ODE Induction Talk: Mr. James Hance
By Lauren Morse '07
On March 14, 2006, 14 economics students were admitted to Omicron Delta Epsilon, Davidson College’s honor society for economics. This year’s initiation banquet featured a talk given by former Vice-Chairman of the Bank of America Corporation, James H. Hance. Mr. Hance holds a B.A. in economics from Westminster College, and MBA from Washington University in St. Louis, and is also a CPA. In his talk, he explored the evolution of the financial services industry that he watched take place throughout his career.
Mr. Hance began by reflecting on his own college experience, specifically how he questioned what he would ever do with a degree in economics. As many of us ask the very same question, it was reassuring to hear that his college experience prepared him for his career and that principles from his economic and accounting classes resurface on a daily basis.
When Mr. Hance was in college, economics was not nearly as pervasive as in the “just-in-time economy” we live in today. He credits instant information and the dynamic nature of the economy for the increasing focus and awareness of economic trends and events. In addition to instant information, he spoke about the surging productivity and strength of businesses. While catastrophic events are certainly a possibility in today’s economy, Mr. Hance believes the economy is strong enough to manage them.
In his timeline approach to discussing the financial services industry, Mr. Hance began by describing the highly regulated, highly inefficient banking system in existence at the beginning of his career. Specifically, interstate banking regulations inhibited banks from expanding and taking advantage of other markets. Banks had excess capacity, engaged in significant risk, and provided no investment management services for clients.
It took until 1994 for interstate banking regulation to be repealed and for complete nationwide banking to come into effect. Now banks are completely free to merge with other banks located anywhere in the nation. The increased scale of banking institutions has significantly reduced excess capacity, and now U.S. banks are able to compete in the international market.
Mr. Hance discussed the recent move towards combined investment and commercial banks. He believes that bringing together investment banking and commercial banking in firms such as Bank of America and Wachovia creates a synergy which drastically increases productivity and financial success. The move towards integrating commercial banking with private corporations, however, is still hindered by legal regulation.
Mr. Hance’s perspectives on the financial services industry was extremely interesting and relevant, especially considering many of the students will be involved in some area of finance after they graduate. We are indebted to Mr. Hance for his time and wish him luck with his new grandchild!