The simmering controversy over American Express' Bluebird card typifies a classic debate: When do regulations that ostensibly protect the public from shady operators really just protect incumbent businesses from competition?
There needs to be stronger incentive for bankers to behave, far-reaching cultural changes spurred by directors and a unilateral commitment to stamp out money-laundering schemes.
Regulators can solve the supersized bank problem by removing barriers to market forces. The most important step is to offset the implicit senior debt funding subsidy.
Former FDIC chairman Sheila Bair wants to ban the revolving door and, moreover, believes bank examiners should be required to make a lifelong commitment to the profession. Not everyone agrees with this prescription.
The complexity of Basel III is irrelevant to 90% of U.S. banks and should not be imposed on them. If rejecting the rules altogether is not considered politically feasible, a sensible alternative would be to simply exempt all community banks from its requirements.
Liability insurance companies generally argue allowing banks to receive insurance coverage for overdraft litigation settlements violates public policy and rewards supposed wrongdoing, but there typically is no explicit exclusion in a policy that justifies this and other go-to positions.
The regulatory maze currently being created under the pretext of helping the consumer and preventing the next housing bust will do neither and will continue to impede the recovery.
Public-private partnerships designed to dispose of banks' costly noncore assets allow governments to transform themselves into facilitators of a banking revival, banks to bolster their balance sheets and private investors to gain access to a pool of profitable assets providing attractive rates of return.
