Editors' Picks: The Best of American Banker 2013
December 30, 2013 12:00 AM
A compilation of the year's favorite stories, as selected by the people who assigned and edited them. Picks exclude items that appear among Top Stories of 2013, as measured by audience size.
How Promontory Financial Became Banking's Shadow Regulator
Promontory Financial Group has built a shadow network between banks and regulators , with close to 400 employees and 1,400 consulting engagements. The Washington-based firm has evolved into a sort of ex-regulator omnibus, capable of forecasting, mimicking and occasionally even substituting for the financial industry's supervisors. "We do the opposite of influencing government," says founder Eugene Ludwig. "We try to influence the private sector in terms of what the government wants it to do."
Big Banks Win, Taxpayers Lose as Fannie Insurance Overhaul Spiked
As the overseer of mortgage giants Fannie Mae and Freddie Mac, the Federal Housing Finance Agency has a duty to safeguard taxpayer dollars. But the regulator may have done just the opposite in February when it informed a group of mortgage trade associations that it had vetoed a Fannie Mae proposal to buy force-placed insurance directly from underwriters.
Housing Group Taps Dubious Data, HUD Ties to Demand Millions from Banks
The National Fair Housing Alliance held a pair of teleconferences during which its president, Shanna Smith, accused two of the nation's biggest banks of a deplorable corporate crime: racial discrimination. But a review of its cases indicates NFHA regularly misidentifies institutions legally responsible for maintaining specific homes and faults banks for damage that occurs before they take possession yet the nonprofit still benefits from a friendly reception among government officials with whom it enjoys cozy ties.
Why the CFPB Keeps Losing Its Senior Staff
The Consumer Financial Protection Bureau is losing senior officials faster than it can replace them , raising concerns among supporters that it may struggle to maintain its aggressive pace. Former CFPB officials offer differing reasons for the flood of departures, including cultural clashes between the new agency and the organizations where they used to work. They also point to private industry's aggressive recruiting of agency personnel and the intensity of the CFPB's work.
Unusual OCC Order Hits Bank for Discriminating Against White Males
A Maryland community bank cited by regulators for lending policies that allegedly favored minorities and women becomes evidence for some observers of just how frustrating it is for institutions to comply with fair lending laws .
Bank M&A Fees Have Skyrocketed in the Past Decade
A growing number of bankers are calling on dealmakers to help them expand their balance sheets or exit the business amid the difficulties of operating in a low-interest rate, high-regulation environment. Investment bankers, however, are taking a larger bite out of the wallets of buyers and sellers than they did a decade ago.
Gay Bankers, Once Silent, Speak of Progress and Hurdles
The buttoned-up ranks of predominantly straight white men who run the banking world are making more room for their gay and lesbian colleagues . But as is common with the industry's other diversity efforts, this one still falters somewhere between the soaring rhetoric and on-the-ground realities. "No one should be afraid to come to work every day as who they are," says Wells Fargo's (WFC) Shelley Freeman.
Four Takeaways from JPM's Massive $13B Mortgage Settlement
In theory at least, JPMorgan Chase's (JPM) tentative $13 billion settlement with federal regulators was a major financial and reputational blow to the bank. But in reality, the deal may set the country's largest bank free , allowing CEO Jamie Dimon to finally put to rest a series of scandals and get back to what he does best make money.
Three Bankers Who Tackled Social Media with Fun and Flair
Let go of your fear and start tweeting, liking and pinning. That's the message (or, perhaps better put, the post) from community bankers who have embraced social media while many of their peers merely groan about it .
How Elizabeth Warren Breaks the Mold as Freshman Senator
Ten months into her Capitol Hill career, the Massachusetts Democrat appeared to have embraced a dual approach to her work: using her star power to bring attention to issues like "too big to fail" banks; and getting down into the weeds of nitty-gritty financial policymaking in areas like foreclosures and insurance licensing.
Is FDIC Waging a Stealth Crackdown on Online Lenders?
Payday lenders report suddenly being unable to meet loan demand, despite complying with all relevant laws. Critics charge that behind the scenes, Federal Deposit Insurance Corp. examiners are expressing opposition to storefront and online payday lending , and the agency is forcing banks to cut ties with a number of short-term lenders.
