Regulation: Crisis Starter or Crisis Suppressor? Following last week's op-eds from Rep. Maxine Waters and Sens. Bob Corker and Mark Warner, Rep. Jeb Hensarling rekindled an old debate when he suggested regulation – not lack thereof – caused the financial crisis. Some readers agreed with this assessment – "Hensarling has the story right," one commenter wrote – but others took issue with the House Financial Services Committee chairman's assertion that the Community Reinvestment Act caused the subprime mortgage crisis. "I've been trying to find exactly where in the [CRA], lending companies like Countrywide were required to make stated-income pick-a-payment loans on homes with wildly-inflated appraisals," one reader commented. "Guess I'll have to keep on looking." Another reader saw a more complex picture: "Typical of perfect storms, there were several forces that came together in 2008 to trigger the crisis." American Banker Editor in Chief Neil Weinberg also took a nuancedview in a separate op-ed arguing that, five years after the crisis, regulation has made things better and worse, while attorney Akshat Tewary argued that it's watered-down rules that are leaving us open to the next crisis.  

This Week in ‘Too Big to Fail': Sean Park of Anthemis Group argued that the late Ronald Coase's work can help us understand why megabanks came into being – and why their days may be numbered. "Increased complexity costs and decreased transaction cost advantages will inevitably lead to a fundamental redefinition of the ‘optimal' corporate structure and size in banking," Park wrote. "They will favor banks that disassemble their vertically integrated model into more flexible, adaptable and resilient networks of businesses and operations." But some readers disagreed with the idea that natural economic forces would cause the megabanks to dismantle themselves. "Unless federal financial regulators stop coddling the megabanks instead of supervising them, they will continue to present a clear and present danger to the U.S. economy," one wrote. Meanwhile, Cornelius Hurley of the Boston University Center for Finance, Law & Policy argued the Government Accountability Office should use very specific metrics to ensure it accurately tallies the subsidy for TBTF banks in its forthcoming study. "The GAO should focus on the gross benefit of being TBTF, not the benefit net of fines, penalties and regulatory burdens," he wrote. Many readers agreed with this methodology, but one commenter felt the parameters were, among other things, too subjective. "A more objective approach might be not to assume the conclusion of the study and instead look at all factors, all costs and benefits, from size and scale of operations," he wrote. "Familiarity with other GAO efforts would lead one to suppose that they will opt for objectivity."

Women in Banking, Continued: To close out our Women in Banking series, risk management expert Susan Palm argued hard work, drive and a good mentor were the keys to success, while Jennifer Openshaw of Finect pointed out that tech was driving new opportunities for women in the industry.

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