Spotlight on Ethics: Banks should make their commitment to ethics more visible in order to reboot their reputations, write BuckleySandler partners Jeremiah Buckley and Thomas Sporkin. To that end, they suggest that banks consider appointing a chief ethics officer and building ethical considerations explicitly into their decision-making processes. One reader took issue with the idea of appointing an officer in charge of ethics, arguing that this should be the chief executive's responsibility. "Delegating this role to another is admitting a lack of commitment to sound business practices," wrote commenter "rmahoney6." Another commenter suggested that the "mundane, individual choices" that ultimately determine an organization's ethical culture can't be standardized. Reader "KJHandly" expanded on that line of thinking, wondering, "Is the appropriate focus on ethics at the corporate or the individual level, or both?"
No Silver Bullet: Raising banks' capital requirements is only one part of the equation for ensuring the safety of the financial system, according to Allan Grody and Peter Hughes of Financial InterGroup Holdings. They say it's equally important for regulators to encourage a stronger approach to risk management and technological infrastructures that support that goal. "We need a 'firm-at-risk' risk management regime, not just the 'capital-at-risk' one that we have now," the authors write.
Also on the blog: Brazil is primed for a surge in mobile payments, according to Bethan Cowper, head of international marketing at Compass Plus. Noma Bruton, chief human resources officer of Pacific Mercantile Bank, offers up some hiring advice for modern-day lenders.
The financial industry is weaker for embracing a someday-my-prince-will-come mentality, with regulators cast in the role of the dashing rescuer, according to Hester Peirce of the Mercatus Center. Sometimes regulators are more adversaries than saviors, business and commercial litigator Mark Belongia writes. He notes a spike in the Federal Deposit Insurance Corp.'s efforts to bar directors and officers of failed banks from the industry.
The Consumer Financial Protection Bureau should avoid emulating Colorado's payday lending reforms as it weighs new regulations for the industry, according to Lauren Saunders of the National Consumer Law Center. Meanwhile, the Obama administration should allow Fannie Mae and Freddie Mac to start keeping a portion of their profits in order to build up capital, writes Paulina McGrath, chair of the Community Mortgage Lenders of America. Barring that, the government could at least lower guarantee fees, she says, since it's not like the additional revenue is helping to revitalize the agencies.
Cash in hand isn't the same thing as cash in the bank, so allowing companies to conflate the two on their books is a risky practice, according to Bill Bergman, director of research for Truth in Accounting and a former Fed economist. "Accounting standards that give carte blanche to 'cash and cash equivalents,' assuming they are safe and hold unchanging value, are at odds with market discipline," he writes.
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