Federal Reserve monetary policy known as quantitative easing, or printing money and buying bonds.
President Obama Tuesday nominated community banker Allan Landon for a seat on the U.S. Federal Reserve’s board amid growing concerns Main Street has little say on monetary policy. A growing number of lawmakers urged the president to appoint someone with community banking experience to one of the two open seats, hoping to reign-in the enormous influence that big Wall Street companies hold.
“ICBA is pleased that the President has announced his intent to nominate someone with community banking experience and supports Allan Landon for a seat on the Federal Reserve Board,” Independent Community Bankers of America President Camden Fine said in a statement. “Landon’s experience as the CEO of a community bank and his broader sector experience will bring a much-needed community bank perspective to the board’s deliberations.”
Landon, 66, a partner at private investment fund Community BanCapital, was chief executive of the Bank of Hawaii (NYSE: BOH) from 2004 until 2010. During his tenure, from 1999 to 2010, the company’s stock rose 152.6 percent, even as the S&P 500 was down 14.4 percent.
Prior to Bank of Hawaii, Landon was a partner with Ernst & Young, where he worked for 28 years in several Midwest and Eastern offices, before working as the CFO at First American in Tennessee.
Community BanCapital, which is based in Portland, Oregon, invests in the debt of community banks. The website says he is “responsible for sourcing , evaluating and monitoring investments.”
However, the appointment may be more about Landon’s ties to Washington and Obama’s family than it is about ties to small-bank, Main Street America.
The president’s grandmother Madelyn Dunham was one of the first female vice presidents at the Bank of Hawaii, where Landon was CEO. He even read aloud a letter from the newly elected Obama at a community service after her death in late-2008.
Further, Landon also serves on the boards of both the Smithsonian Institution, the Corporation for Public Broadcasting and MidFirst Bank in Oklahoma City.
Still, proponents say there is a reason to be optimistic with the nomination, which comes just as the Fed prepares for its first interest rate increase since 2006. Most expect the increase around mid-year, and say Landon’s common sense perspective is sorely needed during such a time.
“ICBA has been outspoken in calling upon the White House and Congress to ensure a community bank presence on the Fed board,” the ICBA adds. “ICBA hopes for a swift confirmation of Landon by the Senate, and, if confirmed, looks forward to working with him in the coming months to ensure an environment where community banks and the thousands of communities they serve can continue to succeed.”
Fed governors with community banking pedigrees are typically charged with supervision and regulatory issues. However, if confirmed by the new Republican Senate, Landon would have a regular vote on monetary policy.
Community banks have been suffering under the 2010 Dodd-Frank financial oversight law, which the Fed and other regulators are implementing. They say they need relief from the thousands of regulations demanding more resources for compliance small banks simply cannot afford. Fed officials have said they are open to loosening some rules to lessen the burden on smaller banks, but hope Landon’s seat on the policy-making board will serve as their voice.
