Category Archives: Credit markets

Wolf Richter: New Rules For Life Insurers – “Future Generations Have To Deal With The Financial Carnage”

During the off-hours on Sunday, when few people were willing to ruin whatever remained of their weekend and when even astute observers weren’t supposed to pay attention, the National Association of Insurance Commissioners approved new rules that would allow life insurance companies to lower their reserves for future claims—at the worst possible time—having already forgotten all about the financial crisis.

Can Open Source Ratings Break the Ratings Agency Oligopoly?

By Professor Krassimir Petrov, who has taught economics and finance in the U.S., Ireland, Bulgaria, Saudi Arabia, Bahrain, Taiwan, and Macau

The current credit-ratings system is a complete farce that has caused damage in the trillions. It needs to be completely reformed into a more transparent, competitive system. An open-source approach presents a perfect solution.

Why Robert Khuzami Would Be a Terrible Choice to Head the SEC

Given that the Obama Administration appears to think that missing-in-action Attorney General Eric Holder has been doing a fine job, it probably isn’t surprising to see the SEC’s head of enforcement, Robert Khuzami, included on a short list of names rumored to be under consideration to head of the agency.

But if the object is to prove that regulators can’t regulate and it’s too hard to enforce securities laws, then Khuzami’s your man.

Escalating Delinquency Rates Make Student Loans Look Like the New Subprime

ow that student loans are undeniably in bubble territory, the officialdom is starting to wake up and take notice.

Mirabile Dictu! Regulators Using Trading Scandals to Push for Tougher Capital Requirements

Most news reports on financial regulatory reform hew to a few storylines: banks pushing back in private and winning on diluting regulatory reform; banks attributing lousy profits to new regulations (with a notable lack of proof of this convenient blame-shifting); bank regulators demonstrating capture, corruption and incompetence (which even though true to a fair degree is played up by industry incumbents to support the notion that regulation is futile).

So it’s refreshing to see a contrasting storyline….

Yes, Virginia, the IRS Does Not Treat the Connected Like the Rest of Us (REMIC Edition)

We’ve written at some length about the failure of the IRS to go after what look like slam-dunk violations of the rules governing the tax treatment of mortgage-backed securities. Apparently the noise has been made about the failure to pursue REMIC violations, the latest by two law professors in a journal article, has roused the IRS from its official somnolence.

Justice in America: Systematic Document Forgery and Fabrication Yield One Criminal Plea Bargain

This admission of guilt by Lorraine Brown of Lender Processing Services subsidiary DocX for wire and mail fraud on the federal level and fraudulent and forged document filings in Missouri now allows the Obama Administration to claim it has sent another “executive” to jail.

Parking Basel: A Case Study of How Banks Stymie Regulatory Reform

Basel III’s getting nowhere in the US.

Greenspan’s Switch to Debt Scaremongering

Stephanie Kelton provides two video clips to underscore the point that until quite recently, Greenspan made the point that MMT types do: that the US as a currency issuer, can always pay its debts.

Quelle Surprise! New York Fed Chair Dudley Confirms that TBTF Lives, Big Firms Still Can’t Be Resolved

The New York Fed’s William Dudley gave a surprisingly candid, meaning not positive, assessment of the state of the Too Big to Fail problem in a speech yesterday at the Clearing House’s Second Annual Business Meeting and Conference. From the text of his speech (hat tip Richard Smith):

Modern Money & Public Purpose: Yanis Varoufakis and Marshall Auerback on the Eurozone Crisis

One of the reasons the public knows little about economics is that most economists are lousy speakers. Part of that is their reliance on jargon, which is often shamanistic, designed to obscure rather than communicate. But the other reason is that a lot of economists don’t bother to try to be engaging.

The remarks by Yanis Varoufakis and Marshall Auerback are informative and lively, if ultimately pretty grim. The comments at YouTube are extremely positive.

Bankers Beginning to Look a Smidge Desperate: Goldman Looking for Technology Magic Bullets to Fix its Cost Problem

Now that Wall Street blew up the global economy in its search for fun and profit, it is finally having to eat its own cooking in the form of more modest profits. Of course, the slightly chastened Masters of the Universe seem constitutionally unable to recognize that their own actions might have something to do with the fix they are in.

Michael Olenick: Schadenfreude Alert – Banks Paying Extortionate Fees for Foreclosure Reviews

By Michael Olenick, a regular contributor on Naked Capitalism. You can follow him on Twitter at @michael_olenick

Every time it appears that the OCC foreclosure reviews have hit bottom they sink further into the morass.

From Argentina to Greece: A Global Roller-Coaster

By Diana Tussie, founding director of the Latin American Trade Network. Cross posted from Triple Crisis

Looking back at the Argentine case, the behavior of the private creditors indeed accurately predicts the Greek case….