BankThink

Federal Reserve Board Chairman Ben Bernanke said regulators have made progress over the last year, but more reforms need to be made in order to keep the financial system safe.

As more consumers pile into Bitcoin and the currency's market capitalization increases, any handful of trades will not have as strong an effect on the currency’s price swings.

Receiving Wide Coverage ...The Taper: The Federal Reserve announced it will begin cutting back on bond purchases next month, sooner than many economists expected. While this is generally viewed as a vote of confidence in the economy by departing Chairman Ben Bernanke, the central bank cautioned it would keep short-term rates near zero until "well past" when unemployment falls below 6.5% (it was 7% last month). The decision to "taper" asset purchases is one less thing for Janet Yellen to worry about when she succeeds Bernanke next month, but she'll still have a full plate, according to a sidebar in the Journal (which focuses exclusively on monetary policy issues and doesn't mention bank regulation, which presents a whole other set of challenges). In an op-ed in the FT, economics professor Barry Eichengreen calls the taper announcement a "non-event": "These changes are inconsequential by the standards of the dramatic and unprecedented developments in monetary policy that we have seen since 2008; $10bn of [reductions in] monthly securities purchases are a drop in the bucket for a central bank with a $4tn balance sheet. … It is a way for the Fed to signal to its detractors that it hears their criticisms of its unconventional monetary policies, and that it shares their desire to return to business as usual. … But, at the same time, the central bank has also signalled that it is not prepared to return to normal monetary policy until a normal economy has returned."

Why banks should strive to bridge the gap between audit teams and business lines with better information sharing, high-powered data analytics and business risk assessments.

If compliance burden sends traders packing for Russia, Brazil or Mexico, the U.S. would lose not only investment capital but also the ability to monitor algorithmic trading for manipulative practices.

What we have seen from the bank regulatory agencies is an unsustainable proliferation of rules. Big banks are taking on water to keep up, while community banks are being swamped.

Receiving Wide Coverage ...JPM Lawsuits, Etc.: JPMorgan Chase sued the Federal Deposit Insurance Corp. on Tuesday for over $1 billion, alleging that the regulator did not honor its obligation to cover legal claims against Washington Mutual. JPM, of course, acquired WaMu in a hastily drawn-up deal at the height of the financial crisis. (We're saying "hastily drawn-up" here, since the agreement apparently lacks specifics over who exactly is liable for what.) JPM is not seeking restitution for the landmark $13 billion mortgage settlement it reached with the Justice Department in November, because, you know, as part of that settlement, it agreed not to. The bank is, however, looking for the FDIC receivership to cover damages from "24 suits brought by a variety of investors, for which it said it should not have to take responsibility," reports the FT. The bank includes settlements paid out to Fannie Mae and Freddie Mac over bad loans they purchased from WaMu. Spokespersons from both sides are declining to comment. The Journal notes that JPM's "confrontation with one regulator comes as the bank faces a host of other legal headaches and investigations into everything from its overseas hiring practices to its trading operations." In fact, just yesterday, the bank was sued by Mississippi's attorney general over its credit card debt collection practices. And, in case you haven't had your fill of JPM news this morning, a new report, per the Journal, has found JPM "is the least likely among 15 big U.S. commercial banks to return large amounts of excess capital to shareholders over the next three years."

Regulatory officials have been optimistic that they would finish critical aspects of the Dodd-Frank Act by the yearend, but as the year comes to a close, banking agencies are likely to miss the target.

Online bill pay technology developed with small business users in mind is lacking. But new offerings could provide companies with greater functionality, while also helping financial institutions reduce risk and build stronger customer relationships.

Branches are outdated, expensive and unwieldy. For years, bankers have postponed dealing with the dead weight. Now it looks like they’re starting to make the necessary hard decisions. Finally.