Bank Lawyer's Blog

Tribal Warfare Takes A Potentially Deadly Turn

But Jesus said unto them, A prophet is not without honour, but in his own country, and among his own kin, and in his own house. Mark 6:4

There is no sadder moment in life than when your own "peeps" turn on you, like rancid milk in the stomach of a lactose-intolerant toddler. Thus, it must have been excruciatingly depressing when Princess Running Joke first read that the Chippewa-Cree have now added themselves to the list of parties challenging the legitimacy of the appointment of Recess Richie as Commissar Director of the Politburo CFPB, the Princess' proud concoction.

The tribal challenge is related to the declaration of war the Chippewa-Cree and other tribes made last year on the CFPB after "The Adjustment Bureau" issued civil investigative demands to that tribe, as well as the Tunica-Biloxi and the Otoe-Missouria tribes concerning the tribes involvement in online small-loan lending activities. Rumour has it that the demands were served on those three tribes by the Bureau's chief process server, George Armstrong Custer VII. Custer was last seen several months ago attempting to serve a similar demand on the Oglala Sioux, but has not been heard from since. Sioux Chief Son-of-son-of-son-of-son-of-Sitting Bull asserted that he had absolutely no idea where the missing "Yellow Hair" might be.

Not surprisingly, the CFPB has suddenly maintained radio silence over the latest challenge.

The Chippewa-Cree challenged the request in part on grounds Cordray’s appointment was illegal. Cordray hasn’t acted on the petition, which could require him to address the constitutional question, the people said. By contrast, when three other companies filed similar petitions, Cordray published responses within 90 days, records show.

James Hopper of the Otoe-Missouria company, Billi Anne Raining Bird-Morsette of the Chippewa-Cree firm and Marshal Pierite of the Tunica-Biloxi lender didn’t respond to requests for comment. Vahey, the bureau spokeswoman, declined to comment on an ongoing enforcement matter.

Expect the CFPB's Sergeant Schultz act to last for some time. There's no future in having to address the fact that the ground on which you stand is composed of beach sand.

Ballard Spahr's Barbara Mishkin points out some other interesting aspects of this situation.

The CIDs were reported to have been served last year.  Assuming the Chippewa-Cree tribe filed its petition objecting to the CID within the time frame mandated by CFPB regulations (which is no more than 20 days of when a CID is served), we find it interesting that the petition does not appear on the CFPB’s website.  The website shows the filing dates of petitions to set aside or modify CIDs and the dates on which the CFPB’s decisions on the petitions were issued (with links to the petitions and decisions).  As to the three petitions listed, the CFPB issued its decisions within approximately one to three months of the date the petition was filed.  We also find it interesting that the CFPB has not yet brought enforcement actions against the tribes.

I guess that now that other tribes have caught on to the fact that the emperor may have no constitutional clothes, the emperor sees no future in appearing in public. It looks like the tribes may be continuing in the small-loan online lending business until the legitimacy of Cordray's appointment is resolved, one way or the other. Last year, Recess Richie publicly declared that he was "zoning in" on tribal payday lending. It appears that in light of the Bureau's recess appointment Achilles heel, Cordray and his cadres may be "zoning out."

I wonder if the political hacks in The White House who were patting themselves on the back over the intrasession recess appoint idea when they first proposed it are still held in such high regard by the other members of their posse.

Job Interview Suicide

When a close friend recently told me that her financial services company's human resources department was encountering Gen Y candidates for employment who, in the course of interviews, (a) talked like gum-popping adolescents, and (b) repeatedly checked their "smart" phones for email and text messages and, on occasion, actually texted, I thought that she might be exaggerating. I not only was unaware of the problem, I was completely clueless that it extended to law students.

Anna Ivey, former admissions dean at the University of Chicago Law School, had this to say (among many other things) about how law students could enhance their prospects of landing a job.

