At legislative banking day, officials outline challenges, opportunities for industry
Ken Kobylowski, acting commissioner of the state Department of Banking and Insurance, told a banking conference in Trenton today that the New Jersey banking industry is in good financial shape, but faces serious challenges from expensive regulations under the federal Dodd-Frank financial regulatory law, and from Basel III, a proposal now before federal banking regulators to impose higher capital requirements on smaller banks, potentially constraining their ability to lend.
"The majority of New Jersey banks continue to be well capitalized and in generally good financial condition," Kobylowski said during the annual Trenton legislative day sponsored by the New Jersey Bankers Association. But, he said, bankers tell him businesses are uncertain about future tax and health care costs, which has prompted them to put on hold decisions to expand and borrow.
Dodd-Frank, Kobylowski said, impacts every bank in the state. "We are hearing that you may need to merge simply because you are trying to achieve economies to meet the regulatory burden," he said. "That is the tail wagging the dog, and it is beyond comprehension."
Kobylowski said New Jersey bankers have been vocal in their opposition to Basel III, and "my advice is please keep doing that — you need to be heard. You have a great story to tell the federal government and you need to keep telling it, and I will tell it every chance I can." He said that proposal would extend rigorous capital requirements to community banks, and "it absolutely makes no sense."
A major goal of the bankers is to get legislation passed to speed up the foreclosure process; a bill now on Gov. Chris Christie's desk would speed foreclosures of abandoned properties.
Assemblyman Gary Schaer (D-Passaic), chair of the Assembly Financial Institutions and Insurance Committee, said New Jersey is one of the few states where foreclosures go through the courts, and it now takes on average 1,000 days to get a property through foreclosure — "which is an unheard of number. We need to find a way to change the current reality so that it makes sense, and makes financial sense to do business in this state."
Senate President Stephen M. Sweeney (D-West Deptford) urged bankers to help get the higher education bond issue passed in the Nov. 6 election. He noted that New Jersey exports more than 30,000 high school graduates out of state to attend college, in many cases because there is no room for them here. He said the brain drain threatens the state's critical pharmaceutical sector.
Sweeney said his son is now a student The College of New Jersey, in Ewing. "I did not go to college, and I appreciate it more than anyone," he said. "I have succeeded beyond my dreams, but a college degree is something you can depend on, and they can't take it away from you."
Meanwhile, state Treasurer Andrew P. Sidamon-Eristoff argued against higher taxes for those earning $1 million or more.
"We need more millionaires in New Jersey, whether we entice them to come here or we grow them ourselves," he said. "These individuals are supporting our (government) revenues and they are supporting our nonprofits."