BB&T CEO: Apple Pay should be subjected to regulations

BB&T CEO Kelly King is among bankers who have expressed concerns about new regulations banks have been subjected to since the financial crisis.

A few years ago, for example, he warned that the Dodd-Frank financial overhaul act will cause thousands of small banks to disappear.

But this week, King called for regulations — for Apple's new payments system, that is.

King said Apple Pay, which Apple unveiled in September, and others like it should be subject to the same regulations as the biggest U.S. banks to head off attacks by terrorists and computer hackers, according to a Bloomberg story on Friday.

Here's an excerpt from that story:

The possibility that a terrorist hacks into the financial system through a third-party payments company is a “greater threat” than if a similar attack were leveled against a community lender, King said yesterday in an interview. “We have to start raising awareness of this issue.”

Regulators should consider whether such firms qualify as systemically important financial institutions, King, 66, said at a panel discussion in New York at the Clearing House annual conference. Such a designation could lead to tighter capital, leverage and liquidity rules like those faced by banks. While King said he favors healthy free-market competition between banks and nonbanks, industry regulations make that impossible, he said.

“We are headed toward a socialist system,” he said, smiling and drawing laughs from the audience. “My hope is that going forward we will have a healthy shadow and regular banking system” all subject to a similar regulatory regime, he said. 

Speaking of the "shadow" banking system, King has talked about that before. For example, he's previously traced the financial crisis to the development of the shadow banking system over the past few decades.

Here's what he said about that in a 2011 interview with the Observer:

Q. A lot of people, though, suffered in the financial crisis and some would say banks didn't look out enough for customers. What would you say to that?

A. I would say there's some truth to that. There are some customers that have been abused, and I'm ashamed of that for the broad financial services industry.

I will say that the vast majority of that occurred in the shadow system, which was not part of what I would call the banking system. These independent brokers that were being paid big fees just to get that little old lady to sign the loan and then ship it off — that's a horrible system. And those people have a right to be mad and those people who perpetrated those injustices should be dealt with.

BB&T is among large banks that have signed on to ApplePay so that their customers can tie the payments system to their bank accounts.

In an October interview with Bloomberg TV, King said BB&T wanted to make ApplePay available to its customers. "We're very happy to be a part of it," he said in the interview.

BB&T is based in Winston-Salem. The regional lender is the third-largest bank by market share in the Charlotte metro area.

On an unrelated note, King, speaking at that same conference where he made the Apple Pay remarks, expressed concerns about the "incredible" risk U.S. banks are taking in corporate and commercial lending. Here's a link to a Reuters story on that.