BankThink

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

Government-mandated risk retention is not an answer to the problem of bad loans being bundled up and sold to unsuspecting buyers. A better approach is to make sure that MBS purchasers have access to good loan-level data about what they are buying.

By pretending to treat the guarantee problem as actuarial rather than political, Corker-Warner can garner the support of traditional lending and housing lobbies that historically supported Fannie and Freddie.

Receiving Wide Coverage ...Fed Staff Violates Rules: It's not just the banks, folks, it's also the regulators. The Federal Reserve's inspector general says the Fed violated its own rules when a staff member inadvertently emailed minutes from a March policy meeting a day early. Oops. The email went to 150 people including some of the biggest banks and investment firms on Wall Street plus congressional staffers. The IG says the Fed failed to provide sufficient training to employees handling confidential information. Wall Street Journal, New York Times

It’s easier to sell a person something he wants than to scare him into buying protection from something he wants to avoid. That’s particularly applicable when it comes to selling payments security.

A Huffington Post scoop describes serious morale problems at the Fed, but lays most of the blame for that on former Fed Chair Alan Greenspan. Editor-at-large Barbara A. Rehm sees it differently.

Bank regulators, enforcement authorities and legislatures in key countries will have to work together to enforce Basel's well-meaning guidelines related to money-laundering and terrorism financing.

Incremental gains in women's progress are no longer a sufficient substitute for meaningful change.

Receiving Wide Coverage ...Sweet Partial Victory: Bankers were mostly happy with a revision that softens the criteria for qualified residential mortgages. A provision of the Dodd-Frank Act requires banks and other lenders to retain 5% credit risk of loans they sell on the secondary market that don't fit QRM requirements. However, regulators revised the definition of the QRM exemption and it is so broad that 98% of loans last year would have been covered, the Wall Street Journal said.

The federal income tax exemption benefits credit union members and bank customers as credit unions provide a check on banks through their competitive rates and fees.