Bank Lawyer's Blog

Too Reasonable For The Top Job?

There may be legitimate reasons, about which reasonable people (and, in addition, the writer for this blog) might disagree, to oppose Mary Jo White for the head of the SEC. One of dumbest reasons is that she's an experienced corporate attorney who has represented big banks.

"If nominated by the president, however, she will undoubtedly face some opposition on Capitol Hill due to her time defending high-profile financial institutions and Wall Street executives," Compass Point said.

God forbid that the SEC might be run by someone with hands-on expertise in the subject matter. Better the top spot should go to a career academic or bureaucratic hack, especially if they're 1/32nd Chippewa/Cherokee/Choctaw/Fugawi.

"White would also face scrutiny from Democrats due to a statement she made during a recent panel appearance urging caution when prosecuting financial crimes: 'We must distinguish what is criminal from what is reckless behavior or bad business decisions and not bow to the frenzy…And I worry the frenzy overrides reason and judgment sometimes.'"

I can see why Senators of a certain stripe might blanche at the prospect that the full-out campaign to criminalize corporate governance decisions that's been running full bore since Enron ran aground should take a brief pause for thoughtful reconsideration. Not "bowing to frenzy" is positively un-American these days.

Mary Joe's been nominated by The One, and a majority of the Senate travels in the same boxcar as The Nominator. Thus, I think any "hard questioning" of Ms. White will likely not derail her confirmation, if the White House is serious about pushing her.

Not that you'd take any political prognostication I make to Vegas and lay down serious money on it. After all, I'm the guy who once thought Diana Taylor was a shoo-in for the Chairman of the FDIC.

Grab The Pitchfork

A reader sent me this gem today. It's a recent story in Rolling Stone magazine by Matt Taibbi, the guy who coined the description of Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." Therefore, you know Matt's going to be all over anything that smells of favoring Wall Street and "Too-Big-To_Fail" banks.

The subject of Matt's most recent ire is SEC Commissioner Daniel Gallagher, whose April speech in Denver contained some passages that made the hair on the back of Matt's neck stand up like the fur on the back of a cat that just ran into a pitt bull. After giving the reader some background on the enforcement prowess of the SEC ("the top cop on the financial services beat has demonstrated particular incompetence with regard to investigations of high-profile targets at powerhouse banks and financial companies"), and detailing a number of miscreants connected to the recent economic collapse that the SEC has notoriously failed to pursue, Matt gets down to what has him "cheesed off" about the April 13, 2012 speech by Gallagher

Here are a couple of excerpts from the speech and a brief sample of Matt's responses.

Gallagher: It is critically important that our enforcement program be extremely efficient… Recognizing that it is unrealistic to imagine we will ever achieve a one-to-one correspondence between incidents of misfeasance and SEC Enforcement staff, we’d better plan to do everything we can to increase our hit-rate per investigation opened, and should commit our staff resources carefully, which is to say, consciously.

Taibbi: how is securing a good "hit rate" in finding crime a problem in an era where even an $11 billion robbery isn’t high enough in the in-box to warrant a criminal investigation? For most of the last ten years, you could walk into any major bank in America and find whole departments committed to the practice of writing false, robosigned affidavit.

Gallagher: Experience teaches us, for example, that fraud tends to proliferate in smaller entities that may lack highly developed compliance programs. It also means thinking carefully about what we might, borrowing again from the world of sports, call “shot selection.” It can be tempting to tangle with prominent institutions. But chasing headlines and solving problems are two different things. The question is what will do most good – where our focus should be. And the record seems to suggest that we can do most to protect smaller, unsophisticated investors by focusing more attention on smaller entities...

Taibbi: Just so we’re clear about what we’re talking about here: the S.E.C., rather than go after serial violators like Bank of America and Chase, proposes that the best place to find crime is in small-cap companies, because that’s where fraud “proliferates.”
In the last year or so I’ve heard from several attorneys who represent smaller clients who tell me they’re flabbergasted, watching the S.E.C. give the Chases, Goldmans, and Citigroups free ride after free ride while their pockmarked little clients at fledgling public companies get served the whole regulatory meal for minor disclosure violations – even cases that simply involve bad paperwork, where money isn’t even stolen. If you’re a little tech startup and there’s a $100,000 problem in your books, you can expect the full Princess Bride torture machine treatment, with multiple agents assigned to your case, serious criminal penalties, asset seizures, etc.

