Yearly Archives: 2012
Not-So-Dumb Consumers Shun OCC’s Bogus Foreclosure Reviews
Consumers seem to have wised up to the fact that the Administration is not on their side, particularly as far as housing is concerned.
Read more...Bill Black on How the Jumpstart Obama’s Bucket Shops Act is Just Another in a Long Series of Fraud-Promoting Legislation
Yves here. The Washington Post reports tonight that there is some pushback about the decried-by-anyone-who-knows-bupkis-about-securities-markets-and-isn’t-on-take JOBS Ac, which appears to be certain to be signed into law.
Bill Black reminds us that tons of absolutely terrible financial regulation (as in deregulation) over the last 25 years have passed with large margins.
Read more...World Bank Nominee Kim Under Fire for “Dying for Growth” Book
The US nominee to lead the World Bank, Jim Yong Kim, has come under attack for editing a book called “Dying for Growth.” It apparently performs the cardinal sins of questioning whether a relentless pursuit of growth produces necessarily produces good outcomes and taking issue with neoliberalism. From the Financial Times:
Read more...A Qualified Defense of DeMarco, the Administration’s Favorite Scapegoat for Its Failed Housing Policies (Updated)
There’s been an interesting contretemps over an article by Gretchen Morgenson over the weekend, “A Bailout by Another Name.” Morgenson made the hardly-controversial observation that writing down Fannie and Freddie first mortgages without wiping out any relate second is a back door bailout. Remember, this was one of our key objections to the bank-friendly mortgage settlement, that a requirement to write down firsts and only write down related seconds to a degree is a subsidy to banks when if you were to believe the PR, the settlement is supposed to redress past abuses.
Morgenson also defends DeMarco’s refusal to do principal mods on Fannie and Freddie loans, arguing that he is subject to a requirement to preserve taxpayer assets and that the studies on this have been inconclusive. She adds that the focus is again incorrectly on Fannie and Freddie and not the banks. HAMP mods on GSE paper appear to be roughly proportional to their market share of original lending (around 40% before the crisis) when given their much lower default/delinquency rates, you’d expect them to represent a smaller share than they do relative to mods of bank owned and private label securitized loans.
The fact that this article has gotten heated responses from Felix Salmon and Dean Baker appears to be more a function of tribalism of various sorts than about the policy issues at hand.
Read more...Links 3/26/12
On the Meaningless of Contracts and the New Optionality
An old saying is that contracts are only as good as the parties that enter into them. And the evidence is growing that when there is a meaningful power disparity between two parties to an agreement, the odds are high that the bigger player will elect to behave badly. This blog is rife with examples: pervasive contractual and regulatory violations in securitizations and foreclosures, banks exploiting not just ordinary consumers with “tricks and traps” but even billionaire clients; debt collection abuses; routine raiding of employee pensions while CEO pay and perquisites remain sacrosanct; and, of course, the pilfering of customer accounts at MF Global.
And conditions on the ground are even worse. Hoisted from comments:
Read more...Bill Black: “The only winning move is not to play”—the insanity of the regulatory race to the bottom
Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives
The plot of the movie WarGames (1983) involves a slacker hacker (played by Matthew Broderick) who starts playing the game “Global Thermonuclear War” with Joshua, a Department of Defense (DoD) supercomputer that has been given partial control by DoD of our nuclear forces. The game prompts Joshua, who has been programmed to win games, to trick DoD into authorizing Joshua to launch an attack on the Soviet Union so that Joshua can win the game. The hacker and the professor that programmed Joshua realize that the only way to prevent Joshua from attacking is to teach “him” that no one can “win” global thermonuclear war. The insanity is that the people who created the game “Global Thermonuclear War” thought it could be won. Joshua races through thousands of scenarios and ends his plan to win the “Global Thermonuclear War” game by attacking the Soviet Union when he realizes that “the only winning move is not to play.”
Read more...Four things I learned last week
“It would be irresponsible not to speculate.” — Peggy Noonan
No doubt there were more important things to be learned; but here are four things that I learned. Maybe one thing I’ll learn this coming week is not to play the magpie and collect bright shiny objects; or perhaps I’ll learn that the feuilleton is not a form with which people choose to engage. Bold, persistent experimentation!
Read more...Links 3/25/12
Adam Davidson Presents the Trophy Nanny as 1% Status Symbol
In his role as the Lord Haw-Haw of yawning income disparity, Adam Davidson reports on the world of elite nannies in his latest New York Times piece, “The Best Nanny Money Can Buy.” Child caregivers perceived to be good enough for the superrich (which means they might need to possess other skills, like speaking Mandarin, cooking restaurnt-level meals, being able to ride and groom horses or sailing) make big bucks!
Read more...Victory in Oakland County Transfer Tax Case Paves Way for Other Michigan Suits Against Fannie and Freddie
A few counties have filed litigation against various securitization players (originators, servicers, MERS) for the underpayment of recording fees. Similarly, New York attorney general Eric Schneiderman filed a wide ranging suit against MERS and three banks that used it and settled it for $25 million (it included a mention of $2 billion in unpaid recording fees but we were skeptical of viability of his argument).
However, counties in Michigan have scored an important victory.
Read more...Daniel Alpert: Consumer Credit Growing at Highest Rate in Past Decade – Unhealthy and Unsustainable?
Alright, got your attention. But the headline above is not offered merely by way of titillation, as a former partner of mine would say—it has the added advantage of being true.
Read more...Links 3/24/12
China’s Real Choices for Growth
Yves here. I particularly like this post because Michael Pettis takes some boundary conditions about China and works through their implications. One quibble I have is that he talks of “debt capacity limits.” That depends who the issuer is. The national government could in theory “print,” it has no need to issue debt to fund its activities. But the constraint on that sort of approach is inflation, and China is trying to cool off inflation without crimping growth too much. So China is pretty much in the conundrum Pettis describes, but for slightly more complicated reasons.
Cross posted from MacroBusiness
An exclusive excerpt from Michael Pettis’ most recent newsletter:
Last week’s news was dominated by the sudden but not wholly unexpected removal of Bo Xilai as mayor of Chongqing.
After the initial shock wore off, much of the speculation within China has moved on to what his ousting says about the evolution of power and, for economists, how it will affect the reform and rebalancing of the Chinese economy. More importantly, it seems to me that too many analysts over emphasize the intentions of the Chinese leadership when projecting China’s future.
Read more...
