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"The 2012 elections will usher in a government that is
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If Isaac's idea of a government "laser-focused on economic growth" meant a victory for Mitt Romney (whom he supported), it didn't happen. President Obama won re-election.
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"The U.S. will end its love affair with lowest common denominator international regulatory accords. A
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FDIC Vice Chairman Thomas Hoenig (pictured) came out in favor of the U.S. scrapping Basel III, and implementation in this country was indefinitely delayed. But the fight is far from over; regulators remain committed to finding a way to implement Basel III.
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"Megabanks will
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Asset sizes of the major banks remained virtually flat. The year saw some significant business line pullbacks, from Bank of America's vastly reduced presence in the mortgage business and the sale of its overseas wealth management unit to Citigroup's continued winnowing of Citi Holdings.
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"Benjamin Lawsky will
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Indeed, Lawsky (pictured) made waves and ruffled feathers with his money laundering case against Standard Chartered, which resulted in the U.K. bank paying hundreds of millions in fines.
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"The Durbin Amendment to Dodd-Frank will be
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Wrong. Despite bankers' concerns about the harm the Durbin amendment will do to industry revenues, there was no serious legislative effort — by Dick Durbin (pictured) or anyone else — to mitigate its impact.
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"The Durbin Interchange Amendment
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As noted, no Durbin repeal.
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"A much more workable and somewhat
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This did not happen. The proposal issued last year garnered more than 18,000 public comments and was widely derided as too complicated. Regulators blew past a July 2012 completion date mandated under the Dodd-Frank Act, and it remains unclear when the Volcker Rule will be finalized.
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"Consumer compliance issues will continue to emerge as an area of intense focus from a regulatory perspective with some
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Indeed, the CFPB showed its teeth with enforcement actions against Discover, Capital One and even the reputedly customer-focused American Express. There is little doubt that consumer compliance issues are "an area of intense focus."
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"In 2012, a new issue will be added to the already-formidable mix of industry challenges: the
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This hasn't happened but regulators are clearly toying with the idea. FDIC Vice Chairman Tom Hoenig has repeatedly called for forcing big banks to spin off their riskier activities. Even Fed Gov. Daniel Tarullo (pictured), who has not gone as far as Hoenig, has suggested that some kind of cap on bank size is desirable.
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"Those elected officials who ignored the warning signs during the last decade will
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No notable mea culpas from politicians. Fannie Mae, Freddie Mac and the Federal Housing Administration, meanwhile, still dominate the mortgage market, and it's unclear whether Congress will even try to address housing finance reform in 2013.
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"
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Home prices began to tick up midyear, but remain far from their peak. Home construction accelerated in 2012, too.
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"
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Vikram Pandit (pictured) was ousted as CEO of Citigroup.
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"Shareholder activism, not regulators, will
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Shareholder activism arguably played a role in the management change at Citi — an embarrassing defeat in the annual say-on-pay vote gave the board ammunition to force Pandit out. No major restructurings, though.
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"
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The FSB has played a strong role in international regulation, including in the selection of JPMorgan and Citigroup as the two U.S. firms to face the highest capital surcharge for systemically important institutions.
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"In 2012, Angela Merkel, with help from some bit players, will
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The Continent's crisis was taken off a boil by the European Central Bank's
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"On the regulatory and risk management front, the emphasis will
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Revenue growth was tough to achieve. The obvious solution was to slash staff, which the industry did. Banks continued to woo affluent customers, but didn't ditch the "bad" ones: It turns out many overestimated how badly revenues would be hurt by the Durbin debit interchange rule. Revenue is roaring back, as volume makes up for reduced margins.
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"Ongoing economic weakness will manifest itself in another large nonbank blowup due to poor risk management practices." — Clifford Rossi, University of Maryland
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The brokerage firm Knight Capital nearly failed when to a botched software upgrade resulted in the firm making unintended trades.
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"JPMorgan Chase Chief Executive Jamie Dimon will have the misfortune of
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Right executive, wrong mess. Dimon (pictured) spent much of the year on the defensive after misjudging the amount of trouble that could fit in a teapot. The "London Whale" debacle took a modest bite out of JPMorgan's profits and a larger one out of Dimon's reputation as a savvy risk manager. The MF Global story faded from view as investigations bogged down.
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"2012 will be the year the
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The focus this year on mobile payments has been at the point of sale instead of on person-to-person payments. Google Wallet fine-tuned its system to allow more banks to link their cards; the Isis wallet finally launched its tests in Salt Lake City and Austin, Texas; PayPal inked a deal with Discover to allow its digital wallet to work with any merchant that accepts Discover.
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"In yet a further demonstration of how out of step financial services firms are with their customers, there will be
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Mobile gained momentum but is a long way from transforming consumer banking. Even the most enthusiastic early adopters of systems like the
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"Expect an
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The CFPB opened an
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"The Consumer Financial Protection Bureau will develop, and the industry will adopt, a
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The CFPB
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"As a result of lawsuits filed by the cities of Baltimore and Memphis, Wells Fargo Bank will
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Wells Fargo is no model of best practices in the
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"The Financial Stability Oversight Council will
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FSOC is still focused on identifying systemically important nonbanks. It has taken no moves toward breaking up or restructuring the nation's largest banks.
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