BankThink

Google removed 22 malicious apps from Android Market, its smartphone app store since last week — and has removed over 100 such apps this year.

Receiving Wide Coverage ...Fortress Fed: Ahead of the central bank's policy meeting today, the Journal has a lengthy feature taking stock of Ben Bernanke's six years as chairman. Among his current goals, the story says, Bernanke "wants to transform the Fed by making its murky decision making more transparent." He's already taken steps in this direction by initiating quarterly press conferences; potential strategies include disclosing the Fed's forecasts for short-term rates and adopting a formal inflation target. (There's also a sidebar with details on Bernanke's home mortgage.) Yet the Fed remains secretive in other ways. On the FT's "Money Supply" blog, Robin Harding writes that he made a Freedom of Information Act request for the Federal Reserve Board's reviews and examinations of the 12 regional Fed banks since 2000. The board rejected his request, arguing that the regional banks are "financial institutions" and thus information about them is confidential and exempt from FOIA. "This is a ludicrous catch-22 because the regional Fed banks are themselves financial supervisors of hundreds and hundreds of other banks," Harding writes. "Their performance in that role is a matter of public interest." Well said, and we might add that while confidentiality on bank-supervision matters may be necessary to avoid panics, it's hard to imagine a run on the New York Fed. We hope Harding appeals. On the other hand, Reuters' blogger Felix Salmon points out that other countries' central banks are even more opaque than ours. He cites a Bloomberg News story on the Fed's currency swap program, in which it has loaned dollars to foreign central banks to relend to local commercial banks. The Fed disclosed all the transactions with its counterparts, but even it may not know the identities of the ultimate borrowers; a Fed spokeswoman tells Bloomberg there's "no formal reporting channel" for it to get this information. And of course the foreign central banks don't publish it. At least the Fed is now bound by law - Dodd-Frank, to be exact - to identify borrowers from its discount window (after a lag of two years, to avoid stigmatizing them). God bless America, and good luck to Bernanke and Harding alike in their efforts to open more curtains at the Fed and let in that glorious sunlight.

Maybe it's better to leave home without it — people are at a greater risk of identity theft when they travel, USA Today reported Monday.

Short-term disruption of the financial services industry will most likely come from within: when banks partner with financial services entrepreneurs and embrace innovation. It's happened repeatedly in the payments sector: PayPal and Wells Fargo ten years ago, Square and JP Morgan Chase Paymentech today.

Expect more debt exchanges and cash tender offers from banks in the coming months. The strategy is rational and the alternatives for generating equity are limited at best.

Lots of ink has been spilled over financial events in Europe, but the essential issues are much more straightforward than they've been portrayed.

Yes, CUNA backtracked on the number of people who moved to credit unions on Bank Transfer Day. But so what? 440,000 new members is nothing to sneeze at. In fact, it's a stunning success.

As communication continues to digitalize and members become ever more mobile, credit unions need to stay ahead of the curve and ensure that they can communicate with members, no matter the channel.

Just because you are in the 1% does not mean you do not identify with and understand the needs of the 99%. But it does raise questions about how involved the "owners" are in the credit union's governance.

Receiving Wide Coverage ...ClusterSwap: European banks are even more exposed to the risk of government defaults than you think. According to a story in today's Journal, regulatory data released last week shows these institutions have been big writers of credit default swaps on government bonds of the continent's dodgier countries. And it's not just investment-banking-heavy multinationals like Barclays and Deutsche Bank that have been selling this insurance; smaller European institutions, like Landesbank Baden-Wurttemberg in Germany, have also been taking sovereign credit risk this way. Granted, CDS sellers typically hedge this risk by buying CDS on the same bonds. But as we've learned from the recent discussion of "gross" versus "net" exposure, those hedges are only as good as the counterparties behind them. And by and large the CDS-seller European banks appear to have bought their offsetting hedges from, well, other European banks. It is somewhat reassuring, though, to read this bit in the Journal story: "Some big banks … say they buy only from banks outside the countries in which they are seeking protection"; for example, "Deutsche Bank wouldn't buy Italian swaps from an Italian bank." No bank would do anything that foolish … right? Also in the Journal, the "Heard on the Street" column notes that the cost of a swap insuring against a default by Bank of America is higher now than it was in the dark days of early 2009. Moreover, there isn't as much difference between the cost of insuring B of A's senior and subordinated debt as there was then. These developments, the column says, suggest the market now believes two things: that the U.S. of A is less likely to stand behind B of A should the bank falter; and that regulators could well exercise their new resolution powers under the Dodd-Frank Act to wind down a giant institution, a scenario in which senior bondholders stand to lose money. Bottom line: "Investors aren't so sure 'too-big-to-fail' banks will always deserve that moniker." Lastly on the topic of CDS: it ain't exactly the smoothest five pages of text we ever read, but a new report by Nicholas Vause, a senior economist at the Bank of International Settlements, is worth the time. Data from June 2011, Vause writes, suggests that derivatives dealers have been transferring "multi-name credit risk" (the CDS market's equivalent of index funds, roughly speaking) to shadow banks (a broad category that includes insurance companies, pension funds and money market mutual funds, all of which lack the same public backstops and supervision of traditional banks). "These types of CDS can be difficult to value and have experienced significant price jumps in the past" (never a good thing if you've been a seller). Morning Scan translation: there may be more AIG-style blow-ups waiting to happen out there. Underscoring the aforementioned concerns about counterparty risk, Vause also writes that banks and security dealers have been net sellers of credit protection on financial-sector debt. "The risk of simultaneous default of protection sellers and reference entities is often higher when these institutions come from a common sector, rather than different sectors. As the financial sector is broad, however, this risk could have been mitigated by careful pairing of reference entities with counterparties." Morning Scan translation: let's just hope no one bought insurance against default by an Italian bank from another Italian bank. Or the same one.