Regulation

The biggest banks are coming off a year when their stocks and profits soared. Yet below the surface, they face a number of vexing problems: more regulation, less lucrative trading, an inability to do big deals and lower multiples than many smaller rivals. American Banker staffers discuss whether such factors may some day encourage shareholders to agitate for breakups.

"Servicers now face compensatory fees, not for mistakes or unreasonable delays, but simply as the cost of doing business," Mortgage Bankers Association President David Stevens says.

Steven Antonakes, the CFPB's deputy director, gave a speech which indicated the agency has shifted to a hard-line stance regarding compliance with a new mortgage servicing rule that went into effect last month. "Business as usual has ended in the mortgage servicing industry," he said.

Even legislators can run into trouble with creditors.

As Credit Suisse Group AG (CSGN) sees it, time has run out on New York Attorney General Eric Schneiderman’s pursuit of Wall Street banks for mortgage fraud that helped trigger the financial crisis.

JPMorgan Chase & Co. dropped Al-Rajhi Bank, the world's largest Shariah-compliant lender, as a correspondent banking client amid a push to improve risk controls, said two people with direct knowledge of the move.

Sens. Tim Johnson and Mike Crapo run the risk of proposing a second-rate solution for the market to gain mass support for their new legislation.

Risk-weighted regulations doom banks to lend too much, on too easy terms, to "infallible" borrowers –some of whom, as a result, will eventually prove to be very risky.

Pressured by overseas governments and institutions, the Fed nevertheless stayed the course in finalizing tough new rules for roughly 100 foreign banks doing business in the U.S. — a sign that the central bank's emphasis remains on national stability over international cooperation.

The Federal Deposit Insurance Corp. is suing eight former officers and directors of Habersham Bank over their role in the failure of the Clarkesville, Ga., lender.