Now here’s Déjà vu all over again. You might remember the name Rebecca Mairone from a few years ago. She’s back in the news… Now she, personally, has to cough up a cool million bucks. That’s nice. It should be a lot more. And she should be doing prison time.
Read more...At one level, the Government Accountability Office’s long-awaited report on whether banks receive subsidies on their borrowing costs by virtue of being Too Big to Fail is somewhat anticlimactic. In the interim, small-c conservative institutions like the Federal Reserve and the International Monetary Fund came down squarely on the side of a subsidy, quantifying it as high as $70 billion a year. Similarly, GAO’s first report on this subject matter found that government support during the crisis was much cheaper than alternatives, was secured by junk collateral, tended to be used more by bigger banks, and basically represented all that stood between the biggest institutions and insolvency. That kind of tells you what you need to know. The nature of the subsidy during a credit crisis simply matters more than during a time of relative calm.
Read more...Major multi-national bank BNP Paribas just pleaded guilty to money-laundering a little less than $200 billion over the course of the last ten years. According to New York Superintendent of Financial Services Benjamin Lawsky, “BNPP employees – with the knowledge of multiple senior executives – engaged in a long-standing scheme that illegally funneled money to countries involved in terrorism and genocide.”
Read more...Today is technically the drop-dead date for Argentina to work out an agreement to pay off vulture funds that long ago purchased their distressed debt, or else the country will go into default for the second time in thirteen years. 11th-hour negotiations with a mediator have yielded no results thus far. WSJ divines momentum from the length of the mediation session, which is pretty weak tea.
The default would actually be to the exchange bondholders who already hold agreements with Argentina for restructured debt payments going back to the 2001 default. Judge Thomas Griesa prevented the country from making a scheduled interest payment to the exchange bondholders without the vulture funds getting their $1.5 billion first (the vultures paid roughly $48 million for the distressed debt, so it’s a huge payday).
Read more...The sanction spiral concocted by the US and the EU in response to the ever more tragic fiasco in Ukraine is supposed to force, or at least encourage Russian President Vladimir Putin to abandon whatever schemes he may have concerning Ukraine. So the 28 EU members are trying to hash out new sanctions today, to be duct-taped to the existing spiral that ineffectually jabs at 87 Russian individuals and 20 Russian organizations.
This time, the sanctions are supposed to have teeth. And a broad impact that would squeeze the Russian economy, much to the liking of the US government. Under discussion are, among other goodies, curtailing Russian banks’ access to EU capital markets and kicking the defense and energy sectors where European technologies play a big role.
Read more...As the recession in Europe painfully proves all attempts at austerity to be dead-ends, the search for the miraculous “silver-bullet” continues. The European Central Bank (ECB) has initiated a negative “nominal” interest rate. That means the ECB, the first monetary authority to ever take such an action in a common currency zone, will be charging commercial banks for the funds they deposit (overnight) rather than paying them interest.
Read more...This week marks the 100th anniversary of a nearly forgotten yet critical moment in global finance. As the looming outbreak of World War I appeared more and more imminent when Austria made an ultimatum to Serbia in the last week of July 1914, the resulting fear in global markets set off a massive financial panic. Investors, fearing unpaid debts, pulled out of stocks and bonds in a scramble for cash, which at this point in history meant gold. The London Stock Exchange reacted by closing on July 31 and staying closed for five straight months. The U.S. stock exchange, which witnessed a mass dumping of securities by European investors in exchange for gold to finance the war, would also close on the same day, for about four months. Britain declared war while on a bank holiday. Over 50 countries experienced some form of asset depletion or bank run. Here’s an incredible statistic: “For six weeks during August and early September every stock exchange in the world was closed, with the exception of New Zealand, Tokyo and the Denver Colorado Mining Exchange.”
Read more...As the heir-in-waiting to the title of world’s largest economy, China finds itself in a strange position in terms of its oil consumption.
In September 2013, China became the biggest net importer of crude, beating out the U.S. for the first time. This came as no surprise, given how rapidly China’s thirst for oil has grown, although landing in top place happened a little ahead of U.S. Energy Information Agency (EIA) predictions that it would take place in 2014. However, where the U.S. has been shoring up its own internal production, China has lagged behind. Between 2011 and 2014, U.S. oil production rose by 31 percent, as opposed to China, which saw its own production increase by a little more than 5 percent over that time. This leaves China utterly dependent on oil imports, a vulnerable position to be in at a time when its economy is beginning to wobble.
Read more...At one level, a crackdown on foreclosure rescue scams and not the overarching mortgage and foreclosure fraud is like letting the arsonist who set fire to the house go while busting the guy who took five bucks off the dresser before the house started to burn. Nevertheless, these scams do represent some of the worst elements of our society, featuring the kind of people who see suffering and vulnerability and think about dollar signs. One of my first entrees into this world of foreclosure nightmares was through a friend who had fallen behind on his payments, and then paid somebody up-front money to help him secure a loan modification. That person did nothing to help and then skipped town with the cash.
So it’s good to see CFPB finally take a crack at this, in conjunction with the Federal Trade Commission and 15 states.
Read more...OPEC’s second largest oil producer is in severe disarray just as the world has come to rely upon Iraq for greater energy supplies.
Iraq is facing its biggest security threat in years following a surprise attack by Sunni militants on Mosul. In the June 10 attack on Iraq’s second largest city, members of the Islamic State of Iraq and Syria (ISIS) surprised Iraq’s security forces, driving them out and storming military bases, police stations and the provincial governor’s headquarters.
Read more...Cantor’s loss probably had many fathers. It may be as simple as this: polls always show that voters hate Congress but love their Congressmember, and Cantor, who had a whole mess of new, more conservative voters in his district after the 2010 gerrymander, symbolized the former rather than the latter. To the engaged sliver of voters participating, Cantor was the city slicker (even the Jewish city slicker, some suggest) who strove for institutional power and lost touch with the people he represented. The fact that Cantor won the areas closest to D.C. and lost the ones furthest away fits that theory.
But there’s no question that conservative economics professor David Brat succeeded in channeling a strain of right-wing populism to target Cantor, and plausibly so, as a corporate stooge and progenitor of crony capitalism. Lee Fang at Republic Report did the most thorough work on this…
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