BankThink

Receiving Wide Coverage ...Summers Withdraws: Big news broke over the weekend when Lawrence Summers, one of the two top candidates, took his name out of consideration for the Federal Reserve chairman spot, writing in a letter to President Barack Obama "that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery." (Full text of Summers' letter can be found here, here and here; President Obama's statement accepting Summers' withdrawal is here.) The development is somewhat surprising, given that, earlier this month, White House insiders were reporting a Summers' nomination was imminent, despite mounting Senate opposition to his chairmanship. The Atlantic attributes Summers' withdrawal to a "small team of Democrats" — namely, Jon Tester of Montana, Sherrod Brown of Ohio, Jeff Merkley of Oregon and Elizabeth Warren of Massachusetts — who were expected to oppose the nomination, though other news outlets say it was Syria that ultimately did Summers in. "The president's inability to rally Congressional Democrats on Syria persuaded Mr. Summers that his most important audience — the Senate, which must confirm a Fed chairman — probably could not be won over," notes the Times. Global financial markets were cheering on Monday, reports the Journal, largely based off of the assumption that Fed vice chairman Janet Yellen, who is considered "to be more cautious about winding back the Fed's stimulus program," will now get the job. But Yellen's appointment may not be a lock. The President still has options, points out the Washington Post's Neil Irwin, including Donald Kohn, Roger Ferguson, Stan Fischer and Jeremy Stein. (Former U.S. Treasury Secretary Timothy Geithner's is also being name-dropped by a few news outlets, though reports have already surfaced that he remains uninterested in the position.) "Now we get to see what direction the president wants to go now that his favored candidate is out of the picture," Irwin concludes. More big picture coverage: Wall Street Journal, Washington Post, Financial Times, American Banker

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

Jim Bruce, the director of a new documentary on the Fed, said Summers "doesn’t really have a background… in central banking" while praising Yellen’s character and integrity.

Most of the five-year retrospectives on the financial crisis were pretty boring, according to Editor-at-Large Barbara A. Rehm. But a few were very revealing about the industry’s future, including the massive onslaught of rules still on their way.

A 1999 memorandum explains why the DOJ refrains from prosecuting large financial institutions for their blatant regulatory violations, but why does it refrain from going after the employees who behaved badly?

Receiving Wide Coverage ...#TwitterIPO: If economics is the allocation of scarce resources, what does it mean that the company had to devote 67 of 140 characters to the disclaimer, "This Tweet does not constitute an offer of any securities for sale"? Wall Street Journal, Financial Times, New York Times, Washington Post

MagicBand, a system that Walt Disney Co. has been testing all year with a limited number of employees and Walt Disney World resort patrons, seems to be poised for success based on what looks like an extreme level of commitment to it — so far.

Want consumers to engage with your financial firm? Don’t try to turn their finances into a flashy smartphone game; find new ways to do their banking for them.

With the general push for more capital, liquidity, regulatory knowledge, and tools, the financial sector is safer and more competitive.

Through bitter experience, bond purchasers learned about the moral hazard embedded in private residential mortgage-backed securities and their grossly inadequate legal protections.