On the one hand, given that the Eurozone remains a major economic and financial flashpoint, it is good to see a major news service like Bloomberg provide a lengthy report on a continuing existential threat, that of deposit flight, or as we have described it, a slow motion bank run. But it’s a bit surprising it has taken them this long to take notice.
Read more...Reader Deontos highlighted a post on Reuters by two Brooklyn Law School professors, Bradley Borden and David Reiss, on a subject near and dear to our hearts, the abject failure of the IRS to take interest in widespread, probably pervasive, violations of REMIC, the part of the Federal tax code that governs mortgage securitizations.
The reason this matters is that this situation belies on of the Administration’s pet claims, that its hands were tied as far as addressing the foreclosure mess was concerned because it had no leverage over servicers. As we’ll discuss, in fact the Administration has a nuclear weapon in its hands that it is simply refusing to use.
Read more...By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser.
The UK’s failed regulator, the Financial Services Authority, is up to its old tricks again. Last week, it sought to scapegoat just one of the 16 directors who drove the awesomely badly managed British bank Halifax Bank of Scotland into the ground. And all he received was a £500,000 fine and a lifetime ban from working in the financial sector.
Read more...This edited transcript is expanded from a live phone interview with Michael Hudson by Dimitris Yannopoulos for Athens News. It summarizes some of the major themes from Hudson’s new book, The Bubble and Beyond: Fictitious Capital, Debt Deflation and Global Crisis, which is available on Amazon.
Q: How has the financial system evolved into the form of economic servitude that you call “debt peonage” in your book, implying a negation of democracy as well as free-market capitalism as classically understood?
Read more...It’s difficult to puzzle out what Bernanke thinks he is accomplishing with QE3. The level of bond buying, as various commentators have pointed out, is much lower than in the earlier QE programs. And pulling out bigger guns in the past was not terribly productive. As we wrote in April 2011 in a post titled “Mirabile Dictu! Economists Agree All the Fed Has Done is Goose Financial Markets!“:
Read more...By Eugene Linden, a journalist and author of seven books who has written extensively about animal behavior, environmental issues, and markets
On a recent conference call, the strategist of a major international bank (it was an off-the-record call for clients only) laid out the bare bones of what he called the world’s “giant experiment” in debt and interest rates. Never before have so many countries maintained such low base rates for so long; never before in peacetime have so many countries had such huge deficits and debt burdens; never before in U.S. history had long term rates been so low; never before has the U.S. gone so many decades without deflation following inflation. Because we live in these unprecedented times, it’s easy to lose sight just our strange they are… and how dangerous.
Read more...It’s one thing for the officialdom to sit back and allow financial services industry chicanery to go un or inadequately punished, quite another to get in bed with them to perpetrate a scam.
Read more...The Fed’s launch of QE3 looks more than a tad desperate. If you believe the central premise of the Fed’s action, that propping up asset price gains would have enough effect on consumptions to lift the economy out of stall speed, it would seem logical to sit back a bit and let the recent stock market rally and the (supposed) housing market recovery do their trick. But the Fed has finally taken note of the worsening state of the job creation in an already lousy employment market and has decided it needed to Do Something More.
Read more...In an perverse case of synchronicity, one headline last night touted regulatory efforts to address systemic risk as another highlighted bank efforts to increase it. And the ongoing efforts of banks to expand risk creation is no accident.
Read more...Sheila Bair, the former FDIC chairman who heads the Systemic Risk Council, and Ricardo Delfina, a fellow Systemic Risk Council member, met on Sunday with members of several Occupy Wall Street working groups: Occupy Bank, Alternative Banking, and Occupy the SEC. I’ve watched presentations by Bair twice previously: once when she was at the FDIC, another not long after she had left government service. Even though she had been pretty direct in those discussions, she was surprisingly specific in this meeting about some of the impediments she faced during the crisis. Some of the topics:
Read more...On Thursday, ECB chief Mario Draghi announced a bond-buying program that had been largely leaked the day prior, namely that of a new bond buying program, the Outright Monetary Transactions, or OMT. Bond yields in Italy and Spain had already come down on the rumor, and stock markets around the world rallied on the news.
The enthusiasm appears overdone when you look at the sketchy details.
Read more...Yves here. This is a subject near and dear to my heart. Banks occasionally harrumph that if regulators are too mean, they’ll just pack up and go somewhere else. That’s complete bluster as far as TBTF banks are concerned. Any major bank needs to be backstopped by a real central bank. The Caymans don’t begin to cut it. And central banks are actually not all that welcoming of world scale players trying to take advantage of the slack they give to banks they’ve been in bed with a long time. UBS considered splitting in two and relocating its investment banking operations when the Swiss National Bank announced it would impost 20% equity requirements. It has concluded it has to stay put.
Andrew Norton debunks another sort of threat made by large banks: that they will move significant activities out of particular financial centers like London.
Read more...Sadly, there is a reason that the Obama Administration believes that any problem can be solved by better propaganda.
Read more...By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, a research associate at the Levy Economics Institute of Bard College, and author of “The Bubble and Beyond,” which is available on Amazon.
The pace of Wall Street’s war against the 99% is quickening in preparation for the kill.
Read more...Today, Joseph Smith, the official monitor for the Federal-state mortgage settlement entered into earlier this year with five major servicers, released a glossy initial report on program progress. Needless to say, my cynicism was piqued both by the glossy format of the document and the decision to release it well before the required date of second quarter 2013.
But the distressing part is the way the settlement is playing out according to script.
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