More than 40 percent of homeowners seeking help from the Obama administration’s flagship effort to rescue those at risk of foreclosure have dropped out of the program. The latest report on the program suggests foreclosures could rise in the second half of the year and weaken an ailing housing market.
Jobless benefits extension passes Senate test
July 20, 2010 By
More than 2.5 million unemployed Americans are one step closer to having their unemployment benefits restored.
Why Small Banks Are Big Losers in Bailout
July 16, 2010 By
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.
Reform Bill: Geithner to Inherit Sweeping Influence
July 16, 2010 By
The dramatic expansion of financial regulation approved by Congress this week bears the stamp of no one more than Treasury Secretary Timothy F. Geithner and gives him vast powers to determine the final form of the new rules.
W.House eyes Elizabeth Warren for New Consumer Watchdog
July 16, 2010 By
Elizabeth Warren, an outspoken consumer rights advocate feared by Wall Street, is among top contenders to head a new financial consumer watchdog bureau, sources
Goldman Case a Win for SEC
July 16, 2010 By
At first blush, the SEC’s settlement with Goldman Sachs over fraud charges looked like a victory for the bank
What’s in Financial Reform Bill? Most Americans Don’t Know
July 15, 2010 By
The broadest overhaul of US financial rules since the Great Depression won final approval in the Senate on Thursday. Yet over 70% of Americans know nothing about the legislation.
Grading The Bill: WSJ.com
July 15, 2010 By
Economists and other prominent members of the financial community gave the overhaul legislation mixed reviews
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.
Yin/Yang at the Federal Reserve
March 22, 2010 By 3 Comments
Several months ago I supported Ben Bernanke when his re-nomination as Chairman of the Fed came under fire. While others such as Simon Johnson called for his removal, I wrote that I instead wanted to see more focus on systemic incentives. Put a bit differently, I believed we were being more reactive in our approach to the financial crisis than pragmatic about how thousands of mostly well-meaning citizens — both public and private — could have made such collective decisions as led to collapse.
This remains a key issue in need of attention, and it requires deep thinking about whether assumptions used to pass legislation over the past 40 years still hold.
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.
Defusing “Financial Weapons of Mass Destruction”
February 15, 2010 By 2 Comments
In 2002 Warren Buffett wrote that in his view, credit derivatives were financial weapons of mass destruction (“FWMDs”). He made the comment while explaining to shareholders why he was unwinding a Berkshire Hathaway subsidiary dealing in them, and few outside of the value investor community paid much heed.
Eight years later we could be singing a different tune in both the media and Congress. After all, we’ve had a financial crisis, $23.7 trillion of potential government financial backstops and a “Great Recession” that were all exacerbated and partially caused by a FWMD explosion. With some notable exceptions however we haven’t changed enough, and these contracts remain poorly understood even as the markets have evolved beyond the levels for which Mr. Buffett first expressed concern.
Where Elizabeth Warren Got It Wrong
February 9, 2010 By 8 Comments
I adore Elizabeth Warren and consider her one of the more courageous policy leaders in Washington today. Her simple, prescient toaster metaphors of 2007 (which I’ve previously mentioned) were brilliant.
However, in her most recent Wall Street Journal Op-Ed, “Wall Street’s Race to the Bottom,” I believe Professor Warren makes unfortunate leaps that weaken her purpose and give credence (if not, outright strength) to the destructive ongoing debate around financial regulation. This debate continues to paralyze our political system, change nothing about the underlying causes of the crisis and offend just about everyone. As American citizens we need to hold our elected officials accountable to get something done now, or history is bound to repeat itself.
The Retro-Reacta-Tax: Lamenting Poor Term Sheets
January 15, 2010 By Leave a Comment
When $23.7 trillion in government programs were variously created to provide direct (and indirect) support to the financial system it seems everyone involved either conveniently forgot or didn’t know that firms lay aside 50%+ of revenue for compensation as standard operating procedure. If the goal was to allow banks to “earn” their way out of cataclysmic loss rather than to forcibly unwind them, the synthetic creation of bank revenue would lead to only one possibility with regards industry bonuses.
An Adversarial Relationship…The Missing Ingredient?
December 23, 2009 By 7 Comments
It is neither controversial that mistakes were made leading into the crisis nor that the Fed bears much responsibility. That said, I’m unclear the institution (or Bernanke) deserve such aggression as demonstrated in this article.
Instead of focusing on the Chairman, I’d like to see more interest in the system-wide incentives that drive the current structure. Arguably, almost anyone could have been chairman and the results would have been the same (or far worse).
Jason Paez (