BankThink

The recent court ruling on debit interchange fees should remind the payments industry how harmful the Durbin amendment is.

Strengthening the underlying loan manufacturing process and diversifying this risk in the secondary market remain critical to ensuring the integrity of the market.

The Basel system has sanctioned bank balance sheets on the verge of insolvency, but in doing so it may have permitted much more lending and much more trading.

Receiving Wide Coverage ...A Probe Within a Probe: Just when you thought we would go a week without learning new details about JPMorgan Chase's regulatory troubles, reports surface that the nation's largest bank is currently being probed about possibly obstructing a probe. As it turns out, the Justice Department's criminal investigation into whether JPM manipulated U.S. energy markets (remember that one?) is really focused on whether the bank withheld information from regulators during the Federal Energy Regulatory Commission's investigation into the matter. JPM agreed to pay $410 million to settle FERC's allegations back in July. The bank didn't admit or deny wrongdoing as part of the settlement. Reuters, which broke the story, reports the DOJ decided to look into whether JPM had impeded that investigation, in part, due to a letter Sens. Elizabeth Warren, D-Mass, and Edward Markey, D-Mass, sent to FERC at the end of July. "The letter asked FERC about why it had allowed JPMorgan to settle the case without admitting wrongdoing and why no individual executives faced regulatory action," the article notes. "[It] also asked FERC why no action was taken against people who 'impeded the Commission's investigations.'" JPM has previously denied that employees lied during the FERC probe. Bloomberg columnist Jonathan Weil argues that little will come from the DOJ's new investigation. "It's unlikely that the government would ever prosecute JPMorgan, for obstruction or anything else, because it's too big to fail," he writes. "If the energy regulator couldn't see fit to file claims against any individuals, it's difficult to imagine the Justice Department would press criminal charges against them later." Meanwhile, the Journal reminds readers: "The Justice Department has at least seven other investigations of [JPM] in the works."

Will mortgage reform rectify past discriminatory practices or close the gap between white and nonwhite rates of homeownership? The major proposals in Washington show little interest in these critical questions.

While some saw Tim Pawlenty's unexpected recommendation to strike Syria as a sign he may be weighing a return to politics, the former Minnesota governor said he is focused on his "current job" as head of the Financial Services Roundtable.

The idea of subjecting U.S. financial supervision to peer review by European and Asian financial regulators with their own problems is a bit rich to swallow.

Customers tend to "hire smilers." When otherwise comparable alternatives exist, people gravitate toward businesses that make them feel welcomed and appreciated.

Receiving Wide Coverage ...S&P vs. DOJ, Retaliation Edition: Well, this is an interesting tactic. Standard & Poor's is arguing that the federal government is suing the firm in retaliation for stripping the U.S. of its AAA credit rating back in 2011. Per S&P's latest court filing, "the government's 'impermissibly selective, punitive and meritless' lawsuit was brought 'in retaliation for defendants' exercise of their free-speech rights with respect to the creditworthiness of the United States of America,'" the Times reports. Scan readers will recall that the U.S. Department of Justice filed civil charges against the credit rating agency back in February for allegedly ignoring their own standards and rating mortgage investments much higher than they should have been in years leading up to the financial crisis. A spokeswoman for the DOJ told the Journal the retaliation allegation was preposterous. Lawyers tell the paper making the claim stick will be "an uphill battle" as S&P would need "to prove that there was direct communication between different government agencies and to indicate any such goal, as of the alleged retaliation by the government." The FT reports that S&P's lawyers "have demanded, and been granted, permission to collect documents and emails from government departments and agencies relating to the DOJ's decision to launch the lawsuit." Tuesday's court filing cites a total of 19 defenses to the government's allegations. Among them, S&P argued that even Federal Reserve Chairman Ben Bernanke (who has previously been attached to civil crisis-related cases) and then-Treasury Secretary Hank Paulson didn't anticipate how serious the crisis was, prior to it actually happening. S&P has argued in previous court filings that certain assurances it made about the objectivity of its ratings process constitute "classic puffery" — the vague and overblown language that businesses often use to describe the virtues of their products and services — which is also an interesting tactic, given the firm's business model.

If spun off from firms that rate corporate debt, raters of asset-backed securities would have less incentive to sugarcoat ratings in exchange for the promise of an issuer’s other business.