By Marshall Auerback, a portfolio strategist and hedge fund manager
As several newspapers have recently highlighted, Germany is slowly but surely moving toward a plan to combine much of Europe’s bad debt into a single fund with the idea of paying it off over 25 years.
Read more...Yves here. The Financial Times and New York Times tonight both have good overviews on the state of play in the effort to contain a slow-motion Spanish bank run. On the one hand, the Spanish government is in a position to tell the Eurocrats that it will consider only a bank bailout and not be required to take on further austerity measures. Given that retail sales have fallen nearly 10% year to year, it’s hard to see how anyone could expect more austerity to be a good idea.
Although markets reacted as if a deal was imminent, the FT makes it sound as if quite a few details need to be ironed out. And no wonder…
Read more...By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks
Two former finance and political influence gods (Jon Corzine and Jamie Dimon) have tumbled back to earth. Yet, troublingly, the mythology that’s cowed the political establishment and the financial press for so long remains very much intact.
Read more...By Michael Olenick, creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick or read his blog, Seeing Through Data
The focus of news stories on mortgage abuses often focus on the immediate victims, the borrowers, but that’s far from a complete tally of the losers. And they also typically fail to look hard enough at the winners and the way they are able, again and again, to burn everyone but themselves.
Read more...Yesterday, various news and financial sites picked up the release last Friday of a report by the Treasury’s Inspector General titled “SAFETY AND SOUNDNESS: OCC’s Supervision of National Bank’s Foreclosure Practices“. The media accounts are workman-like summaries with titles like “Bank oversight office failed to spot foreclosure fraud, Treasury inspector general says.”
The problem is that these various accounts are narrowly accurate (in that they summarize the report) but missed the real story.
Read more...The report that John Giddens, the bankruptcy trustee in MF Global, released Monday is thorough and confirms many of the observations made in journalistic accounts of the firm’s collapse, particularly regarding inadequate risk and accounting controls, JP Morgan’s aggressive posture greatly increasing the liquidity squeeze. But a stunning revelation that comes early in the account and is central to the failure of the firm does not get the emphasis that it warrants.
Read more...Due to being a bit under the gun before taking off for our holiday (I hope you all enjoyed the posts from Matt Stoller, Lambert, and the other guest writers), we didn’t address a May 10 speech by the acting FDIC chairman, Martin Gruenberg, on the FDIC’s current thinking on how to resolve so called systemically important financial institutions, or SIFIs. I’m turning to this despite the delay because I see some people who ought to know better, such as the normally solid John Hussmann, taking the FDIC”s claims at face value.
Read more...Here’s Barney Frank, in an exit interview recently in New York Magazine, revealing unwittingly that Obama during the transition rejected a Bush administration concession to write down mortgages. Here’s what Barney said.
Read more...The mortgage crisis was worsened this past time because critical decisions were made during the transition between Bush and Obama. We voted the TARP out. The TARP was basically being administered by Hank Paulson as the last man home in a lame duck, and I was disappointed. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first resisted that, he just wanted to get the money out. And after he got the first chunk of money out, he would have had to ask for a second chunk, he said, all right, I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it. This is now December, so we tried to get the Obama people to ask him and they wouldn’t do it.
Below you’ll find the amicus brief filed by the Alternative Banking Group on May 21 in support of Judge Jed Rakoff’s ruling questioning a proposed $285 million settlement in the SEC v. Citigroup Capital Markets (ruing here, summary and discussion here).
Read more...By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow at the Roosevelt Institute. Cross posted from Alternet
It’s good that the watchdog is barking, but we’d all better watch closely to see if it will bite.
Read more...By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from http://www.macrobusiness.com.au/2012/05/europes-problems-multiply/“>MacroBusiness.
It feels as if Europe has rolled the clocks back to 2011 as the effects of the ECB’s LTRO have now well and truly warn off and the markets appear to have reconnected with idea that the fundamental issues of the Eurozone have never been addressed.
Read more...As reporters keep digging into the “London Whale” story, the picture that emerges about the caliber of risk controls and management supervision at JP Morgan only look worse and worse.
Read more...By the Alternative Banking Working Group of Occupy Wall Street
Dear Jamie Dimon:
We, the Alternative Banking Working Group of Occupy Wall Street, are staging an intervention on your behalf.
Read more...By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks
The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank’s original loss estimates. The total damage is anyone’s guess at this point.
This fiasco is beginning to look a lot like accounting control fraud.
Read more...By Brett Scott, who operates as a consultant bridging the gap between finance and those involved in socio-environmental justice and international development. He has also written for the Guardian, the Ecologist, New Internationalist and Open Democracy. Brett blogs at www.suitpossum.blogspot.com and tweets as @Suitpossum. He is a fellow of the WWF/ICAEW Finance Innovation Lab.
The greatest barriers to financial whistleblowing are social and economic, not legal.
Read more...