Moving Forward at the Fed:  All eyes were on the central bank this week as Federal Reserve chairman nominee Janet Yellen appeared before the Senate Banking Committee for her confirmation hearing.  Yellen is widely expected to be confirmed and several BankThink contributors weighed in on what the central bank needs to do to achieve its dual mandate. Kentucky banking commissioner Charles Vice urged the President to nominate a bank supervisor to the Fed's Board of Governors, given the imminent departures of Elizabeth Duke and Sarah Bloom Raskin. "The Board's supervisory responsibility and monetary policy function will benefit from a Board of Governors comprised of diverse professional backgrounds, including experience and knowledge of financial supervision," he wrote. Risk consultant Mayra RodríguezValladares suggested Yellen ensure Basel's implementation, strengthen Dodd-Frank's living will requirements and form closer ties with regulators, while American Banker Editor at Large Barb Rehm advocated Yellen declare the Fed's independence from Treasury. "Declaring independence and being independent are two different things," one reader commented. Tony Hughes of Moody's Analytics expressed disappointment with the Fed's 2014 stress test scenarios and argued the central bank should test how banks would manage their capital during the next boom instead. "The highest credit losses are observed when a severe recession follows on the heels of a surging economy," he writes. "Not only does a boom encourage banks to chase volume and revenue, but a strong economy also encourages businesses and households to more fully utilize the credit lines they have already been granted." 

Big, Bad Bank Fees: BankThink deputy editor Jeanine Skowronski suggests banks avoid fee backlash by making sure new fees carry a clear value exchange, offer something new (ahem, mobile) and are easily avoided. Also, "if brainstorming sessions around a new fee dovetail into discussions about how to trick customers in paying more of them – a la reordering transactions to impose a fee on an otherwise nonexistent overdraft – it's probably best to just shelve that idea and start over," she wrote. One reader agreed with some of these suggestions, but argued it may be tricky to charge for mobile services. "Too often as an industry we want fast acceptance of a new service model such as mobile so we don't charge for it because we think we will save a lot of operating costs," he wrote. "Unfortunately by not charging in the critical beginning stages, we have established the new channel as a no cost channel in the minds of our customers. So there is a big backlash to the charges when they come."  

Join the Discussion: Anyone interested in how investors should assess a bank's performance may want to check out the ongoing debate between BankThink contributors J.V. Rizzi and Harvard Winters. The pair has been debating the topic since Winters took issue with Rizzi's assertion that cost of equity was a true measure for investors. What's your take on the topic? Leave a comment below!

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