May 20, 2012

FDIC Busy Bees

December 19, 2009 By Jason Paez Leave a Comment

Mish commentary on bank failures:

Seven Banks Fail, 140 YTD total, Sheila Bair “prepared to handle an ever-larger number of bank failures next year”

A total of 140 banks have failed year to date and FDIC Chairman Sheila Bair is adding staff, prepared for even more failures next year.

Please consider Seven U.S. Banks Are Seized, Raising Year’s Failure Toll to 140

Seven U.S. banks were seized by regulators today, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.

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Bernanke Confirmation Headwinds Increasing

December 19, 2009 By Jason Paez Leave a Comment

I’d be very surprised if Bernanke isn’t confirmed, but still…

Bernanke Confirmation Headwinds Increasing

By Yves Smith

The party line is that Ben Bernanke’s confirmation for a second term as Fed chief is a shoe-in, although he might face an unseemly amount of roughing up, like having to step down briefly if the senators who plan to put a hold on his vote succeed in delaying it beyond the end of January. And then there is also that wee inconvenience that Congress has woken up to the fact that the electorate is seriously unhappy about bailouts without accountability and reform, and the Fed allowed the Treasury to circumvent normal budget approval processed (as Willem Buiter has put it, the Fed acted as a “quasi-fiscal agent” of the Treasury). So a little, perhaps a lot, of curtailment of the Fed’s expanded role is in the offing.

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The Fed Can Help, But Fiscal Policy Is The Key To Job Creation

December 18, 2009 By Jason Paez 4 Comments

Thoma is right on the money — quantitative easing is a rare beast to begin with and monetary policy is a blunt instrument. I’ve already engaged the possibility that Fed “Independence is a Red Herring.” At very least, critics can and should look for job creation elsewhere.

A downstream speculation of this debate: is the Fed in the right business with a dual mandate? Full employment seems by definition politically charged — price stability is a more refined mandate for the Fed toolkit.

The Fed Can Help, But Fiscal Policy Is The Key To Job Creation

By Mark Thoma | Dec 18, 2009

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Paul Volcker Picks Up a Bat

December 17, 2009 By Jason Paez Leave a Comment

Volcker may not have the most prominent position in government these days, but it’s good to see another perspective in the debate at his level — hopefully our policy will come out more effectively as a result, whichever direction it takes.

Paul Volcker Picks Up A Bat

For most the past 12 months, Paul Volcker was sitting on the policy sidelines.  He had impressive sounding job titles – member of President Obama’s Transition Economic Advisory Board immediately after last November’s election, and quickly named to head the new Economic Recovery Board.

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Fed “Independence” is a Red Herring

December 15, 2009 By Jason Paez Leave a Comment

While I’d not go so far as the author in saying the Fed has done a terrible job (it truly hasn’t), I’ve already alluded to somewhat comparable questions about the Fed’s dual mandate. Whatever the structural considerations are, evidence has mounted that the FRB is not as independent as proponents claim.

Whether or not this is a good thing appears open to debate. Are independence and accountability somehow irreconcilable?

I don’t like political influence affecting my monetary stability but it seems that ship may have sailed.

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Volcker: “Wake Up, Gentlemen”

December 15, 2009 By Jason Paez Leave a Comment

Volcker has made a lot of splash recently, including his questioning whether financial innovation has improved society much since the ATM. This may or may not have been hyperbole on his part (the High Yield bond market led to some good innovations, for one), but it seems clear that he is indeed moving the ball along a different direction.

“Wake Up, Gentlemen”

The guiding myth underpinning the reconstruction of our dangerous banking system is: Financial innovation as-we-know-it is valuable and must be preserved.  Anyone opposed to this approach is a populist, with or without a pitchfork.

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FDIC Playing a Dangerous Game

December 14, 2009 By Jason Paez Leave a Comment

Government may need to think outside the box to get the kind of lending they want going again, hopefully without leaving the punch-bowl out too long. Fiscal stimulus can at least be more focused than a monetary one — quantitative easing can’t last forever.

Where does politics end and prudence begin?

Sheila Bair Begs For More Bank Failures

One might think that 159 bank failures in the last two years would be the primary concern to Sheila Bair.

Unfortunately, that is not the case as noted by Bloomberg in FDIC’s Bair Concerned Banks Making Only ‘Safest Loans,’ Urges More Lending

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Thoughts on Fed Exit Strategy

December 14, 2009 By Jason Paez Leave a Comment

The case against fractional reserve banking is an interesting one, though almost certainly fruitless (and unnecessary). However, the concern from Stephen Roach is something I share — there is a lot of risk in the upcoming unwind of Fed positions.

Relatedly, the Murray Rothbard suggestions are fascinating to read.

Thoughts on Fed’s Exit Strategy: Stephen Roach vs. Mish

Former Fed economist and current Morgan Stanley Asia Chairman Stephen Roach Sees ‘Great Risk’ in Fed Exit Strategy.