Talk like an adult. That means learning how to write a decent cover letter and sounding professional on the phone. It also means using grown-up speech patterns. Many law school students don't and won't, and it puts them at a disadvantage. (Reforming speech patterns is hard. I'm a product of my generation, too—Generation X—and I find myself slipping from time to time.) The client, boss, hiring partner, judge, etc., will be less inclined to listen to you if you sound like a high school babysitter.

The word "like" is not a conversation placeholder among the erudite, I suppose.

A recent USA Today article had even more depressing stories about interview behavior among those "of a certain age."

Human resource professionals say they've seen recent college grads text or take calls in interviews, dress inappropriately, use slang or overly casual language and exhibit other oddball behavior.

"It's behavior that may be completely appropriate outside the interview," says Jaime Fall, vice president of the HR Policy Association. "The interview is still a traditional environment."

Fall and other HR executives say such quirks have become more commonplace the past three years or so, and are displayed by about one in five recent grads. They're prompting recruiters to rule out otherwise qualified candidates for entry-level positions and delay hiring decisions.

Among the types of other "oddball behavior" cited in the article are bringing your Dad into the interview, either in person or by telephone, to negotiate a better starting salary, and bringing your cat to an interview and playing with it. I suppose flossing and playing video games during job interviews are soon to follow.

This simply cannot be due entirely to "peer pressure." Aren't parents giving these kids a "heads up" on proper social interaction skills? I assume that a majority of them are, because these oddballs don't appear to constitute a majority of the interviewee "pool." However, the fact that they exist in numbers that merit comment from the main stream media is depressing.

As a "silver lining" kind of guy, I always wax upbeat when I consider that these folks will be the future competition for the clients' legal budgets. As a citizen of a country (and a civilization) I love, I wane a little more gloomy when I consider the long-term implications.

Let's hope that this is a temporary phenomenon that will soon pass, like bell-bottomed jeans and tie-dyed shirts. After all, the country has survived the Baby Boomers. At least it has thus far. How much worse could Gen Y be?

New Boss Same As The Old Boss

I last looked at the litigation against Wells Fargo over its overdraft practices three years ago. At that time, federal district court judge William Alsup had ruled against the bank on the issue and awarded plaintiffs $203 million in damages. While the Ninth Circuit overturned the judge's decision as to certain federal law claims, it also ruled that Wells Fargo's conduct violated California's unfair competition law and sent the decision back to Judge Alsup to determine the damages for that claim. Well, guess what? The judge ruled that the damages are $203 million.

Are you as amazed as I was?

“Because Wells Fargo misrepresented the posting order and overdraft charges to its customers, the appropriate form of restitution is to restore the unexpected charges to Wells Fargo’s customers,” Alsup said in a May 14 order. He also said customers were entitled to interest on the award as of Oct. 25, 2010, the original date of the judgment.

Fear not, big bankers and those who love them: this case ain't over by a long shot.

Richele Messick, a Wells Fargo spokeswoman, said the bank is disappointed with the judge’s decision.

“We don’t believe that the ruling is in line with the facts of this or the law and plan to appeal,” she said.

If that statement sounds familiar, it's because it is. Here's Ms. Messick's public statement from 2010:

“We’re disappointed with the judge’s ruling,” said Richele Messick, a bank spokeswoman. “We don’t believe the ruling is in line with the facts of the case.”

Ms. Messick said Wells Fargo’s method of processing transactions was “appropriate and consistent with customers’ interest and the laws and rules of governing regulatory authorities.”

Ms. Messick then excused herself, grabbed a fire extinguisher, and spread a load of CO2 on her burning pants.

Even assuming that the bank's litigation costs are well into eight figures by now, sending partners' kids to Harvard and buying Beamers for a regiment of associates, that's still a cheaper alternative than shelling out $203 million, with interest. Assuming the bank has adequately reserved for the liability, then the longer this drags on the more scorched the earth becomes under the plaintiffs' feet and the more the plaintiffs' lawyers will have invested in the case without being compensated. At some point in the future, they may settle for what the bank believes is a relative "bargain."

