'Banks as Utilities Are Inevitable': Comments of the Week
June 19, 2015 7:30 AM
American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and from our social media platforms.
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On banks' fear that nimble startups will scoop up the most profitable, customer-facing business lines and leave traditional financial institutions stuck with the dregs:
"It is clear that taxpayers not just regulators want deposit-taking institutions to leave and stay out of risky businesses. After all, it's the taxpayers that have to bail them out. This environment leaves banks with slim pickings in the human capital market. This, in turn, makes it even harder for banks to innovate when their cultures are already averse to change. Banks as utilities, I am afraid, is, for the most part, inevitable."
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On the implications of financial services "unbundling" (via <a href="https://twitter.com/search?q=%40ClaytonACollins%20%40AmerBanker&src=typd" target="_blank">Twitter</a>):
"Unbundling trend is a bane for money center banks but feather in cap for regional and commercial banks serving later adopter retail clients."
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Advice for banks considering whether fintech startups are potential partners or competitors (via <a href="https://twitter.com/search?q=%40daryl_bateman%20%40amerbanker&src=typd" target="_blank">Twitter</a>):
"Keep friends close, enemies closer and don't lose sight of your customer!"
Pictured: Al Pacino
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On the news that former Congressman and Dodd-Frank co-author Barney Frank will join the board of Signature Bank in New York:
"Good choice; Barney Frank was the Sergeant Schultz of the banking meltdown."
Pictured: Bob Crane as Colonel Hogan (left) and John Banner as Sergeant Schultz from the television program Hogan's Heroes
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On the implications of Discover Financial Services' decision to get out of the residential mortgage business:
"It didn't take them long to realize that expertise in credit cards doesn't necessarily translate to other lending businesses. I'll wager that many other new entrants will discover that lending isn't as easy as they thought, particularly when we go through a full credit cycle."
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On an op-ed by Rep. Maxine Waters criticizing the Justice Department for neglecting to prosecute any bankers allegedly involved in the rate-rigging conspiracy:
"It is interesting that the business was penalized rather than the people who designed the crime. That only penalized shareholders and taxpayers, who were innocent. The tragedy is that, if you couldn't buy your way out, you were prosecuted."
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On the argument that since the Federal Deposit Insurance Corp. typically declines to impose losses on failed banks' uninsured deposits, there's no need for the agency to establish a daily record-keeping requirement for banks:
"'Since 2008, seldom have uninsured deposits suffered any loss in banks of any size that have failed.' Seldom is good, and occasional losses are a good thing to teach institutional investors to watch the solvency of where they invest. Otherwise, we get an FDIC that is more expensive."
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On whether the practice of credit scoring puts low-income and minority groups at an unjust disadvantage:
"A credit score is simply the output of an algorithm that attempts to predict a borrower's propensity to pay. Given the extreme lengths that lenders must go to in order to prove that an algorithm has no intentional or unintentional disparate impact, I struggle to see the injustices in an algorithm that lets banks better predict and price risk."
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On a report that a growing number of Consumer Financial Protection Bureau employees are suing the agency for discrimination based on race and gender:
"Do as I say, not as I do."
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On whether Barclays erred in mounting a dead-serious response to a humorous (if misguided) email from a junior analyst to summer interns:
"Banks take their recruiting very seriously, and over the past few years have been particularly sensitive about reputation concerns. With so much at stake, [the] suggestion to go with the joke would essentially force the bank to bend its recruiting and PR efforts to the tone of any junior analyst who decides to potentially embarrass his employer with a caustic and snarky e-mail to a group of new recruits."
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On the roots of banks' straight-faced public relations strategy:
"Bankers work constantly to make their highly-regulated bureaucracies seem user-friendly. The result is a culture of pretense. They want sorely to make both customers and regulators [think] that they are infallible. Sense of humor in a bank? They were surgically removed in the recruiting and training process."
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On the CFPB delaying a mortgage disclosure rule due to an unspecified "administrative error" (via <a href="http://www.nationalmortgagenews.com/news/regulation/cfpb-delays-mortgage-disclosures-due-to-administrative-error-1053797-1.html" target="_blank"><em>National Mortgage News</em></a>):
"Why does the CFPB get to make an 'administrative error,' then wave a magic wand with impunity? If we [lenders] make an 'administrative error' we are subject to 'cost to cure,' fines, imprisonment, beheading
"
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