Mulling a Regulatory Overhaul: Edward L. Yingling, partner at Covington & Burling LLP and former American Bankers Association president, made some provocative points when he argued that the complexity of regulation isn't the industry's biggest problem. Instead, the entire bank regulatory system needs to be simplified, he suggested.  "It should be obvious that no one in his or her right mind would design the bank regulatory system we have today," Yingling wrote. "No third-world country's bureaucracy is so byzantine."  Bill Isaac, former Federal Deposit Insurance Corp. chairman and a BankThink contributor, agreed and urged Yingling to add "the Basel committee in Switzerland for capital, liquidity, and other supervisory rules … and the Financial Accounting Standards Board for accounting requirements directly impacting capital, reserves, and profits" to his already long list of bank regulators. But another reader thought changing the current regulatory structure would be easier said than done. "Such a proposal would make the ‘what to do with Fannie Mae and Freddie Mac' legislative Gordian knot look like sandbox play as the competing federal and state interests … fought tooth and nail to maintain their influence," he commented.  

Can Banks and Nonbanks Be Friends? In her latest Point of Sale column, BankThink Deputy Editor Jeanine Skowronski argued that banks and nonbanks should stop competing for market share and, instead, establish symbiotic partnerships in 2014.  "Eventually, I suspect these partnerships will morph into the model Lauren Pollak of Jump Associates envisioned in her Future Model of Banking post," she wrote. "The startup will develop and provide products and services; the financial firm will serve as back-end service provider." One reader agreed that this model might work for big banks, but urged smaller banks to stay in the fight. "Ninety-eight percent of the banks need to refocus their attention on the core – developing unique and valuable value propositions for their customer segments, and executing to perfection," he wrote. "It is not a foregone conclusion that nonbank startups are better at product development and marketing than traditional banks."     

Ghost of Risk Management Past, Present and Future: Frank Santora ofHudson City Savings Bank and Susan Palm of MetricStream reflected on 2013's risk management lessons and offered some predictions for 2014. One involved a tough road ahead for firms that until now have operated outside of regulators' purview. "Under Dodd-Frank, previously unregulated entities and financial institutions, such as options clearing houses, private capital firms and hedge funds are now evaluated for safety and soundness," they wrote. "These kinds of organizations are new to this level of regulatory scrutiny and oversight, and therefore will need to implement even stronger compliance and operational risk management programs."

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