The Federal Reserve may cause another crisis by botching the withdrawal of liquidity from the U.S. economy, Morgan Stanley Asia Chairman Stephen Roach said.

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Congress and Swiss Cheese Legislation

December 10, 2009 By Jason Paez Leave a Comment

Lobbying has long been a sore point for politics and unfortunately the activity does reflect a conflicting agenda vis-à-vis taxpayers on occasion. This is probably one of those times.

OTC derivatives are ground zero that led to the cascading bilateral counterparty collapse of 2008.

$344 Million Buys A Lot Of Loopholes

The world financial system nearly melted down in 2008. This was a result of the interlocking web of exposures between major financial institutions caused by the unregulated and completely opaque over-the-counter (OTC) derivatives market. The U.S. taxpayer was forced to pledge nearly $24 trillion in cash and loan guarantees to avert financial Armageddon. That amounts to approximately $200,000 for every household in America!

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Small Business Confidence Plunges — Where Will Jobs Come From?

December 9, 2009 By Jason Paez Leave a Comment

I happen to know for a fact that the Administration is working hard on these issues relating to small business, but it doesn’t make it any less concerning…

Small Business Confidence Plunges — Where Will Jobs Come From?

Two-thirds of job creation in postwar recoveries came from small business. And small business is in terrible shape. The only comprehensive poll of small business sentiment is the Discover Small Business Index. Its most recent poll shows a collapse of confidence between October and November, with a majority of small business owners having cash flow problems.

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Fed: Bubble Fighter?

December 2, 2009 By Jason Paez Leave a Comment

I’m concerned this debate may be reactionary in nature. Treading controversial ground, surely…

Fed Debates New Role: Bubble Fighter

Not so long ago, Federal Reserve officials were confident they knew what to do when they saw bubbles building in prices of stocks, houses or other assets: Nothing.

Now, as Fed Chairman Ben Bernanke faces a confirmation hearing Thursday on a second four-year term, he and others at the central bank are rethinking the hands-off approach they’ve followed over the past decade. On the heels of a burst housing-and-credit bubble, Mr. Bernanke now calls financial booms “perhaps the most difficult problem for monetary policy this decade.”

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Game Theory in Polifinance

November 29, 2009 By Jason Paez Leave a Comment

Is the financial services industry a zero-sum game?

“Can’t Get Enough: Goldman’s Profit is Citi’s Pain?”

By Thomas Adams, at Paykin Krieg and Adams, LLP, and a former managing director at Ambac and FGIC.

Many thanks for the thoughtful comments on my earlier post. If you can take a little more on the subject, I thought I would add some clarification to some of the issues raised.

First, on the merits of a monoline vs. AIG bailout, consider a case of counterparty compare and contrast, using Goldman Sachs and Citigroup as examples.

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Nitpicking a Fed Chairman

November 29, 2009 By Jason Paez Leave a Comment

Yves is terrific to read when she gets rolling — I’m not against Bernanke but I must admit:

  1. that he even felt compelled to write an op-ed is remarkable (Fed Chairmen historically do not do this), and
  2. he does lay it on a wee bit thick.

Bernanke Tries to Defend the Fed

In a sign that the Federal Reserve is circling the wagons, chairman Ben Bernanke has an op-ed in the Washington Post that attempts to defend the central bank’s role. What is interesting is how much the tables have turned. The Obama effort to make the Fed into the uber bank regulator has become a rout, with decent odds that the Fed will have its powers reduced, and an increasing possibility that Bernanke might not be reconfirmed (which is frankly the right outcome, no CEO who presided over a similar disaster would still be in charge).

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More Compelling Than a “Vampire Squid”

November 24, 2009 By Jason Paez 1 Comment

I’m not all that into the vampire squid meme, but well supported arguments deserve attention in the arena of government influence. Clearly, evidence supports that Goldman is very good to their shareholders and employees. In my mind, this means they’re upholding their side of fiduciary responsibility.

If there is a problem embedded here (and likely there is), then responsibility should ultimately rest with our elected leaders.

Goldman/AIG Conspiracy Theories: There’s a Reason They Won’t Go Away

Note: this post is by Thomas Adams, at Paykin Krieg and Adams, LLP, and a former managing director at Ambac and FGIC, with some minor additions by yours truly. This is a significant piece of some puzzles he, some other experts who prefer to remain anonymous, and I have been pushing on for several months.

This is a preview of More Compelling Than a “Vampire Squid”. Read the full post (2412 words, 1 image, estimated 9:39 mins reading time)
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Romer-Romer Squared

November 24, 2009 By Jason Paez Leave a Comment

An interesting take on the influential Romer-Romer criticism of the Federal Reserve. Either way it goes this is an important debate.

This is a preview of Romer-Romer Squared. Read the full post (1179 words, estimated 4:43 mins reading time)
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