Forum President Rob Nichols on CNBC’s live coverage of the State of the Union address
January 27, 2010
John Harwood: In just a few minutes from now, President Barack Obama will deliver his first State of the Union address. As we wait for the speech, we're joined by Rob Nichols, the president of the Financial Services Forum, Anita Dunn, former White House Communications Director, also Joe Lockhart, former Clinton Press Secretary and the Press Secretary in the Bush White House. Rob, let me start with you. Is this President waging war on Wall Street?
Rob Nichols: No, I really don't think so. We’re very interested, John and Carl, thank you for having me, in listening to the President's speech tonight and specifically we're going to be listening for what he's going to say in regulatory reform. We're in heated agreement with the President on the important need to modernize our supervisory architecture, it’s extremely important to do that. We need to remove this regulatory uncertainty in the capital markets, we need to provide certainty for investors and policyholders and consumers. We need to be positioned strategically and competitively in the global financial marketplace. I understand there has been rhetoric over time, but I think there's a lot more in common that the financial services industry has with Congress and the Administration on the need to do two things. Specifically, one, come up with systemic supervision to make it so it's unlikely and harder for a crisis like we just had to ever happen again, and secondly to have resolution authority, so that if a large institution were to fail, it could do so in a non-chaotic manner that wouldn't cause spillover effects. So there's a lot in common, something we'll be listening to.
John Harwood: Neel Kashkari told us a few minutes ago that the President’s bank tax and risk and scope restrictions of the Volcker Rule are aimed at the right target and the bank tax that he would support its enactment as a former official in the Bush Treasury Department. Is he right?
Rob Nichols: I did see Neel’s comments. I'm interested in seeing more details about those two proposals. Congress' initial intent on repayment was to wait five years and see how of that much was repaid. I'll be interested to see how Congress deals with that proposal. I think we ought to see more details.
John Harwood: Are you fighting the Administration -- are you trying to take those down?
Rob Nichols: We are partnering with the Administration and partnering with Congress. We want to work together in a constructive, thoughtful way. It's too important to get this wrong.
After President Obama’s State of the Union Speech: 10:21 p.m.
John Harwood: I'm John Harwood here in Washington, with Carl Quintanilla. We've been listening to President Barack Obama, the 44th president of the United States, delivering his State of the Union address for the last, little more than an hour. We've got a panel to talk about the issue, but I want to start with Rob Nichols of the Financial Services Forum. Rob there's a passage in the speech at the end where the President went after TV pundits and on behalf of the industry, I'll take that hit. We'll plead guilty to the silly arguments.
Carl Quintanilla: Except on this show tonight.
John Harwood: Exactly. But he also had a passage where he said, the House has passed financial reform and the lobbyists are already trying to kill it. Was he talking about you? And do you plead guilty?
Rob Nichols: I do not plead guilty. We've been working in a very collaborative, thoughtful way with Chairman Frank's Committee and now we're doing the same thing with Chairman Dodd's Committee. Obviously the House has finished their product. The Senate is in the middle of working on theirs. We've been trying to play a very thoughtful, productive role. We are very interested in getting regulatory modernization. We are pro-reg reform. We just need to do it the right way. We need to get a new systemic supervisor. We also need a resolution authority. These are very important pieces to modernize and update our supervisory architecture.
John Harwood: Do you believe a comprehensive financial regulation bill, touching the points the President mentioned tonight, as well as the scope limits and the bank tax is ultimately going to reach his desk?
Rob Nichols: I'm not sure about the size and scope limits. We haven't seen the paper on those details yet, and we're very interested in seeing them. But I am optimistic that we can have regulatory modernization and reform. I think's important for the capital markets to have that certainty. There's this uncertainty –
John Harwood: Massachusetts did not stop that.
Rob Nichols: There's regulatory uncertainty right now over the capital markets that certainly needs to be addressed. The markets need certainty; they need predict ability, so it would be very important to get a strong bi-partisan bill, obviously half done in the house, now moving on to the senate. There will be a lot more to follow. We want play a constructive and productive role.
Carl Quintanilla: So when he raises the threat of a veto as he did tonight, does that say to you there's little to no negotiation to be done with the protection agency; there is no bi-partisan deal to be forged?
Rob Nichols: I know Chairman Dodd and Ranking Member Shelby have some views on the right way to enhance consumer protections. We're interested in seeing those. Walt Minnick, who is a Democrat from Idaho, had a proposal that almost passed the House. I understand that some in the Senate are looking at that. I'm very interested to see what comes out of the Senate process in terms of enhancing consumer protections. It is clear there will be a title in the Senate bill to enhance consumer protections. We are for enhancing consumer protections. We just need to see what the details are.
Carl Quintanilla: Would it surprise you to see bank stock sell off in the morning?
Rob Nichols: I never like to predict, as a long time Treasury Official, I never like to predict what the market does. But one thing the markets are looking for is certainty, obviously. One other thing I would like to point out too, in his speech that I thought was very positive, he talks about global engagement. When we talked before the President’s spoke, I pointed out the need for us to globally engaged, to open up foreign markets, particularly China. Which again is a challenge, but a huge opportunity for our manufacturers and exporters and I was heartened that he pulled that out and that he also mentioned South Korea, Panama and Columbia. I think that’s very important
Rob Nichols: So as a third thing John, in addition to reg reform, very important, in addition to global engagement, opening up foreign markets another very important thing, the President referencing tonight, the third thing, is he did mention this deficit, the deficit overhang, the deficit picture. The markets are very concerned about the long-term fiscal situation surrounding the United States.
John Harwood: Do you think they'll take his focus tonight as credible, given Democratic control of the Congress? Do you think the markets will?
Rob Nichols: I think the very robust conversation about how to rein down spending is going to take place in the next few weeks, in the halls of Congress. But I’ll tell you that the markets look at both the short-term deficit outlook and the long-term debt of our nation; those are very important things that we need to think about.
Carl Quintanilla: Couple minutes here to go around with our guests, Rob Nichols, Anita Dunn, Tony Frappo, Joe Lockhart. Final thoughts Rob?
Rob Nichols: Reg reform, It’s coming up, it’s in the Senate, we need to get it done right.
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The Financial Services Forum is a non-partisan financial and economic policy organization comprising the CEOs of 19 of the largest and most diversified financial services institutions doing business in the United States.
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