Plus, you know, it's the principle of the thing.

Variations On The Theme of "Pet Parakeet"

Every once in a while, I receive an email that threatens to expand the level of parody and sarcasm beyond the ability of the human mind to contain it without erupting in cornucopia of burst cranial blood vessels like a bag of Orville Redenbacher Kettle Korn in the microwave after 45 seconds on "high." A recent post in which I envisioned the CFPB "telling an auto loan lender that if a dealer from which it buys paper ever causes emotional pain to a buyer's pet parakeet, the lender is on the hook for the vet's bill," inspired one bank executive's inner snark blossom to fully bloom. He or she shall remain anonymous, primarily because this most excellent rant was communicated, without naming names, by a friend of this banker. This banker obviously has a full grasp of the new paradigm in consumer lending.

Enjoy!

 

"How clearly illustrative of the hell I live in every day:  “…if a dealer from which it [a bank] buys paper ever causes emotional pain to a buyer's pet parakeet, the lender is on the hook for the vet's bill…”.  Don’t forget that asking the borrower to honor the terms of the loan to which he or she agreed is in fact considered an unnecessary infliction of emotional distress.  The parakeet will pick up those vibes in the house and stop singing.  This will only further depress the borrower, who is still by the way driving the $80,000 car for which he or she is not paying, because the parakeet’s song is what keeps that buyer motivated to get up every day.  If the borrower doesn’t get up and go to work every day, the bank can’t get paid for its loan.  So the bank has a vested interest in keeping the parakeet happy and in this case a vet may not be enough.  This parakeet needs a behaviorist.  A parakeet whisperer, who understands the parakeet and can help restore the parakeet’s emotional well-being, only after which there can be a hope for the bank to be repaid for its loan. The borrower should retain the car, because after all the car will be necessary to transport the parakeet to its bird shrink, without which the loan on the car can’t be repaid.  Now you can clearly see why it’s in the bank’s best interest not only to not be paid on the loan, but to in fact pay all expenses for a parakeet psychiatrist to get that parakeet singing again.  And there is no way to make sure this happens unless a government bureaucrat has a nice office from which to read all the reports the bank will be required to produce justifying that the bank has done all it could and spent money on everything possible to get that parakeet happy, or to otherwise force the bank to do more to help the parakeet.  Doing so from a cube would be, well, inhumane – though I can’t resist pointing out that I see a few parallels between the parakeet and the bureaucrat (both are sitting miserable and silent in a small cage and pooping on everything that crosses their paths….)"

 

Arbitrary, Instrusive, and Ubiquitous

Inspired by last night's post, a regular reader pointed me to last Friday's post by Tom Brown, who was off to the races over two recent utterances by high-level CFPB officials. The post's title, "The Beginnings of Overreach at the CFPB. Whatever happened to personal responsibility?" gives you a clue that he and I (and Marvin Umholtz) are singing from the same songbook.

The first object of Tom's ire was Stacy Canan, deputy assistant director of the CFPB’s Office for Older Americans, who stated in an NPR interview that “There absolutely are some financial advisors that are using the designations just for marketing purposes...and they don’t really have the substantive expertise and training to back up what that designation implies to investors,” and "Seniors deserve the right to understand whether they’re entrusting their life savings to someone who’s only had a weekend seminar versus spent months or even years of training to learn how to give adequate financial advice.”

Canan's solution is that the CFPB should become involved in establishing standards for the accreditation of financial advisers. This drove Tom to a fits of sublime snark.

Seniors can ask. “What does it take to become a Chartered Retirement Planner anyway?,” they might say. Or “What’s does becoming a Certified Investment Advisor involve?,” would be another good one. Now that I think of it, a prospective client might have other questions as well, such as about the planner’s prior experience and educational background. She might also ask for references. Back in the days before the CFPB, this sort of preparation was referred to as “common sense,” and Americans were actually pretty good at using it.

