'Hope St. Peter Overlooks My Legacy Issues': Comments of the Week
July 10, 2015 7:30 AM
American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and from our social media platforms.
In response to JPMorgan Chase's statement that a settlement with federal and state authorities over faulty credit-card collection practices "covers issues from several years ago" and puts an end to "legacy issues":
"Love JPM's reference to 'legacy issues' as a means of distancing themselves from culpability. When I reach the pearly gates, I hope St. Peter overlooks my legacy issues."
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On what the JPMorgan Chase settlement reveals about the Consumer Financial Protection Bureau's approach to enforcement:
"These actions would have been unnecessary if the CFPB had continued to target the unfair, deceptive, abusive and predatory card practices of the 'too big to behave' banks after hitting Capital One Bank in July 2012. Selective, isolated & capricious enforcement continues to be a hallmark of the Bureau instead of the uniform, industry-wide enforcement that is supposed to be its charter."
Pictured: Consumer Financial Protection Bureau director Richard Cordray
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In response to the claim that neobanks are better than traditional institutions at maintaining a daily presence in customers' lives:
"More like, 'we'll bother you more than any real bank.'"
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On the implications of Ford Motor Co.'s car-sharing pilot program for the auto financing industry:
"Car sharing will not help borrowers with damaged credit buy a car. It may augment income, and therefore improve debt/income ratios, but this has no bearing on credit history or credit score which is a separate factor in credit decisions. And I question whether it will allow borrowers to buy more expensive cars. Perhaps the captives will recognize it to sell cars, but other lenders will be unlikely to view prospective rental income as dependable. They may view it as adding risk, as it could negatively impact collateral values."
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On why community banks should focus on a few specific markets rather than peddling their wares to a broad swath of customers:
"These community banks need to identify their competitive advantages and target those market segments where they can exploit these. They are small so can be more agile if they stop trying to be all things to all people."
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On an apparent contradiction in a Financial Industry Regulatory Authority statement that Wells Fargo and other companies caught and reported overcharges to mutual funds but "neither admitted nor denied the charges" in a $30 million settlement:
"How is it that the companies could detect and report the overcharges, but not admit that they had done it?"
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On the reporting errors that continue to plague Americans' credit reports:
"The credit bureaus need to be held accountable for their lack of responsiveness to correcting mistakes. And more importantly should NOT be allowed to offer credit monitoring products. That is a case of the fox watching the hen house!"
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On whether large insurers like MetLife are fair game for designation as systemically important financial institutions:
"Bigness has low impact on systemic financial risk. What does have high impact is asset-liability mismatching, and interconnectedness."
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On whether financial startups' services are superior to those of traditional banks:
"Banks only exist because of their entrenched legacy and regulatory moat
When it comes to the actual services that banks provide micro-lending, peer-to-peer, investing, bill pay startups (LendingClub for lending, Betterment for investing, Check for bill pay) provide services that are 10x better. Banks are not in the business of serving customers, rather [they're] in the business of making big loans to customers. As such, every other service banks provide is suboptimal at best."
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On how banks' failure to upgrade their technological systems has hobbled their ability to adapt to modern times:
"[Regulators] have been telling banks to upgrade technology for as long as I can remember
Instead banks crazily maintain the Ptolemaic impossibility of their patched-up systems. The partnership that is really needed is brand-new banks on the digital model from the ground up. And that is happening."
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