BankThink

While I'm sure some community bankers applauded Sandy Weill's recent call to break up our nation's largest banks, I, for one, did not.

Receiving Wide Coverage ...It's the Principle of the Matter: The Federal Housing Finance Agency caused a stir when it went against the Treasury Department's wishes and ruled principal reductions would not be awarded to struggling borrowers whose loans are owned by Fannie Mae or Freddie Mac. FHFA acting director Edward DeMarco ultimately cited moral hazard, maintaining a small number of strategic defaults on mortgages would wind up hurting taxpayers. In a written rebuttal, U.S. Treasury secretary Timothy Geithner — who the Journal notes was against principal reductions in 2009 — asked the FHFA to reconsider and said he was "concerned" over the regulator's "continued opposition" to the purported aid. The Treasury Department also sent out a tweet shortly after the decision was announced, asserting "FHFA's own analysis shows principal reduction at Fannie & Freddie could help up to half a million homeowners and save GSEs $3.6 billion."

The Small Business Lending Enhancement Act would let credit unions help small businesses and our economy without costing taxpayers a dime. Whether lifting the cap creates one job or 1,000, it would be a success.

Two measures that the banking industry is hoping to see pass in the Senate are being stymied by Republican Sen. Jim DeMint. His hold on the bill that combines the two measures is "an effort to force a symbolic vote on repealing" on Dodd-Frank, writes American Banker's Kevin Wack.

"Federal Reserve Board Gov. Sarah Bloom Raskin urged regulators to narrow a proposed exemption to the Volcker Rule, saying it may allow banks to avoid compliance with the ban on proprietary trading," writes American Banker's Donna Boraks.

This is no time to start unwinding the largest banks. There's enough uncertainty in this fragile economy. But starting a conversation now about the costs and benefits will lay the groundwork for sound action when conditions improve.

A year after the Fed enacted the Durbin amendment, predictions that swipe fee reform would kill free checking, hurt credit unions and stifle competition have failed to come true.

Receiving Wide Coverage ...Eye on Central Banks: The European Central Bank and the Federal Reserve are set to meet this week in an effort to bolster the flagging global economy. According to the Journal, Fed Chairman Ben Bernanke will focus on how to spur enough economic growth in the U.S. to drive down unemployment, while ECB head Mario Draghi needs to address growing concerns that countries will abandon the euro. The Journal says there's a chance the Fed could unveil a new program for buying mortgage or government securities to bring down long-term interest rates, but it also may simply wait until economic forecasts are updated in September to take significant action. Reuters similarly suggests the eurozone debt crisis won't see palpable changes until key policymakers return in September from their summer holidays.

The modern, neo-Glass-Steagall advocacy has a mystical quality about it, an appeal that proposes to rise above the tough debate over the thorny details and reach back to a mythical time when bank regulation worked so very well.

Dodd-Frank "however good its intentions, has not and will not protect us against another meltdown," writes former senator Ted Kaufman. He's concerned about the growing size of big banks and what he views as fatal flaws in living wills. Want to really protect against another meltdown? Add that Kaufman-Brown amendment to the legistlation.