BankThink

It´s open season on regulatory restructuring: Bank regulators are gathering in the House Financial Services Committee this morning to share their views on the Obama administration´s plan to overhaul the financial system. BankThink is brining you live blogging coverage of the hearing, which will consist of two panels of witnesses. Treasury Secretary Timothy Geithner will take the stage first, alone. He´ll be followed by Federal Reserve Chairman Ben Bernanke, FDIC Chairman Sheila Bair; Comptroller of the Currency John Dugan, OTS Director John Bowman, and Joseph Smith, Jr., the North Carolina state banking commissioner, testifying together. Stay tuned.

Editor's note: this is the second of two articles exploring how the financial crisis impacts CU employees. The first article can be found here.

Aug. 1 marks the date that financial institutions and other creditors must be in compliance with the Red Flag provisions of the Fair and Accurate Credit Transactions Act of 2003 (FACTA).

"We have to cut costs." That statement has become the mantra of the past two years, leaving many already-lean credit unions faced with some tough decisions. Reducing personnel or closing branches early might chop expenses, but these tactics could also erode service. Salary freezes might cause top employees to look elsewhere. Delaying new product offerings could put the institution at a competitive disadvantage in the market.

I always enjoy reading Frank Diekmann's weekly column, since he often looks at issues affecting credit unions from a different angle than most. This is particularly true of his editorial in the July 13 issue regarding a national brand campaign for credit unions. In the editorial, he makes the observation that such a national branding campaign is not going to come from the top down; rather it will come from the bottom up. Clearly, that has been the case here in Pennsylvania.

Word of mouth, it has long been said, is the most powerful form of advertising. Indeed, credit unions have long claimed that they make up in word of mouth what they lack in advertising and marketing budgets, though it's a safe bet most marketing directors would happily take a few more dollars just to be safe.

Trouble in the commercial real estate market is highlighting a disparity between large and small banks with ominous implications for the Obama administration´s approach to "too-big-to-fail." Though officials have insisted that banks would not want to be classified as "Tier 1" institutions due to the higher capital requirements and additional leverage restrictions they´d face, the CRE problem proves there are still advantages to being very big.

It appears that Freddie Mac´s new CEO Charles E. "Ed" Haldeman, Jr. is in for a surprise. The former chairman and CEO of Putnam Investment Management, LLC insisted in an interview with American Banker today that he wanted to participate in the reshaping of the government sponsored enterprises. Amid calls alternately for their elimination or rehabilitation, Haldeman is expecting to have a say in the final formulation of a plan for ending their government conservatorship. "I want to be involved in a debate where we identify the advantages and disadvantages of each possibility," he said.

The pieces of a more equitable fate for troubled financial giants are beginning to come into view as evidenced by this week´s private-sector rescue of CIT. The lender´s salvation may serve as a prop for future government bailout strategies. But its ordeal is also further proof that the government needs more power to seize and resolve large companies.

Federal Reserve Chairman Ben Bernanke will be making the rounds in Congress this week to discuss the state of the economy while the other banking regulators prepare to voice their views on regulatory restructuring. The Office of the Comptroller of the Currency´s underwriting survey is due out early in the week, and the Treasury department is expecting by Thursday letters from the largest 25 banks detailing their progress on loan modifications.