Bank Lawyer's Blog

Are Federal Thrifts Flipping Out?

Yesterday's American Banker had a front-page story (paid subscription required) that discussed how some large federal savings banks were flipping from an OTS to an OCC charter. Apparently, the uncertainty of what effect the proposed financial reform legislation, including proposals to abolish the OTS, might have on federal thrifts is causing some publicly-traded thrifts to end the uncertainty by simply switching charters.

While the story featured $60 billion Hudson City Savings Bank jumpting to the OCC, the OTS denied that any pressure was being put on its assessment base by such a large defection or by any other potential defection, for that matter.

"The OTS budget is cyclical. In some years, the agency runs a surplus; in other years, there is a deficit," OTS spokesman William Ruberry said in a statement, without providing specific numbers. "Over time, there is a balance."

Ruberry also dismissed suggestions that the potential for a regulatory overhaul is hurting the agency. "Naysayers have been predicting the demise of the OTS for 20 years and, despite those predictions, the OTS continues to fulfill its mission," he said.

Mr. Ruberry then screamed that alien sucker fish were nibbling his giblets and encased himself in a thermal snuggy to await the arrival of Lord Zardoz of the planet Ishtar, who is apparently leading an inter-galactic revival of the federal thrift charter. The rest of us believe that the OTS' budget is currently "cyclical" in the same manner that your washer runs through the spin cycle right before it stops. The "balance over time" concept is problematic for an agency whose time is just about up.

As for the fact that predictions have been made in the past that the OTS is a dead man walking and that such predictions haven't panned out thus far, I can only say that the only such prediction that has to be correct is the very last one made. We'll be certain to archive this article and resurrect it next year to see how cocky everyone is feeling then

That said, I have to agree with the closing comments of attorney Kip Weissman, who said "he's skeptical that a number of thrifts will follow Hudson City's lead. He thinks many are waiting to see what happens with regulatory overhaul legislation."

"There clearly is a large group of institutions that are actually thinking about it and are on hold pending the clarification of the legislation," he said. "That could change in six weeks when things become more clear, but now there are still a lot of issues with what your charter will look like."

I agree that if you're a federal thrift you'd be foolish not to be seriously exploring a charter change. I also agree that until we see what the final legislation that passes both houses looks like in this regard, cautious federal thrifts will be holding their water.

Andy Cuomo's Pinata Week

New York Attorney General Andrew Cuomo is a man who appears in many respects to want to follow in the footsteps of Eliot "Mess" Spitzer, only, he hopes, without tripping over a stray hooker. Like The Spitz, Andy is generating a lot of hostile feelings. The latest emanations of negativity issued forth last week from two sources, one a Duke University professor and the other a well known banking analyst. Both of them think Cuomo's abilities and character are lower than a gnat's navel.

First out of the starting gate was Duke professor Michael Munger, who, in an interview with LegalNewsline.com, excoriated Cuomo for suing Bank of America over alleged concealment of Merrill Lynch losses.

The way Duke University professor and former North Carolina gubernatorial candidate Michael Munger sees it, there can be only two reasons New York Attorney General Andrew Cuomo is suing Bank of America -- and neither of them are good.

"One is that he actually believes it," Munger said Tuesday when asked about Cuomo's fraud lawsuit. "That would mean his hypocrisy is incredible.

"The other is that this is fake, that he's doing this for personal aggrandizement."

I hate it when people sugarcoat their opinions, don't you? Eventually, Munger stopped being polite and took off the gloves.

Munger, like a recent Wall Street Journal editorial, says Cuomo's reign as secretary of the Department of Housing and Urban Development Authority under President Bill Clinton was a big cause of the financial problems of today.

Cuomo required Fannie Mae and Freddie Mac to buy $2.4 trillion in mortgages over a 10-year span. Cuomo said that meant affordable housing for 28.1 million low- and moderate-income families.

"The fact is that pressure had been placed on both private banks and Fannie Mae and Freddie Mac to increase the amount of affordable housing available for people who couldn't afford it," Munger said.

"Banks were making loans they wouldn't make under normal circumstances. They were pressed by both Congress and Cuomo and the HUD. Basically, they were putting a government stamp of approval on them to buy these as investment-grade assets.

"To put it bluntly, the government was setting a trap... For Andrew Cuomo to blame somebody else, he caused it as much as anybody, or his agency caused it more than anybody -- and certainly more than any bank merger."

