BankThink

The Federal Deposit Insurance Corp.'s inspector general said in a report Friday that there must be stronger coordination between agency divisions to carry out Dodd-Frank responsibilities dealing with the resolution of failed behemoths.

Modern giants are likely to behave at least as badly as their World War II counterparts.

Receiving Wide Coverage ...A Battle over Board Member Bonuses: A small bank holding company has set the stage for a battle over whether activist hedge funds should be allowed to pay preferred board members bonuses. More specifically, Institutional Shareholder Services (of "dethrone Jamie Dimon" fame) is calling on shareholders to vote out three Provident Financial Holdings directors after they unilaterally approved a bylaw barring investor-paid incentives. The vote is indicative of larger tensions that have resulted after several hedge funds tried to compensate certain directors. Law firm Wachtell, Lipton, Rosen & Katz recommended companies adopt bylaws prohibiting any third party from paying board members for their service. The activists argue that their bonuses link pay to performance and help companies attract better board members. But critics think the incentives are actually more like bribes and create decided conflicts of interest. Calmer heads suggest a compromise is in order: let hedge funds, for instance, compensate their directors for campaign expenses or allow directors' incentives based on the company's results, not the hedge funds'. Wall Street Journal, New York Times

Lenders’ choices today are stark: Make Qualified Mortgage loans and risk being sued under the disparate-impact doctrine; make non-QM loans and risk being sued under the ability-to-pay-doctrine; or sell their loans to Fannie Mae and Freddie Mac.

Former Chairman of the House Financial Services Committee Barney Frank called Friday for both stringent standards and lenient enforcement around the 2010 Dodd-Frank law's Volcker Rule.

The world of lending and loan servicing is undergoing huge transformation, with operational changes that will take time to play out.

Receiving Wide Coverage ...Co-op Bank Probe: The U.K. Treasury has launched a probe into Co-operative Bank that will examine how the bank was run (and regulated) in the years leading up to its current crisis. Scan readers will recall that the bank is in the middle of bailing itself out largely by ceding control to institutional investors. The Journal says the inquiry "may prove uncomfortable for Britain's politicians, particularly in the opposition Labour Party, some of whom championed Co-op Bank as a model of responsible lending following the financial crisis." The U.K.'s Prudential Regulation Authority and the Financial Conduct Authority are also mulling inquiries. Late last week, former Co-op chairman Paul Flowers was arrested as part of a drug investigation.

The PCI Security Standards Council's hacker-inspired data mapping plans are crucial to protecting super-interconnected enterprise systems.

A recap of the informed opinions (and the discussions they generated) this week.

At NCUA's recent board meeting it was announced that the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio had reached 1.31%, and as a result no premium would be charged to credit unions in 2013.