Embracing TBTF: Becoming too big to fail has its advantages, according to banking consultant J.V. Rizzi. He argues that more regional lenders are going to follow the lead of banks like CIT Group and plan mergers that push them over the $50 billion-asset threshold that qualifies banks as systemically important financial institutions. The reason? The benefits of the implicit government subsidy associated with being TBTF can outweigh the drawbacks of taking on additional regulatory requirements, according to Rizzi. Some readers say this logic doesn't hold water. "I do hear of banks approaching the $50 billion threshold considering bold leaps across it, but not because they are eager to get there, but rather to be sure that there is enough business to be able to support the added burden," writes the American Bankers Association's Wayne Abernathy. "Today, with all the new regulations and Federal Reserve Board discretion to intervene into a bank's operating decisions, not to mention risks from [Department of Justice and Consumer Financial Protection Bureau] litigation that is mostly politically motivated, it is hard to understand why anyone would want to be a banker, let alone a SIFI," writes American Enterprise Institute fellow Paul Kupiec.
Lean In: Achieving gender equality in the workplace isn't just the right thing to do it's also good business, according to MUFG Union Bank president and chief executive Katsumi Hatao. "In today's marketplace, an exclusively male team meeting with a company headed by a woman can't expect to win her banking business," he writes. "Corporations and in my case, the bank must reflect modern society." That sentiment is echoed by Financial Women's Association president Maureen Adolf, who encourages women to ignore the much-criticized advice of chief executive Satya Nadella and go ahead and ask for off-cycle raises and promotions. "If we ever hope to close the pay gap and see women at the head of more than 5% of Fortune 500 companies, women need to ask for what they believe they deserve, and companies must change ingrained attitudes toward those who do so," she writes.
Also on the blog: Banks should seize the chance to promote financial inclusion in the developing world via mobile money products, writes Rodger Voorhies, director of the Financial Services for the Poor initiative at the Bill & Melinda Gates Foundation. He argues that the low-cost, high-volume digital payment models popular in Kenya and Bangladesh suggest that it's possible for banks to profitably serve the poor.
People who live in metropolitan areas with high levels of foreclosures and concentrated poverty are more likely to have high blood pressure, according to research by Antwan Jones and Gregory Squires, both faculty members at the sociology department of George Washington University. They recommend that health care and financial service providers collaborate to address these intersecting social problems. Meanwhile, the American Enterprise Institute's Paul Kupiec and Stephen Oliner make the case for a mortgage product they say could help prevent another housing bust. The Wealth Building Home Loan, a 15-year, fixed-rate mortgage developed by the neo-conservative think tank, is designed to help borrowers make faster inroads into loan principal. "Widespread adoption of the WBHL would sharply lower the odds of another financial crisis," the authors write. "Because these loans amortize quickly, instances of negative equity would be unusual, even in areas with volatile house prices."
Private student loan servicers and lenders should help struggling borrowers by offering workout plans, according to Maura Dundon of the Center for Responsible Lending. Former banking attorney Eric Fischer recommends that bank boards develop a more rigorous approach to annual self-assessments in order to bolster corporate governance. Trunomi chief Stuart Lacey suggests that banks steel themselves for the day when opt-in spam laws and other privacy protections restrict the flow of customer data. And Pace University professor James Gabberty urges banks to make information security improvements before they're hit with cyberattacks. His recommended measures include instituting mandatory password expirations for internal computer systems and tokenizing customer transactions.