[...]

Asked to describe Cuomo's term with one word, Munger chose "complicit."

"He didn't resist," Munger said. "He was far from being someone who made it better. He went along to create the conditions that caused the disaster.

"He forced the banks to make bad loans, then he forced Fannie Mae and Freddie Mac to certify the bad loans as if they were good."

Another verbal whipping was administered by Dick Bove, who, in an interview with CNBC, drove home the same point. Bove went so far as to call Cumo "the father of the subprime crisis." I guess we'll have an awful lot of potential fathers having to take paternity tests before that issue is settled, but the old saying is certainly true, that success has many fathers while failure is an orphan.

"One of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today, and why the government is spending hundreds of millions of dollars in supporting them, is because of the edicts pushed through by Mr. Cuomo," said Bove, of  Rochdale Securities, in a live interview.

"It's also thought by many that the hundreds of thousands of people who are losing their homes, are [doing so] to a great degree because of the actions taken by Mr. Cuomo at HUD," Bove added.

Bove also bashed Cuomo for attacking big banks that are so important to the business base of New York. He thinks that was a dumb move for a man who apparently wants to follow The Sheriff of Wall Street from the Attorney General's office to the Governor's mansion.

"His lack of financial acumen may prevent him from doing the right things even if he wants to," he said. "You just don't want someone with that type of lack of understanding of the financial system running a state as important as New York."

Given the pitiful performance of the most recent governors of New York, it's pretty damning to state that Andy's too dumb to be governor of The Empire State. That has been a position where cerebral firepower has been as absent as personal virtue. If Andy can't limbo under a bar set that high, he may have already risen to his level of incompetence.

Time To Refloat Pandit's Trial Balloon?

About a year ago, Citibank CEO Vikram Pandit floated a trial balloon during Congressional testimony that turned out to be made of lead. Pandit suggested that one way to deal with toxic assets on the balance sheets of banks was to mark them to market and let the banks amortize the losses against earnings over a ten-year period, rather than take an immediate hit to capital. Having come from Pandit, who became Sheila Bair's red-headed step child, the trial balloon went nowhere fast. Instead, Congress gave us the fabulously successful TARP CPP and its progeny, which most recipients have tried to pay back as fast as they've been able, due mainly to bank-bashing by members of the same Congress that voted to give banks the money in the first place, and to Congress changing the rules of the game after the banks took the capital investments.

The only serious analysis of Pandit's idea in the blogosphere that I've read was done by Vinny Catalano at Minyanville. A year ago, Catalano set forth a proposed plan for implementing the amortization that would have used a Public/Private Investment Bank to buy "toxic assets" from banks. Obviously, such a plan had no chance of going anywhere and wouldn't have anymore of a successful chance of flying today, since no one was willing to suffer the political risk of trying to price toxic assets and let the government take the risk that whatever price they established was too high. "Bank bailouts" with tax dollars are a train that left the station a long time ago and they aren't ever coming back. On the other hand, the very last commenter to Catalano's post, Erik Sebesta, had an idea then that could work now.

Why transfer to the PPIB if the suggested amortization accounting rule gives the bank the help it needs? Better to keep the toxic assets with the bank which has the highest motivation to sell for a good price.

That makes sense to me. The banks would use existing accounting rules to do what Sheila Bair's been yapping at them to do: "get real" about establishing losses on commercial loans. Instead of having to take immediate massive write-downs to their capital, however, they'd be allowed to write down only 10% of the loss currently and amortize the remainder over the next decade. It's likely going to take them (and their borrowers) the next decade to work their way out of most of their troubled commercial loans anyway, so I'm not sure the amortization period is unsupportable. It's not the 25-to-40 year amortization period that the regulators allowed in the "supervisory goodwill" cases of several decades back.

I'm not thinking of "too-big-to-be-accountable" banks or of the radioactive CDOs or MBSs on (or barely off) their books. Instead, I'm thinking of the community banks that the FDIC has been exterminating like Kulaks in the Ukraine circa 1932, the little guys loaded up with commercial real estate and C&I loans they made to local businesses. You know, the George Baileys that Arianna Huffington wants to smother with warm kisses. How about we see if maybe instead of kicking the can down the road solely for residential loan borrowers, we try to save a few of the banks the FDIC is supposed to be watching out for and, perhaps, save some jobs while we're at it. A ten-year amortization won't save everyone, but I think that it will save many.