Canan made another pronouncement that I had to read twice to make certain that she said what I thought she said. “Seniors in particular often mistakenly believe that their financial advisor is looking out for their best interest. That is rarely true.” Tom's response to that wholesale slander of an entire profession was pithy.

Really? Advisors only rarely look out for their clients’ best interest? One wonders how they’ve managed to stay in business. Canan seems to believe that the investment advisory business is simply systematic, organized thievery. Worse, she seems to think consumers are too stupid to recognize that. But not to worry! She’s from the federal government and is here to help. I’ve got a better idea. How about we assume that consumers are capable of taking personal responsibility for their decisions, and can be expected to make the right ones? Decisions related to one’s finances are among the most personal an individual can make. It’s outrageous that a government agency, the CFPB, is scheming to get involved in them.

Apparently, we have folks at the highest levels of this agency whose regulatory bona fides isn't sullied with the grime of actually having any first-hand knowledge of the businesses they currently regulate and seek to regulate. If ignorance is bliss, they're perpetually orgasmic. Moreover, the desire to infantilize entire segments of the American populace and require them to look to the CFPB as their paternal (or matriarchal) protector is palpable.

Tom also takes off on the recent pronouncements by the CFPB on student lending, especially that the solution to the student loan crisis is for lenders to forgive and/or modify indebtedness and to extend more of it to students who don't pay it back. Throwing good money after bad appears to be a dead end to those of us with a actual lending experience. As another of my readers put it in an email to me, "I don't even know where to start with this bad idea." On the other I do know where to start: with the trash can.

In the end, he articulates well a frustration that many of us feel.

The people who run the CFPB seem to have the basic view that under no circumstances should  people have to live with the consequences of their own freely made decisions or bear their own personal responsibility. Instead, the government should always be able to intrude itself in people’s lives to “fix” things. The trouble with allowing the government to insert itself into every part of your life is that, well, the government is going to end up inserting itself into every part of your life. There’s a word for that: tyranny. The CFPB tries to portray itself as a paternalistic entity that’s only trying to help people. In fact, it’s bureaucratic monstrosity, funded directly by the Fed, that is accountable to exactly nobody. The ideas that people at the CFPB come up with sound benign enough now. But as they accumulate (and they will, trust me) they’ll seem arbitrary, intrusive, and ubiquitous—and, of course, expensive.. But by then it will be too late. The time to start objecting to the agency’s intrusiveness is now.

Save Me From Myself

Marvin Umholtz's latest CU Strategic Hot Topics email newsletter contains a lengthy discussion of a position paper issued late last month by the National Consumer Law Center (NCLC), which calls on the CFPB to restrict bank and credit union overdraft fees to the "reasonable and proportional" standard applied to credit card penalty fees by the terms of CARD Act, notwithstanding the fact that there is no express statutory requirement to apply such a limitation to overdraft fees. The NCLC argues that the CFPB has such authority by virtue of its ability to ban "unfair, deceptive, and abusive practices."

Of particular interest to Marvin, and to me, is the use of behavioral economic theory (previously discussed here) as support for the argument that overdraft fees are inherently "abusive" and "unfair."

This correspondent found of particular interest the NCLC white paper’s discussion about how the CFPB should leverage unfair, deceptive, or abusive practices authorities to price-control overdraft fees. It argued that overdraft fees were inherently unfair because they were not avoidable by a reasonable consumer. The NCLC said, “Accordingly, the analysis should take into [account] consumers’ likely knowledge gaps and their optimism bias, which has been shown by behavioral economics research. The information differential between banks and consumers is stark. As discussed in Sections II and III.B, supra, banks use sophisticated systems to keep track of consumers’ transactions and maximize overdrafts. In contrast, behavioral economics research shows that consumers are over-optimistic and tend to discount the likelihood of negative events. Nor do they have the capacity to quickly and accurately assess the risks associated with such contingencies. This gives banks the opportunity to attract consumers with, for example, a promise of ‘free checking,’ while at the same time charging high fees for overdrafts and engaging practices to maximize them that will far outstrip any savings from lack of a monthly maintenance fee. As a result, overdrafts and their associated fees may not be reasonably avoidable by consumers – especially the lower-income consumers who bear the brunt of these fees.” The NCLC’s anti-bank rhetoric is specious and mean-spirited.

