BankThink

CFPB Director Richard Cordray is expected to stick out his recess appointment term through 2013 regardless of who wins the presidency. After that various different scenarios could play out.

In all the regulatory discussion of small banks vs. megabanks, what about midsized banks? Some of those banks that are over the $50 billlion asset threshold, but far from being a Wall Street behemoth, are hiring their own lobbyists.

The potential consequences include rising interest rates, dropping home values, a resurgence of foreclosures and a dramatic, perhaps generational loss of consumer confidence.

Only a strong QM rule can prevent a repeat of the past and protect consumers from the type of risky and irresponsible lending that preceded the foreclosure crisis.

Receiving Wide Coverage ...Banks Take Back Seat: Wide coverage? That'd be the election and the hurricane, of course. The only banking story covered by more than one major paper is HSBC's $800 million additional reserve for its U.S. money laundering case. That brings the tab to $1.5 billion, and it could rise "significantly higher." CEO Stuart Gulliver acknowledged the rising tab and correlated reputational damage. The bank lost money in its European and North American businesses, relying on emerging markets for the good news. The brightest spot in was HSBC's performance in Hong Kong, which brought the bank a profit of $1.8 billion.

As the effective date for compliance with the CFPB's final remittance rule approaches, bankers are saying meeting all the requirements will not feasible. "It's one of those 'you can't get there from here’ regulations," says an industry lawyer.

With financial institutions keeping interest rates lower and fees higher on new commercial hybrid accounts, institutions are, in fact, discouraging commercial clients from switching to their new products.

The Consumer Financial Protection Bureau put out its first issue of "Supervisory Highlights," which provides an overview of issues that have emerged in examinations by the agency.

When the OCC took over supervising thrifts, we evaluated the model being used and determined the cost to keep it viable was not justified. Superior interest rate risk models are available from dozens of vendors.

Receiving Wide Coverage ...Intergalactically Systemic: The list of really, really, waywayway too-big-to-fail banks is out, and Citigroup and JPMorgan Chase are on it. The Financial Stability Board, which is coordinating the international regulatory reform effort for the G20 economies, said Thursday that it had put the two New York banks in an echelon that would subject them to a 2.5% capital surcharge. That means that they would have to maintain common equity equal to 9.5% of risk-weighted assets, compared with a universal 7% baseline. Deutsche Bank and HSBC are also in the 2.5% bucket, while other American firms like Bank of America and Goldman Sachs are in the 1.5% bucket and Wells Fargo is at 1%. The list is subject to change and the requirements for the additional loss cushions will be phased in beginning in 2016.