Another Side of the Bitcoin Debate: Pamela J. Martinson and Christopher P. Masterson of Sidley Austin LLP took on one of 2013's hottest topics Bitcoin by warning there were hazards in lending to the cryptocurrency's users. "Owned Bitcoin has the potential to be collateral for loans, but creditors are likely more concerned with restricting Bitcoin acquisition or use by borrowers due to the uncertain regulatory landscape, irreversible nature of payments, extreme volatility of value and anonymity of the system," they wrote. One reader felt a borrower's use of Bitcoin wasn't always relevant. "If the debtor uses another asset, like a traditional bank account, and does not offer the bitcoin as collateral, what business is it of the bank whether that person or company owns or handles bitcoin?" he wrote. Another commenter thought the authors were selling the cryptocurrency short. "Bitcoin technology introduces some very new novel ways to use bitcoins in collateral and escrow transactions that simply have no parallel in today's banking system," the reader argued. "In a nutshell, because the authority to transfer Bitcoin is established through mathematics rather than institutions, it is possible to create elaborate mathematical equations where control of the Bitcoins is spread across multiple parties." (Indeed, the economics and technology writer Eli Dourado has described "m of n" multi-signature transactions, in which bitcoins cannot be released from an account without the consent of at least one party plus an arbitrator.) Martinson and Masterson described loan agreements with covenants or reps and warranties that restrict borrowers' use of Bitcoin, and a commenter on Reddit smelled foul play, grumbling, "Here's another way in which banks are trying to squelch Bitcoin." But another Redditor had a more prosaic take: "Banks are so stupid, they can't change their paradigms so they are completely missing the boat."
Dodd-Frank Mortgage Rules: Necessary or Predatory? Diane Katz of the Heritage Foundationreignited debate over Dodd-Frank mortgage rules that will soon take effect by suggesting the regulations will produce more harm than benefit. "The impact will be particularly hard on smaller community banks that lack the capacity to increase their compliance staff or to hire consultants," she wrote. "Some are simply leaving the mortgage market." But some readers felt the industry needs to be heavily regulated. "Let's not forget the events that led to Dodd-Frank. A serious financial crisis damaged the country's economy significantly," one commented.
In Case You Missed It: Leslie Berkoff of Moritt Hock & Hamroff argued creditors deserve better bankruptcy reform and Michael Cohn of WolfPAC Solutions Group capped off the holiday season by looking at the classic film "It's a Wonderful Life" through a risk manager's eyes.
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