Citigroup Boys' Club Highlights Industry Gender Gap
When Citigroup's (NYSE:C) new Chief Executive, Michael Corbat, announced a long list of promotions and executive changes in January 2013, one notable feature of the lineup was its all-male cast. The lack of gender diversity among Corbat's top lieutenants serves as yet another example of a persistent industry trend: a glaring lack of boardroom and executive-suite diversity .
Bank M&A in Three Acts: Hunting, Buying, Integrating
The stories of three closely watched midsize banks crystallize the different and sometimes tedious stages of being a bank buyer these days .
Slate Writer Is Dead Wrong to Root Against Community Banks
American Banker's Washington Bureau Chief, Rob Blackwell, disputes the claims of Slate blogger Matt Yglesias that small banks are poorly managed, impossible to regulate and incapable of competing. Yglesias, argues Blackwell, "provides scant evidence to back those claims, and an examination of the current environment facing small banks suggests that in all three cases he is dead wrong ."
Banks Brace for End of Prepayment Penalty Boom
The mortgage-refinance boom lifted banks' bottom lines when they needed it most. But once rates started rising, revenues collapsed and banks were forced to lay off thousands of workers. This story profiles how a similar trend is taking hold with prepayment penalty fees , whose decline is expected to hit multifamily mortgage lenders hardest.
How Big Banks Killed a Plan to Speed Up Money Transfers
In the United Kingdom, people can send money to someone else's bank account within a couple of hours. In Mexico, the process takes no more than a minute or two. Yet in the United States it still takes days, thanks to a bloc of big banks, which played a decisive role in torpedoing a recent proposal to speed up payments .
Small Banks, 'Squeezed to Death,' Re-Embrace Cards
Community banks began to issue credit cards in greater numbers after retreating from the market in the wake of the financial crisis. Despite the risks, issuing cards can help small banks fend off larger rivals and provide a revenue stream at a time when net interest margins are getting squeezed. "Not having a card strategy is a liability ," says one observer.
How California Law Put a Hot Payments Innovator on Ice
Three years ago Aaron Greenspan had a hot mobile payments startup that was poised to take a bite out of the entrenched card networks. Then California regulators put him out of business. "I was literally told, 'You will go to federal prison if you don't shut down,' " Greenspan says. His story highlights a broader problem that threatens to constrain financial innovation-across the country : state money transmitter licensing requirements are slowing or barring young businesses outright from entering the payments field.
Buried in Fine Print: $57 Billion of FHA Loans Big Banks May Have to Eat
The nation's four largest banks have assured investors in quarterly filings that $57 billion of seriously delinquent loans on their books are government-insured, pose no threat to their bottom lines and require no reserves against losses. However, outsiders say the banks could face hefty losses if the loans go into foreclosure because there is no guarantee that the federal programs will cover them. "The banks say they are certain of repayment on these distressed assets, but that's simply not true," says one observer.
Downfall of Subprime Cards Spawns Opportunity
When Americans with poor credit histories find themselves in a jam, it's harder than it used to be to get a reasonably priced loan. That's because of a sharp drop-off in the marketing of subprime credit cards--products that are often laden with fees but still a better deal for many people with poor repayment histories than are the payday and car-title loans to which some are now resorting. The trend also explains why a lot of nontraditional lenders see opportunity in serving Americans who lack access to prime credit .
Banks Probe Regulatory Limits of Credit Card Add-Ons
Several banks have halted sales of credit card add-ons following a second round of government crackdowns on the products . However, American Express (AXP), Wells Fargo and Citigroup appear to be testing how much wiggle room regulators have left them in the lucrative but oft-criticized business.
Bank Population Shrinks Rapidly Amid Lull in Startups
The population of U.S. banks has dwindled rapidly over the last three years to below 7,000 even though the pace of failures has abated and merger activity has slowed. What's really driven down the numbers is the lack of startups. That contrasts sharply with the five years leading up to the financial crisis, when an average of 156 new banks opened each year or roughly one bank for every two that failed or merged out of existence.