I haven't given this any more thought than the few moments I've been able to steal from my billable hour servitude to "The Man," and certainly little of lasting value is likely to arise from a cerebrum the size of a walnut. Nevertheless, why not have the giant intellects housed with the bank regulatory agencies explore this simple idea and see what merit it might have now that a sufficient time has elapsed to ensure that it is torn from its Vikram-like roots and now can be considered Pandit-free? Since banks are required by law to use GAAP, such a scheme may very well take a new act of Congress, and that might be difficult in light of the current bout of self-flagellation over health care reform being fought out in D.C. Again, however, unless the FDIC truly has a plan to murder two thousand or so banks in order to make its job easier to perform, what have we got to lose by at least giving this more than a passing thought?

FDIC's "Repudiation" Powers: Deja Vu All Over Again

As the FDIC continues to sing its favorite tune, "Another One Bites the Dust," listeners who do business with FDIC-insured banks and thrifts should become familiar with the repudiation powers of the FDIC in its capacity as the receiver of a failed financial institution. Dallas-based Haynes and Boone recently put out a client alert on the topic that is worth reading. As a landlord or service provider to a bank, you just hate to wake up on a Saturday morning and find that the lease or contract you thought was solid gold when you left work on Friday might be no more than dust blowing in the wind by the time the receiver gets through with it.

While you're at it, you might also find a K&L Gates memo on the same subject from a couple of years ago to be valuable. That memo also discusses 12 USC 1821(e) and the "D'Oench, Duhme Doctrine" that is codified in that provision of federal law. I recall that after the last time we through massive bank failures, many legal counsel for borrowers became incensed when they learned that all those side-letter and hand-shake deals made by the failed bank's former management that they thought they could assert against the FDIC as receiver ended up as no more than spitballs being tossed at an M1 Abrams tank. 

When folks think of risks in the banking business, they likely think first of risks that the bank takes in dealing with third parties, like counterparties in a SWAP transaction or borrowers in a loan transaction. If the FDIC keeps mowing down community banks like wheat before the thresher, being a third party on the other side of any contractual relationship with a bank will be like being a rookie in a No Limit Texas Hold'em Poker tournament sitting across the table from Phil Ivey. Sooner or later, no matter how observant or skilled you might be, you're going down. It's best to be prepared.

Non-Intersecting Parallel Universes

You listen to the remarks of Sheila Bair, Chris Cole and Doug Tippens this week at the National Association of Attorneys General Conference and you have to ask yourself whether these people occupy the same universe. Which one are you populating?

On a lighter note, whether or not you support a new consumer protection agency, you have to laugh at the antics of current and former SNL performers, plus Jim Carrey, who are pushing the concept of the agency through satire (hat tip to US Banker).

Funny or Die's Presidential Reunion from Will Ferrell

Bair to Bonderman: Howling Will Get You Nowhere

Last week, David Bonderman publicly complained that the FDIC was scaring off private equity from failed bank deals. Sheila Bair has heard what she refers to as "a lot of howling" about the FDIC's restrictions on private equity acquiring broken banks from the FDIC, and she's clearly channeled the ghost of Rhett Butler: "Frankly, my dear, I don't give a damn."

U.S. bank regulators have "struck a good balance" in their rules on private equity investments in failed banks, despite grousing from the industry, Federal Deposit Insurance Corp Chairman Sheila Bair said on Tuesday.

"I think we're learning as we go along, but it seems to me at this point, I think we have struck a good balance," Bair said in an interview with Reuters.

"We have had private equity in bidding, subject to our statement of bidding which requires higher capital and requires them to lock in their investment for three years." 

[...]

"I know there's still a lot of howling about it," Bair said about the rules, while noting that private equity groups often do not have a track record of bank investment, creating the need for the safeguards.

The "lack of a track record" would also have applied to Ms. Bair before she took over the FDIC, since she's never spent a day in her life in a position with an FDIC-insured institution other than a brief stint as a bank teller. Yet, she's apparently qualified to determine who does and who does not merit consideration as an acceptable buyer of failed banks and, if qualified, under what set of restrictions they should operate. Funny how what's sauce for the goose is castor oil for the gander.

