With new leadership, Minnesota bankers look to future

Northwestern Financial Review, Jul 15-Jul 31, 2003 by Bengtson, Tom

Paul Pieschel told colleagues "our future is in our hands," as he accepted the presidency of the Minnesota Bankers Association at the group's annual meeting and convention, June 22-24 at the St. Paul Radisson Hotel. Pieschel, president of the Farmers & Merchants State Bank of Springfield, Minn., is the fifth person to follow in his father's footsteps as MBA president in the 114-year history of the organization. Michael Pieschel was MBA president in 1974-75.

But Paul Pieschel was not looking to the past during the two-day meeting. "We cannot depend on others to do our work for us," he said, urging his colleagues to get involved in the political process. He said bankers face several issues in Minnesota, including predatory lending, credit union competition and privacy. "If we sit on the sidelines, onerous legislation will get passed that will affect all of us. It is important that bankers continue to be involved. Our lobbying team cannot do it all by themselves.

"If you want a voice, you have to be involved," he continued during an interview. "Opinions are a dime a dozen. You can complain or get involved."

Pieschel said he is eager to work with Joe Witt, the attorney named MBA's executive vice president on June 5. Pieschel said Witt will be spending much of his time traveling around the state. "Getting Joe out to visit with the bankers is really key," Pieschel said. "We want to re-establish a personal touch from the MBA."

Witt concurred, saying he would be heading the association's ongoing membership program. "It is the CEO's responsibility to get out and meet the membership," Witt said.

Witt, well-known by many Minnesota bankers, has worked on the association's legal staff since 1996. He said the association's ability to identify the MBA services used by each member has recently been enhanced; the information will allow the association to better serve the membership.

Pieschel said he looks forward to working with the Independent Community Bankers of Minnesota, which also recently installed a new chief executive. Will Haddeland became the ICBM president on June 1.

"We have a lot of common issues where we can work together," Pieschel said. "We need to speak with one voice as much as possible. We need to try to build on our similarities."

Ken Fergeson, chairman-elect of the American Bankers Association, urged bankers to work together against expanded business lending authority that the credit union industry is seeking. "The monster credit unions truly are a parasite in our country," Fergeson said. "They take and they take and never give anything back."

He said the ABA has formed a state association credit union coordinating committee that is focusing on credit union issues. "Every time they make one of these obnoxious proposals, we will be there to protest," he said, referring to an NCUA proposal to figure a credit union's business lending limit without including loan participations. The National Credit Union Administration recently proposed rules that would exempt participations from the 12.5 percent cap that currently applies to credit union's business lending.

Fergeson also encouraged bankers to oppose legislation that would prevent banks from engaging in real estate brokerage and management under the Gramm-Leach-Bliley Act of 1999. "I know it is hard for many bankers to get excited about real estate," Fergeson said, "but if we lose this one, we don't have a prayer against credit unions.

"If we let the realtors determine what is a financial service, then we are doomed. Who will be next to say what we can or can't do?"

Economist Brian Wesbury said the economy is "poised for barn burner growth," predicting real gross domestic product growth of 4 percent in the third quarter, 5 percent in the fourth quarter, and 5.5 percent in the first half of 2004. He said the tax cut will have an enormous positive impact on the economy. Interest rates, which he described as artificially low, will begin to rise. "We will see an increase in inflation to three or four percent by the end of 2004, early 2005," he said.

Wesbury said he is confident about the economy, but that he is concerned about the government's efforts to provide a prescription drug benefit. He said the price of pharmaceuticals is likely to rise if the government helps people to pay for drugs. Price controls are likely to follow, and that will suppress research and development at the drug companies, he said.