2 In 5 Western Bankers Believe Dodd-Frank Won’t Be Effective In Detecting Financial System Risk

July 29, 2011 - PRLog -- Los Angeles –Two in five (44%) West Region bankers believe that the overall financial reform will not be effective in detecting broad risks to the financial system and preventing or reducing the threat of a future taxpayer-funded bailout, according to Grant Thornton LLP’s 18th Annual Bank Executive Survey, conducted in conjunction with Bank Director magazine. Nationally, 48% of bankers believe it will not be effective.

“Though we hear the majority of bankers commenting about the challenges Dodd-Frank imposes on institutions, they are agreeing that they see some positive impact,” says Jim Pulsipher, partner and SoCal financial institutions practice leader at Grant Thornton. “The positive impact they refer to includes increased attention toward risk management and compensation frameworks that reward executives for long-term performance rather than short-term gains.”

Less than a third (32%) of Western bankers believe that financial reform will be effective and of those, none believe it will be “very effective” and 6% believe that it will be “effective;” and the remaining 24% of respondents think it’s too soon to tell.

Despite Western bankers’ concerns regarding Dodd-Frank and increased regulations, the survey shows a resurgence of optimism about the U.S. economy. West Region bankers’ optimism has nearly tripled since the last survey, with 53% reporting that they feel that the U.S. economy will improve in the next six months, compared with just 18% in August 2010. Nationally, 39% of bankers feel the U.S. economy will improve.

Locally, Western bankers are also more optimistic than they were nine months ago, with 52% saying that they believe their local economy will improve in the next six months, compared with only 18% in August 2010. Nationally, 44% of bankers feel their local economy will improve.

“It is a time of major change for the banking industry,” says Pulsipher.  “The survey reveals increased optimism, albeit cautious at times. And as the economy recovers, one of the greatest assets of any bank is confidence — confidence from consumers and regulators, and confidence within banks themselves to jumpstart hiring. Banks will have the opportunity in the coming months to help shape not only their own recovery, but that of the economy as a whole.”

With more than one-third of Western bankers (36%) reporting that they plan to increase hiring in the next six months, it is clear their optimism has spread to that arena as well. Nationally, 32% of bankers plan to increase hiring.

Visit www.GrantThornton.com/banksurvey to read or download a copy of the survey report.

Do you feel that the U.S. economy will improve / remain the same / get worse in the next six months?

National:       Improve-39%      Remain the same-52%   Get worse-9%
West Region:    Improve-53%       Remain the same-41%   Get worse-6%


Do you feel that your local economy will improve / remain the same / get worse in the next six months?*

National:       Improve-44%      Remain the same-50%    Get worse-6%
West Region:    Improve-52%      Remain the same-46%    Get worse-3%

Do you expect the number of people you employ at your bank to increase / remain the same / decrease in the next six months?*

National:       Increase-32%       Remain the same-52%    Decrease-16%
West Region:    Increase-36%       Remain the same-52%    Decrease-12%

How effective do you expect the overall financial reform will be in detecting the broad risks to the financial system and preventing or reducing the threat of a future taxpayer-funded bailout?*

National:       Very effective-1%          Effective-3%         Somewhat effective-34%   
            Not effective at all-48%   Too soon to tell-13%

West Region: Very effective-0%         Effective-6%          Somewhat effective-27%      
            Not effective at all-44%    Too soon to tell-24%

* Percentages may not total 100 due to rounding.


About the Survey
Grant Thornton LLP and Bank Director magazine conducted this national online survey in April and May of bank CEOs, CFOs and audit committee members. Ten percent of the respondents were from the West Region (AK, AZ, CA, ID, NM, NV, OR, UT and WA). Thirty-eight percent of the respondents were from small banks (those with less than $500 million in estimated assets at the end of 2009), while the remaining 62% were from large banks (those with more than $500 million in estimated assets at the end of 2009). Regarding ownership structure, 51% report that they are public institutions, 39% are private and 10% are mutuals. To see past survey results, please go to www.GrantThornton.com/banksurvey.

About Grant Thornton LLP
The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.