PayThink

Why do we instinctively cower to power after financial crises and human tragedies? And what can be done about it?

The Consumer Financial Protection Bureau garnered a positive reaction after the release of the "qualified mortgage" rule, which governs mortgage underwriting. The industry is optimistic that the still-pending securitization rule may also turn out better than expected.

"A real bank failure has yet to test the Dodd-Frank Act's resolution regime, but an industry group says its realistic mock-up shows the facility can prevent systemic fallout," writes American Banker's Joe Adler.

The Consumer Financial Protection Bureau released a series of rules overhauling the mortgage system. One rule released on Friday bans compensation to mortgage originators based on loan terms, including a higher interest rate or generally a high-cost loan.

As a part of several appraisal rules released last week, the Consumer Financial Protection Bureau will require mortgage lenders to release free copies of home appraisals to borrowers.

The lawmaker behind the Federal Reserve and Glass-Steagall Acts understood that unless legislation imposes specific rules, including clear limits on financial institutions' activities, we are bound to have lax regulation, excessive speculation, and crises.

A recent BankThink post bemoans the one-size-fits-all application of Basel III. But the reason capital rules have become so sweeping is that banks have become bigger, more complex and more connected to the global economy.

Political denial and cover-up are in the CFPB's DNA. The agency was predestined to be overbearing, which will only hurt borrowers in the long run.

Require megabanks to pay their stealth subsidies into a reserve available only to creditors and the FDIC. Market discipline will do the rest, as shareholders demand that the banks shrink.

It seems clear that the Consumer Financial Protection Bureau believes balloon mortgages are not abusive or predatory. Why, then, does the rule so restrict their use?