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Tag >> Banking
Oct 07
2010

Should banks give up the payments game?

Posted by dbedell in SWIFTpaymentsGoogleelectronic bank account managementeBAMcash managementCashbanking industryBanking

dbedell

In a blog Thursday on FinanSer--the Financial Services Club blogsite—commentator Chris Skinner posed the following question: Since payments are becoming so commoditized that it is foreseeable at some point they may become free, what does this do to the role of a bank as an intermediary in the payments business?

Skinner suggests that banks should and are moving towards becoming repositories of information, as they are further disintermediated from the payments space, and as margins disappear for payments processing.

Aug 26
2010

Why Herz's retirement may be bad for accounting

Posted by Ron F in Securities and Exchange CommissionGAAPfinanacial reportingFEIFASBcomplianceBankingAccounting

Ron F

The retirement of FASB's long-serving chairman is no surprise. Eight years is a long time at the helm, especially when the last two involved a serious banking crisis in which accounting was a central concern. But Bob Herz kept a stiff upper lip and gave little quarter, even when playing defense and compromising where he had to.

When I interviewed Herz's predecessor, Ed Jenkins, he had clearly been through the ringer on everything from derivatives accounting to Enron. And it showed.

Aug 24
2010

Trups will no longer count as banks' Tier 1 capital

Posted by mcole in Riskhybridsfinancial reformDealsBanksBanking

mcole

The Dodd-Frank financial reform is allowing banks to redeem trust preferred securities at face value for 90 days. So far, large banks haven't used the redemption provision and they may not take the opportunity at all.

The new law is offering this option as trust preferred securities, also called Trups, will no longer qualify as Tier 1 capital. The exclusion will begin in 2013.

Aug 23
2010

Banks reduce Level 3 assets

Posted by mcole in securitizationRiskfair valueBanksBanking

mcole

Large US banks have reduced hard-to-value Level 3 assets since the beginning of the year, according to quarterly filings, but it doesn't mean their balance sheets are in better shape.

The decline was modest for some banks, especially compared with the sharp improvement in 2009 when banks raised equity and reduced leverage. In addition, the recent requirements to consolidate off-balance sheet vehicles helped remove some assets from the Level 3 bucket--but only to reclassify them under different categories on balance sheets.

Aug 20
2010

More trouble for banks

Posted by Ron F in Supreme CourtsecuritizationRiskmortgagesmortgage foreclosuresloan lossescomplianceCitigroupCitiCaliforniaBanksBanking

Ron F

This trend has now reached California, so it's about to become a whole lot more meaningful.

Again, this may be a matter of paperwork, but at minimum, it seems like banks will have to spend time and money straightening out their claims to homes on loans they've securitized.

Aug 18
2010

Why regulators shouldn't listen to economists

Posted by Ron F in RiskRegulationNew York Fedfinancial crisisFederal ReserveFedcomplianceBanksbanking reformBankingbank failures

Ron F

This brouhaha over the Boston Fed's rationalization for missing the housing bubble reminds me of a conversation I overheard a few weeks ago between a former Federal Reserve bank supervisor and his counterpart at the New York Fed.

I can't give you their names since they were conversing privately a few feet away from me before the start of a conference on financial regulation (nor can I give you the name of the confab since that would give their identities away), and I just managed to overhear the exchange.

Aug 16
2010

JPMorgan, Cablevision case creates CDO uncertainty

Posted by mcole in securitizationJPMorganDealscompliancecollateralized debt obligationCLOscableBanksBanking

mcole

A recent court decision involving JPMorgan and Mexican cable operator Empresas Cablevision sent another blow to the securitization market, and especially to collateralized loan obligations (CLOs), but gave more of a say to borrowers when lenders want to pass on their loans to others. It could have a broad-reaching impact on structured financings.

At the end of July, the US District Court for the Southern District of New York invalidated a participation granted by JPMorgan to another bank in a loan from JPMorgan to Cablevision. The terms of the loan allowed participations, but the court recharacterized the participation as an assignment-which required the borrower's consent.

Aug 11
2010

Getting what you wish for

Posted by mcole in Riskratings agenciesFederal ReserveFDICCredit RatingscomplianceCapitalBanking

mcole

As part of the financial overhaul, federal banking agencies have jumpstarted the process of finding alternatives to using credit ratings for calculating banks' capital levels. But alternatives are few and far between and some could be expensive too.

The various bank agencies - the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision - are seeking to gather information and comments on alternatives and on a set of criteria considered important to evaluate creditworthiness standards such as risk sensitivity, transparency, consistency and simplicity.

Aug 05
2010

Why Tim Geithner should ignore the banks

Posted by Ron F in Timothy GeithnerGoldman Sachsfinancial reformfinancial crisisDodd-Frank billcomplianceBanksbanking reformbanking industryBanking

Ron F

Banks' arguments against stricter capital reserve requirements seem to be getting a hearing from regulators such as Tim Geithner and the Basel Committee, but a recent paper suggests they should not.

This was alluded to in a blog today by Simon Johnson over at the Baseline Scenario, but the relevant passages are worth reading.

Aug 04
2010

When confidence is merely a con

Posted by Ron F in Timothy GeithnerRegulationObama Administrationfinancial crisisEUcomplianceBanksbanking reformbanking industryBankingbailouts

Ron F

A column published on Tuesday by Project Syndicate sums up the world's flailing (if not downright cynical) response to the financial crisis in particularly apt terms, I'd say.

The governments' efforts to restore confidence in the banking sector without really addressing the causes of its loss of confidence is akin to trying to tickle oneself, observed Paul Seabright of the University of Toulouse in the piece, entitled "Financial History's False Lessons."

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