BankThink

How can we make sure that when the big banks' troubles give us a chance to compete for new members, we have the weapons to compete effectively?

Some observational souvenirs picked up in various airport gift shops. And before you ask, no, I didn't save the receipts and you won't be getting a refund.

Historically low interest rates and weak loan demand have masked the long-term profit potential of core deposits. When (not if) the cycle turns, community banks' earnings power will reappear.

Payday and advance deposit loans have been getting a lot of regulatory attention recently.

Receiving Wide Coverage ...LIBOR Reform: The U.S. is better positioned to crack down on manipulation of the London Interbank Offered Rate than the U.K., the FT says. The fine extracted by American authorities from Barclays was nearly quadruple the penalty taken by the British government, the paper notes. The Justice Department and FBI have active criminal investigations of Liborgate, "while the various UK enforcers have essentially held fire." And despite ongoing complaints in this country of lax treatment of financial wrongdoing, compared to its counterparts across the pond "the DoJ has far more experience of bringing cases based on complex financial products and trading, their laws are more on point and prison sentences tend to be longer." Also, in case you were wondering if someone can really be prosecuted for giving a b.s. answer to a hypothetical survey question (and by "b.s." we mean "disingenuous and misleading" — you can't lie about an imaginary situation, can you?) the FT notes that our Commodity Exchange Act "makes it a crime to transmit a false report that would affect the price of a commodity." Sooner or later, we bet some lawyers will be racking up billable hours disputing the objective "falsity" of the what-if rates that banks quoted to the British Bankers Association survey. But the real-world impact of these machinations may be harder to dispute. According to the FT's Gillian Tett, who began reporting on LIBOR mischief five years ago and takes a victory lap in her column today, "an estimated $350tn of derivatives contracts have already been written using Libor as a reference point, and about 90 per cent of US commercial and mortgage loans are thought to be linked to the index, too." The index was susceptible to manipulation because "it was based on private reported quotes, not tangible deals," she writes, but LIBOR would be hard to replace with another benchmark since it's now "hard-wired into the system." Hence the focus is on reforming LIBOR, with even the BBA now asking for its process to be regulated. One more thing worth pointing out: there was no neither-confirm-nor-deny, we-are-pleased-to-resolve-this-distracting-litigation blarney from Barclays; as noted matter-of-factly at the bottom of a Journal story today, the bank admitted its traders "tried to increase their profits by rigging the bank's submissions" and that "it also submitted artificially low quotes to the U.S. dollar Libor panel during the financial crisis to try to protect the bank's reputation."

Many borrowers with great credit can't get financing rates commensurate with their low risk. There's a major opportunity for banks to generate attractive returns by providing fairly priced student loans to these customers.

Rep. Barney Frank says the Supreme Court's ruling on Thursday to uphold President Obama's healthcare reform legislation gives a bleak outlook for legal opposition to Obama's other major piece of legislation: the Dodd-Frank Act.

The Consumer Financial Protection Bureau, which is required under Dodd-Frank to study the reverse mortgage sector, has found that the products "are not being used as intended, with increasingly younger borrowers taking out larger pots of money rather than gradual income streams to help finance their later years," writes American Banker's Joe Adler in his coverage of the bureau's report.

Much time and energy was spent on a campaign to regulate an optional service consumers could avoid paying for. Meanwhile, mortgage securitization was going gangbusters. Priorities were perhaps misplaced.

John C. Dugan, former comptroller of the currency, and T. Timothy Ryan Jr., former director of the Office of Thrift Supervision, insist that, despite some recent assertions to the contrary, the Dodd-Frank Act really does put end to the too-big-to-fail status of big banks.