BankThink

Ineffective regulation creates a false sense of confidence that causes people and markets to be less diligent than they otherwise would be.

The Dodd-Frank Act of 2010 was created to solve the problems revealed by the financial crisis. It placed enormous power into the hands of the federal banking agencies. Since the reform law was created, little has been done to restore the public's confidence in the government's ability to police the financial system.

Restricting the use of Fannie Mae and Freddie Mac securities in computing the LCR may raise mortgage costs and negatively impact banks' ability to manage liquidity risk.

Receiving Wide Coverage ...More Cyprus: The FT surveys some of the fallout from efforts to shore up Cyprus' insolvent banks, noting that the damage is rippling in all directions and hitting businesses only loosely related to the country's formerly booming offshore financial sector. Some analysts are predicting the Cypriot economy will shrink 10% or more this year, the FT reports.

New Community Reinvestment Act guidelines will reduce paperwork burdens, open up new areas for assistance and make clear that banks falling short will hurt their overall lending test performance.

An effective bail-in regime increases the government's ability to impose losses on debtholders and a lower probability of systemic support could increase bank funding costs.

Congress and regulators are listening. Silence among big bank representatives can be viewed as a green light to pass legislation that limits the size of their financial institutions.

The Federal Deposit Insurance Corp.'s discussion with foreign regulators about cross-border resolutions plans is expanding its efforts beyond just the United Kingdom.

Auto dealer industry representatives warn that costs will rise for borrowers if the Consumer Financial Protection Bureau forces banks to halt auto loan markups determined by dealers.

While JPMorgan's witnesses were testifying with practiced humility, lobbyists were working to gut the reforms of derivatives trading enacted as part of the Dodd-Frank Act.