Sensible Reform, or Reckless Rollbacks? The financial reform bill proposed by Sen. Richard Shelby inspired plenty of debate on BankThink this week. Former Federal Deposit Insurance Corp. chair William Isaac rose to the bill's defense, arguing that the plan to raise the threshold at which banks are automatically classified as systemically important is a smart move that will benefit community and regional banks. Isaac did, however, caution against a provision that would lock in the conservatorship of Fannie Mae and Freddie Mac until Congress decides what to do with the housing giants. The American Enterprise Institute's Paul H. Kupiec also spoke out in support of the bill, arguing that its proposed changes are reasonable compromises on Dodd-Frank. On the opposing side, Jim Carr and Julia Gordon of the Center for American Progress objected to the bill's "slash-and-burn attacks on Dodd-Frank," particularly a provision that would loosen credit restrictions for banks that keep mortgage loans on their books. Much like our contributors, readers' perspectives on the legislation were all over the map. Ed Walker said that while the bill may garner bipartisan support, that doesn't make it middle-of-the-road: "plenty of members of both parties can be counted on to support any little thing the [finance, insurance, and real estate] sector wants." Meanwhile, veteran financial analyst and BankThink regular Chris Whalen fired back at the Center of American Progress, arguing that restrictions on lending "are directly responsible for the collapse of mortgage lending to a 10-year nadir and the related surge in rental costs for millions of Americans."

Too Big to Function: Big banks are inherently riskier than their smaller counterparts despite JPMorgan Chase chief Jamie Dimon's recent claims to the contrary, writes Sageworks' Brian Hamilton. He says that it's a lot harder to catch wayward employees and other problems when a bank is spread out around the globe and operating across multiple business lines. Readers were split between the Dimon and Hamilton camps. On the former side, commenter "jryl" said that big banks "can at least afford to fix things by allocating more resources to internal controls and risk management." But reader "phil" said that while big banks may have the resources to address problems, "there is no desire to do so — no one wants to pay the bill to do it, and whilst there are plenty of chief data officers, few have the wisdom or the remit to see the global picture." Meanwhile, longtime BankThink contributor Allan Grody reiterated his mantra that the problem isn't size per se but the big banks' need to reengineer their technological infrastructure to keep pace with their growth. "Transparency, automated regulatory oversight, efficiency and significantly lowered operational costs and risk would be the outcome," he writes.

Down the Rabbit Hole: Thursday was unofficial Bitcoin day on BankThink, with a post from digital currency expert Chris DeRose offering an under-the-hood look at the blockchain's security feature and an excerpt from New York Times reporter Nathaniel Popper's new book "Digital Gold" on banks' complicated attitudes toward Bitcoin and its underlying technology.

Also on the blog: AEI fellow Alex Pollock argues that forcing Fannie Mae and Freddie Mac to pay a guarantee fee for the Treasury's backstop could be an alternative to the current profits sweep.

Most banks lack the yardsticks to help them distinguish between mediocre customer service and the exceptional kind, according to bank advisor L.T. "Tom" Hall.

Apple Watch is a shiny new toy, but it doesn't herald a sea change in payments, according to Powa Technologies' Dan Wagner. He says that while wearable devices have promise, smartphones are likely to remain the dominant device for the foreseeable future.

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