Chip Dickson discusses consumer credit with CNBC's Rick Santelli

August 20th, 2015

Rick Santelli: Good morning, Chip Dickson - my guest  this morning. Well listen...before we get into the meat of issues regarding the fed and normalization, briefly, why don’t you give me your take on what’s been going on in China - not only the most recent news about the foreign exchange, and maybe it’s because they’re trying to liberalize, timing’s questionable - but the entire package of China.

Chip Dickson: I think what’s going on in China is they’re having trouble making the transition they want to make and that is from an economy that really benefitted from all this fixed investment that really helped the global economy in the past decade to one that’s more consumption-driven. They’re not getting the same bang from their buck from the fixed investment, they’re not getting the right kind of return, there’s a lot of leverage that they’re applying to it and they need demand from somewhere else and I think that starts from lowering their currency, unfortunately. A lot of countries are trying that recipe.

Rick Santelli: Excellent, now when it comes to normalization of the Fed, it’s not a topic that hasn’t gotten due amount of airtime on CNBC and justifiably so, but there’s a take on this that you have that I really like. Basically, it goes something like this: You’ve said that normalization of monetary policy is going to require a shift in fiscal and regulatory policy in the United States to get better economic growth. Elaborate, and you’ve backed into my notion that the Fed should have a nickname: “The Enablers”. Maybe Congress didn’t do what they were supposed to, but by the Fed picking up the slack, I think they put them in a situation where they could continue to do nothing. Elaborate.

Chip Dickson: Well, I think what we have is an economy I call a “low velocity” economy; we’re just not growing that fast. There’s not a lot of real demand and even if you look at nominal growth it’s not much more than 4%. That’s really weak historically. Our participation rates are low, so we’re not creating enough opportunity. I frankly think the politicians have to focus more on creating opportunities. I think that’s not a high priority for most.  So...we’re not creating opportunity, our regulatory environment is really an austere one, and so is our fiscal policy one - and that’s as much on the tax side as it is on the expense side. We need to do things that focus on creating economic growth so we can create a lot more jobs, more demand, and get people a lot more opportunity.

Rick Santelli: See, what you say makes sense, Chip, because let’s look at everything objectively and take a step back. Because after a crisis crazy things always happen in what I call “overcompensation mode”. So after this crisis, boatloads of regulatory issues...I understand why. So maybe a good idea would be to keep it simple; create a threshold where many more mid-size, mid-cap to smaller businesses - right down to the family business - can kind of circumvent some of these more onerous regulations, especially some of the regional banks. Your thoughts?

Chip Dickson: Well, absolutely. This regulatory environment favors the large and not the smaller and mid-size guys, and the smaller and mid-size guys are where you create most of your jobs, so there needs to be a shift there. And the complexity and breadth of the regulations creates just another source of darkness that makes it harder to operate, so we need to do things that make it easier to create more businesses, to innovate and to have smaller companies succeed.