BankThink

To borrow from Mr. Becker's disingenuous BankThink piece ("More Credit Union Business Lending Would Boost Economy"), it's time for our nation's leaders to get serious about credit unions.

Banks spend a great deal of money remodeling branches. Many fork over tens of millions of dollars on remodel initiatives every year, and some of the largest banks will spend over $100 million.

The banking industry, its management teams and boards of directors have been served notice that much more will be required of them.

A lack of jail sentences for financial executives doesn't have to mean justice wasn't done.

Receiving Wide Coverage ...The (Slow) Death of Cash: Canada is getting rid of its penny, which now costs 1.6 times more to produce than it’s worth. Here in the U.S., meanwhile, Christian Science Monitor guest blogger Joseph Salerno declares that Washington has been waging a “war on cash” by refusing to print bills in denominations larger than $100 since 1945. And a Benjamin today sure doesn’t buy as much as it did back then. “This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods,” Salerno writes, bemoaning the loss of privacy that comes with transacting on the grid. Even if you find Salerno’s interpretation of events a touch conspiratorial, keep reading. In the second half of his post he reports a truly amazing phenomenon: the emergence of Tide detergent as a black-market currency for the drug trade. Not any laundry detergent, mind you, just Tide. It fits the bill, as it were, for a currency, Salerno writes. “Tide is the most popular brand of laundry detergent and is widely used by all socioeconomic groups. Tide also is easily recognized because of its Day-Glo orange logo. Laundry detergent can also be stored for long periods without loss of potency or quality. … Enough can be carried by hand or shopping cart for smaller transactions while large quantities can easily be transported and transferred using automobiles.” We hesitate to call Procter & Gamble for comment. For a more optimistic perspective on the digitization of money, MIT’s Technology Review interviews former Treasury Secretary and White House economic advisor Larry Summers about his work with Square (he’s on the board of Jack Dorsey’s disruptive payments company) and the tech VC firm Andreesen Horowitz (where he’s a “special advisor,” which means contributing as “a thinker, not just as a door opener”). “Today, money can get transferred from any part of the planet to any other part of the planet, essentially instantaneously,” says Summers, who also teaches at that other university in Cambridge, we forget what it’s called. “I think for the most part that's a positive thing. People can see prices more easily, they can act on their desires more efficiently; friction is rarely a good thing.” And if you haven’t already, check out American Banker’s video interview with David Wolman, author of the book “The End of Money,” in which he talks about the moral and public-health arguments for doing away with cash, the adoption hurdles for mobile payments, and the privacy issues that quite understandably bother people like Salerno (and us as well, we should emphasize). (While we’re shamelessly self-promoting, watch the clips from our recent analyst roundtable on a meat-and-potatoes banking topic: the future of superregional banks. The latest video focuses on the risks facing this category of institutions; another video has our panel of experts explaining why they nevertheless consider the mid-tier banks the best-positioned group in the new environment.)

The Federal Reserve Board is preparing to release yet another important rule required by Dodd-Frank: how and why fraud occurs in debit card transactions and who should have to pay for it.

Bankers should take these red flags into account when assessing corporate credit and vendor risk. No. 1 on the list: when a company's chairman and CEO are the same individual.

Receiving Wide Coverage ...Lord Blankfein: The financial commentators pan Goldman Sachs' "compromise" of appointing a "lead" director to avoid a shareholder vote on severing the chairman and CEO roles, currently both held by Lloyd Blankfein. While the lead director will do some of the things a nonexecutive chairman would, "BreakingViews" in the Times notes that the investment bank "has in the past argued that one reason it was opposed to splitting the chairman and chief executive roles was that it had a presiding director, John Bryan, who effectively performed these duties already. … Goldman appears to be doing little beyond changing the name of the role." And "Heard on the Street" in the Journal provides a nice précis of why having a nonexecutive chairman is considered a best practice for corporate governance: "The chief executive runs the business and is the main advocate of management's view. The chairman has a primary interest in long-term strategy and protecting the interests of shareholders. While those goals are usually aligned, they can diverge. This is particularly true at financial firms where executives can pursue risky short-term plays in the hope of securing bigger payouts, even if doing so comes at the long-term expense of the firm and shareholders." Yet among the six largest U.S. financial firms, the column notes, the only two that have separated the chairman and CEO jobs are the damaged goods: Citi and B of A. Wall Street Journal, New York Times.

Last week, the Public Company Accounting Oversight Board held its first public hearing relating to its 2011 findings that all of the Big Four CPA firms [Ernst & Young, KPMG, Deloitte & Touche and PricewaterhouseCoopers] have failed to follow generally accepted accounting principles and frequently lack independence from management.

Despite all of the new powers at their disposal, regulators continue to emphasize simplified and standardized disclosure as a critical tool to ensure consumers get a fair deal.