BankThink

Lots to watch for in Washington this week, with the House of Representatives taking up credit card reform and some members of the Senate urging a look at the Federal Deposit Insurance Corp.´s borrowing authority, as well as possible movement on mortgage cramdown legislation.

Another point about yesterday´s revelation from New York Attorney General Andrew Cuomo about the pressure on Ken Lewis to go through with the Bank of America/Merrill Lynch merger: Why did Lewis, known as the "red-blooded" southern, tough-guy banker, not call former Treasury Secretary Henry Paulson out on his bluff? Paulson didn´t technically have the authority to fire anyone.

After a letter from New York Attorney General Andrew Cuomo yesterday revealed that Bank of America CEO Ken Lewis may have been cowed into completing a merger with Merrill Lynch on threats from former Treasury Secretary Hank Paulson, we knew it was time to check in with one of Lewis´ most fiery shareholders, Evelyn Y. Davis. The D.C. scion misses no meetings and takes no prisoners. And as other shareholders´ fury mounted over Lewis apparent failure to disclose the true wretched state of Merrill´s books, we wondered what Davis had to say about the debacle.

Some might argue that Karl Marx was vindicated last year. It seems that capitalists can't miss an opportunity to spoil a good thing, given enough time. Prosperity leads profit seekers to over-invest, Marx would say, and when capacity eventually outstrips demand the whole things collapses. The next generation of winners picks up the pieces at liquidation prices, and the whole cycle starts once more.

Over the last two years, I have often found myself mystified while reviewing the Asset Liability Management (ALM) practices of my community banking clients. When I ask for liquidity forecasts, many times I get a blank stare. At best I may receive a forecast for an upcoming week — with nothing beyond that timeframe.

Oddly, for a country that pioneered the concept of "closure" and that couldn't rest until a movie was finally made showing Gilligan and the others being rescued from the island, mergers never seem to have an epitaph.

Just a quick query to readers of Paul Volcker´s Group of 30 regulatory restructuring proposal: How badly do you think he wanted to do away with mark-to-market accounting while he was writing it?

It´s hard to determine what´s most important: Last week the Government Accountability Office released a report highlighting missed deadlines at the Small Business Administration, which was supposed to have a program to help stimulate the secondary market for SBA loans set up by April. The GAO report said that could now be delayed until June, and SBA lenders and broker-dealers have been clamoring for help, claiming they can neither lend nor trade on the secondary market until it arrives. But a private company that tracks SBA lending and loan sales is claiming activity has increased, despite the delay in real aid to the secondary market.

In recent hearings on Capitol Hill, Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Timothy Geithner have been grilled over the role of China in the world economy.

Collectors often balk at the idea of Collateral Protection Insurance (CPI) because they believe it will make their job more difficult despite the significant financial benefits to the credit union. They fear that adding the cost of force-placed insurance to loan balances and monthly payments will make collecting more difficult and increase delinquency.