Heartening Moves Toward Real Progress in Bank Regulation

By JESSE EISINGER, NYT

With their simultaneous display of hubris, remorselessness, incompetence and corruption, the banks have finally ignited a modicum of courage in banking regulators.

The postcrisis bad behavior — reckless trading at a JPMorgan Chase unit in London, the rampant mortgage modification and foreclosure abuses, manipulation of the key global interest rate benchmark — went just a tad too far. For the first time since the financial crisis, the banks are losing some battles on tougher regulation.

Last week, banking regulators, led by the Federal Deposit Insurance Corporation, but including the Federal Reserve and the Office of the Comptroller of the Currency, proposed a rule to raise the capital at the largest, most dangerous banks.

Separately, Gary Gensler, the head of the Commodity Futures Trading Commission, who has been waging an underfunded and lonely fight to tighten the markets for those side bets called derivatives, managed to push forward a rule to regulate the complex markets. Banks and his fellow commissioners had resisted, pushing for more delay and more study. Nothing is ever killed in Washington; it’s just studied into a perpetual coma.

(More here.)