There's more, and I'd encourage you to read it all. You can argue until the cows come home, as some commenters to the piece do, that making a case in these complex financial kerfuffles is a tough slog, and there's some merit in that argument. Nevertheless, the statements of Commissioner Gallagher, especially the allegation that fraud is more rampant with the little guys than the big, reveal a mind set that extends well beyond the SEC. It's a mind set that makes those of us who deal more with the too-small-to-save than with the too-big-to-fail want to send a Little Bird on a couple of passes down Wall Street, have it return to base for a reload, and then make a few more passes. Then, we'd follow up with napalm. Finally, we'd head to D.C., rinse and repeat.

Big Government and Big Business: An unholy alliance that that encourages the sudden appearance of pitchforks and torches.

Justice

ICBA's Cam Fine is shocked ("Shocked, I tell you!") to discover that another giant bank (in this case, the bank America hates less than all the rest) is getting off the hook when it comes to the imposition of regulatory sanctions. Cam is referring to a recent New York Times article that discussed Citigroup's settlement with the SEC over securities fraud allegations, in which the SEC extracted a promise by Citigroup that it would never again violate securities laws. Citi also promised that it would never again visit a strip joint, drink hard liquor, or call another banker "gay" just because he went to the opening night of the Broadway revival of "Oklahoma." Unfortunately, Citigroup's a repeat offender, and, according to the Times, so are a scad of other large financial institutions. In no case in the last ten years has the SEC sanctioned one of the big boys for violating a C&D imposed by the SEC. Talk about a wimpy deterrent effect.

Any community banker or director reading the article should be outraged. There are no consequences for senior officers and boards of these systemically dangerous financial firms. However, community bankers and directors who, in good faith, sat on the boards of failed community banks are routinely pursued individually and collectively by bank regulators both civilly and, in some cases, criminally.

Cam shouts that this isn't "equal application of the laws." Of course, he's right. But the cold, hard fact is, nobody gives a rip. They're too busy being pepper-spayed in the face while rioting over the "disrespectful" manner in which the beloved Joe Paterno has been dismissed at Penn State for the minor infraction of not calling the cops when his valued defensive coordinator was caught "coordinating" with a ten year-old boy in a shower. We have to get our priorities straight, and if the dissing of "Joe Pa" trumps pedophile rape, it's sure as shooting going to trump the unequal treatment of little banks versus big banks by federal regulators.

We'll get back to you, Cam, as soon as the bowl season's over.

Risk Mitigation For Financial Professionals Using Social Media

Clara Shih, the CEO of a company that provides social media services to financial service business, wrote a nice article for the most recent edition of the ABA Banking Journal entitled "6 Steps Every Financial Professional Should Take Before Using Linkedin." As the title states, it's geared toward "financial professionals," mainly financial advisors, but the "6 Steps" are a valuable list of considerations for a wide variety of financial institution personnel who plan to use LinkedIn and other social media in their business, as well as personal, lives. They are: 

1. Understand the regulatory requirements (even if they don’t directly apply to you today).

2. Undergo requisite training on social media risks, and make sure this training is documented.

3. Identify where to draw the line between your personal and professional identity.

4. Keep your profile current so you are not at risk of misrepresenting your affiliations.

5. Use LinkedIn to strategically grow your business.

6. Educate clients and prospects with helpful information.

Clara does a nice job of fleshing out each point and I'd recommend the article to anyone who's interested in mitigating the risks of using social media in the course of his or her job as a finance professional. In addition, in the middle of the discussion, the Editor dropped in the following note:

[Editor’s note: In a recent community banking meeting, a CEO said examiners told her that federal banking regulators will soon publish guidance concerning use of social media.]

It would be nice to have some guidance from the banking regulators. Until now, we've had to rely upon logic and reasoning by analogy. If we can get a regulatory pronouncement, we can start doing what we do in other areas of bank regulatory practice: throw logic out the window and acclimate ourselves and our clients to the view through the looking glass. At least we all have a comfort level with that approach to life.

It's Time To Come To Grips With Social Media Governance

Let's see if I can complete a post that no one will request be taken down for at least 24 hours...

As if the daily news wasn’t enough to drive a “normal” person to reach for the Zoloft or the Jack Daniels (or both), the consensus among attorneys for various state and national bank trade associations who spoke at last month’s Texas Association of Bank Counsel conference in Austin was that due to the increased compliance burdens placed on community banks by the Dodd-Frank Financial Reform Act (notwithstanding certain trade associations’ crowing about all the exemptions they secured community banks), it will be difficult for banks under $500 million in assets to afford to meet that burden. Community banks of all sizes are going to need as much help as they can get from technological solutions, because most of them won’t have the financial resources to staff the “human capital” that larger banks have access to.

