Upon occasion, I’ve asked readers to contact their Senators or Representatives about pending legislation. Many of you have taken action, even though that takes a bit of effort (actually composing and making the call or e-mail). Some readers have also commented, cynically, “Why bother, Congress will do what it corporate constituents want to happen.” Today’s […]
Read more...Readers may know that one point of contention in the worries about Greece’s deficits is that it had hidden the fact that it violated Maastricht rule that fine eurozone countries whose fiscal deficits exceed 3% of GDP. How was this subterfuge achieved? While the Greek government engaged in some bogus accounting on its own, it […]
Read more...Regulators have been making a concerted push for banks to hold more equity as a protection against loss and overly-optimistic valuation of trading assets. But the head of the Bank of International Settlements, Jamie Caruna, argued at a secret (not) central bankers’ conference in Sydney that banks also need to carry more in the way […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Gretchen Morgenson has a lengthy article tonight at the New York Times, “Testy Conflict With Goldman Helped Push A.I.G. to Edge.” While it provides some useful new tidbits, it peculiarly focuses on an aspect of Goldman’s dealings with AIG that, particularly with the […]
Read more...On the one hand, debating the merits of the Volcker Rule may seem a tad academic, given the rousing opposition it is encountering from Congress (and you have to love the world of politics: the biggest obstacle is, basically, “We sorta have a deal, you can’t retrade it!” Funny how banks and AIG get to […]
Read more...Paul Volcker has an op-ed in the New York Times that made my stomach sink. I had considerable hopes for Volcker’s involvement in financial reform; he’s one of the few regulators with the stature (literally and figuratively) who can say things to bankers, the media, and government officials that are unpalatable yet need to be […]
Read more...Not that I have the time or patience to dig through 250,000 pages of documents, but I have a nagging suspicion that the people who are pouring through various AIG-related disclosures may be missing key points or snookered into interpretations that may be unduly flattering to various banksters. The focus of the recent investigations into […]
Read more...By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives John Cassidy (2009) How Markets Fail: The Logic of Economic Calamities Like Mark Anthony with Julius Caesar, many have now come to bury the Efficient Market Hypothesis (“EMH”) rather than praise it. Amusingly, […]
Read more...By Edward Harrison of Credit Writedowns. Following up on Yves’ earlier piece on the Obama Administration’s banker windfall compensation tax scheme, I want to talk about a competing plan by Sheila Bair. While the first plan seems designed for political purposes in an election year, this plan is geared more toward the longer-term and systemic […]
Read more...By Thomas Adams, at Paykin Krieg and Adams, LLP, and a former managing director at Ambac and FGIC. The ugly mess at TCW over chief investment officer Jeff Gundlach’s recent departure, has prompted a number of headlines lately. I was surprised to learn that Gundlach had a number of dirty secrets, and not just the […]
Read more...McClatchy has a breathless piece up on CDOs and other “exotic” transactions that Goldman did in the Caymans (hat tip reader John D). The problem is that the author got his hands on some very solid information (prospectuses of 40 deals) but the story itself is a bit of muddle. While it has some helpful […]
Read more...The Treasury Department, as reported by Bloomberg, and commented on by Rolfe Winkler and Huffington Post (among others) noted, considerably increased its Freddie and Fannie safety net, by removing all limits on the amounts on offer (an increase from a ceiling of $400 billion) and simultaneously allowing the two GSEs to increase their balance sheets […]
Read more...By Washington’s Blog. As I have previously noted, credit default swaps are destabilizing for the economy. See this. And the models used to evaluate financial instruments – such as the Gaussian copula formula for CDOs – are inherently flawed. Now, Princeton University economists and computer scientists have demonstrated that financial derivatives are also inherently vulnerable […]
Read more...Senator Jim Bunning gave a long, detailed, specific, and very good list of questions to Fed chair Ben Bernanke, and Bunning has posted the resulting Q&A on his website. I find this a pretty remarkable document. While a certain amount of bureaucratic jousting is to be expected (ie, there is a level of artful dodging […]
Read more...Tall Paul is my hero. I would go further than he did in a speech in Sussex. The case can made that financial innovation of the OTC derivatives variety, which has mushroomed from 1992 onward, has been at best a wealth transfer device from the real economy to the financial economy, and has probably exacted […]
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