'Small Banks Are Crybabies': Comments of the Week
July 26, 2013 8:00 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 whether the future housing finance system should include a government guarantee:
"There is no reason to provide a federal guarantee other than to provide implicit unfunded subsidies that sow the seeds of a future financial system systemic collapse."
Related Article:
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On blaming mortgage servicers for the high redefault rate on loan modifications in a government program:
"It's the servicer's fault - clearly! And use the three strikes rule for borrowers - that is, they get to default three times before their loan is forgiven."
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On mortgage lenders laying workers off as refinancing volume wanes:
"Layoffs are frequently the knee-jerk response to a symptom rather than a thoughtful solution to a problem.
A cost/benefit analysis should include the cost of recruiting and training new employees versus the cost of cross-training existing staff in other lines of business. When activity in one line of business slows, another typically is accelerating."
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On expectations that the Consumer Financial Protection Bureau will be more aggressive in its third year:
"The CFPB exists to fill a vacuum created mostly by the banking industry. As banks, especially the bigger banks, exercised their ability to say 'caveat emptor' to the public (which used to trust them for good financial advice), the public realized that they were being treated in an abusive manner.
Until the banks and their associations start to support good practices, good behavior and provide solid actions (not lip service), the public will ask the CFPB to 'pour it on.'"
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On the glacial pace of Dodd-Frank rule writing three years after the law's passage:
"The Dodd Frank bill is doing exactly what it was designed to do - write a vague bill and keep everyone's attention for five years."
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On the claim that small banks are being 'squeezed to death':
"Baloney! Small banks are a bunch of crybabies. To increase earnings but not risk they could seek to sell insurance, annuities
or they could sell the popcorn they used to give away at the door."
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On the future role of banks:
"Banking doesn't just have to be about a place to store money. What if your bank was also an information bank?"
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On the suggestion that banks should become repositories for customers' personal data and reputation:
"An interesting idea
in line with the historical role of banking. However, today the general level of trust in our industry is
below that of many other industries. It seems to me a prerequisite for this service is to be a broadly trusted industry, so this future is now at risk."
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On the idea that consumer relationships with banks will become more intimate and personalized:
"Consumers are slowly becoming more comfortable with
privacy-personalization trade-offs.
This is being driven, primarily, by a generational shift - younger consumers are just more comfortable with third-parties having and using their personal information. The question
is who will provide this new, more personalized banking experience."
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On criticism of McDonald's Visa payroll card program:
"Are the experts actually supporting a retrograde movement to paychecks and check cashers?"
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On the addition of 11 large banks to the stress tests:
"Judging by the estimates of additional regulatory cost, these 11 banks will be expending collectively somewhere around $50 million for what, exactly? More customer service? No. Better customer service? No. More lending? No."
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On anti-money-laundering laws choking off remittances to Somalia:
"This is temporary bad news for the Africans needing the remittances, but great news for Bitcoin. Becoming the solution to problems like this worldwide will catapult the value and acceptance of Bitcoin, and there won't be a damned thing that governments can do about it." (Via Reddit )
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