Paging Frannie McMae: Meaningful reform of Fannie Mae and Freddie Mac seems a ways off, so we might as well merge the two and save some money in the meantime, argues attorney Stephen A. Blumenthal, a former acting director of the agencies' old regulator, the Office of Federal Housing Enterprise Oversight. Combining the government-sponsored enterprises "would be a logical extension of the current [Federal Housing Finance Agency] program that seeks to make the enterprises more efficient by eliminating their duplication of efforts," he writes. Readers are on board with the plan. "Wasn't the only reason for the formation of Freddie to create the appearance of 'competition' for Fannie so there would not appear to be a monopoly back in the 30's?" writes commenter jonb. "Now that the GSE concept is so integrated into the mortgage process, what difference does it make any more?" Another reader, markfromkansas, suggested combining all the federal home loan programs, including those for veterans and rural areas, under one umbrella. "Even if we can't do that, can we at least give them all the same credit standards? The logic of a given factor being good enough for one federal program but not another escapes me," he writes.
Choke Point Target: Critics of Operation Choke Point often argue that the Department of Justice's program unfairly targets law-abiding companies in controversial but lawful industries like payday lending and arms dealing. William Isaac, a former chairman of the Federal Deposit Insurance Corp., says that Choke Point also harms the working-class people who patronize payday lenders, check cashers and other alternative financial service providers. "Eliminating these businesses will not do consumers any favors," he writes. "States that eliminate payday loans immediately experience a substantial rise in costly outcomes to consumers, according to research at the Federal Reserve Bank of New York and Kansas City Fed."
Also on the blog: The Community Reinvestment Act determines banks' community lending responsibilities according to their branch locations, but a growing number of lenders have a limited brick-and-mortar presence. There's an easy solution to the problem, according to attorney Warren Traiger: "Regulators should simply carve out a category of virtual banks that have tailored CRA responsibilities and examination standards."
Mayra Rodríguez Valladares warns that banks may be exposing themselves to operational risk by outsourcing Volcker Rule compliance work to lawyers, accountants, consultants and IT vendors. Management consultant Davia Temin takes a look at some uncomfortable findings about how successful women negotiate unconscious gender bias and power dynamics in finance, technology and other industries.
Bank tellers and other front-line staff often resist training that asks them to make heavy-handed sales pitches, and with good reason, according to consultant Dave Martin. Customers who come into branches "often aren't in a genial mood, and the last thing they want is to be forced to hear a lengthy spiel about some product that's of no interest to them," he writes. Martin recommends that banks focus on winning over customers with capable, friendly service before asking for additional business.
Before lending to bitcoin users, banks should draw up new requirements that address the specific credit risks associated with digital currencies, according to attorney David Lawson. And community bank marketer Kevin Tynan offers up a bold idea: credit unions and community banks should collaborate on an ad campaign that lashes out at big banks and positions local institutions as a trustworthy, caring alternative.