BankThink

The Terminating Bailouts for Taxpayer Fairness Act adds more regulatory uncertainty to a financial sector that desperately needs clarity and direction.

More than a decade ago, regulators nearly suffocated PayPal. Now it looks like they're trying to squelch another disruptive, innovative payments system.

Receiving Wide Coverage ...Brown-Vitter TBTF Bill: Sens. Sherrod Brown and David Vitter formally unveiled their TBTF bill — or the pointedly named Terminating Bailouts for Taxpayer Fairness Act — Wednesday. Key components include a 15% capital requirement for banks with more than $500 billion in assets. Regional banks would be required to meet an 8% capital requirement while community banks would be exempt from the proposal. The bill, if passed, would also impose restrictions on a bank holding company's ability to move assets or liabilities from nonbanking to banking affiliates. (You can find a full roundup of its central elements here.) "Requiring the largest banks to finance themselves with more equity and with less debt will provide them with a simple choice," the senators explained in a New York Times op-ed. "They can either ensure they can weather the next crisis without a bailout, or they can become smaller." Reaction to the bill, thus far, appears to include some general support ("This is the appropriate direction for regulation," writes Slate blogger Matthew Yglesias), calls to give existing legislation a chance ("I'm fighting for [Dodd-Frank]," Sen. Carl Levin tells Bloomberg. "I can't at the same time give up on that and say 'break up the banks.'") and early Wall Street rallying cries. Whether the bill can actually pass is another issue entirely. "Brown and Vitter may have a difficult time getting their bill through Congress," the Washington Post notes. The bill does "not appear to have — at least so far — broad enough support in Congress to move forward," the FT echoes. "[It] was not immediately endorsed by any co-sponsors, for instance, and Mike Crapo, the top Republican on the Senate banking committee, recently disavowed the need for more stringent capital standards to be set by law."

The debate continued Tuesday on how to resolve the issue of "too big to fail" between banking analysts, former regulators, lawmakers, banking industry representatives and top academics.

Wage costs offshore are on the rise. Local talent is available in abundance and the growing popularity of digital channels has created ample cost-reduction opportunities at home.

Analyses only consider borrowers who were offered a loan package they were willing to accept. Applicants denied a loan and applicants who turned down loans are not considered at all.

Receiving Wide Coverage ...HSBC's Job 'Demise': HSBC got some extra attention for what could have been a routine — and somewhat expected — job cut announcement when someone got creative with the language in its press release. In announcing plans to cut more than 1,100 U.K. jobs due to new wealth adviser regulations, the bank noted "the integration of advisers means the roles of commercial financial advisers will be demised." And then, again, a bit further down, "the bank will be demising the roles of 942 relationship managers." The use of the word "demise" in lieu of, say, cut or downsize drew the ire of Britain's largest workers' union, which said it may ask workers if they want to consider a strike ballot. It also earned the bank a fresh wave of criticism from a few media pundits, despite the bank's plan to create 2,017 new positions for which affected (or perhaps demised?) workers would be able to apply. "Let's hope HSBC used this absurd euphemism only in its baffling press release, and not in its formal letter to 3,166 employees warning them that they are at risk of redundancy," writes Nils Pratley of The Guardian. A London headhunter didn't mince words when talking to the I: "I've heard a lot of HR guff in my time. But this is something else. It makes them look not only foolish, but callous and thoughtless, too." A HSBC spokesman explained to the Journal's MoneyBeat blog (which was quick to point out demising doesn't mean what HSBC thinks it does) "the bank likes 'demising' because it suggests that while the jobs will disappear, the employees won't necessarily leave the bank." (So, perhaps, this is the opposite of job creation?) New York Times, Bloomberg

Banks' ability to provide crucial services in support of economic growth reflect their risk-bearing capacity, which is directly related to market valuations of bank franchises.

With bitcoin in the media spotlight, everyone seems to have an opinion on the price. Few recognize the profound implications of decentralized money for the monetary system, society and government – not to mention the emerging business opportunities.

The House Financial Services Committee will not accept testimony from Consumer Financial Protection Bureau Director Richard Cordray on the agency's semi-annual, according to Rep. Jeb Hensarling, R-Texas. The chairman argues that Cordray was not legally appointed to the position.