Behavioral economics assumes that many consumers are uninformed and irrational and that consumers make systemic mistakes in their choice of credit products. Rather than let people make their own decisions behavioral economists believe that a central regulator should adopt policies designed to address that ignorance and irrationality. Behaviorists use these premises to justify big government intervention in the market to prevent consumers from harming themselves. The NCLC’s anti-overdraft narrative is reliant on this everyone-is-a-victim belief.

I couldn't have said it better myself. And now, I don't have to.

Marvin continues:

As the NCLC points out, the Dodd-Frank Act defines a practice as abusive if the CFPB finds that it (1) Materially interferes with a consumer’s ability to understand a term or condition of a consumer financial product or service; or (2) Takes unreasonable advantage of – (A) A consumer's lack of understanding of the material risks, costs, or conditions of the product or service; (B) A consumer’s inability to protect his or her own interests when selecting or using a product or service; or (C) The consumer’s reliance on a covered person [the financial services provider].  The NCLC white paper came to the simple conclusion that due to the inherent nature of overdrafts they were abusive.  NCLC wrote, “When choosing a bank or type of account, consumers cannot be expected to be able to know or compare how banks process transactions or what steps the bank will do to induce overdrafts.  The way in which transactions are processed by a bank is a complicated matter that consumers cannot reasonably understand.  Again, banks take advantage of the consumer’s reliance that the bank will not engage in activities to deliberately trip them into incurring overdrafts and being charged overdraft fees.”  Why does the empowering of the CFPB to make arbitrary and capricious “abusive” findings remind this correspondent of the in loco parentis “ability to repay” determination in other Dodd-Frank Act-mandated CFPB rules?  Apparently the ideologically questionable behavioral economists at the CFPB will know “abusive” when they see it.  Do the CFPB behavioral economists have any respect for individual rights – like the right to make one’s own decisions even if mistaken?

I think that the answer to that question is "No." Or, perhaps, "Hell, No!"

None of this should come as a surprise. Liz Warren's purpose in birthing the idea for the CFPB was to create a powerful independent federal agency, free from most oversight and any chance of "regulatory capture," to decide whether consumer financial products and services were "safe" for consumers. In other words, the basis for the CFPB is a belief in the use of the Nanny State to protect the proles from themselves because the state knows what's best for them even when they don't. Behavioral economic theory is the bedrock on which this house of cards is built. Moreover, the CFPB has been manipulating statistics in its war on overdraft fees for some time.

Get used to it, folks, because barring a "counter revolution," this is only the beginning.

You Have Nothing To Lose But Your Chains

The latest edition of Ballard Spahr's "CFPB Monitor" starts off with an article by Barbara Mishkin about how CFPB employees have voted to unionize. Apparently, getting starting salaries of $173,000, plus tuition for courses in basic banking law, are not enough for the employees of the most powerful, poorly regulated federal government agency created since Joe Stalin went to (not) meet his (nonexistent) maker. No, their backsides are severely chapped over heinous office accommodations. It seems that the CFPB is in the process of renovating its Intergalactic Headquarters, aka, "The Death Star," and while that renovation is taking place, the "proles" are being asked to place their posteriors in...<gasp>...Dilbert-like "open space." Their current office space is sufficiently annoying, since more than one person has to share a private office, but cubicles???? Them's fightin' words, Pilgrims!