Let us not quibble over such trivialities, however, lest we brand ourselves as fit for nothing more than government work. Instead, let's assume that the additional "safeguards" are justified and deal with reality, in the same sense that Olympic skier Julia Mancuso must deal with the fact that teammate Lindsey Vonn is a Nordic Amazon Goddess and Ms. Mancuso is not. You live with the facts and move on from there. As Wilbur Ross and others have previously stated, Blackstone Group's COO Garrett Moran states again: it's all about return on equity. "It is very straightforward in terms of the capital cost, you have a higher break-even point depending on what kind of return you're trying to get," he said.

"It is like getting leg ankle weights in a race -- it's a disadvantage. We're just always trying to figure out how to ...win a race with those ankle weights."

Sheila shed no tears for the shackled runners of Blackstone or its brethren.

"I know there's a lot of complaining about it, but you know, you gotta do what you gotta do," she said. "We're letting them in, we're letting them bid with some higher standards, and again I think that's appropriate."

You don't "gotta do" what you're doing, Sheila, anymore than the FDIC "had to" pioneer the Southwest Plan model of failed bank resolutions with the Dime Savings Bank resolution, when Stewart Root was with the FDIC. That was a model later adapted by the FSLIC that encouraged private investors to recapitalize the busted thrift industry. Now, the state of banking in this nation is even worse than it was then. You need to get capital from somewhere to buy all your crap, and if you're counting on the pool of "strategic buyers" from within the baking industry to supply it, you're smoking rope.

What you've chosen to do is to discourage potential capital sources and, for those private equity players who still choose to participate (and they certainly exist), you've forced them, as a matter of basic business economics, to make lower bids than you would have received if you hadn't imposed your restrictions. The FDIC's recoveries will, therefore, be less than they would have been without the restrictions.

None of which "has to be." It will "be" only because you've made a choice. A bad one, in my view, but then I don't have the decades of intense industry involvement that you possess. Moreover, my concern is for the future of the industry you're supposed to be temporarily watching over in between gigs as a university professor or CEO of a consumer advocacy group. You've obviously got more cosmic concerns on your plate.

Freddie Mac's Originators Balking At Buybacks

A recent article in The American Banker (paid subscription required) focused on an unpleasant fact for Freddie Mac: when it pushes loan sellers to buy back loans, some of them tell Uncle Freddie to "take your loan and shove it, we ain't buyin' back no more."

The GSE said some big-bank customers aren't honoring its loan repurchase requests "in a timely manner." A total of $4 billion in loan repurchase requests were unfulfilled as of Dec. 31, up by about a third from a year earlier. Nearly 30% of those requests had been outstanding for more than three months. And though some servicers had financial difficulties, three of the GSE's "larger, higher credit quality" servicers had more than 30% of their repurchase obligations outstanding that long.

"It's more like the movie 'Network,' where the star says, 'I'm mad as hell, and I'm not going to take it anymore,' " said Larry Platt, a partner in the financial services group at K&L Gates LLP in Washington. "The dollars are too much."

Fannie Mae recently launched a "Quality Control Initiative" to support its contention that its repurchase requests aren't the result of nitpicking nor a desire to recoup the massive losses that it (and Freddie Mac) have been taking since they started operating as part of the US Government's bottomless pit of public money that is being used to support residential mortgage markets without having to appear as part of the wildly widening US government's deficit, but are, instead, a result of lenders being dumber than a stump. It's apparent that such public relations ploys aren't impressing the troops.

Lenders have complained that the GSEs are being too picky, pushing back loans for minor oversights.

"I think why you see resistance is there is this overcorrection going on, in terms of everything being pushed back," said Paul Anastos, president of Mortgage Master Inc., a Walpole, Mass., lender. (He said he sells loans to Freddie, which has never asked him to buy any back.)

"If they focused in on really what was the problem, they'd gain more traction. I think they'd have more cooperation."

Observers note that neither side can afford to push the other side to the brink. Fannie and Freddie are the only game in town when it comes to loan purchases, while the GSEs need big loan originators like Wells Fargo, Bank of America, and JP Morgan Chase, so it can't afford to financially damage them or honk them off to the point that they get really creative and find a way to bypass Fannie and Freddie or simply say "screw it" and focus on something more profitable and less likely to involve the US Government changing the deal on them (again) after the fact. Sooner or later, they'll have to reach a compromise.

In the meantime, the spat will provide plenty of fodder for chit-chat among those of us who saw this buy-back Armageddon coming years ago.

