Economists Barry Cynamon and Steven Fazzari argue that much of the growth in the US over the past 25 years has been fueled by consumer debt. Their research indicates that the consumers will cut spending as a result of the housing recession, which they believe will trigger the worst contraction since the 1980s, and possibly […]
Read more...As the credit crisis has worsened, we no longer hear the argument once commonly made in support of subprime mortgages, namely, that they were good for people with poor credit, since it enabled them to buy housing they could not otherwise afford Maybe it’s because the problems we are seeing resulted from the fact that […]
Read more...Readers of this blog are likely to know that those arbitration agreements that customers have to sign when opening a brokerage account are a scam. As the Wall Street Journal noted, clients must go to industry-operated arbitration forums, and doubts about the fairness of the system to investors have led three senators to urge the […]
Read more...A good old-fashioned showdown is set for this week between the Congress and the Fed. Congressmen are hoppin’ mad at the Fed’s failure not only to act to stem overheated and sometimes predatory subprime lending, but also its patent lack of enthusiasm in doing anything to keep this and other predatory practices from recurring. And […]
Read more...Why do Americans save so little? It’s the temptation, stupid. John Kay of the Financial Times ponders why Americans and Brits are so lousy at saving when our advanced capital market offer us more attractive investment (and speculative) vehicles than other economies. Because they also offer more, and more varied borrowing products, and let’s face […]
Read more...Today’s Wall Street Journal describes how the Office of Thrift Supervision is weighing new rules that would bar the banks it supervises from engaging in “unfair and deceptive” practices, a response to widespread claims of “predatory lending” in the subprime mortgage market. This effort, if it comes to fruition, is less and more than it […]
Read more...Crime and war have a lot in common. The good guys and the bad guys are in a constant battle of escalation, each trying to adapt to and surpass each other’s latest techniques. On the information technology front, one of the fundamental techniques in investigating crime (both the hacker perpetrated sort and routine investigations of […]
Read more...This article ran on MarketWatch, and I find it a sign of the times. Despite the supposedly sound state of the economy (if you call a tanking housing market and 1.3% GDP growth, which is negative in real terms, “sound”), MarketWatch nevertheless thought this story would appeal to its target audience, the investing class. The […]
Read more...One of the issues facing any regulator is how to balance the interests of its various constituencies. Over the last twenty years, the pendulum has swung away from protecting consumers to promoting business interests. On some fronts, we are seeing pressures to move in the other direction. For example, the Vioxx case, which highlighted the […]
Read more...Although I must confess to not being a close observer of the Washington scene, even at my remove, it’s crystal clear that the Democrats haven’t been willing to take on Bush frontally. Polls show widespread opposition towards Bush’s Iraq policies, and all the Dems are willing to put forward is a wimpy two sentence non-binding […]
Read more...Louis the XIV’s finance minister, Jean-Baptiste Colbert once described the art of taxation as plucking the maximum amount of feathers from the goose with the least amount of hissing. Credit card companies have managed to do the tax man one better. They don’t care what the goose does, as long as they get their feathers. […]
Read more...That’s what the Wall Street Journal told us yesterday in its first-page story,”Bank of America Casts Wider Net for Hispanics.” The bank, now the nation’s largest issuer of credit cards thanks to its acquisition of MBNA, is quietly rolling out a program to provide credit cards to illegal immigrants. I don’t have a problem with […]
Read more...We’ve commented in a couple of recent posts (January 14 and January 23) on how credit card companies’ success in price gouging, ahem, extracting revenue from their customers had gone so far as to run the risk of regulatory pushback. We are seeing some initial shots across the industry’s bow. Today, MarketWatch published this story […]
Read more...Usury is becoming a hot topic. We posted on it a few days ago; it is also featured in a January 13 New York Times Op-Ed piece, “Banks Gone Wild” by Joe Lee and Thomas Parrish, which was then picked up in the blogsphere by Mark Thoma’s Economist’s View. From the Times: I owe about […]
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