BankThink

Political junkies in Washington last week were riveted by all the machinations surrounding President Obama's attempts to get his nominations through Congress. There were conspiracy theories and allegations. Talk of payback and retribution. Rumors and dark horse candidates. And all of that took place within the 703,000 square-feet building between 7th and 9th streets in the District.

Members are turning to their credit unions in growing numbers for mortgages. In fact, the mortgage business at credit unions soared in 2012. With this growth comes another level in regulatory compliance.

John A. Vardallas, CEO of TheAmericanBoomeR Group, gives thirteen critical initiatives credit unions should implement in 2013.

Receiving Wide Coverage ...Executive Pay: The global crackdown on executive pay continues. Swiss voters backed a plan over the weekend that places severe limits on how companies pay their executives and directors. These limits give shareholders (including pension funds holding shares) a binding say on executive compensation, prohibit bonuses from being awarded to executives joining or leaving the firm and require "annual re-elections for directors." Firms that violate these rules could face heavy fines equal to six years in salary or face a prison sentence of up to three years, the New York Times reports. The plan, which could be implemented in 2014 or 2015 (or maybe even later) depending on whether you talk to its supporters or opponents, will apply to all companies listed in Switzerland. This includes UBS, which is among the companies the Journal says will be affected "most dramatically" by the initiative due to "their relatively large payrolls and because they need to recruit employees from around the world." The approval of the Swiss proposal follows a move late last week by the European Union to cap bankers' bonuses at twice their salary. An op-ed posted on Dealbook is critical of the EU's move, expressing that bankers will find a way to skirt the rule, and suggests paying bankers like waiters, capping their salaries and requiring them to rely on tips. "Banks boast so often about serving customers that it would mean they really have to practice what they preach — or expect a welter of forlorn-looking bankers following clients out of offices asking what they did wrong," the author notes. "The chance of seeing that alone surely makes paying bankers in tips worthy of consideration."

Characteristics of prepaid cards and checking accounts have converged. This will continue until they are simply different names for the same thing. Manage them together, and provide with each all the relevant features for which customers will profitably pay.

Federal agencies have the authority and ability to raise minimum capital in a direct and meaningful way, outside of the Basel III process.

Receiving Wide Coverage ...The Sequester: It's scheduled to take effect sometime today, with a last-minute budget deal considered unlikely. For banks, that means budget cuts at regulators, further delaying Dodd-Frank rulemakings, not to mention indirect effects on the industry from the broader economic impact, as American Banker recently explained. For big-picture coverage: Wall Street Journal, Financial Times, New York Times, Washington Post

Bankers must concentrate on achieving greater efficiencies, stop focusing on short-term goals and strike the right balance between unacceptably poor compliance practices and unattainable perfection.

Making home loans that aren't "qualified mortgages" will soon carry legal risk. Will making only QM loans expose lenders to fair-lending claims under the disparate impact doctrine? Washington must clarify.

During the Credit Union National Association conference on Wednesday, Richard Cordray, the director of the Consumer Financial Protection Bureau, said smaller financial institutions should lend beyond a new ultrasafe class of mortgages created by the agency.