Law and regulation

WASHINGTON — Two officials of the Consumer Financial Protection Bureau who played important roles in shaping the new mortgage rules have joined Wells Fargo (WFC).

Without meaningful transparency on banks’ financial reports, regulatory capital ratios and living wills, anyone writing about bank earnings is a willing actor in banks’ quarterly earnings Kabuki theater.

American Banker readers share their views on the most pressing banking topics of the week. As excerpted from the Comments sections of AmericanBanker.com articles.

Under its aggressive quantitative easing program, the Fed is borrowing short-term and investing long-term, exposing itself to severe interest rate risk when short-term rates rise, writes former Fed economist Scott Hein.

American Express' joint travel venture may get delayed as it awaits regulatory approval, CFO Jeff Campbell told investors Jan 16.

WASHINGTON — Good bank supervision is the best wait to limit risks to the financial system, but monetary policy can be used to promote stability in rare instances, Federal Reserve Gov. Jeremy Stein said Wednesday.

WASHINGTON — Comptroller of the Currency Thomas Curry said his agency is increasingly concerned about the cybersecurity risks from banks relying too much on certain vendors and using service providers in foreign countries.

As drafted, the Johnson-Crapo bill would allow big banks to originate, aggregate, and guarantee mortgages. Small lenders worry such vertically integrated companies could price them out of the business.

Sens. Sherrod Brown, D-Ohio, and Elizabeth Warren, D-Mass., urged regulators on Wednesday to tighten restrictions on banks involved in physical commodities markets.

Bank of America Corp. is paying $950 million to settle claims that its Countrywide unit pooled faulty mortgages into securities that helped hobble Financial Guaranty Insurance Co. and saddled buyers with losses.

Demand for loans by consumers and businesses grew in the first quarter, according to a Federal Reserve report released Wednesday.

The Obama administration is urging activists like the National Council of La Raza to support legislation to overhaul the housing finance market, ahead of a Senate Banking Committee vote scheduled for late April.

A poor showing for a bank in the Dodd-Frank stress test would need to be reflected in a counterparty bank's internal rating system, potentially restricting the bank's access to market liquidity.

The moves are part of a recent trend of banks exiting businesses that they believe have fallen out of favor with regulators.

U.S. banks today are safer, sounder, more secure, transparent, accountable and are performing their critical roles in the global economy.

The Office of the Comptroller of the Currency is likely to make changes to its proposal outlining the "heightened expectations" the largest banks must face after the industry raised concerns that certain provisions could backfire.

The most notable quotes from American Banker stories of the previous week. Readers are encouraged to add their own observations in the Comments fields at the bottom of each slide.

Banks need to take fewer risks and hold more capital, but recent regulations, including the Volcker rule, are "not cost-effective" for banks and "too expensive for the potential benefits." That's bank critic Anat Admati, the Stanford finance professor and co-author of "The Bankers' New Clothes," who also discusses big banks' corporate governance and recent probes into high-frequency trading.

WASHINGTON — Federal Reserve Board Chair Janet Yellen said Tuesday that the largest banks need to face higher capital requirements to stem potential risks to the financial system.

The proposed Small Lender Mutual cooperative would be expensive for small firms to capitalize, and its securities may get inferior pricing compared to those issued by large banks and nonbanks.