BankThink

There's a sizable, growing community of people who'd be receptive to the notion that you can get needed services without having to support the companies that have inflicted so much damage on the economy and the country.

The Consumer Financial Protection Bureau is working to finalize the definition of a Qualified Mortgage under the forthcoming ability-to-pay regulations. These regulations will have profound implications for the entire U.S. residential mortgage market.

Your credit union is quite likely a strong supporter of education in your local community.

Re "Carving Up Big Banks Won't Work, Any Way You Slice It":

Receiving Wide Coverage ...Money Market Funds, Again: The Journal reports that money market funds are getting eleventh-hour support from two Republican congressmen in their fight against new regulations. Spencer Bauchus and Jeb Hensarling, both senior members of the House Financial Services committee, recently fired off a pointed letter to SEC Chairman Mary Schapiro, urging that she do more analysis before pressing ahead with new rules. This came after money fund executives held a whirlwind series of meetings with lawmakers on both sides of the aisle last month. A formal SEC proposal was supposed to come out a few weeks ago, but it’s apparently been delayed for at least a month. Among the agency’s five commissioners, two are against the Schapiro plan, two support it, and Luis Aquilar remains officially undecided but publicly skeptical. Separately, in an op-ed in the Journal, Eric S. Rosengren, president of the Boston Fed (which ran an emergency loan program for MMFs during the crisis, Beantown being home to many mutual fund managers) argues that the funds still need reform. The subset of MMFs known as prime funds take on credit risk to a degree that’s “inconsistent with investors' perceptions of a low-risk, highly liquid investment,” he writes. For example, more than 60 of these funds had exposure to Dexia, the French bank that got bailed out last year. (Former banking regulator and current money fund advocate Jerry Hawke has cited MMFs’ ability to meet a high number of redemptions without incident during last year’s Euro panic as evidence that the SEC’s 2010 reforms were sufficient.) Rosengren also says a forthcoming white paper from the Boston Fed will show that money fund sponsors had to shore up their funds at least 50 times from 2007 to 2010. You can’t rely on sponsors to always have the will and the wherewithal to step in like this, he argues (and if the sponsor’s a bank, you can’t assume regulators would allow it to do so). Rosengren calls the SEC’s plan, which would require floating net asset values and capital buffers and restrict immediate redemptions, “thoughtful [and] stability-minded.”

When I see my name in print included alongside names like Sheila Bair, Tom Hoenig, Richard Fisher, and Simon Johnson, I take notice.

Trying to keep up with developments in mobile financial services can be a dizzying prospect. Banks are fearful of being left in the dust, yet they are hesitant to make a big bet on mobile that could possibly distinguish them from the rest of the field but could just as easily fail.

Receiving Wide Coverage ...Maiden’s Suitors: Following the Citi-Goldman-Credit Suisse team-up, two more consortiums have been formed to bid for the complex securities from the New York Fed’s Maiden Lane III portfolio, the papers report. The second alliance consists of Bank of America Merrill Lynch (no comma missing there; that mouthful is just one dealer), Morgan Stanley and Nomura. The third partnership is the most interesting since it’s made up of the two investment banks that are said to have a special pricing advantage: Barclays and Deutsche Bank. The European duo reportedly intends to unwind the CDOs and sell off the underlying bonds for a profit, a play that would be difficult or at least expensive for any other bidders since Deutsche already owns other pieces of the same CDOs and Barclays is the interest rate swap counterparty on the transactions (hence both firms must be bought out to collapse the deals). Old-school CitiGoldSuisse, on the other hand, plans to just resell the CDOs in their current form to clients if it wins the auction. Most interestingly, BankAmeriMorgNom wants to repackage the CDOs into new securities with higher ratings, according to the FT. (CDOs of other CDOs? Ratings arbitrage? Where have we heard that one before?) The Journal, and to a lesser extent the Times, emphasize the “how far we’ve come” angle: The reason the New York Fed owns the Maiden Lane assets in the first place is that it took the stuff off the hands of investment banks in the fall of 2008 when AIG, which had insured the then-radioactive paper, was wobbling. Yet the same bonds are now in hot demand on the Street. Financial Times, Wall Street Journal, New York Times

Arnold Schwarzenegger said, when he was first elected as governor of California, that he wanted to "blow up the boxes" of the state bureaucracy.

American Banker apparently feels duty-bound to publish a story whenever it learns of a credit union that is not supporting the industry’s effort to enact legislation raising the cap that now constrains credit unions' ability to lend to small businesses ("Third Credit Union Dissents on Business Lending Bill," April 23).