BankThink

Critics of nonbanks contend that consumers use "high-cost" alternatives because they are financially illiterate. But, like most simplistic conclusions, this one is seldom accompanied by facts and is as wrong as it is demeaning of the innate intelligence of these consumers.

Receiving Wide Coverage ...A Countrywide Haunting: Bank of America found itself on the receiving end of a $1 billion mortgage lawsuit filed by the federal government on Wednesday. Federal prosecutors are accusing the bank of carrying out a scheme ("called the 'Hustle' and 'High Speed Swim Lane'") started by its Countrywide unit that defrauded government-backed mortgage agencies Fannie Mae and Freddie Mac "by churning out loans at a rapid pace without proper controls." B of A is denying wrongdoing. The case appears to be the latest move in the government's renewed crusade to punish mortgage lenders for their part in the 2008 financial crisis. JPMorgan Chase found itself on the receiving end of a civil lawsuit related to Bears Stearns' bad lending practices earlier this month with New York Attorney General Eric Schneiderman promising more cases were on the way. But many people — including former FDIC chairman Sheila Bair, who said in a meeting with American Banker recently she doubted the effectiveness of lawsuits and enforcement actions brought against institutions and not individuals — see the actions as a "too little, too late" scenario. "If Countrywide committed 'spectacularly brazen' fraud, why can't the [government] identify any individual perpetrators?" Times reporter Binyamin Appelbaum tweeted following the lawsuit's announcement. Federal prosecutors could apparently identify individuals involved (which, perhaps, can be seen as more of an issue). As a follow up tweet from Reuters blogger Alison Frankel noted: "The complaint actually identifies two Countrywide officials by name but they're not named as defendants." Washington Post, New York Times,Wall Street Journal, Financial Times

Well-intentioned policies are causing inadvertent redlining. Our proposed Dignity Mortgage would show there are few if any additional risks of lending to the large cohort of presently excluded prospective homebuyers.

The CFPB announced that it will soon be supervising large consumer debt collections firms.

If the program ends, most TAG deposits held by community banks will quickly migrate to the biggest banks as investors still expect the federal government to protect all deposits held by these financial behemoths.

An analysis of Senate rulings indicates voters who believe in strengthening customer protections should cast their ballots for Democrats, while voters who believe banks should not have to answer to a consumer regulator should choose Republicans.

Receiving Wide Coverage ...Romney's Reserve: Various news outlets are following up on a Times article from Binyamin Applebaum that focuses on potential Federal Reserve chairman replacements for Ben Bernanke should Republican candidate Mitt Romney win the upcoming presidential election. (It should be noted some attention is also being given to potential Obama appointees, given Andrew Ross Sorkin's recent disclosure Bernanke isn't interested in another term once his current one expires in January 2014, but with much less fervor, perhaps, since another Obama appointee is generally considered less likely to dramatically overhaul monetary policy. Romney, on the other hand, has criticized recent Fed attempts to stimulate the economy.) Applebaum's article focuses on three likely Romney candidates — R. Glenn Hubbard, who served as chairman of the Council of Economic Advisers under President George W. Bush, his successor N. Gregory Mankiw and John B. Taylor, a Stanford University economics professor — with the general takeaway being that Taylor, "an outspoken critic of Fed policy" is most likely to implement a hawkish overhaul. (QE4 never, perhaps?) However, a subsequent analysis from FT blogger Robin Harding suggests it may be impossible for any new Fed chairman to turn a bunch of doves into hawks, given the term limits of its existing governors and the current body of regional presidents. "Even if a president Romney appointed a hawkish Fed chairman in 2014, around half the voting membership of the FOMC would probably be doves who had backed current policy," Harding writes. "Any change towards more hawkish policy initiated by a new chairman would have to be slow and gradual, which is just how the designers of the Federal Reserve System wanted it." This sentiment was echoed by Reuters blogger Felix Salmon, who also believes a major revamp would be difficult, even from a hawk like Taylor. "The Fed board isn't a bunch of muppets, rubber-stamping whatever the chairman wants," he writes. "It's pretty easy to build a consensus around low interest rates when inflation is low. Taylor, by contrast, would be trying to build a consensus around higher interest rates when inflation is low — and that's much more difficult."

In a typical case, a short sale took nearly nine months, and extraordinary patience and tenacity, to get done. That's no way to stage a housing recovery. Streamline the process.

"A critical mass of angst and dissatisfaction with the Dodd-Frank Act and Basel III is opening the door to change," writes Barbara Rehm. If you want to read the brightest mind on the topic, check out Karen Shaw Petrou's assessments, she says.

The flood of new regulation, demands for more capital, harsh enforcement and an unexplained three-year-old de facto moratorium on de novo charters lead one to believe Washington wants fewer community banks