Fannie Mae Launches Loan Quality Initiative

We noted earlier this month that Fannie Mae and Freddie Mac were in "full put-back mode." Apparently, Fannie is feeling a tad defensive about the publicity that it's been receiving over this issue. It wants to assure interested parties that it's not taking an electron microscope to the loan files to uncover grounds to force loan repurchases. That's because, according to an article in The American Banker (paid subscription required),  it doesn't have to drill very deeply to find defects in the loan documents and underwriting.

Fannie Mae said Friday that many mortgage lenders are not complying with the most basic underwriting guidelines, such as confirming a borrower's identity or verifying a Social Security number.

Marianne Sullivan, a senior vice president and Fannie's chief risk officer, sent a nine-page letter to lenders announcing a "Loan Quality Initiative" to ensure that loans meet the government-sponsored enterprise's credit and eligibility guidelines.

Sullivan said Fannie analyzed the primary drivers of loan-repurchase requests and has launched the initiative to identify ways to improve compliance with its guidelines. "Many repurchase requests are driven by the fact that the delivered loan does not meet Fannie Mae's eligibility requirements," she wrote.

Online publication Mortgage Daily News has a few comments on the "LQI." They rightly note that it appears bank quality control staff are going to have to "spend some time in the classroom." I'm not certain that's necessarily a bad thing. If originators are screwing up the basics, classroom time is something that ought to be happening. Also, MDN suggests that since Fannie Mae is going to begin a process where it tries to weed out the chaff from the wheat before it purchases a loan, originators should have a friendly relationship with a "scratch and dent desk." Again, good advice.

Bonderman To FDIC: You're Making A Bad Situation Worse

TPG Capital’s David Bonderman isn’t exactly a loquacious guy when it comes to public utterances, so when he drops a hot opinion in a public forum, it tends to be noticed. Today at a University of North Carolina conference, he told his audience that he thinks that the FDIC is blowing it by driving away private equity from acquiring failed banks from the FDIC.

The Federal Deposit Insurance Corp, concerned about equity funds exploiting the depressed assets of troubled banks by quickly selling them off, has limited the percentage of ownership and control by outside investors.

But Bonderman said firms that specialize in turning around failing enterprises are precisely the medicine such banks need.

Bonderman, speaking at a University of North Carolina conference here, pointed particularly to FDIC polices as aggravating the problem.

"The FDIC has taken the view that they are terrified of private equity guys -- or anybody else for that matter -- getting control of a financial institution," he said.

"Well, if you can't do that, you can't fix it. So the reason you are seeing so many announced bank failures and no equity coming in is because of misguided policies by the U.S. government

As many readers may recall, TPG lost over $1.3 billionwhen Washington Mutual failed in 2008. The fact that TPG wants in on FDIC-assisted failed bank transactions after suffering that loss shows you the upside potential in FDIC failed bank transactions. It also shows you one of the reasons that the FDIC is gun-shy of private equity: risk-takers might actually make money and then the FDIC might be criticized by mouth-breathing politicians and private sector pundits who resent the fact that other people make money.

For example, look at all the heat being generated by the recently announced financial results for OneWest Bank, the private equity-funded takeover vehicle for the assets and deposits of IndyMac. That hefty profit caused professional sound bite dispenser Bert Ely to ejaculate the following gem: "It makes you wonder whether the [FDIC] loss is due to the acquirer getting too sweet a deal." Well, if that’s the case, then the FDIC broke the law, which requires the FDIC to select the least-costly alternative, which the FDIC assures us that it did. As everyone knows, government officials never fudge the truth, so you can take the FDIC assurances to the bank.

You begin to comprehend the FDIC’s political dilemma, though, don’t you? They don’t sell to a private investor and they’re criticized by folks like Bonderman (and other private equity heavyweights) for taking a heavier loss than they otherwise would have had to have taken. They bring in a private investor, lower their loss, but—god forbid—the private investor makes money, and guys like Bert Ely opine that the deal might be “too sweet.” The next thing you know, pajama-clad bloggers are nipping at your heels, then all hell breaks loose.

On the bright side (for PE investors, at any rate), Bonderman thinks that the PE freeze-out by the FDIC might be thawing.

Sooner or later the Feds will get the idea that the way you get capital into the system is to attract it, not to repel it, and make rules that reward capital and not the other way around," he said.

