BankThink

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

Fannie Mae and Freddie Mac have tightened their 'representation and warranty' framework. Other public sector mortgage funders, including FHA, VA, and the USDA should follow suit … or risk being left with lemons.

Higher capital requirements for federal mortgage lenders, more stringent QM and QRM requirements for borrowers and a heightened reliance on private markets will help keep taxpayers from paying for future bailouts.

Receiving Wide Coverage ...Naming Names: British authorities have identified almost two dozen individuals at banks as possible co-conspirators in a probe into the manipulation of the London Interbank Offered Rate. The Serious Fraud Office notified the individuals last week that they had been included in court papers related to a case against Tom Hayes, a former trader at UBS and Citigroup. High Court justice Jeremy Cooke also lifted an order from last week that barred the Wall Street Journal from reporting the names of the individuals. Cooke found that there was "no basis" for the restriction, according to the Journal. Under British law, judges can restrict what the media reports if it might prejudice a defendant or potential jurors, according the New York Times. None of individuals have been "formally accused of wrongdoing," the Financial Times reported. Hayes and two others were supposed to plead not guilty to charges on Monday but that has been delayed until December.

The Consumer Financial Protection Bureau's Director Richard Cordray said Monday that the agency has been in contact with vendors and they should be ready to comply with the qualified-mortgage rule by January.

The Federal Reserve Board and the Federal Deposit Insurance Corp. are expected to release a proposal that would require the biggest U.S. financial institutions to hold long-term debt that could be converted to equity should a bank fail.

It’s almost impossible to disclose the exact amount of third-party fees that will be charged for delivering money when those third parties may include a village council or military authority.

Customers want to bank in the most convenient way for them. Banks don’t need to close their branches necessarily, but they certainly must transform them to address this fundamental shift in behavior.

Receiving Wide Coverage ...JPMorgan Chase's Deal: Over the weekend the country's largest financial institution reached a tentative $13 billion settlement with the Justice Department over the bank's questionable mortgage practices. But despite the record penalty, the bank's board is standing firmly behind its chief executive Jamie Dimon, whose role in negotiating the settlement only seemed to cement the board's support. A phone call by Dimon to a top deputy of Attorney General Eric Holder ahead of a planned news conference by the Justice Department helped to spur the record deal, according to accounts by those involved with the negotiations. Despite the tentative deal, the Justice Department could continue to pursue a potential more serious criminal probe into JPMorgan, the Journal reports. The two continue to battle whether the bank must admit wrongdoing in the settlement, the paper says. The monumental fine is unlikely to faze investors though, if finalized. JPMorgan will likely make the case it had been prepared for this given the $9.5 billion charge it took in the third quarter for litigation expense. Helping matters, the banks also disclosed it had a $23 billion legal reserve on hand. The editorial board calls the Morgan settlement a "watershed moment in American capitalism." Not everyone backs the government in this fight, however, as many on Wall Street believe the government pulled off a shakedown with the implicit threat of criminal prosecution, the FT says.

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