In Defense of Wall Street: Veteran bank analyst Dick Bove took the road slightly less traveled this week with the debut of his book "Guardians of Prosperity: Why America Needs Big Banks," which argues that financialdisaster will ensue if it becomes impossible for big banks to fill their role in the economy."We have a choice to make," Bove wrote in an excerpt published on BankThink. "Will we be powerful or will we be small? Will we merely be a nation that plays it safe, or will we embrace our heritage of taking great risks to achieve great results?"(Bove provided more details regarding his defense of Wall Street, including his thoughts on regulators, in this video interview with American Banker's Maria Aspan.) Readers'reaction to Boves stance was decidedly split. One commenter called Boves excerpt "a great article from a fine American,"while another agreed that Wall Street should be allowed to embrace risk. "Risk is not merely about reaping rewards, it is also about losing one's money if one makes a wrong decision or does a failed job of executing the project,"he wrote. But another reader added a caveat. "Taking on risk in order to reap the rewards is a fine practice, so long as the players are willing to accept the consequences when they fail,"the commenter wrote. And a few others had very little sympathy for the big banks. "Positioning Wall Street as those poor overburdened guys who can't get a break'aint going to work anymore, sorry,"one reader commented.
Return of the Risk Doctor: BankThink's resident Risk Doctor Clifford Rossi returned from a holiday break this week with a column on how community banks can save themselves. Short version: by collaborating on a big data initiative. "Banking is increasingly a data-driven business and while retaining the benefits of a customer-facing model is an essential ingredient to community banking's success, it must be augmented with capabilities that allow the sector to make improvements by insights gained from robust data and analytic services,"Rossi argued. Most readers agreed with Rossis basic premise, but thought there were a few hurdles community banks would have to clear to get there. "The idea has merit, but one major consideration not mentioned [is] interest rates and how sustained low rates have severely limited the ability of community banks to grow profits and invest in the future,"one commenter wrote. "Today, data collection, mining and analytical tools are quite affordable for a community bank,"another countered. "The larger issue is that community bankers don't understand the value of their data. They don't want to invest any significant resources at all in managing it or analyzing it. Too many see their information on a transaction by transaction basis and miss the larger picture."
What Banking Could Do Without: Paul L. Lee of Debevoise & Plimpton LLP wondered why the authors of banking law were so obsessed with eponyms while Dave Martin of Financial Supermarkets Inc. pinpointed three mindsets bankers were better off abandoning. "We need our more change-averse team members to realize that to stand still is to fall behind,"he wrote.
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