I was thinking about this problem the other day while talking to Scott Brown (no, not the Senator from Massachusetts, the CTO and founder of Kronovia). One of the areas in which I have an interest is social media, and during and following my presentation at the Austin conference on the use of social media by banks, community bankers who might otherwise give social media “branding” efforts a shot made it clear that one of the roadblocks in the way of their willingness to engage in social media is concern about how to manage the risks. Although many bankers describe the risk as “compliance” risk, it’s really more accurately described as concern about all the potential legal risks of social media.

Scott participated as one of the panelists in a recent BankLawStuff webinar on social media governance issues for banks, and I wanted to follow up with him to see what the technology solutions were all about. My inner geek is sometimes difficult to reign in. There are other businesses in the same “space” as Kronovia, but since I knew Scott, I assumed that he was a good place to start, and he was kind enough to share his views with me.

Kronovia’s approach to managing social media risk is to provide a technology solution that’s akin to the methods banks and other financial businesses currently use to manage their e-mail communications risk. In fact, he said that a community bank can leverage e-mail scanning tools that it is already using in order to scan and monitor social media activity by the bank's employees. The technology acts as a “social media pipe” that gathers all of your employees social media “chatter,” and archives it. Just as important, it also compares the bank’s social media policy to what employees are actually saying via social media and kicks out potential violations based upon key words or other “triggers” the bank would choose. The bank would require that any employee who talks about the bank in social media must register the media in the bank’s “pipe” (system) so that such scanning can occur. If you don’t register it, you can still use it, but not to discuss anything about the bank’s business.

For community banks, a critical factor is going to be affordability of a solution. Scott conceded that banks need to be careful in choosing a service provider, and that while Kronovia and others are charging on a fee-per-user basis, some providers are trying to get the bank to invest in substantially more technology than they may need, as compared to others who will work with the bank to use as much of the bank’s existing technology infrastructure as possible.

One “hole” that concerned me in this technology was that caused by renegade employees, those who, notwithstanding the bank’s policy that requires employees to register social media through which they will discuss the bank, go “off the reservation” and start talking about the bank’s business on unregistered social media sites: people like Arvest Bank’s “One Hot Party Girl” (who, although I misidentified her in my Austin speech as “Hot Bikini Girl,” was pitching loans to people via a picture of herself in “a small bikini” on her own Facebook page). Scott pointed out that there are numerous free “listening tools” like these twenty profiled on Digital Marketing Mercenary’s blog. Certainly, using such free tools would make more sense for banks who aren't able to afford three full-time employees who do nothing but scour the Internet for discussions that mention the bank’s name.

At some point (which may have already arrived), banks aren’t going to have the option of doing nothing. Social media use by employees is proceeding at a rapid pace, and social media governance policies are a wise idea, whether or not the bank is going to jump into the use of social media itself. Not having any policy to govern the use of social media by employees in ways that could adversely affect the bank, or, having a policy in place but not adopting effective tools to monitor and enforce it, might be considered to be unsafe. As a recent client alert from Norris McLaughlin & Norris P.A. points out, the SEC and FINRA are already focused on social media sites and the risks they pose to the businesses they regulate. While the federal banking agencies are currently otherwise occupied, banks should take the trend seriously and be seriously thinking about social media governance.

Q & A

As promised (or threatened, depending upon your viewpoint), here are answers to additional questions that were submitted at last week's Bank Law Stuff executive briefing on the Dodd-Frank House of Horrors Act. The answer was supplied by either Tom Bieging (TB) or Joe Lynyak (JL). The occasional snark is identified as mine (KF). Although I told listeners that we intended to answer only those questions that related specifically to the impact of the new legislation on community banks, Mr. Lynyak generously chose to answer several (although not all) off-topic questions, as well.

Question: Under slide # 12 on FDIC’s Assessment Rules and Expanded Deposit Insurance Coverage, I got a little confused.  Would you please explain the new coverage?  I understand it increasing to $250,000, but not the last two lines on the slide.  What does the prohibition entail?  Interest bearing accounts do not receive coverage?  But until December 31^st, 2012 interest bearing accounts are covered? 

