Secretary Robin Wiessmann discusses stepping in and leading a proactive, forward-thinking PA Department of Banking and Securities
Nick DiFrancesco (ND): Thank you for sitting down and talking with us Madame Secretary and congratulations on your Senate confirmation. You’ve been at the Department now for a little over 6 months. What have been some of your observations of the department? Obviously it’s a department that has gone through some transition in the past few years and this is your second time serving in a leadership role here in the Commonwealth.
Secretary Robin L. Wiessmann (RW): I was pleased and humbled that Governor Wolf asked me to come back to Harrisburg to serve Pennsylvanians again, particularly in the area that interests me so much, financial services. When I served as State Treasurer several years ago, I was focused on investment management and cash management for the Commonwealth. The appeal of coming to the Department of Banking and Securities is addressing the different set of challenges to my own core professional base, specifically as they relate to commercial banking, investing, and non-bank lending.
The Department was merged in 2012 and I think the integration of those two departments (Department of Banking and Securities Commission) is still ongoing. I plan to further integrate and optimize our operations. My plan is for the work of our department to more accurately reflect what’s going on in the real and increasingly fungible marketplace of both the banking and securities worlds.
ND: You have a pretty extensive background in the financial services industry in both the public and private sectors. Was there something about the industry that piqued your interest or has it always been something that’s fascinated you?
RW: Since my time as an adolescent I’ve been very interested in public policy. The financial services industry wasn’t my target, and ultimately I went to law school. However, in law school I realized that I didn’t know about the facts or circumstances of many business transactions we studied. I wanted to learn more about business so I would have a greater appreciation for the case law in front of me. And that’s how I got into finance.
In retrospect, I don’t think I actually planned on practicing law. I was more interested in law as an analytical approach to life and business. Even so, I took the bar exam, and I am still happily a member of the Pennsylvania Bar Association. The legal training has been a tremendous asset in terms of my approach to problem solving and decision making.
I’ve really enjoyed being able to work in both public and private sectors. I’ve had a varied career because it keeps work life interesting. Taking up different assignments is always a formula for growth.
ND: Most of our readers will remember you from your time as the State’s Treasurer. Are there any similarities between the Treasury Department and Department of Banking and Securities you see as a benefit, or maybe some lessons you learned from that role you hope to carry over to this office?
RW: My term as Treasurer certainly prepared me in terms of dealing with the issues of public visibility and fiduciary responsibility, working with the players in Harrisburg, and understanding the roles and relationships of the legislature and governor.
I thought I had a fairly good understanding of most of these issues from my time as an investment banker, looking at the creditworthiness of states around the country. However, this experience as an observer is different and no replacement for actually being in the game.
There are two aspects of my work as Treasurer that really helped prepare me as head of the Department of Banking and Securities. First is the fact that both offices involve serving in a very public role with a very high degree of fiduciary responsibility. Second is the financial management.
I went to the Treasury because I wanted to introduce institutional investing standards and bring more of a technical/professional framework for decision making to the operation. I think we were successful in achieving these goals.
My role as head of the Department of Banking and Securities is quite different in the sense that we’re first and foremost a regulator. However, we also want to cultivate a healthy economic environment for our stakeholders and help foster economic vitality for Pennsylvania.
I am pleased that the Department of Banking and Securities is extremely well regarded by the financial services industry as well as other regulators, and that we were re-accredited last year with high marks from the Conference of State Bank Supervisors. Coming into my role as Secretary, I appreciate the high level of expertise in our staff and the way they communicate clearly and work professionally with the businesses and individuals we oversee.
ND: You’ve spoken on record about addressing the issue of cyber-security for state chartered institutions. How do you see the Department meeting what is a very challenging area and being a resource to try and mitigate some of the risks that are out there for consumers and businesses?
RW: When I joined the Department, the first issue that I wanted to address was cyber-security. It is the one thing that can keep me awake at night, and I think it’s the same for our bank CEO’s. When a big box store’s security and its credit card holders are compromised, we see lots of damage to the business and its customers. However, when you’re looking at a bank being attacked by cyber-criminals, the outcome could challenge the bank’s very viability.
The Department has setup a cyber-security task force. We’re working on a strategy to help our banks and other businesses that may not be large enough to create a cyber-security model themselves. Very recently, the Federal Financial Institutions Examination Council, a body of federal and state regulators, put out a model cyber-security self-assessment tool. I encourage our banks to take advantage of this self-assessment tool, as well as other best-practices tools that are available and are proving to be effective. Many of these tools will be made available on our website sometime after Labor Day.
