Wall Street Journal

Zions Bancorp is a comparatively small and simple fish in the "too big to fail" pond, but it's among the banks that's struggled most with the Federal Reserve's stress tests. The paper implies that Zions' predicament may be indicative of the problems with the $50-billion asset threshold used to determine which institutions are systemically important. The Salt Lake City lender focuses on "meat and potatoes banking," like lending and taking deposits, whereas most of the firms subject to the stress tests tend toward a more varied and potentially risky menu of activities. The paper also points to Zions' now greatly reduced portfolio of collateralized debt obligations as a source of trouble in the tests: "In its predictions of the stress tests, Zions didn't assign any hypothetical losses to its remaining portfolio of CDOs. The Fed, by contrast, forecast $400 million worth of losses."

Ocwen Financial is pushing back against institutional investors' attempt to "remove the firm as the servicer of billions of dollars of mortgage pools," the paper reports. The investors penned a letter to trustees in January charging Ocwen with shoddy servicing practices. Ocwen has now volleyed back with the charge that investors just don't want it to make loan modifications for borrowers.

Banks are increasingly hanging onto their mortgage loans rather than selling them off to investors, writes John Carney of "Heard on the Street." One of the main forces behind this shift appears to be Fannie and Freddie's higher guarantee fees. This trend may put a dent in Fannie and Freddie's earnings, but he says the news is probably worth a toast: "private capital is playing a larger role in funding mortgages, something housing-finance reformers have long cited as their goal."

The shadow-banking sector has increased short-term credit for the first time in 82 months — a good sign for the economic recovery, according to the paper.

Financial Times

Benjamin Lawsky is throwing his hat into the Libor-probe ring with an investigation into Deutsche Bank, the paper reports. The German bank is already in settlement talks over the Libor scandal with the Justice Department. The involvement of New York's Department of Financial Services "could lead to stiffer penalties" for Deutsche, according to anonymice.

Bank of America's long-term shareholders now have more of a say in the makeup of its corporate board. The bank caved to pension funds' request and changed its bylaws to allow shareholders who have owned "stocks representing at least 3% of voting power" for at least three years to nominate board directors.

New York Times

Would bank executives be more inclined to abide by the law if their own money was on the line? Gretchen Morgenson suspects the answer is yes. She offers a rundown of two proposals that make the same assumption. Citigroup shareholders are slated to vote on a proposal in April that would force the bank's executives to kick a "substantial portion" of their annual compensation into a pool of money that could be used to pay for penalties. Citi is not a big fan of this idea, and it doesn't have to implement the proposal even if shareholders approve it. But Morgenson thinks the bank might give in if the drumbeat gets loud enough. Meanwhile, a professor and trial lawyer for the Office of the United States Trustee has another idea. He proposes that bank executives discovered to have presided over a period of governance failings should give up 25% of their compensation for the three years before the wrongdoing began.

We're missing a lot of data on student loan debt, and University of Michigan professor Susan Dynarski worries this limits our ability to judge "the risks that student debt places on individual households and the economy as a whole." If the Education Department isn't equipped to crunch the numbers on delinquency rates and debt relief programs, she suggests it hand the information over to the Federal Reserve or the Consumer Financial Protection Bureau.

Banking lawyer H. Rodgin Cohen is treated to a sonata by the world's tiniest violin in a Reuters Breakingviews column. The authors take issue with Cohen's recent claim that the fear of regulatory capture is a "canard" ruining the relationship between bank examiners and the firms they oversee. Banks need tough supervision, according to Daniel Indiviglio and Anthony Currie; they advise firms that they'll get used to post-crisis regulatory burdens eventually.

Now-retired Dallas Fed president and frequent dissenter Richard W. Fisher was "frequently mistaken in his economic predictions but seldom boring" during his tenure, according to Binyamin Appelbaum. The article also reveals that Fisher, who stepped down from his position last week, has a colorful personal history as an entrepreneur. In college, he earned money by working "as a cook and a crew member on the yacht of a wealthy alumnus, and by renting his dorm room to amorous couples."

New York's Department of Consumer Affairs is launching a car loan program that aims to provide low-income borrowers with a way to get affordable credit from lenders rather than dealerships. The department is asking banks that participate in the program to cap interest rates at 16% and clearly disclose the terms of the loans.

A column by the Morning Star Company founder Chris Rufer argues that the Export-Import Bank is a "case study in corporate welfare." Rufer writes the Koch brothers also oppose the bank on these grounds, an assertion that prompted some disbelief among Times commenters.

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