The nation’s small banks, as the conventional wisdom has it, were victims of a financial crisis brought on by greed and excess on Wall Street, but the small bank-TARP recipients that are likely to generate big taxpayer losses.
Goldman Shares Up: SEC To Make ‘Significant Announcement’
July 15, 2010 By
Shares of Goldman Sachs Group Inc. (GS) climbed 4% late Thursday after the U.S. Securities and Exchange Commission announced it intends to make a “significant announcement” at 4:45 p.m. EDT.
Devil in the Details: Do Banks Really Need $221 Billion of New Capital?
February 17, 2010 By 3 Comments
Today’s NYT Dealbook headline reads (underlines added for emphasis):
Top banks will need an extra $221 billion of capital and see annual profits slump by $110 billion if all proposed regulations to reform the industry are brought in, leading analysts said on Wednesday, Reuters reported.
If all the initiatives from regulators are implemented it would cut the average return on equity to 5.4 percent from 13.3 percent next year, hurt economic growth and raise costs for bank services, JPMorgan analysts warned, according to the news service.
Strategic Default vs Corporate Fiduciary Responsibility
December 21, 2009 By 9 Comments
Elizabeth Warren has a fondness for exploding toasters that she’s been arguing since at least 2007:
It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street–and the mortgage won’t even carry a disclosure of that fact to the homeowner. Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time.
Too Much Spitzer, Not Enough AIG
December 19, 2009 By Leave a Comment
As a New Yorker I still cringe at details of Gov. Spitzer’s fall from grace, tidbits I wish I could forget. This doesn’t take away from his fundamental arguments with William Black though.
We know too much about Spitzer, not nearly enough about what really happened at AIG.
Show Us the E-Mail
By ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK || NYTimes.comWE end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do.
Of Central Banking and Corporate Balance Sheets
December 19, 2009 By 2 Comments
Tyler (who may or may not be more than one person!) over at Zero Hedge is a very fun blogger to read and can be counted on for sharp observations of interesting technical trends, as well as sarcastic wit. His posts on shadow banking are particularly of note.
Cautionary Observations From A Chronological Analysis Of The S&P 500 Balance Sheet
There was a time when investment decisions had more to do with fundamentals than whether Bernanke would wake up tomorrow and decide it is time to stop the liquidity spigot (arguably, the only thing that matters these days). Indeed, if in the odd chance Bernanke is not reconfirmed by the Senate, the huge drop the market experienced last year when Congress refused to get Paulson’s first TARP version to be shoved down its throat, will seem like a Sunday morning picnic.
Congress and Swiss Cheese Legislation
December 10, 2009 By 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!
Fed: Bubble Fighter?
December 2, 2009 By 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.”
Simon Johnson: The Quiet Coup
March 31, 2009 By Leave a Comment
The seminal work that launched Simon Johnson, James Kwok and Baseline Scenario into eco-blogger stardom, and for good reason.
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
Jason Paez (