BankThink

Receiving Wide Coverage ...Who Speaks for the Savers? The Times and the Journal offer critiques of the Fed's zero-interest rate policy. In her Times column, Gretchen Morgenson frames the argument in moral terms and implicates the financial sector: "The Fed drove down interest rates to almost zero to shore up big banks and an economy that those banks helped drive off a cliff. Now savers, who did nothing to create the financial crisis, are being punished." In a Journal op-ed, Andy Laperriere of the investment research firm ISI Group makes an economic case against ZIRP, arguing that encouraging consumption at the expense of savings will hurt growth: "Prosperity does not come from spending; it comes from work, saving and investment." Wall Street Journal, New York Times

The reviews, mandated by regulators, could turn up errors made by the mortgage servicers' auditors. What if the firm doing a foreclosure review previously audited the same client?

U.S. bankers and telecom providers seeking to crack the code on how to successfully implement and accelerate mobile payments can take a lesson from their peers in Kenya. This country is at the forefront of a mobile banking revolution that is empowering its citizens and opening up new lines of commerce.

Receiving Wide Coverage ...Crisis, Reform and Redress: In an op-ed in the Journal, Treasury Secretary Timothy Geithner says financial companies that complain about regulatory reform must have “crisis amnesia”: “My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system.” Of course, one can agree on the need for reform while questioning the kind of reforms that have been enacted. For example, in an op-ed in the FT, former FDIC head William Isaac and former Wells Fargo chief Dick Kovacevich argue that imposing “breathtaking” capital requirements is a less-than-ideal way to discourage reckless risk-taking. Equity holders, they note, have less power, and less incentive, to control risk than creditors do. As an alternative, Isaac and Kovacevich suggest requiring big banks to regularly issue senior and subordinated long-term debt, whose holders would absorb losses ahead of the FDIC and hence shield taxpayers. The mandatory debt issuance would subject banks to “market discipline”: “A risky bank would have to pay higher interest and ultimately might not be able to issue debt, which would curtail growth and force it to adopt a new strategy.” (The piece does express some qualified support for Dodd-Frank’s “living wills,” however.) The question of how to prevent another meltdown to one side, Phil Angelides, who chaired the Financial Crisis Inquiry Commission, wants to make sure those responsible for the one we just went through get their just desserts. “After the savings-and-loan debacle of the late 1980s, more than 1,000 bank and thrift executives were convicted of felonies. But today the rate of federal prosecutions for financial fraud is less than half of what it was then,” Angelides writes in the Times. The president’s new mortgage securities fraud task force holds promise, Angelides says, but the Obama administration must give it the proper tools, mandate and budget to succeed in investigating and prosecuting mortgage mischief. Wall Street Journal, Financial Times, New York Times.

One has to admire the tenacity of the credit union lobby. Once again, a handful of very large credit unions are putting pressure on Congressional officials to pass legislation that will increase credit unions' business lending authority from 12.5 percent of their total assets to 27.5 percent. The commercial banking industry has fought off similar attempts for such expansion in previous Congressional sessions and we are working hard to do so once again.

Bank of America's long-running tests to revamp the pricing of its checking accounts have landed it back in the spotlight.

Receiving Wide Coverage ...“Uneven and Modest”: That’s how Fed chairman Ben Bernanke characterized the economic recovery in his semi-annual Humphrey-Hawkins testimony before Congress. Bernanke also said during his testimony that regulators are likely to delay implementation of the Volcker rule, which is supposed to take effect in July. The Dodd-Frank Act allows the agencies to delay implementation by up to two years, he said. Wall Street Journal, New York Times, Washington Post, Financial Times

After more than three years of turmoil, the financial services industry is starting to regroup and move forward on the public relations front. It's a return to normalcy, accompanied with a natural inclination to return to the familiar and comfortable. But with new regulations and a rapidly changing communications environment, there is a need to consider fresh ideas — from unexpected sources.

Receiving Wide Coverage ...The Loan Arrangers: Happy days are here again. Sort of. After a string of quarters pulling back from risk, banks are finally signaling the time is right to grow again.

It's about time banks stop whining about increased regulation and do something to get ahead of it.