One "source" claimed that CFPB employees are worried about noise levels. Heck, they carry a pretty big stick, so why don't they learn to talk (and walk) softly?

Look, I understand that when you're threatening to lock and load on some beat-down community bank that issued a disclosure statement that said "may" instead of "will," and, therefore, was massively "deceptive," or you're telling an auto loan lender that if a dealer from which it buys paper ever causes emotional pain to a buyer's pet parakeet, the lender is on the hook for the vet's bill, you would be sensitive about cross-talk. Obviously, you need to keep the brow beating appropriately segmented. I mean, look what happened when Bugs Moran encroached on Al Capione's space. It wasn't pretty, and those guys were mere amateurs when it comes to wielding a Tommy Gun.

Now that the CFPB employees are represented by a union, though, I'm certain that office space is only the tip of the iceberg when it comes to workers' demands.

The union’s president is reported as having said that, in addition to workspace concerns, CFPB employees are concerned about travel policies and benefits, work schedules, reviews, promotions and alternative work schedules.  The report describes CFPB staffers as having “grown frustrated in recent months after putting in grueling hours as they raced to meet statutory deadlines” under Dodd-Frank.

I can imagine that working until 5:30 and even 6:00 pm can be wearisome if you have to do it day-after-day-after-day-my-god-will-this-never-freakin'-end!It wwould be suicide-induing if you had to grind it out in open space.

In the words of the last person to make the absolute best use of every second of every working day (and, especially, of every night) he spent in D.C, once intoned, "I feel your pain."

There Ain't No "There," There

Last week, an article by Andy Peters in the American Banker hit a nerve. It profiled a California bank that had tried to make small dollar loans work as an alternative to payday lending, but had decided to give up the effort.

One PacificCoast Bank in Oakland, Calif., is regrouping as it looks to battle payday lenders in the San Francisco Bay area.

The $282 million-asset thrift recently pulled the plug on its One Pac Pal loan, which it tailored to offer low-income clients short-term credit at reasonable rates and terms. The program, which began 18 months earlier, lost too much money, says Kat Taylor, One PacificCoast's chief executive.

"We have not yet found an economically sustainable product that's sufficient to save enough people" from payday lenders, she says.

I hate to say "I told you so," but...Oh, who am I kidding. I TOLD YOU SO!From August 1, 2007:

In June, when the FDIC issued its final Affordable Small-Dollar Loan Guidelines and FDIC Chairman Sheila Bair was pressing commercial banks to compete with payday lenders for the "Mini Me" loan biz, even banks in states like North Carolina, which kicked out the bottom feeders, were rolling their eyeballs in disdain at the prospect of rushing in to fill the breach. Among other problems, the Guidelines "encourage" banks to cap the APR at 36 percent.

[...]

The North Carolina banks banks profiled in the linked article didn't believe that there was enough bang for the buck to justify dipping their toes in the shallow water. Even the lone credit union that offered a payday loan-like product wasn't making any money on it because it was barred by state law from charging more than an 18% APR and it was actually requiring the loan to be paid back in 90 days. If it had only rolled the loan over (and over and over) and neglected to comply with the usury laws, it might, like Madonna, have been able to "get into the groove" and make some real payday lender-like money.

Lyndsey Medsker, spokesperson for the Community Financial Services Association of America, which, according to another article, represents about 60 percent of the payday loan industry, said the 36% annual percentage rate cap was a non-starter for commercial banks.

"There's an effort to cap loans at 36 percent annual rate, which the FDIC guidelines suggest. How that works into two- week loans is $1.38 per $100," she says. "I know payday lenders can't make money on that, so banks couldn't possibly either."

Mr. Peters' latest article also quotes a consultant as correctly noting that at the same time these loans pose a high risk of nonpayment, they bear a high regulatory compliance risk and, because credit scores must be thrown out the window (or reliance on them reduced), a high underwriting risk. Peters also notes that the FDIC ended its small dollar loan pilot program in 2009 because banks couldn't make a return sufficient to cover the risk.

