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Piero Rivolta has had a unique perch from which to watch the current financial troubles.
Yacht and car builder, real estate developer and novelist, Rivolta is also a large investor and chairman of the board of Bradenton-based Flagship National Bank. He worries that too many of his fellow professionals are blaming banks for the current tight lending when they should be looking a lot higher.
Recently Rivolta sent out a public statement decrying the new rules on banks as the antithesis to job growth and economic recovery. Federal government officials have required banks to quickly raise larger and larger capital reserves, Rivolta says, while at the same time forcing banks to toss potentially good loans into foreclosure prematurely.
“Banks are caught in the middle,” he told Coffee Talk. “When I built my building here I borrowed $39 million. I never used all $39 million. The bank said take $2-3 million more so you're not stuck in the middle. Now to borrow $39 million, you would need to show the bank you have $39 million. This is killing businesses. The only people that win are the speculators.”
These new rules are also preventing banks from finding additional capital investment. As an example, Rivolta says he and other investors put $4.7 million in investment capital into Flagship National Bank in early December and within a month the investment was completely gone to raise the bank's reserve.
If the reserve levels were lowered or the deadline extended and banks were given a freer hand to deal with mortgages, Rivolta believes that most banks could recover on their own through lending, which in turn would allow businesses to hire.
“We should be talking about jobs instead of health insurance,” he says. “If you don't have a thing to eat or a way to pay your mortgage, you don't care about your health insurance.”
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