BankThink

Receiving Wide Coverage ...A Golden Age for Whistleblowers?: The Internal Revenue Service has awarded Bradley Birkenfeld, a convicted former banker, $104 million for the role he played in exposing the aid Swiss bank UBS provided to wealthy clients in a decades-long effort to help them evade paying taxes. According to the Journal, details provided by Birkenfeld ultimately led UBS "to turn over the names of more than 4,000 account holders who were U.S. taxpayers and pay $780 million to resolve a criminal case involving secret offshore accounts." The agency has also collected more than $5 billion in taxes and penalties from over 33,000 U.S. taxpayers, who confessed to holding undeclared overseas accounts following news of the scandal. Birkenfeld himself was charged with conspiracy for failing to come clean about his role in the matter and is currently serving the remainder of a 40-month prison sentence in home confinement in New Hampshire.

While holding that Congress intended patent-eligible subject matter to "include anything under the sun that is made by man," the Supreme Court has consistently identified three exceptions: laws of nature, physical phenomena and abstract ideas. That last exception has proven most problematic for financial inventions.

The Office of Financial Research, created by the Dodd-Frank Act, has neither yet become the all-powerful entity its opponents feared, nor "the muscular, autonomous U.S. hub for financial regulatory data collection, standardization and storage that its backers hoped for.”

The FDIC can invest in the equity of teetering but salvageable banks. This would save money for the taxpayers, preserve banks that are worth preserving – and send a clear message about the future of community banking.

Receiving Wide Coverage ...Wait a Minute … Do Bailouts Work?: That seems to be the question following the Treasury Department's now official sale of a massive chunk of AIG stock it purchased at the height of the financial crisis. According to the Journal, the Treasury sold shares to the public at $32.50 apiece, netting $18 billion, and bringing the federal government's return on its original $182.3 billion investment in the insurance firm to a combined total of $194.7 billion (or $12.4 billion in profit). So were the bailouts a necessary evil? Dealbook's Andrew Ross Sorkin, not surprisingly, seems to think so. In this column (which isn't so much a column as it is a transcript of the "told-you-so" conversation he had with former SIGTARP-turned-author Neil Barofsky), Sorkin essentially elaborates on the thesis posed at the end of his bailout book "Too Big to Fail": "As distasteful as the rescue effort was, it should be clear by now that without it, we faced an economic Armageddon. And the results thus far of bailing out the big banks, and AIG, indicate a profit."

We've heard plenty about big banks, and a lot about the small banks, but what about the impact of regulation on those that are somewhere inbetween?

The courts' indecision as to whether whistle-blowers who report wrongdoing internally are protected by Dodd-Frank sends one clear message: Come forward at your own risk.

The standard definition of SIFIs is essentially useless. What was intended to be a limited Congressional power has expanded into a blank check to act in any case where there is an aggregate effect on economic activity.

Starting Oct. 1, issuers with effective fraud reduction strategies will be eligible to make more money off debit card transactions. To reap the benefits of the Fed's new rule, banks will need to work together.

Increasingly burdensome requirements, such as small business panels and cost-benefit analysis, inhibit writing of new regulations. But substituting enforcement actions that unevenly apply vague or unwritten rules betrays the regulatory mandate.