Small banks botched public relations, outsider charges

July 23, 2010
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Bank reform is now law, and regulators soon will begin drawing up new rules for banks to live by.

Mark Hill, a local entrepreneur with close ties to banking, thinks small- and medium-size banks are going to regret not having lobbied harder to knock some of the sharp edges off the legislation.

Hill has an unusual perspective on the industry. He made a lot of money selling software to mid-sized banks through the firm he started, Baker Hill, and then made another killing when he sold Baker Hill to Experian in 2005.

The new regulations will be overwrought, thus expensive for banks, fears Hill, now an angel investor in tech startups. And he believes the banks have nobody to blame but themselves.

In the months leading up to the debate over reform, small- and medium-sized banks did a rotten job of telling their story, he says. The public needed to be reminded that banks play a crucial role in the economy by accepting savings, loaning out the money and making a return for the depositor. Depositors also needed to be told that businesses and jobs depend on profitable banks.

The banks should have screamed in the public square that, while admitting they also got caught up in mortgage speculation and other excesses pioneered by the huge Wall Street institutions, instead, they were not Wall Street; they mostly helped Main Street prosper.

Hill can’t recall receiving so much as a piece of direct mail from his own bank explaining banks’ role in the economy and larger society.

“It feels like they ought to be starting with their own customers,” he says. “I think a lot of people think the bank is the big, bad guy who won’t lend them money. They’ve just not done a good job of differentiating themselves in the mind’s eye of the public.”

do you agree? Did the smaller banks botch public relations?
 

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  • What reform?
    You think banking reform was heavy-handed? Seriously? Did it curtail the casino-style betting of derivatives that got us in this mess? No. Did it force banks to separate the depositors money from their own when they make those wild gambles (Volker rule)? No. If anything this new legislation is weak sauce. Does Mark Hill remember why bank reform became an issue in the first place? I do agree with him on one thing: the banks have nobody to blame but themselves. Too bad he thinks it's related to PR.
  • What
    You know who cried most about regulations in the early Bush administration? The very people who got the deregulations and caused the financial crisis. I choose to bank at small local banks and not the megabanks (although it is getting harder to do) for this very reason. Do you think for a moment that the megabanks really care about me, my community, the welfare of my society when they reside elsewhere? You bet they don't. They only look after themselves at the price of all us other guys. Case in point, the financial crisis we are now in.
  • What
    You know who cried most about regulations in the early Bush administration? The very people who got the deregulations and caused the financial crisis. I choose to bank at small local banks and not the megabanks (although it is getting harder to do) for this very reason. Do you think for a moment that the megabanks really care about me, my community, the welfare of my society when they reside elsewhere? You bet they don't. They only look after themselves at the price of all us other guys. Case in point, the financial crisis we are now in.
  • Not so fast
    Jim, fair enough, but you're naive if don't think that small banks care about their bottom line first and foremost. And look at the list of 96 banks the FDIC has shut down this year. Mostly small, community banks. The dirty secret out there that no one wants to seem to talk about is that a lot of small banks made bad commercial real estate bets, and we're starting to see the results of that. So, don't be so quick to sing the small bank praises.

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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