In the recent rush to dismantle government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, it appears that those in charge (government advisors, senators, and the like) don’t quite understand some things -- Fannie and Freddie, the U.S. banking landscape, and who is to blame for the mortgage fiasco. Scary thought. If you need a realistic example of government crisis competency, think about the auto workers’ union -- what was, until a couple of years ago, a shining example of U.S.-based industry and the free enterprise system -- or General Motors and Chrysler. And all GM and Chrysler wanted was to borrow a few billion … possibly less than the taxpayer money the United States is wont to give away to the good folks of Egypt or Nigeria.
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What is the first thing created after a crisis in the United States? A non-partisan panel of folks who are not normally involved with the subject.
When the flash crash happened back in May of 2010, the U.S. reaction to this crisis was no different: Let’s create a panel of people who have good intentions, but who ultimately have no power or say in the final decision. The alphabet soup of regulators (what a missed opportunity to consolidate!) listened with great interest as the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues described the problem with the listed marketplace. The most glaring problem is a lack of liquidity when everyone is trying to exit a market.
An Aite Group client asked me a rather simple question regarding my recently published report, Trends in Bank-Supported, Business-Initiated Payments. This led to an interesting conversation about what I am seeing in the market regarding combining retail and wholesale banking platforms (given that small businesses frequently behave like consumers), and banks’ need to consider their customer segments when planning for their payments future. An interesting topic, to be sure.
On February 18, Barclays officially shut down its branch-based retail investment operations (see Advisor One's story for more details), leading to the loss of 1,000 jobs focused on delivering financial planning through Barclays retail bank branches.
I visited with a vendor of policy administration solutions for life insurance a couple of weeks ago. Like many other vendors these days, this one offers a variety of components that facilitate specific policy administration functions: underwriting, commissions, billing, licensing, forms, ratings, etc. Life insurers, it seems, are showing little appetite for massive migrations of core administration systems. Rather than moving their substantial, complex, and long-lived books of business from many aging mainframe or earlier-generation configurable policy administration platforms, the dominant emerging paradigm is a component-based approach to modernizing functions.