Category Archives: Risk and risk management

The Careless Organizers of Gumball 3000 are Hooked Up with Boiler Room Scam “Servicers” Carbon Neutral Investments (CNI)

The Gumball 3000 event is helping a deeply dodgy British firm with its marketing.

The Glam and The Scam: Sauber Formula 1 Team and its Partner, Carbon Neutral Investments, Limited

The Sauber F1 team and their dodgy partners, Carbon Neutral Investments

How Novice Eco-Warrior Michael Bloomberg Ended up Looking as if he Endorses Carbon Credit Scams

Mayor Bloomberg stitched up by Italian Vogue and a dodgy financial firm: his image and words are being exploited to market carbon credit scams

How Banks Profit From Distress (British Edition)

Yves here. Readers will notice how closely the US banking model hews to the UK version (or more accurately, original), particularly in its predatory practices.

Reps. Alan Grayson and John Conyers Call for End to Bank Welfare, Tough Rules on Bank Capital

Congressmen Alan Grayson and John Conyers have published a well-thought-out proposal on bank equity, with the objective of assuring that when banks do stupid things (which they do with great regularity, even before the era of casino banking, they’d embrace some new fad and run off the cliff together, like lemmings), they have enough capital to absorb losses. And that means a lot more capital than regulators are demanding they have now.

So I urge you to co-sign their letter (full text below) at http://nobankwelfare.com/.

The Fat Lady Has Yet to Sing for Dimon and JP Morgan

I thought I was late to write about JP Morgan’s $920 million multi-regulator settlement last week on the London Whale, but breathless news of a possible $11 billion settlement of mortgage-related liabilities has pushed the bank and its chief back under the hot lights.

Rajiv Sethi: Information, Beliefs, and Trading

Yves here. This is a terrific post, and I think readers who are in the unfortunate position of having to invest in the markets will relate to Sethi’s analysis (personally, I hate trading, I wish it were possible to be a long-term investor, but that’s become an awful lot like driving a Model T on a Nascar track). The use of Intrade data and discussing Obama v. Romney-biased speculators is both clever and makes the discussion accessible. And I must confess to being very attached to my “priors” and too willing to fight the tape!

Treasury Department’s Disingenuous Answers to Elizabeth Warren on Dodd Frank, Too Big to Fail

One of the aggravating facts of life in bureaucracies is having to contend regularly with misrepresentation. And I don’t mean faux friendly corporate bromides like “We’re here to help,” but weasely, technically accurate but substantively misleading statements. A Treasury reply to some questions from Elizabeth Warren is a classic in this genre.

Bill Black: Higher Bank Capital Requirements are Necessary but not Sufficient to Prevent the Next Crisis

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 posed from Benzinga

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

It’s not only not a good idea, it’s not good because capital requirements can be gamed just like other rules.

James Galbraith, Neil Barofsky, and John Coffee Discuss Lessons from Lehman Meltdown

I have to confess that given the length of this panel discussion presented by Better Markets, I’ve looked only at the start, which is quite promising. Given the caliber of the participants, I’m hoping to get to it over the weekend, since it will be a departure from the bromides the MSM seems to be serving up on this anniversary of the Lehman collapse. This talk is oriented towards a discerning audience and offer more insider detail.

Gaius Publius: Are We Having “Bank Deregulation” Crises or “Unrestricted Capital Flow” Crises?

Yves here. For the last four years, we’ve been highlighting research that has found that high levels of international capital flows are strongly associated with frequent and severe financial crises. Gaius describes how more economists are endorsing this idea, and how the proposed trade deals, the Trans-Pacific Partnership and the US-EU trade agreement, will only make matters worse.

Fed’s Jackson Hole Participants to QE-Exit Whacked Emerging Economies: Drop Dead

The latest Fed confab at Jackson Hole is demonstrating that central bankers were so keen to avoid taking much blame for the global financial crisis that they also failed to learn critical lessons from it. That lapse in turn is directly related to the present emerging markets upheaval that has the potential to morph into something worse.

What is Shadow Banking?

There is much confusion about what shadow banking is and why it might create systemic risks. This column presents shadow banking as ‘all financial activities, except traditional banking, which require a private or public backstop to operate’. The idea that shadow banking is something that needs a backstop changes how we think about regulation. Although it won’t be easy, regulation is possible

On the SEC’s Too Little, Too Late “Fabulous Fab” CDO Victory

Narrowly speaking, it’s good that the SEC won its case against ex-Goldman staffer Fabrice Tourre for his role in marketing a toxic CDO to bond insurer ACA. But let’s not kid ourselves as to what this verdict amounts to.