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SIFMA Annual Meeting: Kelly calls for fresh look at financial products, priorities

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This post is by SmartBrief Finance Editor Sean McMahon, who attended the annual meeting for the Securities Industry and Financial Markets Association earlier this week in New York. For more coverage of the meeting, follow @SBFinance on Twitter and sign up for SIFMA SmartBrief.

In a wide-ranging interview Monday, BNY Mellon Chairman and CEO Robert Kelly touched on numerous topics related to the economy and the financial services industry. Kelly expressed concern about what he sees as a fading sense of confidence in the economy. “It feels a lot better than it did 12 to 18 months ago, but not as good as it did 3 to 6 months ago,” Kelly said.

As the country’s housing market continues to falter, Kelly called for national standards for underwriting mortgages, as well as for banks to keep half of the value of the loans on their balance sheets. “Most countries underwrite the products and put a very large portion of the product on their balance sheets. We don’t do that here,” Kelly explained. Kelly also suggested the industry step back and take a look at some of the products it offers. “Having a 30-year product is not necessary in this country,” he said.

Kelly touched on fundamental changes that should take place in the United States to foster growth and avoid a repeat of the financial downturn – such as re-investing in education, manufacturing and infrastructure. “In order to fix things long term, you don’t do temporary things. You do permanent things,” Kelly said. “If you give people the right tax rates. If you don’t over-regulate them and if you educate them; Good things will happen.”

Kelly also stressed the importance of the financial services industry in the U.S. recovery. “The only time our image is going to improve is when the unemployment rate comes down in this country. … We are the blood that flows through the circulatory system of the economy,” Kelly said.

With regard to accounting standards, Kelly sounded off in favor of convergence. “Frankly, I think it is completely bizarre we are still debating this. There are two global accounting systems. There’s America and there’s the rest of the world.”

Looking back at the peak of the financial crisis in the fall of 2008, Kelly said regulators such as former Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke deserve an “A+” for the actions they undertook to stabilize the markets. “It was breathtakingly effective. I know a lot of people don’t share that view, but it is true,” Kelly said.