'd rather see a centralized regulatory environment where there is specific accountability.
The bottom line is that we need a regulatory framework that allows a supervisory body to adequately respond to a financial crisis.
-- Compiled by Rebecca Go