Answer (TB): The law has permanently increased deposit insurance coverage to $250,000 per account, effective immediately.  There has also been a two year extension of the FDIC’s Transaction Account Guarantee program (TAG).  However, the TAG program will no longer cover low interest NOW accounts and is no longer optional after December 31, 2010.  The TAG program, as modified by the statute, will be repealed on January 1, 2013 unless it is extended.

Supplemental Answer (KF): If a business thinks it's more important to have coverage of a transaction account in excess of $250,000 for the next two years, it can't receive interest on the account. The customer has to weight the comparative benefits of receiving interest versus having unlimited coverage.

Question: With the ultimate regulatory and compliance issues that the small community banks (less than $1 billion) will have to deal with, being that they are personnel constrained especially in these areas, how will they address their regulatory compliance issues? suggestions?

Answer (JL): To the extent that new compliance measures relate to lending and deposit products and services, many--but not all--of the anticipated new compliance issues can be outsourced by "embedding" compliance into technology. In that regard, many technology providers of loan origination systems and deposit systems are working on upgrades.

While this result will cause community bankers to incur capital costs, it will preserve the ability to compete. However, it may also occur that many community bankers will move to "plain vanilla" products and services and compete on price and service.

Question: Yes, we're bankers with bankers' interests, but what do you foresee in terms of any new legislation that will impact credit unions? Are these guys going to continue to go untouched?

Answer (JL): Credit unions will be subject to the changes made by the CFPB in the same manner as community banks. However, what we see as the principal credit union challenges are (a) the need for additional capital; and (b) eliminating the restriction of the field of membership rules to complete against local community banks for local consumer business. (These issues will require trade-offs, including the possible loss of tax exemptions.)

Question: Why would they exempt real estate brokers?

Answer (JL): Brokers, like teachers, are everywhere, and have the most effective lobby in Washington, DC. in this case, money equals a meritorious argument.

Supplemental Answer (KF): NAR proves the truth of Simon Cameron's assertion that an honest politician is one who, when he's bought, will stay bought.

Question: With all of the limitations on fees, interchange coupled with increased capitalization, isn't banking simply going to boil down to a pure margin business? In other words, lower if not zero interest on deposits and possibly higher rates on loans?

Answer (JL): That could be true, but it remains to be seen how these changes will impact various business models. In any event, the delivery of bank services may radically change.

Supplemental Answer (KF): If I had the ability to answer that question with any degree of certainty, I'd have predicted the subprime crash before it occurred, gone short in 2007, would now own the Big Island of Hawaii, would be drinking Mai-Tais by the pitcher-load on the deck of my yacht, and would be thinking about getting my liver Rolfed before I developed cirrhosis.

Question: How does this act impact the mortgage broker who is not subject to Federal Reserve, FDIC, OCC? Also, how does this act affect mortgage lending/securitization by Wall Street firms who are only regulated by the ineffective SEC?

Answer (JL): Mortgage loan brokers are covered by the CFPB, but likely will continue for the foreseeable future to be examined (if at all) by a state regulator.

However, Title 14 eliminates the payment of yield spread premiums in most situations--which means that the business model of the independent mortgage broker will have to change radically.

Supplemental Answer (KF): I will be interested to see whether the traditional independent broker's disdain for the salaried loan originator employee of a financial institution continues, or whether those salaried jobs start to look a wee bit more attractive.

Question: How much will the SEC be expanded in staff as it was understaffed during the subprime collapse and now the SEC is being the oversight of rating agencies?

Answer (JL): The SEC has been provided additional funding--it remains to be seen whether its enforcement division will be more pro-active.

Question: When will the yield spread premiums cease to exist?

Answer: When the CFPB is created and issues regulations, which will probably take several months. Remember, however, that the Federal Reserve Board has already proposed to eliminate yield spread premiums in its proposed rewrite to the closed-end mortgage requirements of Regulation Z--this means that the actual date that YSPs will be eliminated may occur sooner than later.

Why Can't We All Just Get Along?

Jeff Gerth at ProPublica discusses something in an article he posted today about which those of us who deal with federal bank regulatory agencies are all too well aware: regulators with overlapping jurisdictions spend as much (or perhaps more) time jacking with each other as they do screwing the entities they're supposed to be supervising. They make the antagonists of "Mean Girls" look like Sisters of Mercy.

Backers of financial regulatory reform are gearing up for the final stretch in a yearlong effort to construct a new, streamlined architecture. But recent reports and testimony about the financial crisis suggest a crucial ingredient in any new structure is in short supply: cooperation among the watchdogs.

