BankThink

Breaking up the nation's megabanks will not herald a new Golden Age where market discipline reigns supreme.

Finding ways to spotlight and promote our small business customers within our branches strengthens a customer’s bond with his bank like few things can.

Receiving Wide Coverage ...All About the Dow: Despite "tepid economic growth" and "political gridlock" (most recently personified by the ongoing sequester), the Dow Jones Industrial Average hit a record high on Tuesday, climbing 125.95 points, or 0.89%, to 14253.77 and exceeding the previous record set in October 2007. But will the rally last? Maybe, posits the Journal. Or, alternately, should more investors pile in? Possibly, says the Times, due largely to the ongoing efforts of the Federal Reserve. More big picture coverage of the Dow rally: New York Times, Bloomberg, Reuters

Rep. Maxine Waters, the senior Democrat on the House Financial Services Committee, said she and her colleagues are asking for a quicker pace of work to implement diversity provisions of the Dodd-Frank Act.

Some banks may be getting reckless with the pricing and terms they're offering commercial borrowers. The trend should temper enthusiasm for otherwise welcome signs of growth.

Cards preloaded with unemployment insurance, child support, food stamps and other government benefits can be viewed as potential bank accounts, waiting to be opened by people with the fewest quality opportunities to connect to the financial mainstream.

Receiving Wide Coverage ...Fannie-Freddie Merger: One big step for housing reform? Federal Housing Finance Agency acting director Edward DeMarco unveiled plans on Monday to merge certain parts of government-controlled mortgage giants Fannie Mae and Freddie Mac in order to "create a common platform for issuing mortgage-backed securities." Details on this plan were scarce, but the merger of certain "back-office functions" would involve forming a new company with its own CEO, management and headquarters. This firm will be jointly funded by Fannie and Freddie. The aim is to "create a single standard for issuing securities that could survive independently if the two companies no longer exist," Bloomberg reports. No timeline was given for when the new company would start issuing securities, but it is "unlikely" to take place this year. Congress and the White House will ultimately have to "decide how the securitization platform is operated, and whether it should be privatized." Reaction to the plan, thus far, has been minimal, largely because news of its existence broke late yesterday. BankThink's resident Risk Doctor Cliff Rossi, who has championed combining Fannie and Freddie before, told the Journal, the merger would "signal to the market that the status quo since 2008 for the [companies] is changing." But not everyone was feeling kind toward Fannie and Freddie, which have collectively received $190 billion in taxpayer aid since 2008. "Put all your rotten eggs in one basket," one Post reader commented. "That's sometimes the only way," another reader responded.

Criminal indictments of bank employees indicate a failure in the institution's governance, risk and compliance policies. Boards must take the time to improve their risk management systems.

The Department of Housing and Urban Development is starting the process of issuing its own qualified mortgage rule after the Consumer Financial Protection Bureau issued its QM rule, which could be disruptive to the Federal Housing Administration single-family program.

The best way to meet the needs of consumers and communities is to once again have the private sector play the lead role in the housing market, led by responsible local lenders.