BankThink

Receiving Wide Coverage ...Deal or No Deal? There was brief speculation Monday that President Obama would announce a settlement of government probes into foreclosure abuses in his State of the Union address tonight. Those hopes (or fears, for some consumer advocates) were dashed when Iowa Attorney General Tom Miller, the leader of the multistate task force negotiating with the top five mortgage servicers, went out of his way to say there would be no deal reached this week. For the skeptical consumer advocates, that’s just as well; they “fear the pending settlement would allow banks to pay only a fraction of what is warranted and escape legal culpability for a wide range of abuses that have yet to be fully investigated,” according to the Post. An additional objection is that the banks reportedly would be allowed to earn “credits” toward the $25 billion settlement amount by writing down first mortgages they service for investors, but would not have to swallow losses on the second mortgages the banks themselves own. “This reverses the contractual hierarchy that junior lienholders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration’s instigation,” writes “Naked Capitalism” blogger Yves Smith, who rarely makes a point she doesn’t feel the need to italicize. And yes, those “credits” mean the industry isn’t necessarily going to pay the whole $25 billion out of pocket; the cash portion might be as small as a fifth of the total. On Monday administration officials pitched the tentative terms reached with the servicers to all the states’ attorneys general. A handful of AGs, including California’s Kamala Harris, remain wary of potentially giving away the store. Anonymice tell the Journal that the timetable for a deal is now early February. Wall Street Journal, Washington Post, Naked Capitalism, Financial Times

"Rich" Cordray (as his sidekick Raj Date calls him) is being unfairly stigmatized by press references to him as "5-time Jeopardy winner." As if that were his greatest qualification!

My guess is that Shaun Donovan and Tim Geithner are burning the midnight oil and firing up the afterburners in attempts to wrap this agreement up by Tuesday’s State of the Union address.

Many credit unions have used an RFP in selecting a provider of executive benefits, a complex business that requires specific and detailed knowledge, especially for a tax-exempt organization. But dusting off an old RFP that was used to select a software vendor or a 401(k) provider simply won't work.

I think Mr. World Peace is on to something, and that credit union CEOs just might want to borrow this strategy for their own ends. Yes, I'd certainly be the first to agree, the leaders of America's credit unions aren't always the first to jump onto a trend, but theopportunities here may just be too good for even the stodgiest of execs to pass.

Regarding the disclosure of CAMEL ratings, Aesop recalls the fable of "The Mice and the Weasels" who waged a perpetual war with one another.

2011 acted as a wake-up call to what is happening in our nation. The very fabric of the American Dream is being unwoven by globalization, public policy and even consumer behavior.

In response to State Employees Credit Union disclosing its CAMEL rating and the resulting fallout in North Carolina, I think that transparency is always best. Examination ratings and examination findings should be public information.

Receiving Wide Coverage ...Executive Pay: The Journal and the Times have somewhat different takes on the compensation disclosures from JPMorgan, Morgan Stanley and Citi that came out late last week. "Bonuses Pinched for Bank CEOs," the Journal's headline declared, though the first paragraph elaborated that some bonuses were pinched more than others. The stock bonus for JPMorgan's Jamie Dimon was flat, Morgan Stanley chief James Gorman's stock award was cut in half, and Citi's Vikram Pandit got his first stock award since the financial crisis. The Times' headline telegraphed a more critical take: "Bad Year for Wall St. Not Reflected in Chiefs' Pay." The article suggests that lower-level employees took bigger pay cuts than the top brass at the banking and securities conglomerates, and that any hit being taken by these CEOs to their compensation packages is modest compared to the suffering of shareholders as the companies' stocks tanked in 2011. Meanwhile, "Heard on the Street" in the Journal notes that there's a hitch to the much-celebrated trend of deferring bankers' bonus pay: "firms may be locking in compensation expense that isn't matched by future performance." If revenues fail to rebound, "firms could actually be handcuffed on pay. In the face of further revenue declines, a firm could find itself saddled with large accruals for deferred compensation."

President Obama assured that 2012 would get off to a rousing start when he made a recess appointment of Richard Cordray as head of the Consumer Financial Protection Bureau. Predictably, the appointment generated both praise and outrage.