BankThink

Joe Smith could choose a large consulting firm as project team leader only and mandate that this firm pick experts and on-the-ground compliance staff from a wider range of outfits.

The Senate is preparing to consider legislation that would allow credit unions to engage in more commercial lending, a proposal that the industry has long championed. This proposal is a really bad idea, but because of the political constituency behind credit unions it may actually be passed into law. In the event, the National Credit Union Association and the U.S. taxpayer may be facing significant losses in the future.

Receiving Wide Coverage ...Earnings: JPMorgan Chase and Wells Fargo reported first-quarter results this morning. JPM handily beat analyst estimates, according to the early takes. Previewing JPMorgan's conference call, the Journal's "Ahead of the Tape" said the tone taken by CEO Jamie Dimon "will influence how investors view banks generally." Doesn't it always? The column also notes that "Dimon may have to explain how headline-grabbing trades like those by a unit in London will be affected by a ban on proprietary trading," and we suspect the impetus for him to address the matter will be especially strong now, after this Bloomberg headline: "JPMorgan Said to Transform Treasury to Prop Trading." Another earnings curtain-raiser story in the Journal takes a broad look at how expenses — for things like litigation, compliance and foreclosures — are burdening banks. The FT says the administration's revamped Home Affordable Refinancing Program should aid bank profits in the upcoming reports, though. Wells Fargo, for example, could generate an extra $2 billion to $4 billion of revenue this year from refinancing underwater borrowers through the government's "scheme," as the Brits at the FT call it. (The word's not pejorative on their side of the pond.)

The large municipalities can leverage their primary banking relationships to help their communities — as opposed to seeing all of the benefits accruing to the too-big-to-fail financial conglomerates.

Exposing complex financial instruments to the vetting of thousands of experts could help restore trust in banks.

Receiving Wide Coverage ...Two More Years of This? Try Three: Janet Yellen, the Fed’s vice chairwoman, emphatically supported the central bank’s plan to keep rates super-low through late 2014 and suggested easy money may need to continue “until late 2015.” Wall Street Journal, Financial Times, New York Times, Calculated Risk.

The period when banks report their first quarter financial performance is about to begin. These performance numbers will likely reinforce the reality that, absent significant changes, many banks simply cannot attain the level of profitability needed to remain viable.

The industry is like a 1920s Hollywood actor who does not understand the new technology, has not seen it coming and doesn't understand why the change is happening.

The agencies can use their discretion to act without discretion: treat all banks alike, big or small, and declare that no nonbanks are "systemically important," i.e. too big to fail.

Receiving Wide Coverage ...DeMarco Blinks. No, He Doesn’t: Just reading some of the headlines about Ed DeMarco’s speech yesterday, you’d think the Federal Housing Finance Agency’s indefinitely acting director had flip-flopped and endorsed principal reductions by the GSEs. “Analysis: Write-Downs Would Benefit Fannie, Freddie.” “Housing regulator argues for debt forgiveness.” “New Stance on Forgiving Mortgages.” Well … not quite. The stories make clear that DeMarco remains unconvinced the benefits of having Fannie Mae and Freddie Mac reduce mortgage principal (e.g. the borrowers would be more likely to make payments) would outweigh the costs (e.g. other borrowers might be more likely to miss payments if they see they can get a break). His “new stance” seems to be “meh.” “This is not about some huge difference-making program that will rescue the housing market,” he said. “It is a debate about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand homeowners while minimizing further cost to all other homeowners and taxpayers.” DeMarco, who’s been under pressure from the administration to allow the GSEs to write down mortgages, said he’ll make a final decision on the matter this month. Wall Street Journal, Financial Times, New York Times, Washington Post.