BankThink

In 2004, I had the unique distinction of being perhaps the only person in history to have the U.S. Senate place a bounty on his head. I didn't rob a train. My crime was leading a federal investigation into misconduct at Fannie Mae.

Receiving Wide Coverage ...Tarullo, in Private: As planned, major bank CEOs laid out their concerns about the recent stress tests, proposed counterparty exposure limits, and other regulatory issues to Federal Reserve Governor Daniel Tarullo in a closed-door meeting in New York. The FT says the meeting was "relatively calm," unlike the one last year in which JPMorgan Chase's Jamie Dimon reportedly chewed out Bank of Canada chief Mark Carney. "The banks came away hoping for some concessions from the Fed," the paper says. The Journal has a slightly different take, saying the concerns about new rules were "met with silence," though the article notes that the Fed is not allowed to comment on proposed regulations. "At least one CEO went in with low expectations and emerged from the meeting with a lukewarm view of the event," the Journal says. The Fed itself issued a statement saying Tarullo told the bankers that "their comments would be considered together with all other comments and feedback received from other interested parties," which could either be read as a polite way of blowing them off or taken at face value. Wall Street Journal, Financial Times

In this revenue compressed environment, I hear a lot about initiatives to change bank culture from service to sales to drive badly needed cross-sell revenues.

The gods of irony must be alive and well at American Banker. It's hard to think of a better explanation for the April 30 tirade against "deadbeats" from Andrew Kahr — whose approach to the credit business was described this way in a front-page San Francisco Chronicle news story in 2002:

One of the obstacles to an acquisition is that the offers never make it to the board. They tend to come first through the target's CEO, who stands to lose a job (and compensation) in any sale.

An influx of deposits and shortage of lending opportunities have made the investment portfolio's performance more important to a bank's success. Banks can get bigger returns from these portfolios.

Receiving Wide Coverage ...Counterparty Credit Limits: Today several financial services CEOs will meet with Fed Governor Daniel Tarullo to plead their case against (among other things) the regulator's proposed rule limiting banks' exposure to one another. Under the rule, credit to any counterparty would be capped at 25% of regulatory capital for most institutions and 10% for the biggest ones. The FT reports on "strident" comment letters about the proposal sent to the Fed by Goldman Sachs and Morgan Stanley. The former investment bank sounds familiar warnings about the threat to the U.S. economy and jobs. In his Times column, Peter Eavis parses another comment letter arguing against the rule, this one filed by the Clearing House, a trade group that's been taking on a higher profile and a broader agenda in the last few years. American Banker's Donna Borak has written a helpful explainer about the Tarullo meeting, which will also cover the recent stress test results that confused and angered the bankers and other regulatory proposals under Dodd-Frank that make them nervous. And for an opinionated take on the pow-wow, go to BankThink, where Akshat Tewary, a lawyer, FINRA arbitrator and member of Occupy the SEC (a "subgroup" of the Occupy Wall Street movement) argues that counterparty limits will ultimately benefit the financial services industry itself along with taxpayers, consumers and nonfinancial firms.

Recently, the issue of a lender's authority and right to pursue foreclosure on defaulted residential mortgage loans has become a subject of national interest. It is at the heart of the $25 billion settlement agreed to recently between the Federal government, 49 state attorneys general and the nation's five largest loan servicers.

The Fed's counterparty limit is not so much a banking rule as an indirect antitrust rule. It will create opportunities for smaller institutions to compete. That's the real reason terrified big-bank CEOs are meeting with Fed Governor Tarullo.

Executive compensation has been an important topic in the investor community for over a decade. Unfortunately, shareholders have gone largely unheard and the issue has been little more than a blip on the radar of corporate America.