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BirdsEye View

 This article was written by my friend Sean Ryan for SNL Financial, where he is a blogger.  I agree with every word he wrote, especially about inducting Bob Wilmers to the bankers' Hall of Fame.

M&T Bank Corp. Chairman and CEO Bob Wilmers' letter to shareholders is out, and it makes for distressing reading.

It reinforces the sad truth that under torture everybody breaks, eventually.

Just read this excerpt from this most recent letter to shareholders:

"I understand that I am a criminal... I know the nature of my sins, and I now submit to you o do whatever you tell me to say, tape, or write."

Wait, sorry. That was an excerpt from the bogus confessions extracted from Adm. James Stockdale by the North Vietnamese during his captivity at Hoa Lo Prison.

If you have read Wilmers' past letters to shareholders, and are familiar with M&T's recent regulatory travails, then I think you'll find my momentary confusion quite understandable. 

In his 2010 letter to shareholders, Wilmers' quite reasonably opined that:

"In all the current discussion about increased regulatory oversight regarding the prevention of future crises, too little attention has been paid to downstream effects, namely the economic burden borne by traditional commercial banks like M&T, and in turn the customers we serve. In this context, readers of this Message know that I have, for some time, been concerned about the extent of banking regulation and the cost of complying with it."  

In his 2011 letter, under the heading "Fear-driven rulemaking and its burden," Wilmers wrote:

"A common feature of many of these new directives is a higher order of complexity than had heretofore been typical, particularly for Main Street banks like M&T which do not engage in excessive risk-taking and rely on fundamental banking services as their primary source of income. Utilization of these opaque and intricate methods as a means to prevent a crisis is at best questionable."

 He concludes the section with even more direct criticism:

"Indeed, one has the sense that little or no thought has been given to the cumulative effect of new directives, both on costs and operations. One wishes, thus far in vain, for a clear, complete, simple and straightforward regulatory regime in which both consumers and banks know what to expect and could proceed accordingly, at reasonable expense."

In the 2012 letter, Wilmers went on at even greater length, and was unequivocal:

"One wishes that those charged with understanding and limiting such risk would consider, too, the effect of their individual actions, not in isolation, but in the totality of their impact on the economy. Such changes were surely not in the plans of those who drafted Dodd-Frank, or in the minds of those designing its regulations -or for that matter of examiners and overseers at the many layers of government. Simply put, they are inhibiting, not helping, the economic recovery."

Yet in this year's letter, with another full year of regulators making clear that they would prefer to let the Hudson City transaction twist in the wind, banking system safety and soundness be damned, until they are given a satisfactory show of submission, Wilmers makes just such a display:

''This changed environment calls on regulators to view plans for expansion, such as those which we have proposed, in a different light. Rest assured, we are very cognizant of our obligations in that regard."

And:

"[R]egulators would clearly be remiss not to seek, aggressively , a heightened level of scrutiny on the part of financial institutions which could, absent such vigilance, help make wrongdoing possible . ... Though we had hlstorlcally maintained a program which monitored suspicious financial transactions that could have been linked to illegal activities, in hindsight , we could have done a better job of keeping pace with regulatory expectations and advances in technology in this area."

Bob Wilmers is an honorable man, and one of the best bankers of his generation. If there were a Bank CEO Hall of Fame, he would have been voted in unanimously. In light of which, a regulatory apparatus genuinely focused on de-risking the U.S. banking system would have welcomed the prospect of Wilmers overseeing a larger share of the system's assets, and expeditiously approved the Hudson City deal, while seeking concurrent remediation of any AML problems, real or imagined.

Wilat we have instead is the spectacle of a free-born citizen of the Republic put up to a public display of submission to government clerks. Tar and feathers seem very much in order.

Admiral Stockdale came to understand his captors "are not ideologues so much as they are just ambitious bureaucrats."

The sort of ambitious bureaucrats who can make a man who has spent years offering informed criticism of regulatory excess to suddenly put his name to text such as "Under these circumstances, the need that regulators feel to ensure that every 'i' is dotted and every 't' is crossed, and that no quarter is seen to be given to the banks, is quite understandable."

But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.