BankThink

Like roaches, op risks hide well, multiply quickly, and should be everyone’s problem to stomp out.

Imposing fees risks further alienation of consumers, raising the stakes on the “dare” to consumers to find other ways to meet their financial needs. And there are new and better ways for banks to make money.

Receiving Wide Coverage ...Something to Stress About: Unlike the last round of stress tests, which left it up to banks to release the results, the Federal Reserve plans to open the kimono on the current assessments of banks’ ability to withstand a severe downturn. The six biggest banks will have to project how they’d fare in an imaginary scenario where the European crisis metastasizes into a Lehman-like market catastrophe. And all of the top 19 banks will have to model their performance in a world where unemployment soars past 13% (well above the hypothetical-but-not-so-far-from-reality joblessness rates in the last two sets of stress tests). The assessments are due in January; after reviewing this information the Fed will make it all public in March. “The tough guidelines are a sign the Fed hopes to convince investors that its scrutiny will be tougher than recent tests in Europe,” the main story in the Journal says, though the “Heard on the Street” column laments that it took the panic across the pond for the Fed to see the merits of transparency. The FT, on the other hand, describes disclosure as a double-edged sword: “The pledge of more published data has the potential to reassure or frighten investors.” In a video on the British paper’s website, its U.S. banking editor, Tom Braithwaite, notes that the 2009 stress tests, which were considerably more transparent than last year’s, were “a good confidence boost to the market.” But as the details of the latest tests were announced after the market close Tuesday, the futures market sold off on fears that banks would be forced to do more dilutive equity raises. “Never mind not increas[ing] their payout to investors,” Braithwaite says, “could we be back to a situation where banks were raising capital?” Like the doctor says, you’ll have to wait until the results get back from the lab, please schedule a follow-up with our receptionist. Wall Street Journal, Financial Times, New York Times

Microsoft insists the online gaming service associated with the Xbox 360 did not experience a security breach despite some U.K. consumers who say they fell victim to a phishing scam tied to the video game system.

At the end of October, the Obama Administration announced changes to the Home Affordability Refinance Program that conceivably will make as many as 2 million more homeowners eligible for refinancing over the next two years. This will lower the default risk for the government sponsored entities and their ultimate backers, the American taxpayers, and should provide some level of economic stimulus.

There is always room to maneuver when a balance sheet number represents "management's best estimate."

Don't count on mobile antivirus programs to provide the same protection that they do for PCs.

Google's flashy new mobile security feature, which lets users unlock their phones with facial recognition, is generally considered less secure than a plain old PIN.

Receiving Wide Coverage ...More Bad News for B of A: "Bank of America's board has been told that the company could face a public enforcement action if regulators aren't satisfied with steps taken to strengthen the bank," the Journal reports, citing anonymous sources. Meanwhile, the FT notes that a federal judge's ruling will allow the attorneys general of New York and Delaware to intervene in Bank of America's controversial $8.5 billion mortgage bond settlement. "The action concerns far more than the financial interests of a few sophisticated investors" that agreed to the deal, the judge ruled.

Brian Moynihan, CEO of Bank of America, belatedly rationalized the Bank's announcement of a $5 per month fee for use of debit cards (which was later rescinded) by saying that the fee was "completely clear and transparent." Silly defense for such a grotesque blunder.