'Stop This Abomination': Comments of the Week
May 15, 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.
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On a new report from the World Bank that identifies documentation requirements as the barrier to financial access for 18% of unbanked adults worldwide (<a href="https://twitter.com/iang_fc/status/598592339251171328" target="_blank">via</a> <a href="https://twitter.com/iang_fc/status/598669976342503424" target="_blank">Twitter</a>):
"Experts have been telling regulators that low-value cash products should not be [subject to Financial Action Task Force guidelines] since Mondex . To no avail
The FATF will not fix their guidance until there are riots outside their door in Paris
You don't need [a] degree or committee to know that KYC and AML on mobile phone money is daft."
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On the practice of ordering debit-card transactions to maximize overdraft fees:
"Ordering of transactions and overdraft fees? Go by the Golden Rule. If you wouldn't want it done to you, don't do it to others. When I first got into banking, ordering of transactions to benefit maximum fees didn't feel right
it still doesn't."
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On whether loans held on banks' balance sheets should be exempt from qualified-mortgage rules:
"The notion that 'there is nothing inherently safer about a portfolio loan' is ridiculous. When a loan officer's job is on the line for making good loans, and not posting losses, the only incentive is to make loans we fully intend to collect. When the bank's collection department is in a position to try and collect a payment each month or suffer the damages of foreclosure, there is no incentive to 'push through bad / risky loans.' That is a secondary market trick that led to high-risk mortgage back security pools that caused the crisis. Most portfolio-held loans at community banks are not even negotiable for sale. They use a different type of mortgage with future advance clauses that can't be used in securitized loans."
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On the argument that the absence of a market economy is at the root of the Baltimore riots and that banks should therefore do more to provide low-income black neighborhoods with economic opportunity:
"Markets don't do things. People with good sense take advice like this and do it."
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Image: iStock
On whether a bill to limit the Federal Reserve's emergency lending powers would help ward off future bailouts:
"Prior to the 2008 crisis, neither Goldman Sachs nor Morgan Stanley had the ability to borrow from the Fed. Because they were so big and their failure was so threatening to the economy there was no choice but to bail them out. The Fed gave them immediate bank holding status and all the benefits of borrowing. Do we really think a few new rules are going to stop this abomination of capitalism? If they're too big to fail, they're too big. Pretty simple."
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Image: Bloomberg News
On Moody's decision to downgrade the city of Chicago's debts and Mayor Rahm Emanuel's response that the ratings agency is "play[ing] politics with Chicago's financial future":
"That's rich, Rahm Emanuel accusing Moody's of being politically motivated.
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Image: Bloomberg News
On how banks should strike a balance between taking calculated risks and falling headlong into danger:
"In contrast to truly reckless business plans, a pattern of reasoned innovation should prolong rather than attenuate the expected life of the bank."
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On the news that a character called "Moaning Myrtle" in the <em>Harry Potter</em> series apparently has a namesake in financial reformer Sen. Elizabeth Warren:
"I'm surprised that you were unable to obtain any snarky comments from the Gringotts Bank goblins about Moaning Myrtle's full name." Picture: "Harry Potter" author J.K. Rowling
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Image: Bloomberg News
On the news that the U.K.'s Financial Conduct Authority will no longer permit banks to sever ties with business lines because of regulatory risk:
"I agree that banks should take a risk-based approach to their business, but that must also encompass regulatory risk, which in fact today can be in many cases the greatest risk that a bank faces. Regulators need to own up to the fact that they are creating risks to the conduct of business. Acknowledging that will allow them to address risks that they are creating just as they want banks to do."
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Image: Bloomberg News
On marketplace lenders' moves to partner with banks as well as companies like Google and Sam's Club to bring in customer referrals (<a href="https://twitter.com/itseth/status/596369937427365888" target="_blank">via Twitter</a>):
"So online lenders need brick-and-mortar partnerships to lend? What was the point of being online again?"
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Image: Bloomberg News
On a Bank of America zero-down mortgage program to rehab blighted homes in Detroit (<a href="https://twitter.com/Shnaps/status/598566849563889664" target="_blank">via Twitter</a>):
"Good thing Lowes is also offering 0% financing."
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Image: Bloomberg News
On a housing advocate's claim that Detroit residents in the B of A zero-down loan program will save money by becoming homeowners (<a href="https://twitter.com/haydentiff/status/598851048367788034" target="_blank">via Twitter</a>):
"I hate the comparison of rent vs mortgage. What will these people do when their basement floods?
Homeownership is expensive."
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Image: iStock
