BankThink

The Consumer Financial Protection Bureau proposed two new rules regarding mortgages. One is intended to simply mortgage forms and disclosures. The second would lower broaden the definition of a "high-cost loan" and tighten the rules for them.

If the government could eliminate contract rights in this way, then it would be hard to imagine what contracts could not be set aside in the name of market efficiency.

Receiving Wide Coverage ...Peregrine, Shook: This seems to be the week for disturbing, noir-ish financial stories. First there was that director of the failed Georgia bank believed to be on the lam after being charged with fraud and sending colleagues what read like a suicide note. Now Peregrine Financial, a Chicago futures brokerage, has filed for Chapter 7 liquidation, $215 million of customer funds are missing, and its founder, accused by authorities of fraud, has been hospitalized after an apparent suicide attempt. Wall Street Journal, Financial Times, New York Times, Washington Post

The real losers would be the biggest banks, the holders of second liens, not investors in first mortgages. Those investors might come out ahead, and homeowners and municipalities certainly would.

Dodd-Frank rules on swaps can move forward now that the U.S. Commodity Futures Trading Commission voted on the definition of such trades.

Receiving Wide Coverage ...More Libor: …And our favorite Libor-related read today comes from Boris Johnson, the delightfully disheveled mayor of London. Writing in the Daily Telegraph, Johnson warns, in his inimitable voice, against overreacting to the Barclays scandal, arguing that other industries, such as London’s budding technology firms, need a healthy financial sector to raise capital for them. The Morning Scan cannot resist quoting him at length: “It is time for British politicians to say it loud and clear and in unison: we need bankers, my friends! We need bankers who are not just cautious, owlish Polonius figures. We need bankers who are willing to take punts and put their necks on the line. Yes, by all means arrest anyone who has been involved in a criminal conspiracy to fix Libor. Bang ’em up. Slam ’em away. But we need the political establishment in this country to stop slagging off a sector that is utterly crucial. … We need to maintain or lengthen London’s lead as the best place to raise and allocate that capital, and we won’t succeed in that objective if we keep on bullying, berating and generally beating up anyone who has anything to do with a bank.” If only Johnson’s New York counterpart (and fellow bank defender) Michael Bloomberg were this charming. Johnson also has a funny line in there about corporate sponsorships, which we won’t spoil for you. The comment thread is largely hostile to the mayor’s message, and one of the few Telegraph readers who side with Johnson laments, “Judging from the comments here, the banker bashing politicians have the public mood better than Boris.”

"Isn't it true that there has never been a major crisis that resulted from excessive exposures to what was considered risky, and that these have always resulted from excessive exposures to what was perceived as not risky?"

The Consumer Financial Protection Bureau has made two significant decisions for examinations: to hire a large portion of examiners from outside of the other federal financial regulatory agencies and to bring lawyers along at the beginning.

Impending rules on how banks must handle certain transactions is one of the main factors prompting JPMorgan to combine units. Parts of the company handling securities, derivatives and back-end support started functioning as one group on Friday.

If a senior mortgage executive tells you "there's nothing to worry about, we've got exceptional controls and a great track record in measuring and managing mortgage servicing rights," it is probably worth getting a second opinion.