NORTH KINGSTOWN – Rob Nichols isn’t focused on inflation.
It’s not that he doesn’t think the 40-year-record in inflation rates is a problem – he does – but he knows it’s an issue already receiving ample attention from economists and policymakers.
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What keeps Nichols up at night are the financial crises that don’t get as much air time or ink, but are no less serious to banks and the people who use them.
Nichols, American Bankers Association president and CEO, highlighted what he sees as the most pressing financial issues Tuesday at the North Kingstown Chamber of Commerce annual meeting.
Among the most concerning, to Nichols, is the country’s growing debt, which at this point equals its gross domestic product.
“It’s a terrible place to be,” he said. “No one in Washington is talking about how to pay down our roughly $28 trillion in debt.”
While Nichols struggled to find a solution that could flatten that mountain of money owed, he offered more definitive stances on other hot topics in the finance industry.
Take cryptocurrency, which has become increasingly popular to the point that even the Federal Reserve is studying how to back some kind of digital currency. Nichols didn’t mince words when explaining why he thought this was a bad idea.
He quickly dismissed arguments supporting bank-backed digital assets – the dollar itself is essentially digital thanks to real-time payments and other technology, and free market financial institutions already offer a host of account options to address equity and inclusion issues in banking. China’s backing of digital currency didn’t sway Nichols’ opinion either.
“China does a lot of things I don’t think we need to do,” he said, calling the idea of a central bank digital currency a “solution in search of a problem.”
While the American Banking Association has asked the Federal Reserve to pump the brakes on studying this option, the ABA is not anti-cryptocurrency. Rather, the group, including Nichols, just want to see it regulated in the same way as other financial institutions and products are to protect consumers.
To that end, he came down hard against states like Wyoming which have issued bank charters to cryptocurrency companies, granting them the privileges of a traditional bank or credit union without holding them to the same set of federal regulations.
Rhode Island has adopted a more cautious approach when it comes to cryptocurrency, but if the Ocean State were to do something similar, the ABA would also sound the alarm, Nichols said.
“If you want to do bank-like things…there should be a level of supervision over that entity,” he said. “It’s just a level playing field argument.”
Also at the forefront of ABA’s advocacy efforts in Washington are regulations around cannabis banking, While 39 states – and counting – have legalized marijuana in some form, it’s still illegal federally, putting banks that want to do business with cannabis companies in their states in a tough position.
Nichols was optimistic for passage this year of a congressional bill which creates a safe harbor for banks to do business with cannabis companies in states where marijuana is legal.
In addition to serving as the voice for the nation’s $17 trillion banking industry, Nichols is serving a three-year term, which began in 2020, as chairman of the International Banking Federation. The former assistant secretary for public affairs at the Treasury Department under former President George W. Bush, Nichols has also received the Treasury’s Alexander Hamilton Award and was ranked as one of Washington’s top lobbyists, according to The Hill.
The chamber event held at Quidnesset Country Club marked the first in-person meeting since 2019, and also featured opening remarks by Lt. Gov. Sabina Matos.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
