The Limitations of Dodd-Frank: Dodd-Frank took some heat from contributors this week. First, Clifford Rossi argued that the reform law's Qualified Mortgage and Qualified Residential Mortgage rules provide only limited protection for mortgage investors. "The mortgage equivalent of lifeboat regulation … does not insulate investors against future lapses in mortgage underwriting and origination controls," he wrote. "Strengthening the underlying loan manufacturing process and diversifying this risk in the secondary market remain critical to ensuring the integrity of the market for investors." Next, American Banker Editor at Large Barb Rehm, while largely a fan of the legislation, pointed out that Dodd-Frank missed a few opportunities. The lawmakers' biggest goof, she said, was setting the asset threshold for systemically important banks at the arbitrary level of $50 billion. "It's a huge distraction for the regulators to devise rules and procedures for policing a giant like JPMorgan Chase and then having to retrofit them for a plain vanilla bank like Zions." One reader agreed: "The $50 billion threshold … is an obvious violation of Goodhart's Law." (Don't be embarrassed if you don't know that one; we had to look it up, too. The maxim is "When a measure becomes a target, it ceases to be a good measure.")

Break up the Ratings Cartel? Jeffrey Manns, Associate Professor at the George Washington University Law School, kicked off a lively debate when he suggested it was time to break up the ratings agency oligopoly. "Antitrust law does not regulate oligopolies unless there is express collusion or review of a prospective merger," he explained. "But regulators could encourage the leading rating agencies to divest by requiring independent, non-affiliated firms to rate each category of debt, such as government and corporate bonds, and barring raters from issuing evaluations for more than one asset category." Some readers agreed better regulation for rating agencies was needed. "Moody's, S&P and Fitch have successfully escaped liability because of the probable consequences for all the portfolio managers, traders and sales people that were hamstrung to effect sensible economic transactions," one wrote. "It's well beyond high time to rein them in." But others thought Manns was overstepping. "Any proposal that begins with 'regulators should force this particular restructuring of the [insert here] industry and micromanage its operation' is prima facie wrongheaded," one commented.

Look Who's Talking: Wayne Abernathy of the American Bankers Associationwondered who empowered the international Financial Stability Board to weigh in on the U.S. banking industry. "The idea of subjecting U.S. financial supervision to 'peer review' by a team chaired by a representative from the German central bank, joined by three other European financial regulators, plus one from Japan, another from India and one from Canada, is a bit rich to swallow," he wrote. Meanwhile, Barb Rehm found out why Tim Pawlenty, former governor and presidential candidate turned Financial Services Roundtable CEO, weighed in on Syria. "I've had a full run at elective politics and I don't expect to run in the future," Pawlenty told Rehm. "It's something I just felt personally strong about." 

Columnist Potpourri: Dave Martin of Financial Supermarkets Inc. urged financial institutions to put a smile on the face of their bank, while consultant J.V. Rizzi heralded the return of bank M&A that actually adds value.

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