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The result has been a bloated cost structure that drags down profits when revenues from the bank's volatile mortgage operation fall.Worse, says Kenneth Posner, an analyst at Morgan Stanley, it is unclear that big is necessarily better, even if WaMu had squeezed out efficiencies.
He later faced criticism from political rivals who said HBOS's real problems were caused by the bank's exposure to the volatile mortgage market.
"Any arbitrary constraint on our portfolio would remove an important bid for mortgages from the market, which would lead to higher and more volatile mortgage rates for homeowners," Raines told the Senate Banking Committee.
At least that's what had become readily apparent as the dust settled on his trades, showing that Fink had been trading in Rubin-like amounts billions of dollars in volatile mortgage securities.
The company also said in a filing that it has had informal talks with the Securities and Exchange Commission about the capital-raising plan and its disclosures of exposure to the volatile mortgage derivatives.
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The weak economy, volatile markets, toxic mortgages and potential exposure to the euro zone are undeniably the biggest drags on banks' profits.
His most visible contribution to the current regulatory overhaul effort is what has come to be known as the Volcker rule, which in its initial form would have banned commercial banks from engaging in what Wall Street calls proprietary trading -- that is, risking their own funds to speculate on potentially volatile products like mortgage-backed securities and credit-default swaps.
He has reduced the bank's holdings of corporate loans and exited other volatile businesses, like subprime mortgages and auto leasing.
The core portion of the country's consumer price index, which excludes volatile items like gasoline and mortgage interest, was 1.6percentt in November, compared with 1.8percentt in October.
The system has been forced instead to depend on volatile revenue sources like the mortgage recording tax, which is vulnerable to the ups and, lately, the downs of the real estate market.
The private market for mortgages and mortgage-backed securities remains volatile.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com