Gerth points out a number of cases where instead of cooperating for the greater good, different agencies fiddled while Rome burned:

• While Washington Mutual continued to gorge itself on tainted subprime, the OTS resisted the FDIC's efforts to take a tougher line with the OTS' biggest "customer."
• The SEC and the FRB kept critical information from one another in their flawless oversight of Lehman Brothers, whose flame out without a bail out was the immediate trigger that launched the "Great Recession," the benefits of which those of us who don't work on Wall Street are feeling on a daily basis.
• Ironically, the OTS, described as a "bit player" in the oversight of the Lehman superstructure, raised the biggest alarm about Lehman's thrift subsidiary, which the OTS considered had placed an unwise (and policy-violating) bet on commercial real estate. Apparently, the SEC and FRB paid as much attention to the OTS as I did to my eight year-old brother when I was in high school.
• The OCC blames the FRB for failures at Citigroup which, Comptroller of the Currency John Dugan insists, were at the holding company level, not at the subsidiary national bank level.

Gerth also points out that if Senator Dodd's scheme of financial reform is adopted, sitting at the top of the heap will be the same Timmy Geithner who admitted that he "could have done a better job" of keeping on top of Citigroup when he headed the New York Fed.

The problems presented by competing regulators are real, and always have been real to a large extent. I'm not certain what legislative solution will eliminate the problem of regulators spending as much time back-stabbing and stiff-arming one another as they do paying attention to the banks they regulate. I mean, if it's not being done between the agencies, it's being done within the agencies. It's human nature.

Which, of course, brings us to the crux of the project that's continually underway in our nation's capitol: the perpetual progressive perfection of the hugely flawed human character through more laws and regulations, implemented and enforced by other hugely flawed human characters. Ultimately, it's a futile endeavor, but one that's been the bedrock of many a bank lawyer's retirement fund.

Onward and upward!

One Too Many Allegations

Another stunt started with a bang by Eliot Spitzer was completed by the SEC with a whimper last week. Hank Greenberg, the former AIG CEO who refused to settle with Spitzer or the SEC in 2006 when AIG bit the bullet in 2006 to the tune of $1.6 billion and kicked Greenberg to the curb, paid the SEC a measly $15 million. Spitzer and his bête noire, The Wall Street Journall, had totally different views of the lessons learned. What a surprise.

The Journal, in an editoriall that first ran last Friday, focused on Spitzer's grandstanding, always low hanging fruit in the Bozo-bashing game. In his prime, Spitzer couldn't scratch his posterior without calling a press conference to publicize the fact, and it's true that he's an easy guy to despise. Heck, we love to loath the philandering former governor. Moreover, it's true that while Spitzer was all over the Sunday morning talk shows blathering about "criminal conduct" of Greenberg and others involved in the AIG mess, Greenberg was never indicted, by Spitzer, his successor, or the federales. $15 million is chump change to a man like Greenberg, who must be relieved that his defense team will finally stop sending their kids to Harvard on his nickel. You can legitimately claim that after three years of pursuit, Spitzer and his cohorts were "faced" by Greenberg.

Nevertheless, Spitzer makes valid points in his response to The Journal in his Slate column of today. He correctly notes that five people associated with AIG were, in fact, convicted of federal criminal charges arising out of the scandal and that Greenberg was named as an unindicted co-conspirator. While Greenberg can pass the smell test by asserting that such status proves nothing, legally, the ca-ca hit the fan on Hank's watch. It's hard to defend Hank as a lily-white victim of a nefarious plot cooked up by Boy Spitzer solely to make himself the king (although that plot line has the ring of truth, doesn't it?). Notwithstanding The Journal's assertion that $1.6 billion was a pittance to a money-making machine like AIG, the average observer (or even the aberrant observer, like the author of this blog) finds that hard to swallow. Paying that much cash to avoid criminal prosecution tells most people with no axe to grind that something was rotten at AIG and if Hank didn't know about it, he should have.

The most telling criticism made by Spitzer is one that also struck this Spitzer-basher: that the restatement of earnings forced by Spitzer hurt AIG far more than the accounting adjustments that happened during Hank's time at the helm. So what? If the restatement wasn't justified by the facts, why did AIG not only agree to make them but to pay such a huge fine to boot? If AIG's accounting treatment was correct, then reversing the accounting treatment, paying the fine, and blistering the shareholders as a result was an act of rank cowardice for which the management and board of AIG should be held accountable. Have such claims been made by AIG's shareholders?

