Category Archives: Banking industry

Marcy Wheeler: Standard Chartered Bank Admits Promontory’s Estimates of Its Iran Business Were Wrong

Yves here. A few quick comments on the New York state settlement.

Bill Black: Romney Takes His Political Inspiration from Europe’s Worst Mistakes

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….”

Standard Chartered Settles with New York State for $340 Million (Updated)

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.

Bill Black: “Budget Hero” – Public Media’s Most Despicable Financial Propaganda

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.

Julie Williams, The Lex Luthor of Banking Regulators, Retires

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.

Judge: 90% of Credit Card Lawsuits Can’t Prove Borrower Owes Money

Credit card debt collection may achieve the dubious distinction of making mortgage servicers look good.

Brockton Saves $ and Protests Foreclosure Misdeeds by Moving $170 Million Account from Bank of America

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.

Criminal Sanctions: How to Save Banks Without Rewarding Bankers

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.

Will It Take Popular Pressure to Get Municipalities to Go After Libor Gaming Costs?

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.

Federal Regulators Trying to Leash and Collar Standard Chartered’s Nemesis, Benjamin Lawsky

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:

Get Everyone You Know in Palm Beach County to Vote for Lisa Epstein for Clerk of the Court Next Tuesday

Readers may know I don’t do political endorsements. I’m making an exception because I’ve worked with Lisa Epstein and am extremely impressed with her knowledge, energy, and tenacity. And separately, readers may have come to recognize that county clerks and registers of deeds can be very important guards of the integrity of property records and legal processes. But only a very few, such as Jeff Thigpen in Guilford County, NC, and John O’Brien in Southern Essex County, Massachusetts, have bothered to investigate their own files and speak up about the large-scale problems they have unearthed.

Lisa is an oncology nurse who has become a self trained and formidable mortgage document and foreclosure procedures (as in abuse) expert.

Consumer Financial Protection Bureau Proposes New Safeguards for Mortgage Borrowers

The CFPB is proving to be tough minded on the mortgage front. The Wall Street Journal reports that it intends to require banks to consider a modification request before proceeding with a foreclosure:

Reuters Runs Interference for Elite Corruption, Scrubs Article That Shows How Banks Get Out of Jail Free

Marcy Wheeler put up a useful post yesterday morning, based on a Reuters article describing the efforts of Standard Chartered to combat the damage done by its making illegal transfers on behalf of Iranian banks.

Marcy picked up on how the article revealed the techniques used by big banks to escape suffering meaningful consequences of their misdeeds:

Standard Chartered Makes Empty Threat to Sue New York Regulator Over Iran Money Laundering

I have to confess I’m really enjoying the dust up between the New York Superintendent of Financial Services, Benjamin Lawsky, and his opponents, namely, his target, Standard Chartered, and the flummoxed Federal regulators that he is showing up as so deeply captured that they genuinely can’t tell regulatory theater from the real thing.

FHFA Threatens to Kneecap Use of Eminent Domain to Condemn Mortgages

All this talk of firing Ed DeMarco seems to have led him to decide to live up to his reputation.