Fail Better, Faster: Congress should repeal the preferential treatment that investors in over-the-counter derivatives receive during big-bank failures, according to Kroll Bond Rating Agency's Christopher Whalen. He says this would prevent swap counterparties from running away from their obligations during bankruptcies, thereby aggravating market liquidity problems and prompting regulators to swoop in with bailout money. His recommendation won the approval of reader (and occasional BankThink contributor) Per Kurowski: "Indeed, the best macroprudential regulation is one of microprudential regulations that help banks to fail fast," he writes, "not the current microprudential regulations, which only help to foster 'too big to fail' banks."
Also on the blog: Many banks focus on keeping costs down, but a penny-pinching mentality can make it tough for them to grow. So it's no surprise that the best-performing financial institutions spend more on personnel and systems and generate more revenue than their frugal peers, according to consultant Kevin Halsey.
Too many small-business loan brokers fail to disclose fees to borrowers and steer them toward higher-priced loans in order to receive commissions, according to Brayden McCarthy, head of policy and advocacy at online loan marketplace Fundera. He suggests the industry voluntarily commit to a code of ethics that would ensure brokers' advice serves the best interests of borrowers.
UMB Bank executive vice president Christine Pierson offered advice to women in the banking industry to help them ascend through the ranks. High on her tip list: women should expand beyond their comfort zones in order to develop expertise in a diverse range of areas.
Americans tend to be woefully under-informed about credit scores and credit reports but thanks to a strange legal twist, consumer reporting agencies have to wait three days before giving people the educational materials they request, writes Consumer Data Industry Association chief Stuart Pratt. He urges Congress to pass a new bill that would allow the agencies to provide credit education on demand.
When payments buff Lawrence F. Buettner tried to ship a few bottles of wine from an overnight express company in Napa Valley, he was startled by a request to provide his credit card information on a paper form. He says the experience is emblematic of wider security problems among merchants hanging onto outdated payment processing techniques. "A minimum set of criteria for point of sale technology needs to be established before a merchant is permitted to accept card payments," he writes.
Plenty of banks post regularly on social media sites, but few manage to get a reaction from their audiences. The problem is banks like need to share more emotional content, according to marketing consultant John Siracusa. He cites TD Bank's "automated thanking machine" video and Eastern Bank's "Good Things Happen to Good People" campaign as two examples worth emulating.
Summer Syllabus: With the onset of beach book season, it's almost for American Banker's annual summer reading list. Send your recommended reads bank-related and otherwise to sarah.todd@sourcemedia, including the name of the book, the author, and why you think it's worth checking out.
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