Slideshow

'Can anyone say recipe for disaster?': Comments of the week

November 29, 2018 9:30 PM

Readers weigh in on consumers taking on more debt, President Trump's criticism of the Federal Reserve and Zions CEO Harris Simmons as Banker of the Year:

loan application in business folder showing financial investment concept

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On banks offering more personal loans, which could lead to a wave of defaults in the next economic downturn:

"In the olden days, lenders made loans that were contingent on paying down credit card and other consumer debt. Now, we don't have time for that nonsense and we'll let the consumers do what's best for their households, even when we know they're using the credit to fuel additional consumption. On Black Friday, almost 3 of 10 shoppers are going into the holiday season still carrying debt from last year's festivities. Can anyone say recipe for disaster?"

Related: Banks flock to personal lending, but at what risk?

Financial reports analysis

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On the growing concerns across the banking industry regarding the upcoming implementation of the Current Expected Credit Loss accounting standard:

"For the smallest financial institutions CECL doesn't have to be a crisis, but it needs to be understood and planned for. Implemented properly it does give the institution the opportunity to be forward looking with their reserves -while the current regime does not. It appears that the biggest problem the industry has in dealing with CECL is the widespread belief that it may "go away", be delayed or so significantly changed that preparing now isn't sensible. Preparation should start now."

Related: As CECL anxiety mounts, FASB is in no rush to consider alternative

Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB), speaks during a Senate Banking, Housing & Urban Affairs Committee hearing in Washington, D.C., U.S., on Thursday, April 12, 2018. Senator Elizabeth Warren clashed with Mulvaney, accusing the former GOP congressman of putting politics ahead of protecting consumers. Photographer: Toya Sarno Jordan/Bloomberg

Toya Jordan Sarno/Bloomberg

On a report by Senate Democrats criticizing Mick Mulvaney's tenure as acting director of the Consumer Financial Protection Bureau:

"This is simply confirmation that Director Mulvaney is doing an exceptional job."

Related: Senate Banking’s top Dem issues scathing assessment of CFPB’s Mulvaney

Jerome Powell, chairman of the U.S. Federal Reserve, delivers a speech at a conference to celebrate the 350th anniversary of the Riksbank in Stockholm, Sweden, on Friday, May 25, 2018. The central bank has embarked on an historic monetary easing program over the past years to bring back inflation, using a weaker krona to help achieve its goal. Photographer: Mikael Sjoberg/Bloomberg

Mikael Sjoberg/Bloomberg

On President Trump's continued attacks on Federal Reserve Chair Jerome Powell for raising interest rates:

"Powell is in a tough spot. He was handed a Fed that had been purchasing trillions in GSE MBS thereby artificially propping up the housing market and an economy with rates set dangerously low so much so that there is little room to cut rates when the next downturn occurs. However, a rip the Band-Aid off approach (of raising rates and stopping all new MBS purchases) in a hostile congressional environment may prove to be a pill too bitter to swallow right now. Shock therapy may kill the patient."

Related: Trump says he's 'not even a little bit happy' with Fed's Powell

Fed Chair-designate Jerome Powell with President Trump

Jerome Powell, governor of the U.S. Federal Reserve and President Donald Trump's nominee as chairman of the Federal Reserve, speaks as Trump, left, listens during a nomination announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, Nov. 2, 2017. If approved by the Senate, the 64-year-old former Carlyle Group LP managing director and ex-Treasury undersecretary would succeed Fed Chair Janet Yellen. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

More reaction to Trump's criticism of Powell:
"My support chips are all with Chairman Powell. The Presidents comments are disturbing, disrespectful and just plain destructive. It’s getting to the point where the Presidents targeted remarks like this are a badge of honor to the recipient. It shows they are independent thinkers and independent actors."

Related: Trump can't fire Jerome Powell. Will he try anyway?

A Fannie Mae logo is pictured outside their headquarters in Washington, DC, on Wednesday, December 29, 2004. Fannie Mae, the biggest provider of money for the U.S. mortgage industry, will sell as much as $4 billion of preferred stock after its regulator said it broke accounting rules and is ``significantly undercapitalized.'' Photographer: Jay Mallin / Bloomberg News

Jay Mallin/Bloomberg News

On comments received in response to a risk-based capital proposal for Fannie Mae and Freddie Mac:

"Perhaps the equity discussion should start with a close look at the earnings and income games that Fannie Mae, in particular, plays. The GSE's continue to play income and earnings forecast modeling games with the same outcome - an inevitable multi-billion dollar reversal of previous loan loss reserves. Stop robbing the pillars or the mine will collapse!"

Related: GSE capital rule is hypothetical, but FHFA gets earful anyway

On Harris Simmons, Zions' chief executive, being honored as "Banker of the Year" by American Banker:

"I'm a former regulator who dealt with Mr. Simmons and his staff. I always felt I was dealing with honorable people. Not that other bankers weren't honorable, but Mr. Simmons seemed to be especially so. With this and his other attributes, this accolade is well deserved. Examiners make value judgments about the bankers all the time. It's what tells them what they can trust when a banker tells them something. Mr. Simmons never did anything that made me feel that trust was misplaced."

Related: Banker of the Year: Zions' Harris Simmons

Another reader weighs in on Zions' Harris winning American Banker's "Banker of the Year" award:

"It’s rare when the smartest guy in the room is also the most humble and generous. This gives him the latitude to “call it like he sees it.” This recognition is 100% deserved. Congratulations Harris!"

Related: Banker of the Year: Zions' Harris Simmons

blue digital binary data on computer screen. Close-up shallow DOF

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On a new academic study raising questions about whether algorithms in mortgage lending eliminate bias:

"How totally uninformed. Academia's typical head in the sand conclusion. Any automated underwriting system that does not consider income (verifications of employment), debt burden and age is worthless. The author's assertion that the two GSEs look at only two credit variables: LTV ratio and FICO score is rubbish. Is it so difficult to web search for The Selling guide, Desktop Underwriter or Loan Prospector Documentation Matrix? Fire your Teaching Assistant, professor!"

Related: Weren’t algorithms supposed to make digital mortgages colorblind?