Yearly Archives: 2012

By Daniel Alpert, the founding Managing Partner of Westwood Capital. Cross posted from EconoMonitor

What Does the CCAR Really Tell Us About the Big 4 Commercial Banks?

It has been just over 36 hours since the release of the 2012 CCAR (the “stress test”) of 19 banks. Market response has been decidedly positive with respect to the three of the four top banks that passed, the bloom has somewhat come off the rose with respect to some regional banks, and Citigroup has, well, wilted.

But there is much more in the stress test than is found in the headlines and in media reports, so we thought we’d hunker down with the report yesterday and, after some overall review, focus more on the top four bank holding companies, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo – to see what further conclusions might be drawn. After all, those four banks comprise 68% of all the activity in the CCAR.

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010) Part I; Part II. A significant part of China’s growth has been an illusion. Since […]

This is wonderful news. “The banks are paying $95 million, for example, to settle a case brought by Lynn Szymoniak, a homeowner who was featured on CBS’ “60 Minutes” last year for uncovering details about banks’ so-called robo-signing of foreclosure documents. Szymoniak will get $18 million from the settlement.” Most people don’t know Lynn Symoniak, but […]

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Matt Taibbi has a good piece on the important and public resignation of a former Goldman executive, Greg Smith.

The essence of Smith’s piece is devastating. He points to one simple, specific problem in the company: the fact that Goldman routinely screws its own clients.

Paul Volcker has already referred to Smith’s op-ed, blaming Goldman for the change in the culture of Wall Street.  Taibbi argues that having an insider come out and blast the culture of Goldman is “the endgame for reforming Wall Street.”

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

There’s a rule of thumb in politics, which is that you cannot fight for someone who won’t fight for himself.  The players missing from the financial fraud fight are the investors, or in Wall Street parlance, on “the buy side”.  These are the entities getting routinely ripped off by the big banks through a variety of means, and at least the pension and insurance industry folks are temperamentally more passive than the more predatory banks.  They are also the ones holding the mortgage backed securities whose value is being pillaged by the big bank servicers.  But you can see how they are being punked by the way the Obama administration treats them.

Alison Frankel has the goods on Shaun Donovan, who thinks nothing of lying to the investor community.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller.

I’ve read most of the mortgage settlement documents, and it’s a wide-ranging and very confusing.  There is plenty to criticize, and David Dayen has done a wonderful job going through the nitty gritty.  Abigail Fields has a spectacular review of the, er, problems with the servicing standards.  I’ll make a few criticisms of my own below.  But I think the most interesting parts of the document release were the HUD Inspector General reports on the five banks and the DOJ complaint.  What these prove is what we’ve always known – the law enforcement community knew exactly what these banks were doing, and chose not to prosecute.  There was intent to defraud, fraud, and frankly, according to HUD, it’s not clear that the past tense is the correct tense to use.

Take it away, HUD OIG.

At the time of our review, affidavits continued to be processed by these same signers, who may not have been qualified, and these signers may not have adequately verified certain figures because they accessed a computer screen of data showing a compilation of figures instead of verifying the data against the information through review of the books and records kept in the regular course of business by the institution.

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010). Part I is here.

China’s recovery from the initial effects of the GFC was no miracle. Like the rest of the world, it was the result of “Botox economics”. Using the advantages of a centrally controlled, command economy, Beijing boosted output through government spending and directed bank lending to maintain growth.

Unfortunately, China now faces significant problems. The weakness of its two major trading partners (US and Europe) means export demand is likely to remain subdued. Domestically, the side effects of debt driven investment are now emerging.

China’s ability to sustain high growth levels is questionable. Specifically, its capacity for further stimulus is uncertain. In 2009, Premier Wen Jiabao admitted that the “stabilisation and recovery of the Chinese economy are not yet steady, solid and balanced”.