State Street Corp. chief executive Jay Hooley says he discovered something surprising during his recent business travels in Asia: budding optimism about the US economy.
Hooley said central bankers, pension officials, and others he spoke with from Tokyo to Beijing to Seoul told him they believe the United States will eventually get past its current political gridlock and tackle some of the country’s major economic challenges.
“Distance has the benefit of lending perspective,’’ the head of the Boston-based financial services giant said in an interview. “It’s also long-term vs. short-term [thinking] - America will get on its feet and be back.’’
By contrast, Asian financial leaders are pessimistic about the prospects for economic improvements in other parts of the world, he said. Europe’s debt problems loom large on the global stage, Hooley said, and there are worries about China’s growth rate and the possibility of an Iranian oil crisis.
But he is not convinced that Asian optimism about the US economy is entirely warranted - at least not yet - based on a recent trip he made to Washington. Hooley said he found that both major political parties are more entrenched in their positions than ever, with most officials focused more on the upcoming presidential election than long-term fiscal issues. He questioned lawmakers’ ability to compromise - especially on new regulations aimed at keeping the financial industry in check.
Too much regulation, Hooley said, could affect the ability of the United States to do business globally, and potentially hurt some of State Street’s clients, such as hedge funds.
“The amount of change being contemplated is massive and pervasive,’’ he said. “If we overcorrect this, we could make US corporations less competitive.’’
Hooley acknowledged that since the financial crisis of four years ago, politicians and regulators have been under pressure to create new rules that put banks and other financial institutions under more scrutiny. But he is not convinced that tougher regulations alone would have been enough to head off something like the subprime mortgage debacle. Companies also need to self-regulate, he said. For example, Hooley said, State Street changed some of its practices after losing money in the subprime mortgage debacle because it made good business sense to become more prudent about such lending.
“Risk management is broadly something I feel a lot better about today than I would have five years ago,’’ he said.Beth Healy can be reached at email@example.com.