Paul Ryan has become a lightening rod for controversy, both for his aggressive plans to cut Medicare and Social Security and for questions surrounding suspicious-looking trades in financial stocks that were September 18, 2008, the same day Congressional leadership was briefed about the crisis by Treasury Secretary Hank Paulson.
The Real News Network interviewed Tom Ferguson to parse out history from hype on both issues.
Read more...While MERS has served to illustrate the utter recklessness of the securitization industry, in that its promoters apparently believed that they could implement it nationwide and simply force state law to comply. But as the banks have found out, the law is not always so obliging.
Read more...In a bit of synchronicity, last weekend I had dinner with a buddy whose sibling recently was dunned by a buyer of junk debt. For those not familiar with this dark underbelly of the credit markets, these vultures buy consumer debt from banks (mainly credit card receivables) that the bank has written off. That means they don’t think it’s worth pursuing. At best it’s too close to the statute of limitations expiring or the documentation is questionable or the amounts are all wrong. Most of the time. it’s worse than that: the debt was never owed (they are going after the wrong person), the debt was paid off or discharged in bankruptcy, the statute of limitations has long passed.
Read more...Yves here. We’ve flagged in earlier posts how the Spanish banking crisis has the potential to become destabilizing politically, as if Spain wasn’t already at considerable risk of upheaval. Spanish depositors were pushed to convert their deposits into preference shares, which they were told were just as safe. This was a simple desperation move by the banks to save their own skins, customers be damned, by raising equity from the most unsophisticated source to which they had access. And now that that gambit failed, these shareholders are due to have those investments wiped out unless the Spanish authorities can cut a deal to spare them. Don’t hold your breath.
Read more...By Moe Tkacik, a Brooklyn-based journalist who writes at Das Krapital. First published at Reuters.
You have probably mentally catalogued the student loan crisis alongside all the other looming trillion dollar crises busy imperiling civilization for the purpose of enriching the already rich. But it is different from those crises in a few significant ways, starting with the fact that the entire student loan business is arguably unconstitutional.
Read more...Yves here. A few quick comments on the New York state settlement.
Read more...By 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. Jointly posted with New Economic Perspectives
One of Governor Romney’s criticisms of President Obama is that he “takes his political inspiration from Europe….”
Read more...As we predicted, Standard Chartered has settled rather than face an August 15 hearing with Benjamin Lawsky, New York’s Superintendent of Financial Services over Iran-related money laundering charges.
Read more...By 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
We know that the supporters of austerity simultaneously urge us to reject “European socialism” while adopting the key European strategies that drove Europe into recession – twice. American conservatives assume that Europe must epitomize stringent financial regulation. The opposite is true. Europe adopted “light touch” financial regulation pursuant to neo-liberal economic theory. Its embrace of the three “de’s” – deregulation, desupervision, and de facto decriminalization was far more extreme than the United States. The City of London “won” the regulatory race to the bottom with the U.S. European’s adopted the full Basel II reduction in capital requirements without the minimum gearing ratio that the Federal Deposit Insurance Corporation (FDIC) insisted upon. The FDIC prevailed over the intense, but fortunately unsuccessful opposition of the Federal Reserve economists who were the principal architects of Basel II’s disastrous reduction in capital requirements. The result was that European Union banks had roughly twice the leverage of U.S. banks and faced no meaningful regulatory restraints. The result was far larger real estate bubbles in several European nations (as a percentage of GDP) than in the U.S., multiple financial crises, and a Great Recession that reached depression levels in several nations.
Read more...I just got a press release from the Office of the Comptroller of the Currency that its general counsel Julie Williams, an institution at the regulator for 19 years, is retiring. This is potentially a very big deal, because the OCC just underwent a leadership change from bank friendly John Walsh to a more measured Tom Curry, and the question was whether Curry would consolidate his leadership and move the regulator in a different direction. It looks like that’s what could be happening.
Read more...Credit card debt collection may achieve the dubious distinction of making mortgage servicers look good.
Read more...Although consumer-level “move your money” campaigns are popular, the sad thing is that many individuals are only marginally profitable as checking/savings account customers. So transferring your account out does not have enough of an impact to make a difference (unless you do so in a way that makes branch staff uncomfortable, by doing it in person and describing their banks’ bad behavior. Enough of that might make a psychological difference). The key to retail customer profitability is cross selling, usually at the time of account opening. So the checking account is the gateway product for them to get customers to sign up for retirement accounts/brokerage, credit cards, and (hopefully sooner rather than later) mortgages.
By contrast, bigger customers who use multiple products are a sweet spot for banks.
Read more...Yves here. This article falls in the “mirabile dictu” category: an economist arguing that putting bankers in jail is necessary to combat the deterioration in behavior.
By Giancarlo Spagnolo, Professor of Economics at University of Rome “Tor Vergata” and CEPR Research Affiliate. Cross posted from VoxEU
How to save the banks but not the bankers? This column argues that fines for criminal behaviour in banks are not enough – it may be time to start locking people up.
Read more...This Real News Network video provides an update on the Libor scandal. Tom Ferguson flags an issue that may come as a surprise to some readers.
Read more...The plot thickens! Today, the Wall Street Journal reported that, “Regulators Seek Unity in U.K. Bank Talks.”
If you read the article, a more accurate headline would be “Federal regulators desperate to get in front of Lawsky mob and call it a parade.” All the article says is the mucho unhappy and very much outflanked Federal regulators have gotten a meeting with Lawsky. Just look at the disconnect between the PR in the first paragraph and the actual state of play in the second:
Read more...