The Wisdom of Earl

"My Name is Earl," a short-lived sitcom on NBC, might have been canceled two years ago, but House Financial Services Committee Chairman Spencer Bachus stills sees value in the show, which concerned the exploits of a small-town criminal trying to make amends. Speaking at a Credit Union National Association conference last week, Bachus invoked Earl in an effort to make sense of Congress.

"You wonder about Earl," Bachus said. "Does Earl just not get it? Is that his problem? Is he just oblivious? Or does Earl get it but he doesn't know what to do about it? Or Earl may know about it, knows there's a problem, probably knows how to solve it and just chooses not to."

Bachus said he thinks " the U.S. Congress today is sort of like Earl. We are divided into people that just don't get it or they get it but they don't know what to do about it or they get it, they know what to do about it but they choose not to."

Bachus said this Earl-syndrome is directly related to some Dodd-Frank provisions, including one to limit debit interchange fees for large institutions. "You as credit unions were told the interchange fees didn't apply to you," Bachus said of the rule. "How many of you think it does apply to you?"

After several raised their hands, Bachus continued, "Well, you're right. We know it applies to the community banks. Well, what is Earl gonna do about it? He knows it applies to you."

Routing Turns 100

This year marks the hundredth anniversary of a prosaic, but integral, feature of the U.S. banking system: uniform routing numbers.

Remarkably, through that entire century, those numbers on the lower left hand corner of your checks have been assigned and cataloged by the same two partners: the American Bankers Association and the company that is known today as Accuity. (When the partnership started, the business was a part of Rand McNally, of World Atlas fame.)

To commemorate the centennial, Accuity held a reception Tuesday night at the Museum of American Finance on Wall Street. On display, in a glass case, was the very first edition, published in 1911, of the "Key to Routing Numbers of the American Bankers Association." The book was opened to the first page of listings; the number at the top belonged to Bank of New York ("1:1"). (Full disclosure: Accuity is an affiliate of SourceMedia, the parent company of American Banker.)

According to Hugh M. Jones 4th, Accuity's president and chief executive, "there's a science behind" how today's nine-digit routing numbers are generated. The first two digits are determined by a bank's Federal Reserve district, for example, and the third digit indicates which office of that Fed bank serves the institution. The ninth digit is generated by running the first eight through a complex formula, as a control to make sure the routing number is accurate.

In other words, banks cannot get vanity-plate routing numbers. "But they ask," Jones said with a chuckle. Once, for instance, a bank requested a routing number match its ZIP code.

It all sounds a bit geeky, but standardized routing codes serve a purpose not unlike 10-digit phone numbers or the Dewey Decimal System. Before the ABA system was created, each bank offered its own endorsement stamps "without regard to uniformity of numbers," according to the 1911 edition of the Key. This caused "complications and confusion."

Power Center

Boston University officially launched its Center for Finance, Law and Policy last week by hosting a conference with some of the banking industry's most prominent players.

Participants included Eric Rosengren, the president and chief executive of the Federal Reserve Bank of Boston, and Donald Kohn, former vice chair of he Federal Reserve Board and many more. The new center, formerly known as the Morin Center for Banking and Financial Law, has been a few years in the making, said Cornelius Hurley, its former and now current director. The university, he said, felt it was important to devise a forum that would pull from all "pockets of excellence" throughout the school. "The important thing is to get the people in the room, starting with this university and then radiating out to industry and other universities, and get everybody talking together," said Hurley, former general counsel for the Fed. "The more you reflect on the crisis … people were just not talking to one another, whether it was the gaps between the regulators or the regulated, or even within separate institutions."

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