BankThink

Directors and officers of banks, already under scrutiny from the regulators and law enforcement agencies traditionally charged with examining their actions, should take heed of a new player on the scene: the Office of the Special Inspector General for the Troubled Asset Relief Program. SIGTARP has already been involved in a number of significant financial institution investigations and appears poised to increase the scope of its activity.

If ratified by the Fed, the new liquidity ratios could constrain lending, at the worst possible time. A proposed capital buffer is theoretically countercyclical, but needs more work.

Ignoring state appraisal laws may subject bank employees or third-party service providers to fines or even criminal penalties. National banks relying on federal preemption for appraisal laws should take another look at that assumption in light of Dodd-Frank.

Here's a systemic risk bankers and regulators prefer not to discuss: Banks so big they get away with chronically unethical and illegal behavior.

Receiving Wide Coverage ...JPM Hearing Previews: Today the Senate Banking Committee will question regulators about JPMorgan Chase's $2 billion trading loss. Comptroller of the Currency Thomas Curry says in prepared remarks that his office is looking at whether the bank provided examiners with sufficient information about its trades before they went south, the papers report. The OCC is also looking at potential clawbacks of pay from traders and managers responsible for the blunder, and at what the regulator itself could have done differently, Curry is expected to say. We'd love to link to the actual testimony, but as we type at 7:19 a.m. Eastern, the actual testimony isn't up on the OCC or Senate Banking websites, so for now you'll have to get it filtered through the media outlets that received advance copies. The Morning Scan can vouch that at least one of these publications is reliable: American Banker, Wall Street Journal, Financial Times, New York Times.

On Wednesday, Occupy the SEC will be marching in Manhattan from JPMorgan Chase's downtown office to the SEC, calling for the agency to investigate Jamie Dimon himself for possible violation of the disclosure requirements of Sarbanes-Oxley Act.

In April the Consumer Financial Protection Bureau issued a statement that it was adopting the "disparate impact" concept in its enforcement of the anti-discrimination provisions of the Equal Credit Opportunity Act. It is doing so in a manner consistent with an Interagency Policy Statement issued in 1994 by the Department of Justice and other federal agencies involved with the enforcement of fair lending laws.

Recent delays by the CFPB and Treasury point toward a systemic policy malaise that threatens to make the housing recovery a decade-long event.

Websites such as Amazon.com are often cited as the gold standard for the online experience, but turning your financial institution website into a carbon copy of a retailer site is neither practical nor wise. No financial institution can be, or should be, just like Amazon, yet there are some strategies and tactics that banks can borrow from online retailers, particularly when it comes to cross-selling.

Receiving Wide Coverage ...The Worldwide Willies: Bank lending across national borders shrunk $799 billion in the first quarter, driven by a $637 billion decline in cross-border credit extended to banks, the Bank for International Settlements reported. Notably, cross-border claims on banks in the Eurozone fell $364 billion, the sharpest contraction since the scary final months of 2008. The Journal’s “Heard on the Street” column suggests this was symptomatic of a lack of mutual trust among banks, and surmises that the pullback must be continuing now, given the recent resurgence of fears about Europe. But the U.K. Daily Telegraph emphasizes the role played in the fourth-quarter shrinkage by deleveraging to comply with Basel III capital rules. (You can read the BIS’ report here.) In the FT, columnist Gillian Tett interviews an executive at a firm that operates cash machines across the Eurozone, whose team is “in a state of high alert, battling to ensure that the ATMs will always be stocked, in case consumers ever panic and rush to grab paper notes.” Tett makes some interesting points about the enduring psychological hold of physical cash in a world where money has become largely an abstraction. Wall Street Journal, Daily Telegraph, Financial Times