Here are some fearless forecasts for risk management in 2012 from our regular BankThink contributors:

Nuts for the Winter

"Housing markets will continue to go sideways, on average, during 2012, then they will begin their cyclical recovery in 2013. That will have made seven bad years since the house price peak in 2006, whose losses will have offset the seven boom-then-bubble years of 1999-2006. (Cf. the book of Genesis, Chapter 41: seven fat cows followed by seven lean cows.) Mortgage loans with lenders' 'skin in the game,' for example, the Federal Home Loan Banks' MPF program, will continue to have superior credit performance to all other mortgage loans."

Alex J. Pollock, American Enterprise Institute

The Buck Stops Now

“Accountability comes knocking in 2012. We will see leadership change at a top financial institution next year. The current CEOs will have been on the job for at least three years by the end of 2012 – long enough for the ‘I inherited these problems from the last guy’ grace period to expire. The continuing pain of write-downs, lawsuits, and uninspired business models will cost the job of at least one executive who cannot disinfect the balance sheet and show tangible progress towards creating a more sustainable business.”

Susan Ochs, consultant

Governance Gadflies

“Shareholder activism, not regulators, will force large-scale bank restructuring and management changes.”

 Joseph Rizzi, CapGen Financial Group

Power to the People

“Public policy will win out over financial institution dominance of the financial reform agenda. This will happen as there is now a new global center of financial reform, the G-20’s Financial Stability Board. The FSB, acting in consultation with an apolitical yet to-be constituted Systemic Risk Oversight Council made up of former heads of regulatory agencies and former national bankers will engage SIFI CEO’s and their clients’ Main Street CEO’s in consultations to bring compromise and resolve to risk adjusting financial reform.”

Allan D. Grody, Financial Intergroup Holdings

Euro Trashed

“In 2012, Angela Merkel, with help from some bit players, will cause a more destructive financial crisis than we had in 2008. She grew up in East Germany, her training is in physics, and she does not understand or respect markets. But she's calling the shots for the euro. ‘Sauver ce qui peut l'etre’ or rather, ‘every man for himself.’"

Andrew Kahr, Credit Builders

The Crisis Continues

“On the regulatory and risk management front, the emphasis will continue to be on deleveraging, anemic growth, strategic M&A, and expense management. Strong, organic top line revenue growth will be unattainable and large bank performance will not be sustained at recent levels. Risk to the U.S. economy is likely to increase as a result of on-going stresses in cross-border capital flows, currency markets, and persistent strain on sovereigns and associated fiscal stability.

“The probability of another global recession, while still low, has increased from 5-10% to 15-20%, an unacceptably high level and reflected in market fears and pricing. The importance of getting ‘rid’ of the bad customers and creating excellent retention programs for existing customers will be critical for American banks. First movers will gain advantages while those with their 'head in the sand' will suffer badly. While it is likely that additional regional consolidation in the U.S. could be in the cards if, instead of dipping into another recession, we see a resolution to the EU crisis and a solid 'move to the center' in the U.S. on fiscal policy stains and deadlock, the need for enhanced risk management, capital planning, liquidity stress-testing, and improved corporate governance has perhaps never been higher during the on-going financial crisis.”

Thomas Day, SunGard

MF Global All Over Again

“Ongoing economic weakness will manifest itself in another large nonbank blowup due to poor risk management practices and differential re-hypothecation rules for brokerage firms in the U.S. and U.K.”

Clifford Rossi, University of Maryland

Teflon Wears Off

“JPMorgan Chase Chief Executive Jamie Dimon will have the misfortune of catching a significant amount of fallout from the MF Global mess.”

Francine McKenna, re: the Auditors

Editor's note: Read more in "Bold Predictions, Part I — Durbin Rewrites Durbin" (Regulation & Reform) and "Bold Predictions, Part III – Wells Fargo Becomes the Consumer Advocates' Darling" (Consumer Finance).