BankThink

"A real bank failure has yet to test the Dodd-Frank Act's resolution regime, but an industry group says its realistic mock-up shows the facility can prevent systemic fallout," writes American Banker's Joe Adler.

The Consumer Financial Protection Bureau released a series of rules overhauling the mortgage system. One rule released on Friday bans compensation to mortgage originators based on loan terms, including a higher interest rate or generally a high-cost loan.

As a part of several appraisal rules released last week, the Consumer Financial Protection Bureau will require mortgage lenders to release free copies of home appraisals to borrowers.

The lawmaker behind the Federal Reserve and Glass-Steagall Acts understood that unless legislation imposes specific rules, including clear limits on financial institutions' activities, we are bound to have lax regulation, excessive speculation, and crises.

Receiving Wide Coverage ...Cuts, Cuts … and More Cuts: Banks continue to downsize staff. According to three separate reports from the Financial Times, Commerzbank plans to cut between 4,000 and 6,000 jobs through 2016 in order to turn around its underperforming domestic retail business; UniCredit plans to cut 1,000 jobs at its German unit HvB by 2014 for similar reasons and Lloyds Banking Group is adding another 940 positions to previously announced job cuts set to take place "across the group" as part of a cost saving program. Meanwhile, the Journal reports the Barclays investments unit job cuts, mentioned in yesterday's Scan, are taking place in Asia. Reports of layoffs at big banks, unfortunately, have become a theme of late. Earlier this month, news broke that Amex was set to eliminate 5,400 jobs, or 8.5% of its staff. Citigroup and Morgan Stanley have also made moves to reduce staff recently.

A recent BankThink post bemoans the one-size-fits-all application of Basel III. But the reason capital rules have become so sweeping is that banks have become bigger, more complex and more connected to the global economy.

Political denial and cover-up are in the CFPB's DNA. The agency was predestined to be overbearing, which will only hurt borrowers in the long run.

Require megabanks to pay their stealth subsidies into a reserve available only to creditors and the FDIC. Market discipline will do the rest, as shareholders demand that the banks shrink.

It seems clear that the Consumer Financial Protection Bureau believes balloon mortgages are not abusive or predatory. Why, then, does the rule so restrict their use?

Receiving Wide Coverage ...Highlights from Davos: The World Economic Forum just began in Davos, Switzerland, but has already produced plenty of interesting news for bankers. According to the FT, preliminary buzz around the event is that arriving executives "are plagued with concerns about growth, restive shareholders and declining margins." The article goes on to note that Goldman Sachs CEO Lloyd Blankfein is attending the event for the first time since 2008, though it's unclear how he specifically feels about his bank's balance sheet or the "fractious relationships with shareholders" the FT suggests is collectively percolating among top execs. JPMorgan CEO Jamie Dimon, who spoke earlier this morning, however, may have inadvertently nodded to investor concerns when he dropped this qualified apology for the London Whale: "If you're a shareholder might I apologize deeply. But we did have record results and life goes on." He also went on to criticize regulators, saying "It's five years after the crisis OK, we still have not fixed a lot of the things you are talking about. Part of the reason we are trying to do too much too fast." Meanwhile, a Dealbook article criticizes the forum itself for not devoting enough of its agenda to dissecting the financial crisis. "The World Economic Forum and its leaders appear to be moving on," the author writes. "but if the financial titans gathered there are really going to fight off the small but growing number of critics who are calling for the breakup of the big banks or even more likely a stronger Volcker Rule, they should put forth an alternative or an explanation for why these blowups keep occurring."