Time to Get “Back to Basics”

Tony Fell Gives Keynote at  Toronto Board of Trade’s 121st Annual Dinner

Tony Fell says he keeps a three-foot model of the Titanic in his office – “a constant reminder that bad things can happen.”

Given the global economic downturn, we hardly need that reminder.  In his keynote address at the Toronto Board of Trade’s 121st Annual Dinner on Monday, January 26, Fell, past Chairman and CEO of RBC Capital Markets, was blunt about the reasons for the financial crisis.

There’s plenty of blame to go around, he told the crowd of 1,400. Lax regulators; inadequate corporate governance; a herd mentality in the financial industry that created excessive risk-taking; increasingly complex and highly leveraged financial products; credit rating agencies that operate in a model with a built-in conflict of interest; and poor public policy.

Fell, whose career started 50 years ago in the research department at Dominion Securities, has been around long enough to know that booms and busts, and financial crises too, go in cycles.  Today’s crisis is different in its sheer scale and global nature.  “This is all unchartered waters,” he said.

The stabilization of the banking business in the U.S. and U.K. is the first step to recovery.  Fell noted the need to get “back to basics.”  For any bank, Canada’s included, that means running a more conservative business, reining in growth expectations, reducing leverage, having much less financial engineering and innovation, making fewer “grandstanding” acquisitions, and focusing more on the clients’ business.

We’re also facing a multi-year period of consumer retrenchment, said Fell.  Saving more and spending less might prolong the recovery, “but it’s the right thing to do.”

When will recovery occur?  There’s no crystal ball.  But this won’t be the financial crisis to end all crises, said Fell, “not a chance.”  In fact, 20 years from now, the current financial crisis will likely be forgotten, he says, leaving another generation to learn from our mistakes. Or make the same ones again.

Download Mr. Fell's keynote here and watch for more complete coverage of Tony Fell’s keynote and the 121st Annual Dinner in the upcoming issue of On Board magazine.

View photos of the event.