One PacificCoast bank's experience is in line with the consistent experience of other FDIC-insured banks who've tried to beat payday lenders at their own game over the past six years. Basic business principles don't change. However, they've never ceased to be ignored in the service of an ideological agenda, one which holds that payday loans are evil because they have high fees that "trap" poor people in a never-ending spiral of debt, people who are too stupid and/or unsophisticated and/or desperate to think for themselves, and who must be protected from their inherent deficiencies by those who know better. Guys like Recess Richie and the Payday Slayers.

It's obvious that trying to use traditional banks as payday lending alternatives is not going to work. Unless, of course, you let them earn the same return that payday lenders earn.Which kind of thwarts the "higher purpose," doesn't it?

That's right Liz, reality bites.

Waters Attacked By Sudden Fit Of Reason

This past weekend, The New York Times set out to rehabilitate in the minds of community bankers the image of a woman whose performance in a congressional hearing was once described by The Atlantic's Megan McArdle as "like watching your crazy aunt challenge your boyfriend to prove that fairies aren't real." That's right, you guessed it: Maxine Waters.

The reporter describes a meeting between Mad Max(ine) and community bankers in her district in which Rep. Waters was feeling the pain of the bankers like she was channeling the mojo of William Jefferson Clinton.

“We’ve heard they chase down silly stuff,” Ms. Waters said, referring to regulators and shaking her head in disapproval. “I’m willing to take a hit” to help lower the capital requirements, she said. She even suggested the bankers hire new lobbyists to better represent them. “Influence us,” Ms. Waters said softly, reminding them of her new role as the ranking Democrat on the House Financial Services Committee. “Help us understand the intricacies of your business.”

[...]

As for Dodd-Frank, Ms. Waters said she stood ready to defend the law, but also instructed the bankers to compile a “laundry list” of their concerns. “I don’t want you to look at this as being impossible to tweak,” she said.

After an hour of swiveling nervously in their chairs, the bankers broke into grins. One executive slapped Ms. Waters a high-five. Another embraced her.

“You’ve softened,” Paul C. Hudson, the chairman of Broadway Federal Bank, teased Ms. Waters. “I love the new Maxine.”

What's up with this? Is it simply when Attila The Hun decides to ease up and only lop off the heads of the aged and infirm and spare the able-bodied, the populace reacts with an exaggerated feeling of appreciation born of a profound sense of relief, or is there something more going on here? If you need an objective analysis of a liberal icon, what better source to turn to than the notoriously fair and balanced Pravda New York Times?

The Times claims that in large part her "softening" not only toward community bankers, but toward some of the Wall Street big bankers she used to grill like burgers on a George Foreman 144-incher, is a result of her elevation to the position of ranking Democrat on the House Financial Services Committee, now that Barney Frank has retired. You'd think that circumstance might have the opposite effect: making her feel the need to out-Barney Barney in poking sticks in the eyes of bankers everywhere. After all, the opposition, which controls the committee, is traditionally a lot more pro-banker than is Ms. Waters. She might just as likely feel compelled to carry an even bigger torch for the anti-banker crowd.

The Times posits some theories.

A softer touch with the nation’s biggest banks could allow her to score points — and campaign donations — from an industry unhappy with her previous approach. And being more willing to compromise could also afford her new credibility on Capitol Hill to press her central focus — the cause of consumers.

Or maybe, as she ages, she's found that being a 24/7/365 whirling dervish of a whack job simply taxes her psyche and physique beyond human endurance.

On the down side, Ms. Waters' new-found reasonableness carries the risk of blow-back from the usual suspects.

