'Sorry, been there — not pretty!’: Comments of the week

On efforts by big banks to ease the leverage ratio:

“It seems that Wall Street and their trade groups have already forgotten (or don't want to remember) what triggered the worst financial calamity since the Great Depression — excessive LEVERAGE!! And now they want to go down that road again?? Sorry, been there — not pretty!”

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The major flaw in big banks' argument against the leverage ratio

Disagreeing with an op-ed that criticizes the plan to remove safe assets from the leverage ratio:

The author has a well-earned reputation for careful analysis. In this case, though, he engages in some exaggeration to make his case. Treasury is not proposing to risk weight all of the leverage ratio. Their proposal is simple and sound: don't include riskless assets in the calculation of the SLR. If the role of capital is to cushion risk, why then have banks carry the capital for assets that have little or no risk, like deposits at the Fed and short-term Treasuries?

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The major flaw in big banks' argument against the leverage ratio

Agreeing that it is difficult to gauge whether post-crisis capital rules and other restrictions have kept banks from lending:

“At the community bank level, all lending is local. And there is no way to measure how many loans were not made because of the borrower's perception that it is more difficult to get a loan or that the borrower does not want to go through all the additional paperwork and disclosures that are required today that weren't precrisis.”

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Is regulation really keeping banks from lending?

Another reader believes that post-crisis regulations have negatively affected mortgage loans:

“Mortgage loans cost more and take longer to make. The extensive rules could have been written to require more equity to back these loans and let banks make the same risk assessments they have been doing for 100 years. Loan problems were not created by banks making portfolio loans but rather non-banks with no skin in the game. Dodd/Frank fixed the wrong problem and damaged the market. S/B repealed.”

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Is regulation really keeping banks from lending?

On how Congress may fail to kill the Consumer Financial Protections Bureau’s rule restricting arbitration agreements:

“Based on the performance of Congress over the last 8 to 9 years, I'm not sure anyone can count on Congress for anything. Members are great at holding hearings and press conferences but they are not so great at any measureable outcomes.”

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Institutions shouldn't count on Congress killing CFPB arbitration rule

On a CFPB study indicating that consumers may not fully understand overdraft fees:

“Interesting to see the results of its study of customers of large banks. What is the experience of customers of community banks? Apparently, the Bureau was not interested. Or maybe it was easier to avoid anti-paperwork laws by checking with only a handful of large banks. Or all of the above.”

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CFPB eyes new disclosures for overdraft programs