BOK Financial president: Bailouts will increase duration of

Journal Record, The (Oklahoma City), May 13, 2009 by Heather Caliendo

The combination of excessive financial leverage and bad business decisions are at the root of the financial industry's problems, BOK Financial President and Chief Executive Officer Stan Lybarger said.

"These factors virtually wiped out the Wall Street investment banks and crippled a significant number of large commercial banks," he said. "Over the years the degree of financial leverage in large groups rose substantially. In hindsight that business decision was flawed."

Lybarger spoke to a University of Tulsa Friends of Finance audience Tuesday afternoon.

"Over a year ago when I accepted to speak I didn't know the economy would present such rich material," said Lybarger. "No doubt you all are aware it's been a turbulent year for the financial service industry."

In his speech, Lybarger highlighted events that led up to the financial meltdown.

Though Lybarger agreed action needed to be taken, he criticized the number of federal government intervention programs intended to stabilize the markets and ease liquidity concerns.

While the incentives have indeed stabilized the industry, efforts in capital placement in many banks have been misguided, he said.

Weak financial institutions should have been allowed to fail, he said.

"A good argument can be made without stabilizing those banks the financial system would have ended up in gridlock," said Lybarger. "I do think it both increased the debt and the duration of the recession."

Lybarger said it was a much different approach than in the 1980s when regulators moved quickly and aggressively. About 78 financial institutions were closed in Oklahoma alone.

By contrast, only 58 banks have been closed in all of the U.S. since 2008.

"Clearly the regulators have been slow to close banks and they need to do more," he said.

BOK Financial Corp. was the largest commercial bank in the country that didn't accept money through the Troubled Asset Relief Program.

While there are several reasons the company refused federal funds, Lybarger said it comes down to the fact the company did not foresee a capital need.

Lybarger said in the early stages of the recession, company officials anticipated that many banks would close and BOKF would have the opportunity to acquire some of those institutions.

Since many banks have stayed afloat, the company switched efforts to recruiting.

"It's probably the best recruiting market I've seen since being in the industry," said Lybarger. "So we have picked up some premier talent from all across the country from other institutions that have been suffering."

The $23 billion regional financial services company owns seven bank subsidiaries in the region and full-service banks in eight states.

Lybarger said there will be acquisition opportunities in the future.

"Our focus is to invest in states we are already in," he said. "We are in a number of states and many have relatively small market shares. Those acquisitions bring a lot of value."