Parsing the "Bank Tax" Proposal: Louise Bennetts of the Cato Institute kicked off a lively debate when she suggested Rep. David Camps new "big bank tax" was more destructive populism. "Forcing banks' investment decisions and actions to be dictated by the whims of the majority rather than by consumers and the bottom line that makes them fragile," she wrote, evoking the arguments made by Charles Calomiris and Stephen Haber in their new book Fragile By Design. Some commenters were quick to agree with this assessment. "There is far too much congressional meddling in banking affairs, both overtly and in less visible ways through tangling and misguided over-regulation," one reader wrote. Others thought the tax was worth considering. "Taxing systemic risk is the most efficient way to reduce and eliminate it," another commenter wrote. "It will level the competitive playing field for smaller institutions that compete with real capital as opposed to implied public subsidy."
Life After Payday Loans: Can financial services providers offer small-dollar credit amid all the regulatory scrutiny?Two BankThink contributors believe so. Ken Rees of short-term credit product developer Think Finance urged industry reps and consumer advocates to focus on the common ground in their respective arguments while trying to fill the credit void. Jennifer Tescher and Beth Brockland of the Center for Financial Services Innovation offered a playbook for short-dollar credit that involves restructuring payment models, focusing on a borrowers ability to repay and developing a variety of solutions. "Lenders who put it to the test will find a hungry and growing market, and an opportunity to reap first-mover benefits in market share and customer loyalty," they argued.
An Eye on Innovation: Bradley Leimer, digital strategy lead for Mechanics Bank in Richmond, Calif. and Future Model of Banking contributor, offered a few lessons from BBVAs recent acquisition of nonbank Simple. "Simple's acquisition further proves that the coming contraction in the banking industry is not only real, but this reality should drive bank's primary strategy to focus in building scale and profit through digital," he wrote. (For Bank Technology News Editor in Chief Penny Crossmans take on BBVA and Simple, check out this video on American Banker and this article in The New Yorker.) Meanwhile, Eric M. Jackson (author of The PayPal Wars) and his CapLinked co-founder Christopher Grey outlined what PayPals past meant for the future of headline-making crypto-currency Bitcoin. "If Bitcoin is to continue growing as an alternative currency, it is likely to face all of the same types of fraud that hit PayPal," they wrote. "The remaining players in the Bitcoin ecosystem will need to learn from PayPal's lessons if they're to survive the challenges from fraud that they will surely face over the months to come."
On Cybersecurity: Ryan Elmer of eBankSafe identified a silver lining in the Target breach, and Earl Crane of Promontory Financial argued a cybersecurity framework can help banks address increased regulatory scrutiny.
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