Maybe, maybe not. According to “experts” quoted in a Reuters article today, the FDIC private equity guidelines don’t appear to be changing.

Executives told Reuters that they did not expect the FDIC to make any major changes to the rules.

I don’t expect the rules to be changed either in the near future (although I yearn to be pleasantly surprised). On the other hand, I expect that the days of treating private equity like the plague are over. We’ll see more private equity deals over the next year, as the pressure on the FDIC fund continues to grow.

Thining The Herd To Feed The Vultures

As a good friend of mine is fond of saying, "Everybody has an opinion and most of them should be left undiscovered."

I thought of that observation today while listening to a teleseminar on distressed commercial real estate loan workouts. One of the speakers, a partner in a large, East Coast-based law firm, was moaning about the recent regulatory guidance that advises banks (and bank examiners) that they should not classify a loan solely because the value of the real estate collateral has fallen. The speaker thought that this was a terrible policy, because there was all this money sitting on the sidelines that would like to come into the real estate market and invest in commercial real estate, but until the banks took massive hits on their CRE loans, they weren't incentivized to sell their loans or the collateral they take from borrowers through foreclosure or deeds-in-lieu of foreclosure at "realistic" prices (in other words, at such substantial mark downs from book value that the investors can make a killing). I sobbed hysterically at the thought that vultures (many of them current or ex-Wall Street investment bankers) aren't able to feed on the carcasses of my clients and their borrowers, but I soon recovered.

The teleseminar was directed at lawyers. If community bankers had been listening, they would have howled in derisive laughter or maybe tracked down the lawyer and hooked up his sensitive parts to a car battery.

A contrary view of the current situation was offered by Edward H. Sibbold, the BB&T executive in residence in banking, College of Business Administration, Georgia Southern University and director of the college's Center for Excellence in Financial Services (that title is quite a mouthful), who recently opined in the Savannah Morning News that undue leniency by bank examiners with respect to commercial real estate is not an experience community banks have encountered.

During this period of stress, bank regulators have been increasingly proactive in their reviews, raising the bar in terms of classifying loans as substandard, as well as increasing capital and liquidity requirements.

As a result, the Georgia Bankers Association estimated about 100 banks in Georgia - and that number's growing - are under some form of administrative action by their regulators.

Some analysts and bankers believe the local regulators are taking their marching orders from Washington to "thin the herd" under the theory that the large number of small banks in Georgia and excessive competition are key contributors to the banks' problems.

Others believe the market has changed dramatically in the past 18 months and current regulatory reviews and actions reflect the deterioration in banks' loan portfolios.

Whatever the motives or reasons, regulators have taken more aggressive postures with weak banks and otherwise healthy banks with large real estate loan concentrations. While most Georgia bankers understand the increased level of scrutiny, many believe certain regulatory practices need to provide greater flexibility and time for banks to address current issues.

While the government is publicly pressuring banks to make more loans, new or tighter regulatory guidelines are restricting community banks' ability to lend as well as their deposit activities.

Banks are being pressured to reduce the amount of real estate loans, which typically represent 50 percent to 70 percent of a community bank's loan portfolio. In some cases, new real estate loans with quality borrowers are being denied as banks seek to comply with regulatory requirements.

Good customers often are unable to refinance their loans with local banks due to collateral deficiencies related to depressed real estate prices or when the loan balance exceeds the lending limit of a bank whose capital has shrunk due to operating losses.

As usual, your opinion varies depending on whose pockets are being lined (or not lined) and whose ox is being gored. From my admittedly biased view from inside the whirlwind, I'd have to agree with Mr. Sibbold that community banks have stepped through the looking glass.

Community bankers are facing pressures from all directions. The ceiling is descending, and the walls are closing in. There is no single Mad Hatter in this story - it's a "perfect storm" of economic conditions, regulatory restrictions and a negative public.

Banks are faced with contradictory pressures from different government agencies, accounting rules that artificially magnify losses and regulatory guidelines that limit the recognition of capital and may restrict normal prudent lending and deposit activities.

It is a Wonderland world where right is wrong and wrong is right.

Many people are clamoring for financial regulatory reform and almost everyone wants to eliminate the concept of "too-big-to-fail" for the largest banks.

Community bankers, however, are more concerned the Queen of Hearts and her knaves will appear and scream "off with their heads," and a new policy of "too-small-to-survive" will become the operating principle in government and regulatory policy.