Former Bank of America CEO Hugh McColl shared his thoughts on the origins of the financial crisis during a panel discussion Tuesday night, saying it largely stemmed from too much greed.
McColl also said the nation's biggest banks continue to grow as smaller banks are going away. And he warned that there might be trouble ahead for the U.S. economy as a result of too much money being put into circulation.
McColl was among the participants in the discussion organized by the Federal Reserve Bank of Richmond, which is celebrating its 100th birthday this year.
|Panelists (left to right): Gantt, McColl, Martin and Rothacker|
The focus of the panel talk was the history of banking in Charlotte.
McColl said big banks are getting bigger, despite concerns from regulators and others about financial institutions deemed "too big to fail."
"The facts are that since the Great Recession, the too-big-to-fail banks have gotten much, much larger, and the little banks are disappearing," McColl said.
McColl retired as Bank of America CEO in 2001, before the financial crisis. The "No. 1 underlying cause" of the crisis, he said, was greed.
"You could argue that people borrowed money (for residential mortgages) knowing they wouldn't pay it back. You could argue people made the loan available to them knowing they couldn't pay it back," he said.
McColl said one "great fallacy" that helped spark the crisis was "people believed they could get rid of risk by selling it to somebody else."
"If (there's) nothing else people should have learned out of this collapse is the risk is always there and just because you gave it to somebody else doesn't mean it isn't coming back," he said.
McColl said too much money being put into circulation as a result of fiscal and monetary policy could prove problematic for the U.S. economy, perhaps in the form of future inflation.
"Once it gets into circulation, something's going to happen to it," he said. "It's going to get loaned or invested. We may be sitting on a time bomb of too much money being printed and all this will come home at some point."
"When you get too much money chasing too few good deals, that's when you get problems," he said.
Charlotte has had a Federal Reserve branch since 1927.
McColl called the opening of the branch "the most important" milestone in Charlotte's development into a banking center.
But he also said the region's banking industry expanded along with the economic growth that took place across the South following school desegregation in the 1960s.
"You take '63 forward, the South outgrew the rest of the nation" in terms of incomes, jobs and population, McColl said. "We were growing like gangbusters. ... We just happened to be in the right place at the right time and took advantage of it."