'Dodd-Frank Is Like the TSA': Comments of the Week
August 22, 2014 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 the debatable effectiveness of Dodd-Frank rules:
"Dodd-Frank provides, at great cost and damage to those it pretends to protect, 'regulation theater' in the same way that the federal TSA provides 'security theater' to air travelers."
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On the Congressional push to limit the Federal Reserve's emergency lending authority:
"The Fed discount window and other lending facilities are not meant to keep bad banks afloat any more than a bartender is meant to keep serving drinks to a drunk."
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On the Financial Services Roundtable's ads attacking the Consumer Financial Protection Bureau's plan to expand its online customer complaint database:
"In the dot-com era, we talked about how the Internet could flatten hierarchies by allowing anyone to access a new channel and broadcast their ideas to the audience. Mr. Pawlenty and the FSR are trying to stuff a very big blue genie back into a very small green bottle."
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On a lawsuit alleging that federal regulators unfairly pressured banks to cut ties with legal payday lending businesses:
"I have personal experience with examiners saying if the bank doesn't close a certain account then the bank can expect 'trouble' in their next exam up to and including enforcement actions and civil money penalties. That line, 'Any such termination decisions were the banks' business decision' is about as disingenuous as an armed criminal saying the victim made a 'decision' to hand over his wallet while staring down the barrel of a gun."
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On how regulators are responding to the lawsuit alleging they led a 'concerted campaign' to drive payday lenders out of business under the auspices of Operation Choke Point:
"Ask a 2-year old child with his hand in a cookie jar what he's doing and his answer will invariably be, 'Nothing.' Federal financial regulators appear to employ similar logic when questioned about what they are doing with Operation Choke Point."
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On the parched bank M&A landscape:
"It's quite a distorted market we have now: the Fed's TBTF doctrine has [the six largest] banks under an acquisition moratorium; no M&A among the regionals for fear of tripping a regulatory threshold; and de novos are extinct. Where is the market discipline when the management of every bank over $50 billion has a de facto poison pill?"
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On what Alexander Hamilton would think of today's banking system:
"Hamilton conceived of the banking system as a vehicle to promote the progress of the nation through investments in production and infrastructure. He fought for a national bank, not an oligarchy of private banks. He would be absolutely horrified at the system that currently prevails, where gigantic banks are too busy gambling with derivatives to invest in anything useful, and are being rewarded by the taxpayer for doing so."
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On a proposal for the banking industry to standardize its approach to financial crime compliance:
"If the financial sector won't do this, perhaps we should question their interest in compliance with the [Bank Secrecy Act] and [anti-money-laundering] laws."
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On a proposal to replace banks' living wills with reengineering plans that make their risk exposures more transparent to regulators:
"Well we'll just keep on adding, changing, tweaking regulations, adding computers that oversee computers or what have you, until one day, finally and forevermore, there will be no more bank failure-regulators will foresee all future bank failures of all sizes and pre-empt them. There will be no more government bailouts, no more wringing of hands over disorderly bank failures. Will we all wear white robes in this utopian world?"
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On the practicality of reengineering big banks to get a better handle on their risk:
"We talk to anyone in the world any time and from anywhere instantaneously and for free. We collect and analyze all the world's data and telephone traffic. We Google anything we want to know about and get answers back instantaneously. If we can do that, and we can, we can collect financial transactions of 30 global [financial institutions] and analyze it in real time. We can see risk building up in real-time. And we can do something about it in real-time."
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