Slideshow 'When Reason Fails, Try Blackmail': Comments of the Week

  • July 24 2015, 7:30am EDT
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American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of articles and from our social media platforms.

On regulators' growing tendency to impose stress-test requirements designed for big banks on smaller institutions that are officially exempt from the process:

"No such thing as trickle down; it's a waterfall."

Related Article: Small Banks Face Regulatory Pressure to Stress Test

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On how a pared-down stress-testing model could benefit small banks:

"I believe that the key here is that the 'big bank' style stress testing should not trickle down — but proactive stressing of a community bank's portfolio in a simple, local manner makes good sense. As long as the regulatory expectation is for a simple locally-based model, there's nothing wrong with an expectation of all banks to stress test in some manner to help protect its capital, credit quality and shareholders."

Related Article: Small Banks Face Regulatory Pressure to Stress Test

On Sen. Richard Shelby's efforts to push through his regulatory relief bill by attaching it to separate legislation that approves funding for government agencies:

"When reason fails, try blackmail."

Pictured: Sen. Richard Shelby

Related Article: Shelby Tries End-Run Around Dems to Pass Reg Relief

On House bills that aim to subject the Federal Reserve to more Congressional oversight:

"Politicizing the Fed could have huge negative implications in the future. It seems that the errors made by the Fed were mostly under [Alan] Greenspan's watch and were more errors in judgment, not due to influences of one political party or the other. A politicized Fed probably could not have done what [Paul] Volcker did at the end of the 70's, beginning of the 80's, which was painful but was a key ingredient to the growth experienced in the 80's and 90's."

Pictured: Former Federal Reserve chair Paul Volcker

Related Article: House Panel Debates Bills to Rein In Fed's Authority

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On how banks should hone their "top of the wallet" card strategies in response to the growing popularity of companies like Uber, Lyft and Seamless that process payments automatically:

"Banks and credit unions that embrace Apple Pay and Google Wallet (and soon Android Pay) have a bit of an advantage in this area … When I installed Uber and Lyft, I did not add a credit card. All I did was touch the Google Wallet icon and let the wallet handle payments. Getting someone to change their default payment method on an app-per-app basis is near impossible. Getting the default card changed in a mobile wallet is a lot easier."

Related Article: Uber Makes 'Top of Wallet' Competition Tougher

On banks' reasons for steering clear of the market for private mortgage-backed securities:

"Lie down with dogs, get up with fleas."

Related Article: Is the Fed Creating a Monopoly in the Mortgage Market?

On community banks' experiments with the somewhat risky area of cloud computing:

"Sadly, or perhaps tragically, the bank managers or executives who make this fateful decision may be gone when the 'chickens come home to roost.' Otherwise, they may have to pick up the pieces AND be hit with very expensive and time-consuming lawsuits seeking damages in the millions, based on their actions. Hacking is a way of life today, and small banks are probably the least protected and most vulnerable … If our military and highest-level intelligence operations are having great difficulties fending off such attacks, imagine some small banker even trying to address the issues."

Related Article: Small Banks Take a Test Flight in the Cloud

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Assessing an argument that Ripple Labs, which just had a <a href="" target="_blank">run-in</a> with the Financial Crimes Enforcement Network, truly aims to build a decentralized payment network (<a href="" target="_blank">via Twitter</a>):

"Cool, we'll see if @RippleLabs survives the next rounds of government crackdowns."

Related Article: Ripple's Overlooked Path to Decentralization

On the promise and hurdles facing new technologies for identity management:

"Being certain of who is attempting to perform a particular transaction can allow anyone to participate in a financial network without fear that they are not who they say they are even if you don't explicitly have all of their information. It takes the whole concept of tokenization to the next level. … The problem is that each bank wants to do its own KYC for each customer. They are not quite willing (yet) to accept a decentralized KYC solution." (Via XRPTalk)

Related Article: Ripple's Overlooked Path to Decentralization