ND: As the Secretary for the Department you sit on a number of state boards and organizations that deal with public resources being leveraged to support economic growth. From your perspective and your experience, where do you see your role and the department helping the state’s economic climate?
RW: From the perspective of financial markets, regionally, nationally, and internationally, everything is changing pretty dramatically. The key for Pennsylvania’s economic vitality is the business community embracing the change that is being introduced into the marketplace from technology advances, innovations, and changing customer demographics.
Banks provide access to capital for small businesses and large companies that want to get started in enterprise or expand their operations or markets. I think banks can play a critically important role, along with developers and public officials working together, in fostering economic development in Pennsylvania. Through the state’s economic development authorities – such as the Commonwealth Financing Authority (CFA), PA Industrial Development Authority (PIDA), or the PA Housing Finance Authority (PHFA) – there are funding partnerships available that the banking community can utilize, and I want more banks to take advantage of these opportunities.
ND: You mentioned it earlier, but capital really is the underlying opportunity. You could have the greatest idea in the world, but if you can’t turn it into reality it’s never going to flourish.
RW: Capital is really the engine that drives those ideas, which is why the whole economic development process is so interesting.
ND: This year started off fairly slow on the merger and acquisition activity but has since picked up at a steady rate. Pennsylvania didn’t really get hit with the same level of merger activity during the crisis evidenced in other states and I think that speaks to the prudent management of banks here in the state. Now it seems that a lot of the factors driving M&A are resulting from compliance costs and other regulatory issues. Do you think this is merely cyclical activity in the marketplace or indicative of a more endemic problem for smaller institutions? From our position we would argue that regulation has definitely played a significant factor.
RW: I think you’re right that the banks in Pennsylvania have been managed prudently, and we didn’t see the insolvency issues that beset banking communities in many other states. As you know, the saying goes Pennsylvania has never grown quite as high with the economy but we’ve never sunk quite as low. In bad times we’re looked at as a fairly steady state. That said, I think the merger activity is a very complex arena and a lot of factors are at play.
One of the primary factors is capital always wants to move. There are always people who think that they can get a better yield out of whatever transaction they’re engaged in, and this attitude drives a lot of mergers and acquisitions in a way not previously experienced. We’ve seen this phenomenon from private equity and from public offerings. Wall Street has become mainstream across America and now drives a lot of M&A activity on local and regional levels.
I also believe that M&A activity is subject to what I call “a bit of a pendulum.” We go through these cycles where suddenly “bigger is better” and then there’s divestment and then just as quickly there’s a rush toward smaller companies that offer a personal touch and that becomes more in vogue.
In terms of the fundamental viability of the banks in Pennsylvania, on the one hand you have the millennials who theoretically don’t want houses, but now we’re learning that they do want houses but just later in life. Or we hear that young people don’t have an interest in banking relationships because they can just go on their phone. That may be the case now, when we’re talking about fairly simple transactions and services. That won’t always be the case when they’re looking for more complex financial products and services to help with important issues in their lives.
I think as long as banks keep pace and remain open-minded in developing new marketing towards emerging generations, they’ll be viable. They don’t have to invent all of the new products but they should be making sure they provide an appropriate number of products and services that are attractive on some level. If they stay on their game and work hard at it, and I don’t underestimate how hard it is to do it, then they will be successful.
ND: The Department has always been held in high esteem for its proactive approach to issues rather than acting in a reactive fashion. What are some of the challenges you see facing the Department and the entities it regulates and oversees as you look out over the next few years?
RW: I think the most important thing is to be forward thinking, both as an industry and as a regulator. We need to both embrace change where it’s appropriate but also stick to what’s tried and true and know what the difference is. Banks see this rapidly and dramatically changing landscape now in financial services. The department is focused emphatically on observing, researching, and adapting to the changing landscape. The businesses that banks used to be in, investment-banking firms are now in, and the businesses that investment-banking firms used to be in, commercial banks are now in. There’s much more blurring of traditional lines of financial services products.
ND: You keep an extraordinary schedule, what do you do in your spare time?
RW: One cannot overstate or exaggerate how important it is to have non-business interests, because having fun and pursuing personal goals outside of work helps energize you for work. I enjoy spectator sports, listening to music, and cultural events such as art exhibits or sitting down with a good historical novel, which happens to be my favorite genre of literature.
I especially love spending time with my children because my children give me my best memories. After all, life is too short to pass over the chance to have great moments with my family, such as exploring new frontiers – for example, a family trip to Alaska – coaching my daughter’s soccer teams, or listening to my son’s defense of his thesis.
This exclusive interview can be found featured in the August 2015 issue of Transactions. Not a subscriber? Visit the Transactions page on this website or call PACB at 717-231-7447 to start receiving the magazine.