U.S. Treasury Plan Prompts Reaction from UMB Chairman and CEO
KANSAS CITY, Mo.-(Business Wire)-February 11, 2009 - Chairman and Chief Executive Officer of UMB Financial Corporation, Mariner Kemper, issues the following statement in reaction to the U.S. Treasury’s Financial Stability Plan announced Tuesday, February 10.
“The swift actions by the U.S. Treasury to formulate a plan are encouraging. The ‘stress test’ is a good concept that was lacking from the original plan and should help identify the fault lines within our financial system. However, this component of the plan aside, it remains too vague and lacks essential details on how the $2 trillion will be put to good use. As seen from the first round of TARP, actions taken to promote loan growth have essentially been ineffective as lending remains stagnant.
“As is, the premise for the plan calls for pumping more capital into the system. However, this is somewhat flawed logic as financial institutions primarily loan against deposits, not capital. More capital dollars won't necessarily increase loan demand because the root of the problem is the fragile state of the economy that has people pulling back on consumption. By injecting capital, the plan does more to promote unsound lending practices than addressing the systemic problem.
“To truly be productive in solving the economic crisis, it must be realized that the core issue is that we, the government, businesses and consumers, have overextended for several years. It’s counterintuitive to solve a leverage problem with more leverage. The principles that guide the free market must be allowed to unfold by letting the ‘problems’ within the system fail and the ‘successes’ thrive.
“Alternatively, we propose solutions in the best interest of the taxpayer can be found by:
- Seeking counsel for solutions in moving forward from those who operated soundly rather than from those who broke the system.
- Offering incentives rather than penalties for those not taking ‘oversized risks’ for ‘oversized rewards.’
- Ensuring government intervention becomes more of a last resort than an immediate backstop.”
About UMB
UMB Financial Corporation (NASDAQ: UMBF) is a multi-bank holding company headquartered in Kansas City, Mo., offering complete banking, asset management, health spending solutions and related financial services to both individual and business customers nationwide. Its banking subsidiaries own and operate 137 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include an investment services group based in Milwaukee, Wis., single-purpose companies that deal with brokerage services and insurance, and registered investment advisors for proprietary mutual funds. umb.com @UMBFinancialCor
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