“She should be shoring up regulators’ spines, not clipping their wings,” said Jeff Connaughton, a former lobbyist and Congressional staff member who recently wrote a book entitled “The Payoff: Why Wall Street Always Wins.” Bartlett Naylor, a policy advocate at Public Citizen, a consumer rights group, called the derivatives letter [in which Waters urged the CFTC to delay derivatives trading rules for six months] “troubling,” adding that Ms. Waters “needn’t add her voice to the cacophony from antireform Wall Street apologists.”

Yes, that's right: if you're not adhering to the politically correct ideological line, you're obviously in desperate need of internment in a re-education camp. We get it.

Finally, however, the reporter begins to get to the nub.

The ranking member on the Financial Services Committee typically takes in millions in donations from the financial services industry. As of now, Ms. Waters has received few dollars from the banking industry. Other than a recent $2,500 donation from Goldman Sachs’s political action committee, her coffers are largely stocked with money from unions and other liberal causes.

I suppose the risk of alienating donations from consumer advocates is not so large when one considers how much more scratch Wall Street can cough up. $2,500 wouldn't cover coffee and a danish at Norma's, so you know that the Goldman Sachs of the world have a lot more largesse to spread on Maxine if she just continues to "listen to reason."

This may or may not be a trend. This may or may not be real. Whatever it is, it's entertaining.

Camden Fine Fires Off A Fine Salvo

In  recent opinion piece for Bloomberg News, ICBA CEO Camden Fine was in fine fettle, ranting about his favorite topic: new regulatory burdens are strangling community while the largest banks are doing just fine, thank you very much. Among his salient points are the following:

The megabanks are benefiting from what Bloomberg View calculated is an $83 billion annual taxpayer subsidy, the value of implicit guarantees by the U.S. Treasury. Bloomberg View was correct to characterize the too-big-to-fail subsidy as “a major driver of the largest banks’ profits.”

Perversely, Federal Deposit Insurance Corp. data show that large banks have both the lowest credit quality and the lowest cost of funds in the industry. Community banks rank the highest in both categories even though they have had to compete for years against the megabanks’ access to cheaper money in pricing loans. In addition, community banks must compete against the big lenders’ lower comparative costs in handling regulatory paperwork.

While Cam complains that this is "morally wrong," I suspect that in a nation overrun with Pontius Pilates who sneer in the throes of their born-again relativism "What is 'truth'?," appealing to "morality" as a behavior influencer will have as much impact on Congress as a stern talking to by Pope Francis would have on Charlie Sheen. More effective on the morally challenged is likely to be his economic arguments.

Community banks should be putting their capital to work in the small towns, rural communities and middle-class urban enclaves they know well. Instead, they are focusing too many of their precious human resources on onerous paperwork and time-consuming compliance measures.

Community banks are the source of almost 60 percent of all small-business loans of less than $1 million, as well as mortgage and consumer loans tailored to the needs of their local communities. Large banking organizations with more than $50 billion in assets hold almost 40 percent of outstanding small loans to businesses, according to the Federal Reserve, but loans to small businesses aren’t a significant portion of large-bank lending. Small-business loans represent less than 5 percent of the large banks’ total domestic lending.

Cam outlines five specific steps Congress and the federal regulators could take to help community banks (and credit unions, for that matter, although Cam would choke on his own tongue before admitting it). They include:

• Easing up on some of the more onerous residential mortgage lending and servicing rules.
• Eliminating the requirement that community banks report on every new small business loan application.
• Requiring a cost-benefit analysis for all new regulations and prohibiting the issuance of any regulation where the cost exceeds the benefit.
• Raising the threshold to $350 million in assets for the requirement for an audit of a bank's internal controls.
• Eliminating the annual requirement for sending no-change privacy policies.

These are all helpful suggestions, but  I'm frankly surprised that he didn't also call for the carpet bombing of CFPB's D.C. headquarters and insist that Jamie Dimon's king-size bed be short-sheeted. Oh well, the year is not even half over. There's still time to get down to the really important stuff.