Best Banking Reads of 2014

What a year it’s been for the banking industry! From threats from outside the industry by Apple and Wal-Mart, to questions on whether Colorado and Washington banks should work with legal marijuana businesses, to regulatory shenanigans at the New York Fed, 2014 has been memorable. As the holidays approach and I think back on the year that was, I thought I’d take a few minutes to share some of the banking-related stories I enjoyed in 2014.

Regulations

  • Banks given the go-ahead on working with marijuana businesses: Marijuana may be legal in some states, but that doesn’t mean banks are ready to work with marijuana businesses.
  • How to Punish a Bank: This is from National Public Radio’s Planet Money, so it’s more of a listen than a read, but delves into the problems of effectively punishing the big banks.
  • Bank of America Adds a Mortgage Settlement to Its Collection: Bloomberg’s Matt Levine (also cited in the NPR segment) provides the data on (at the time) Bank of America’s $68 billion in mortgage settlements, and asks how effective these penalties and fines are when they become business-as-usual.
  • Inside the Emerald City: Jack Milligan, editor of Bank Director, delved into the culture of the NY Fed following concerns that regulators got just a bit too cozy with the big banks they oversee.

NonBank Competition

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No High Times for Banks…Yet.

SmokeA story that caught my eye late last week — one I’ve been following for a while — was the latest concerning banking the marijuana industry. The Department of Justice and U.S. Treasury have proposed guidance concerning those banks that want to do business with Colorado’s (and soon Washington’s) marijuana dispensaries, furthering these states’ cause to make these businesses a legitimate business — and a legitimate source of tax dollars.

Banks aren’t off the hook should they choose to offer banking services to marijuana businesses, according to the guidance (available here). Banks can work with these businesses but must ensure that suspicious activity is reported and certain boundaries are respected, like preventing the distribution of the drug to minors and revenue from the sale of marijuana ending up in the hands of organized crime.  The marijuana industry is reportedly elated.

After speaking to James Pishue, CEO of the Washington Bankers Association, and Jenifer Waller, SVP of the Colorado Bankers Association, last fall for an article on this topic (“For Your Review: Bankers Lose Out on Budding Marijuana Industry”) for the 4th quarter issue of Bank Director magazine, I wasn’t so sure that the banking industry would share this enthusiasm.

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