BankThink

Receiving Wide Coverage ...Economy Contracts: Private-sector demand was strong, but businesses reined in inventories and defense spending plummeted, leading to a surprise 0.1% contraction in economic activity in the fourth quarter, according to the Commerce Department's first estimate. The Journal said analysts pinned the plunge in military spending on factors like the drawdown in Afghanistan and worries that more reductions are coming. The Post said government agencies "began adopting contingency plans, instituted hiring freezes and delayed projects in anticipation" of automatic cuts under the sequester. Markets appeared to take the outturn in stride, as the S&P 500 closed down by just 0.39%. Wall Street Journal, New York Times, Washington Post

Confining banks to "narrow" or "traditional" activities, as some policymakers and pundits advocate, would drive even more customers to the shadow sector. Do we really want shadow banks to own the financial future?

Several tech startups have made short-term credit the focus of their business models. But could a product so universally frowned upon ever achieve mainstream acceptance?

Despite the bipartisan nature of the Panel's first vote last week, the new leaders of the House Financial Services Committee, Chairman Jeb Hensarling, and ranking Democrat Rep. Maxine Waters, continue to dispute the effects of the Dodd-Frank reform law.

Big banks must get smaller. Small banks must get bigger. All banks must turn their attention away from crisis-era baggage and show how they'll consistently make money from now on.

Receiving Wide Coverage ...Big Payday: The best-paid financial-services CEO in 2012 was not Lloyd Blankfein or Jamie Dimon but Richard Handler, of the lesser-known investment bank Jefferies Group. He took home $45 million (or $58 million if you count shares he received) after making a deal to sell Jefferies to the industrial smorgasbord Leucadia National, which he'll run. The Journal's story is meaty, highlighting the board's use of peer comparisons in determining Handler's compensation after scrapping that practice the year before. The papers note that Jefferies, bucking the industry trend, pays its bonuses all-cash, up front, rather than deferring them or paying in stock — though according to the FT, "some said the cash bonuses were paltry compared with pay at other banks. Employees must pay the cash back if they leave for one of Jefferies' competitors." Wall Street Journal, Financial Times

Future compensation structures should not only reflect the higher costs of servicing troubled loans but also open the business to more nonbank competitors.

Without a permanent director, the Consumer Financial Protection Bureau has no authority to create or enforce regulations against nonbanks. However, attorneys and industry consultants say several recent mortgage regulations approved by Richard Cordray may still be upheld.

A federal appeals court ruling last week might force Democrats to cut a deal with Republicans over the structure of the Consumer Financial Protection Bureau.

The state is receiving a notably large share of national mortgage settlement benefits because of the level of harm the state sustained during our nation's mortgage crisis.