BankThink

Receiving Wide Coverage ...Sued Over Libor: Fannie Mae is suing nine banks for an estimated $800 million in losses it incurred as a result of alleged manipulation of benchmark interest rates, including Libor. Defendants include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan Chase, Rabobank, Royal Bank of Scotland and UBS. Fannie is also suing the British Bankers' Association. Fannie's counterpart, Freddie Mac, filed a similar lawsuit against more than a dozen banks in March. The Journal dubs Fannie's suit "the latest legal salvo by the mortgage-finance giants." Earlier this week, Rabobank CEO Piet Moerland stepped down following a $1.07 billion settlement over Libor rate-rigging allegations. UBS, Barclays and Royal Bank of Scotland have also reached settlements with global regulators. But Times columnist Floyd Norris argues the hefty fines associated with these settlements have done little to fix the system. "Unfortunately, nothing fundamental is being changed," he writes. "Libor lives on. Regulators who wanted to change that … have been outmaneuvered by those who did not want to risk damaging one of the biggest and most lucrative markets around." Washington Post, New York Times

The House passed the Swaps Regulatory Improvement Act that would reduce restrictions under section 716 of the 2010 Dodd-Frank Act.

In a bipartisan letter to the Consumer Financial Protection Bureau, senators asked the agency to provide data used as basis for warning auto lenders they could be committing fair-lending violations.

When sophisticated, global institutions leave a country or line of business, they create a vacuum likely to be filled by outfits less sensitive to, or capable of managing, the risks involved.

The Capital Asset Pricing Model’s value is debatable in normal times. If misapplied in today’s ultralow interest rate environment, it can severely overvalue banks and excuse poor operating performance.

Another big law like Dodd-Frank could be harmful to the mortgage market, but an incremental approach to housing finance reform might be the perfect solution.

Allowing a further transition period of nine to 12 months would better ensure complete compliance with all the requirements. Meanwhile, community banks will be able to continue providing the safe and solid mortgage loans they are known for.

Receiving Wide Coverage ...B of A Lawsuit Looming? And the financial crisis reckoning continues. Bank of America disclosed in a regulatory filing on Wednesday that a U.S. attorney's office (no word on which one yet) plans to recommend the Justice Department file a civil lawsuit against the bank over bad mortgage-backed securities. The bank also said it has raised its estimate of potential losses from litigation to $5.1 billion, from $2.8 billion. News of a potential lawsuit shouldn't come as too much of a surprise. American Banker's Rob Blackwell and Kate Berry predicted B of A would face the hatchet next, following reports of JPMorgan's (now possibly defunct) $13 billion mortgage-related settlement. According to the FT, "the threat of new civil action is fuelling speculation that B of A will seek to settle U.S. government mortgage cases against it in one hit, like rival JPMorgan."

Since building loyal customers requires making changes across all areas of the organization, 'loyalty' or customer experience management programs should be geared towards change management, not market research.

Community banks have a proportionate disadvantage to taxpayer-subsidized megabanks as the crushing burden of regulation meant to stop the abuses of Wall Street rain down excessively on Main Street.