The goal of the Volcker Rule, which became law under the Dodd-Frank Act was to restrict speculative trading activity in risky derivatives by the Too Big To Fail Banks.  The ban on proprietary bank trading was proposed by former Federal Reserve Chairman Paul Volcker who believed that one of the primary causes of the 2008 financial meltdown was a result of speculative trading activity [...]

The Federal Reserve Bank of Dallas joined the growing chorus of critics who maintain that the Dodd-Frank Act will not prevent future taxpayer funded bank bailouts.  The Dallas Fed said taxpayers are still at risk for the cost of large banks failures and that any future bailouts should result in severe consequences for both bank management and bank creditors.  According to Bloomberg, The [...]

Every banker knows that public confidence in the banking industry is essential. With the banking industry approaching a near meltdown last year, the Federal Reserve decided to conduct a series of “stress tests” on the country’s largest banks in order to restore confidence in the banking system.  After reviewing the results of the stress tests, many critics now [...]

After getting pounded during 2011, bank stocks have soared this year, especially after the Federal Reserve completed its “stress tests” and said that almost every big bank could survive “extremely adverse” economic conditions. During 2011 bank stock shareholders experienced the biggest price declines since the financial panic of 2008.  As worries mounted [...]

Right or wrong, most consumers have an overwhelmingly negative opinion about big banks.   According to a survey by Research and Markets, 86% of social media comments about U.S. and European banks are negative. The negative perception of big banks by the public has become so pervasive that most bank executives probably just ignore it at this point.  Big bank CEOs pained by their [...]

During 2011, some of the smartest investment pros in the world bet heavily on Bank of America and lost big as the stock price collapsed. Concerns over the looming collapse of the European banking system sent U.S bank stocks into a tailspin as panicked investors sold.  From a price of $15 in January 2011 the share price of Bank of America (BAC) declined to a panic low of $4.92 in [...]

During 2012, investor fears about the financial condition of banks resulted in the biggest decline in bank stocks since the financial crash of 2008.  A weakening economy and fears about massive exposure to insolvent European financial institutions sent bank investors running to the exits. The brutal sell off in banking stocks during 2012 can be summarized by viewing the price action [...]

David Stockman, former budget director in the Reagan administration, argues persuasively that the fundamental problems of the financial system are worse than in 2008. The “too big to fail” banks have become bigger, politicians have been bought and paid for, an entitled class of Wall Street financiers are being served by government policies and a massive amount of  [...]

Welcome to Banking Update, a roundup of articles and news from around the internet.  The Federal Reserve’s political moves threaten its independence, loan modification companies prey on vulnerable homeowners, the big banks refuse to disclose their risk on derivatives, consumers want to be bailed out for foolish financial decisions, loss of confidence in governments grow and [...]

Will the “too big to fail” banks that pose a systemic risk to the financial system ever be broken up? If Thomas Hoenig, former Kansas City Fed president wins Senate nomination as the new Vice Chairman of the FDIC, the big banks may have a lot to worry about. Mr. Hoenig should easily win Senate confirmation based on solid bipartisan support and that has a lot of executives [...]