PayThink

The House Financial Services Committee addressed concerns for the Commodity Futures Trading Commission regarding the agency's implementation of derivatives provisions laid out in the Dodd-Frank Reform Act.

The Federal Deposit Insurance Corp.'s board of directors voted to approve a $2.7 billion budget for 2013. With fewer anticipated costs for bank failures and their clean-ups, the budget for the upcoming year had an 18% drop from previous years.

"Regulators from the U.S. and the United Kingdom took a major step Monday toward proving that they could dismantle a large globally active financial institution, outlining how the two sides would cooperate in the event of a cross-border resolution," writesAmerican Banker's Joe Adler.

Some readers quickly labeled all 19 megabanks' failure to pass the Office of the Comptroller of the Currency's new risk tests as evidence that "Too Big to Fail" remains very much alive. Others blamed the OCC's stricter standards.

Banks are assuming greater risk on the strategic side, by entering unfamiliar product territory, and on the cost side, by devoting fewer resources for risk management.

This platform will need to be enterprise-level to ensure consistency in the application of economic scenarios, model use and reporting.

If U.S. banks can decrease costs in routine transactions, they will be able to serve mass segments more profitably and invest disproportionately in high-margin services for the affluent.

Tax incentives and penalties drive behavior regardless of whether or not they represent sound economic reality. And banks will be asked to provide lending and investment support accordingly.

While some may suggest the practice is warranted so agency attorneys can address deficiencies hurting consumers, ultimately everyone loses when opportunities for frank discussion are lost.

Regulators need to create an environment where firms are not afraid to speak out. Banks need to come up with clearer explanations of their business models to prevent the creation of unnecessary rules.