Pub. 3 2013 Issue 1

4 www.azbankers.org A S BUSINESS BECOMES MORE DEPEN- DENT ON POLITICAL DEVELOPMENTS AT THE NATIONAL AND STATE LEVELS, OUR NATIONAL AND STATE BANKING associations will necessarily need to become more involved in politics. This seems logical enough, but the events at the end of last year, that seem to be continuing through this year, underline and put an exclamation point on this reality. As I have said in this space before, the business world has been gripped by politi- cally induced uncertainty for several years. We have been waiting for clarity on mul- tiple fronts which we thought we would get from the election: from the permanence of the Affordable Care and Dodd Frank Acts to the duration of the Bush tax cuts, to name just a few. While the election an- swered some of these questions, our elected representatives at the federal level are show- ing us the downside of divided government: political paralysis. On the “fiscal cliff” in particular, having demagogued the issue all year, they found themselves beyond the dead- line with no agreement. So they allowed tax rates to rise on the wealthy and they postponed the draconian spending cuts known as “sequestration” until March. That roughly coincides with a national default on our financial obligations if the debt ceiling is not increased. It’s also when the stopgap funding for the federal government expires, threatening another government shutdown. So, while we have temporarily averted the “fiscal cliff,” it looks like we’re headed into a “fiscal perfect storm.” As we proceed down this path, the bank- ing industry has much at stake. We have a zealous, and partially new, regulatory estate charged with implementing the Dodd Frank Act – the largest regulatory reform legislation in the history of U.S. banking. We have new “Basel III” capital standards that, while written for inter- national banks, our regulators intend to apply industry-wide, encompassing even community banks. Add to that the new rules on mortgage lending hitting just when the housing market is beginning to recover. We can also expect a concerted effort from Con- gress on reforming Fannie and Freddie. Finally, and this is not an exhaustive list, the credit unions will be back on the Hill this spring with their campaign for ex- panded business lending, leveraging their tax advantaged status to directly compete with us on rate. Closer to home, in Arizona we are continuing to see misguided populist bills that would be problematic for our industry and the broader economy. We faced down several attempts at “eminent domain” legislation which would have had the state seize billions of dollars in mortgage paper in order to “fix” the underwater mortgage problem. We saw a state bank proposal aimed at providing much needed capital to the un-credit- worthy. Finally, and this is also not an exhaustive list, we saw an attempt to make commercial loans non-recourse. If these experiences teach us anything it is that managing our political risk is Government Relations Is Not a Spectator Sport Q President’s Message | continued on page 7 In 2012 our bankers met often with members of our congressional delegation, both here in Arizona and in Washington. Our bankers were also a pervasive presence at the Arizona capitol last year, largely – and successfully – playing defense By PAUL HICKMAN , President & CEO A MESSAGE FROM THE PRES I DENT