Comments of the Week: Simple Fixes for TBTF; Leverage Ratios vs. Risk Weights
May 10, 2013 8:13 AM
American Banker readers share their views on the most pressing banking topics of the week. As excerpted from the Comments sections of AmericanBanker.com articles.
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On the shortcomings of lending business models:
"Borrowing is just as much of a risk for the consumer as it is the institution.
Both participants are making their decision on the assumption that income or revenue will continue to flow, expenses will not outpace income/revenue and the ability to make monthly payments will remain for an extended period of time. Let's face it, bad things happen to good people and good banks. Both eventually fall prey to unforeseen events.
There is no plan B
Maybe it is the actual model that is propagating the risk?"
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On the assertion that too many bankers keep ignoring history:
"This is a mega-bank problem. Thankfully the community bank sector doesn't have amnesia, and as a result don't have these worries. We sleep at night."
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On the Federal Reserve's Jim Bullard suggesting a simple solution to end 'too big to fail':
"Simple is good. Simple is elegant. Simple is usually the right answer. Brown-Vitter comes to mind."
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On the Fed's Bullard suggesting a simple solution to end 'too big to fail':
"Simple is the enemy of bureaucrats. Simple saps their power. Don't hold your breath waiting for it."
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On whether leverage ratios or risk weights should be used as a capital measure:
"Use both, plus better on-site supervision and more marketplace discipline."
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On the assertion that money laundering is an artificial crime:
"I don't trust the government (or any central organization) with the power to confiscate assets. Not that I am pro-crime, but it is just too much power for any human being to have."
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On the assertion that money laundering is an artificial crime:
"If you indiscriminately equate 'governments' with 'oppressive regimes', I'm pretty sure you will find that all laws are onerous - except, perhaps, for the laws that prevent someone from stealing 'your' money as you walk down the street."
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On a Maryland bank getting hit with an OCC order for discriminating against white males:
"Special programs based on race are blatant violations of the [Fair Housing Act].
Blaming HUD because you can't compete fairly is like whining that you can't be in the NBA because you're too short."
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On banks needing branches to hold off competitors:
"To compete, community banks need to take some of the money invested in a branch network and reinvest these funds in mobile technology or be left behind."
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On why banks have a hard time emulating Apple's success:
"Time and again, banks have acquired successful nonbanks only to ultimately dismantle them in one way or another
and the talent leaves for greener, more sympathetic pastures."
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On banks' financial literacy outreach efforts:
"Financial literacy is paramount for bank employees as well."
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