John C. Warren retired last month after leading Rhode Island’s largest independent bank, The Washington Trust Co., as its CEO and chairman since 1996. While Joseph J. MarcAurele – former Citizens Bank Rhode Island president – has taken over, Warren isn’t vanishing from bank business completely. He will remain on the board of directors.
Warren answered a few questions about the state of affairs in the banking industry as he steps down.
PBN: Looking back over your career, what has changed in banking since you started.
WARREN: So many things. The size of the banks. The geographic scope across the country. The competitive nature of finance and banking. The players, a large number of whom were never in finance, and now are effectively banks. Regulation.
Through all that, for us it is still a world of people. The success of Washington Trust is all about people. Still today. That is good.
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PBN: Do you think the past few years have been the most dire since the Great Depression? Why?
WARREN: Yes. We were losing significant confidence and control. Derivatives, subprime mortgages and other factors all collided. The United States and the world were all impacted.
Unemployment did not reach the Great Depression levels, thankfully. We were fortunate to have a chairman of the Federal Reserve [Ben Bernanke] whose expertise was the Great Depression. We did not do everything right, but knowing history and its mistakes certainly did help.
PBN: How do you feel about Congress’s effort at financial reform?
WARREN: It certainly looks like Congress will pass regulatory reform legislation. I agree that some things need to be changed and regulated. The scope of the bill goes too far. It will impact Washington Trust. We will have to pay for it. It will cost us money and require additional staff that will add nothing to our bottom-line profitability.
PBN: What’s your opinion of the government’s response to the crisis in the financial market, i.e. the Troubled Assets Relief Program?
WARREN: The government’s response was not perfect, but managing a crisis never is. I think that TARP bought us the time to stabilize the system. TARP did not end up the way it was originally proposed, but overall it was successful. Congress, the media, and daily events altered so much. [The creation of TARP] sent the message that the banking system would have the capital required and would not fail. The Federal Reserve and the U.S. Treasury would make sure.
PBN: Where do you see the industry going over the next few years?
WARREN: The next few years will provide a good future for the stronger banks – the statewide and local institutions. It will take awhile for many of the financial problems to be resolved. Over this recent time, it has been difficult for business and retail customers. That will offer many opportunities for banks like Washington Trust. We look forward to it.
