BankThink

Receiving Wide Coverage ...Did Greg Smith Do Goldman a Favor?: More news outlets are echoing Dealbook's assessment of former trader Greg Smith's purported tell-all "Why I Left Goldman Sachs: A Wall Street Story" by stating that the book, due out today, isn't much of a tell-all at all. The FT says while Smith's account "paints an unflattering picture" of the investment firm, it doesn't "contain any blockbuster discoveries that could to lead to trouble for the bank's top executives" and, instead, focuses on "Mr. Smith's journey from summer intern to equity derivatives salesman in Goldman's London office." Meanwhile, a second Times review calls the not-so-tell-all "curiously short on facts" and says it actually might help bolster Goldman's reputation. "If Mr. Smith is the ultimate insider, and this is as bad as it gets — Mr. Smith in a hot tub at the Mandalay Bay Hotel in Las Vegas with a topless woman — then he hasn't made much of a case," the reviewer writes.

"Analytical, calm and unbiased," is how his former colleagues describe Steven Antonakes, the CFPB's associate director for supervision, enforcement and fair lending. And it's not just fellow regulators signing his praises, industry veterans view him as being constructive force.

House Financial Services Committee Chairman Spencer Bachus released a report arguing how the Dodd-Frank Act didn’t end too-big-to-fail policies. This comes on the heels of Barney Frank’s report arguing that it did.

The director selection model for too many U.S. banks does not reflect the industry's risk profile realities of 2012.

Receiving Wide Coverage ...Times Are a-Changin': Sort of. On the silver anniversary of the Oct. 19, 1987, Black Monday stock market crash, the New York Times and the Wall Street Journal make prominent note of the event. "A Repeat of '29? Depression in '87 Is Not Expected," declared the Journal in a second-day story that it resurrects on its web site this morning. The Times went even gloomier the day after. "Does 1987 Equal 1929?" it asked. "It did not," notes Times' columnist Floyd Norris. "What it did signify was the beginning of the destruction of markets by dumb computers. Or, to be fair to the computers, by computers programmed by fallible people and trusted by people who did not understand the computer programs' limitations. As computers came in, human judgment went out." Behind the 1987 panic was a whiz-bang financial innovation of the era known as program trading—an early ancestor of high-frequency trading, which was supposed to enable the "smart money" to stay ahead of the market. It didn't. Just in case things went wrong, sophisticated investors circa 1987 hedged their bets with hedges then known as portfolio insurance, early predecessors of credit default swaps that were supposed to protect them against calamity. They didn't. So what lesson, a quarter-century on, is to be learned from Black Monday? That we are destined to learn little, reform less and repeat our mistakes, appears to be Norris' take-away. His column cites an Oct. 20, 1987, Journal quote in which Nobel economics laureate George Stigler says, "I don't think the economy looks like it did in 1929. The most violent and urgent of factors in the great crash was the collapse of the banking system. That can't happen anymore because of the Federal Deposit Insurance Corporation" and other safeguards. Stigler explained that deposit insurance and limits on leverage meant "you won't get the pyramiding effect" that cracked the financial system in 1929. The pyramiding, of course, didn't occur in 1987, when the market snapped back quickly. It came in 2008. Since then, the biggest bricks in our shaky pyramid—the giant handful of banks that now account for over half the entire system's assets—have gotten far bigger still. New York Times, Wall Street Journal

Regulators can solve the supersized bank problem by removing barriers to market forces. The most important step is to offset the implicit senior debt funding subsidy.

The Bipartisan Policy Center is launching Financial Regulatory Reform Initiative to evaluate the effectiveness of the Dodd-Frank Act.

We need more experts who can investigate what happened and identify the perpetrators of attacks rather than simply focus on protecting our critical infrastructure.

Student loan borrowers have been sharing their complaints with the CFPB, and the stories "bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business," says the agency's student loan ombudsman in a report to Congress.

Consistency and ample communication are the cornerstones of acquisition announcements. Compassion and reassurance to your new team members flow to your customers and the community.