Category Archives: Credit markets

Michael Olenick: How Fannie Enriches Private Equity Investors at Taxpayer and Homeowner Expense

By Michael Olenick, creator of NASTIACO, 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

There’s a strong argument that the competing goals of HERA, minimizing loss while promoting affordable housing, are impossible. But doing the opposite, increasing losses while discouraging affordable housing, is even harder, yet Fannie has done that.

How Botched Derivatives Risk Taming Regulations are Again Going to Leave Taxpayers Holding the Bag

An important piece in the Financial Times by Manmohan Singh, a senior economist at the International Monetary Fund, describes persuasively how one of the central vehicles for reducing derivatives risk, that of having a central counterparty (CCP) and requiring dealers to trade with it rather than have a web of bi-lateral exposures, or rely on banks to act as clearers (making them too big to fail) has gone pear shaped. While the immediate reason for this outcome is the unwillingness of national banking regulators to cede powers to an international clearinghouse, Singh fingers an equally important cause: the reluctance to recognize that the underlying problem was and remains undercollateralized derivatives positions. His introduction to the mess:

EU Summiteers Feast While Eurozone Smolders

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

So it’s yet another two days where the leaders of the EU get together for a dinner (this time it’s tarte, fine eggs/mushrooms, braised veal on bed of fresh spinach followed by a chocolate trio) and attempt to thrash out greater economic integration.

Marcy Wheeler: Eric Holder Rewards the Teams that Gave Torturers and Mortgage Fraudsters Immunity

By Marcy Wheeler. Cross posted from emptywheel

As TPM’s Ryan Reilly noted yesterday, among the awards Attorney General Eric Holder gave out at yesterday’s Attorney General’s Award Ceremony was a Distinguished Service Award to John Durham’s investigative team that chose not to prosecute Jose Rodriguez or the torturers who killed their victims.

Public Briefing: Erskine Bowles Determined to Reduce Private Sector Income, Stifle US Economy

Michael Hoexter is a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency. Originally published at New Economic Perspectives.

Bowles Would Have Us Repeat the Errors of the Euro-Zone

That Bowles is currently lionized in Washington policy circles is particularly striking given the slow-motion economic catastrophe occurring within the Euro-Zone. Bowles’s ignorance or willful disregard of macroeconomic accounting processes and insistence that the US government institute laws that reflect that ignorance, repeats the errors made by the Euro-Zone countries when they signed the Maastricht Treaty in 1992.

It’s Time for a Tax to Kill High Frequency Trading

It’s frustrating to know that there’s a simple solution to a serious problem but no one seems willing to do the obvious.

Iberian Pain Only Getting Worse as Spanish Population Falls, Portugal Goes All in For More Failed Austerity

Yves here. Wolf Richter’s latest post may seem a bit breathless, but my assumption is that this rhetorical choice is an effort to try to penetrate Eurocrisis fatigue. The continuing decay, the ongoing last minute patch-ups, the Punch and Judy show between Germany and anyone who dares say anything bad about its perverse creditor moralism, is feeling so stale that it’s easy to tune out.

Yet even though the headlines all seem to be of a muchness, they mask an ongoing deterioration that at some point will produce a state change.

Michael Olenick: Mortgage Industrial Complex Continues Its Push Against Rule of Law

By Michael Olenick, creator of NASTIACO, 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 meaning of the word “chutzpah” varies by context. In criminal court, it might refer to murdering one’s parents then asking for leniency because the perpetrator is an orphan. In family court, it might be invoked when abandoning a child, then pleading the child has been alienated from the parent who left.

We now have a property court usage: perpetrating a massive, well documented fraud then complaining that court bottlenecks – which exist solely because of fraud perpetrated by bank lawyers – cause expensive delays.

Home Appraisers: A Market Failure?

There’s an interesting sign of homebuyer champing at the bit to lever up again with all the “housing has bottomed” talk in a New York Times article last week, “Scrutiny for Home Appraisers as the Market Struggles.” The headline signals the new complaint about appraisers: they aren’t rubber stamping deals entered into by willing buyers and sellers! They are therefore holding back the housing market!

While this frustration among housing enthusiasts is a squeaky wheel in the housing market that probably does warrant comment by the Grey Lady, there are more serious market failures in appraisal land that also deserve attention.

So Where is Schneiderman? Computerized Robosigning Has Made Its Debut

In case you had any doubts about the wisdom of state-level actions to strengthen homeowner rights, the discovery of a new type of abuse, computerized robosigning, should put them to rest.

IMF Suddenly Decides It Might be OK to Loosen Austerity Tourniquets Now that Gangrene is Setting In

While deathbed conversions might earn you a spot in heaven in some religions, they don’t carry you very far here on Planet Earth.

Christine Lagrade has taken too small a step in the right direction far too late to do much good.

More JP Morgan Whitewash

Via e-mail, some updates from Michael Crimmins, a bank compliance expert and member of Occupy the SEC, on the continuing failure of the media to portray the real significance of the JP Morgan London Whale losses: that it revealed glaring deficiencies in internal controls that warrant prosecution of Jamie Dimon under Sarbanes Oxley.

Pimco’s El-Erian Warns of Central Bank Put Bubble

Earlier today, El-Erian in the Financial Times released a short and apt note on the limits of the central bank put.

Even Schneiderman’s Staff Shows Doubts by Voting with Their Feet

Last week, we saw a host of commentators rush to defend the mini October surprise of a sign of life from the heretofore moribund Mortgage Task Force, in the form of a filing by Eric Schneiderman against JP Morgan for fraud charges under New York’s Martin Act, even though we and others took a dim view of the suit. And even though a bit more information has come out, it doesn’t change our view that this and parallel cases (which the Mortgage Task Force has said it will launch) will be settled quietly, well after the election, perhaps even after Schneiderman’s current term expires, for comparatively little.

New York Times Profile of London Whale Boss, Ina Drew, Camouflages Dimon’s Risk Management Failures

A New York Times profile of Ina Drew, the former head of the JP Morgan Chief Investment Office, almost certainly produced high fives in the bank’s corporate communications office. This piece is the best sort of PR you can get: it treats the trading losses as yesterday’s news, of interest only as point of entre into the downfall of a heretofore unknown but once hugely successful and personally appealing trading manager.