'Enormous, sometimes terrible power': Comments of the week

On how Federal Reserve regulatory and monetary-policy actions have exacerbated the widening income gap:

"Fed policy has been blind to many considerations and is likely driven in part by considerations beyond their mission statement. Government agencies that go too far, in ignorance or denial of their enormous and sometimes terrible power, pose a great risk to the economy and to citizens."

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Agreeing with the argument that the regulatory debate has been too focused on capital:

“Regulators have wrestled for years over the use of the M in CAMELS as a leading indicator of a bank’s overall condition, which it should be, rather than its typical use as a lagging one. There is an old saying in examinerdom that there is no amount of capital that can hide bad management. The M, in my view, is THE most important component of the ratings system, making bank regulation much, much more than capital.”

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Pointing to the structure of the regulatory agencies, rather than the amount of their rules, as holding back innovation:

"It might be helpful if Congressman McHenry could clearly describe exactly what are the ‘underlying policy goals?’ A majority of financial services executives identify regulatory and reputation risks as greater concerns than credit risk or interest rate risk. Perhaps, the significant barrier to innovation is not too many regulations but rather too many regulatory agencies. The CFPB's adversarial history certainly does not recommend it as a desirable partner in innovation."

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CFPB’s ‘project catalyst’ failed. Fintech deserves better

On how Watson is being fed data on traders’ emails and chats in an attempt to flag banks about corrupt employees:

“I can see the point but the effectiveness of the AI engine is only limited to the availability of data. I think most people these days have learnt to get off digital channels or use face to face comms, unknown/ hidden devices and identities to ensure some communications don’t come under surveillance easily.”

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In support of Wells Fargo dramatically increasing its borrowings from the Federal Home Loan Bank of Des Moines:

"I’m CEO of a community bank in Iowa, $81 million in assets. I know it’s in vogue now to attack the big banks. Small banks like ours compete with them, and we sure have felt the effect of regulations aimed more at them than us. I’m glad that Wells & other larger banks are members of the FHLBanks along with us. The economies of scale that occur when both big and small pool together through the FHLBanks, create credit access & affordability that our bank can share w the local communities we serve."

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Wells’ borrowing binge sparks concentration fears for Home Loan banks