[Sound of crickets chirping]

No, they sued everyone in sight because of the restatement (including Greenberg and AIG's outside accountants, PricewaterhouseCoopers), but not because the restatement was allegedly improper. Spitzer might have had power, but unless he's Darth Vader with Jedi mind powers, making AIG cough up $1.6 billion with absolutely no case to support him doesn't sound plausible to me. While I usually agree with The Journal with respect to anything having to do with Eliot Mess, in this case, I think the editorial page should have simply called Spitzer a clown, based solely upon the fact that he is, indeed, a clown, and left it at that. By going one allegation too far, they gave Spitzer a spitball to fire back.

Watch What You Tweet

Corporate "Tweeters" are a new breed of marketer. Sometimes, being cutting edge is double-edged. A recent Wall Street Journal article demonstrates how being tech-savvy doesn't mean that you're necessarily compliance-savvy.

An eBay Inc. effort to broaden communication through the popular Twitter Web-messaging service highlights the hurdles facing corporate users of online social media.

The online auctioneer launched a corporate blog in April 2008. Two months later, blogger Richard Brewer-Hay began "tweeting" -- posting updates on Twitter -- about Silicon Valley technology conferences, eBay's quarterly earnings calls and other topics.

The growing Twitter audience also attracted the attention of eBay's lawyers, who last month required Mr. Brewer-Hay to include regulatory disclaimers with certain posts. Some followers think the tougher oversight is squelching Mr. Brewer-Hay's spontaneous, informal style.

[...]

Blogs and tweets can run afoul of Securities and Exchange Commission regulations on corporate communications. But sanitizing such posts risks hurting credibility with online audiences.

[...]

Corporate lawyers say companies should devise a social-media policy before adopting blogs or Twitter. "All of the traditional ways that a company can get in trouble for making public statements" apply to the Web, says Lisa Wood, of Foley Hoag LLP.

She urges companies to include the standard disclaimers they use in other communications, as Mr. Brewer-Hay now does. Ms. Wood says companies shouldn't disclose financial information on Twitter that isn't available elsewhere, and should make clear that opinions expressed by others in company-sponsored forums -- like comments on blogs -- don't represent management's views.

It's obvious that we're all feeling our way along with this new social media marketing "stuff." It's a balancing act, with marketing folks worried that the damn lawyers are going to put a stopper in the magic bottle and lawyers breaking out in flop sweat over the immediacy of the communication and the relative lack of control over the conversations that are generated. That said, I think a lot of the risk is either overblown or, where it's real, can be effectively managed. From the number of financial institutions, large and small, I see on Twitter these days, banks better come to grips with the management of those risks. If not, they'll either be shut out or shot down.

Take My TARP...Please

TCF CEO Bill Cooper is mad as hell, and he's not going to take it anymore.

The man who recently told the Treasury Department that he's got a bad case of seller's remorse and wants to give back his bank's CPP investment, got everything that's been bugging him about the nation's financial mess off his chest. According to BankThink's Rebecca Sausner, who listened to Cooper rant at yesterday's SourceMedia’s Best Practices in Retail Financial Services Symposium in Florida, it was a rare glimpse into the utter honesty of man who's been around long enough that he's not afraid of anything other than running out of Viagra.

One of my personal favorites was his no-holds-barred take on the federal government's role in the meltdown.

“I believe at least 90 percent of this crisis was government driven, created by the government through bad monetary policy, the wrong kind of regulation, the whole impetus for managing economy, lending to the poor, encouraging what was in effect bad lending. All of this stuff was encouraged by the government, and a lot of honest bankers went along with it and didn’t make good judgments.”

Another two I loved, because I find the filing of Suspicious Activity Reports (SARs) to be, for the most part, an egregious waste of time, were these:

On the value of SARs to national defense in the hands of the BSA regulators:
“What the hell? These guys couldn’t find this loan problem when it sat in front of them; they’re going to find a terrorist?"

“Does anybody think there’s not enough regulation in the banking business?” Cooper asked, to a burst of laughter. But, he argues, the regulation is misfocused on issues like BSA instead of fundamental safety and soundness. “They come in and audit the living crap out of you on BSA. Have you guys lived through this? It’s a life/death experience if you flunk BSA. …The only terrorist the BSA program has caught is Spitzer with his pants down.”

And who could resist a Henny Youngman moment.

"I thought swaps were what guys did with their wives in California."

Read them all. They're priceless.