Emily Flitter

Though the Obama administration has attempted to assure lawmakers that its proposed new consumer protection agency would focus equally on banks and nonbank lenders, there are growing doubts about whether that will really happen.

A quick link of interest for BankThink readers: Simon Johnson pointed out on The Baseline Scenario yesterday just how tiny Citigroup Chairman Dick Parsons' financial interest is in the company he chairs.

The banking industry has voiced a range of objections to the proposed Consumer Financial Products Agency, the new consumer protection regulator the Obama administration wants to establish. Even regulators say putting consumer protection in a separate agency would be a step in the wrong direction. But an analysis of fair lending law enforcement among bank regulators by the General Accountability Office concludes the present system isn't working well at all. The GAO's criticism of the current regulatory structure is explicit, but it's worth pondering whether there's implicit support for something like the CFPA woven into the report as well.

The Treasury Department set its sights on tough regulation for over-the-counter derivatives with the release Tuesday of legislative language that is stricter than other recent proposals.

The regulatory restructuring debate has included its fair share of nostalgia for the days when investment and commercial banking were strictly separated—the days before lawmakers took a sledgehammer to the Glass-Steagall Act. But a new wall going up between the two may diminish the need for wistful reflection. Investment and commercial banks are sinking into an image war, with the winner’s prize going to the side that ends up less reviled by the public and lawmakers.

If it indeed enjoys blood, the phantom squid plaguing the financial system must be feasting right now. Members of the financial media are tearing each other up over whether Goldman Sachs is good or evil, and the fight is providing an increasingly effective counterpoint to the mounting pile of stories about Goldman’s sickeningly large returns. The bank whose image problem stems from making too much money is getting a media boost that’s coming, ironically, free of charge.

There's evidence in today's Financial Times that idealists live on — on Capitol Hill. Sen. Mark Warner, D-Va., published an op-ed in the paper arguing for the creation of a single financial regulator. Released as the regulatory restructuring hubbub in Washington comes to a temporary halt and the last remaining lawmakers depart the District for their August recesses, Warner's piece demonstrates how very little progress policymakers have achieved in their attempts to fix a broken system.

WASHINGTON — Treasury Department officials acknowledged Tuesday that new data on loan modifications showed that many servicers are underperforming in trying to carry out the Obama administration's foreclosure prevention plan, but they appeared to have little leeway to force improvements.

The Federal Deposit Insurance Corp. reiterated Monday that banks should look closely at potential losses on second mortgages and other kinds of home equity loans that could come under increased pressure as the foreclosure crisis continues.

Hearing (or no hearing) on executive compensation creates a stir; Tim Geithner can't sell his house either; Fed selects Esther George for temporary position.

This will be the Senate’s last week in session before the August recess; the House has already wrapped up its proceedings. Lawmakers will be ending an ambitious push on regulatory restructuring (not to mention healthcare reform) with less than they expected to accomplish, and that means summer homework. They’ll have plenty to chew on during the break. For one thing, the Treasury Department is insisting it will finally release legislative language on regulating derivatives this week so that members of Congress can review it over recess. There’s no set date and time for the announcement. Other activity on the Hill this week won’t be quite what was in July, but the halls of Congress won’t be completely silent yet.

It’s a pretty dense document, but it holds some important implications: Two economists have released findings showing a connection between better stock price performance during the financial crisis and higher capital requirements for banks. But the question remains: What measure of capital should reign supreme: Tier 1 or tangible common equity? The study’s method and results produce a quandary.

Legislation to regulate derivatives appeared to be on the fast track Thursday as two House committee chairman said they were close to a final agreement on a bill that would significantly curb trading of credit-default swaps and provide strong incentives for banks to bring contracts on to regulated exchanges.

A member of the government's watchdog agency on Wednesday said the Small Business Administration should rethink elements of its program to delegate decision-making power to lenders.

It was a comparison that seemed at first too histrionic to enjoy much of a shelf life: Rolling Stone reporter Matt Taibbi called Goldman Sachs a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Funny, but not necessarily something to float in the mainstream financial media.

The Treasury Department is trying to hammer out legal details for a scheme to use Troubled Asset Relief Program funds to buy SBA-backed loans.

Members of the House Small Business Committee are expected to propose legislation soon to overhaul an array of Small Business Administration programs, including the agency's 7(a) and 504 lending programs.

Banks that received and returned government bailout funds have been chafing against the prices they have to pay to fully extricate themselves from government influence ...

After nearly three years of reforms that reduced private lenders' role in government-guaranteed student lending, a House panel is expected to pass a bill today that would effectively eliminate their role.