BankThink

The Consumer Financial Protection Bureau accused Borders & Borders PLC, a Kentucky law firm, of receiving illegal kickbacks from certain charges on real estate settlements.

Bloomberg estimates big banks receive an $83 billion taxpayer ‘subsidy’ a year. But calculating bank funding levels at normal, as opposed to crisis times, and accounting for Dodd-Frank compliance costs yields a very different estimate.

Receiving Wide Coverage ...Bank of America Found Liable: The verdict of a New York jury Wednesday holding Bank of America liable for alleged mortgage misdeeds at Countrywide may go down as an important turning point in the federal government's belated push for financial crisis accountability. The major papers list several reasons why this civil trial matters: it marks the first time a bank has been held liable for fraud in connection with the mortgage boom; the jury pinned some of the responsibility on an individual executive; the decision is likely to spur class-action lawsuits that could cost Bank of America billions of dollars more; and the victory is likely to embolden the government to bring more such fraud cases against banks.

Politically connected firms might simply be more willing to participate in government-sponsored programs. Or, perhaps more disturbingly, banks might view their political connections as an insurance policy, which may encourage more reckless or risky behavior.

Jeff Plagge, the president and chief executive of Northwest Financial in Arnolds Park, Iowa, and the new chairman of the American Bankers Association believes regulation remains a large industry challenge.

Using return on equity as a performance measure without a risk adjustment is like trying to fly a plane without an altimeter. Sooner or later you will hit something.

Receiving Wide Coverage ...ECB Inspections Start in November: The European Central Bank said Wednesday that it will begin a thorough review in November of the balance sheets of around 130 financial institutions from Latvia to Germany. Some news outlets are calling this a "bad loan" test. The goal is to remove doubts about the strength of European banks in the wake of the European recession. Along with stress tests, the central bank is also requiring all the banks it's assessing to set aside 8% of risk-adjusted capital as buffers against losses. The New York Times opines that the central bank, with its credibility at stake, must show that it can succeed in eliminating doubts about European banks where other national and European authorities have failed, and needs to make clear who will pay to recapitalize weak banks and how terminally ill banks will be shut down without unleashing market turmoil.

Comptroller Thomas Curry’s 'heightened expectations' for large banks should include whether our communities are substantially better off as a result of their presence.

"Lawyers for the Federal Reserve Board filed an appeal Monday against a judgment that invalidated its 2011 rule placing a cap on debit interchange fees," writes American Banker's Donna Borak.

Lenders will be exposed to material put-back risk unless steps are taken to set industry standards for loan origination and processing.