Monthly Archives: August 2012

Revisiting Statements Around the Mortgage Settlement

A little over six months ago, negotiations over the mortgage settlement concluded with a 49 state agreement to address robosigning and other predatory mortgage servicing  and foreclosure practices. This was a pivotal moment, because it was possibly the last leverage point to look into problems with the securitization process that led to the financial crisis. […]


Time to Rethink a Broken Market

Yves here. Readers are likely to assume that the “broken market” of the headline is US housing related, say the private mortgage securitization market, but the subject is what once was the gold standard of trading markets, equities.

Index Universe has cited a study by the Tabb Group that finds that investor confidence in stock markets is even lower than in the period immediately following the flash crash of 2010. Back then, 53% of respondents had high or very high confidence in the markets, and only 15% weak or very weak confidence. As of its August 2012 survey, the number with positive views and negative views were equal, at 34%. This interview with Chris Sparrow, an expert on high frequency trading, describes why he thinks the market is now fundamentally flawed and what can be done to reform it.


Wall Street’s War Against the Cities: Why Bondholders Can’t – and Shouldn’t – be Paid

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, a research associate at the Levy Economics Institute of Bard College, and author of “The Bubble and Beyond,” which is available on Amazon.

The pace of Wall Street’s war against the 99% is quickening in preparation for the kill.


The Young Turks Interviews Matt Stoller on the Audit of the Federal Reserve

In this interview, Cenk Uygur of the Young Turks and Matt Stoller discuss how Congress worked in 2009-2010, and why an audit of the Federal Reserve was able to get through a dysfunctional political system. It’s a long interview, with some echoing at the beginning, but it’s the most comprehensive discussion of how the fight actually […]


Barney Frank Viciously Attacks a Fellow Democrat: How TARP Still Hangs Over Our Politics

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at

Barney frank threw a little noticed temper tantrum in early August, intervening in a California Democratic primary between two incumbents, Brad Sherman and Howard Berman. Every ten years, lines for Congressional districts are redrawn, which sometimes throws sitting Congressmen into the same district. This is the case with Berman and Sherman, who hilariously sound alike and both have a similar hawkish posture on Israel. Berman chairs the Foreign Relations Committee, and is a part of Democratic leadership. Sherman is a very senior member of the Financial Services Committee, and is generally seen as an iconoclast. The support of someone like Barney Frank can make a difference in such a primary, so his bitter attacks on Sherman suggest something more than your standard pique is at work here.

Frank, never one to mince words, said while he’d already endorsed Berman in the race, he’d planned on staying mostly uninvolved until Sherman claimed that he’d “had more to do with” the Dodd-Frank bill to regulate Wall Street “than anyone except Dodd and Frank,” and that he’d forced a major change in the Troubled Asset Relief Program.

The former Financial Services Committee chairman and author of the Dodd-Frank scoffed at both claims.

“They are both appallingly off the mark, they are fantasies. I am a great admirer of Howard Berman. I am not an admirer of Brad Sherman’s approach, I think it’s superficial and headline-hunting,” he said Tuesday afternoon. “This is unfortunately what he does — makes things up to enhance his role, and there’s no basis for it.”

Frank pointed out that Sherman had voted against TARP both times when it came on the House floor, and said he’d had little to do with the Wall Street reform regulation.


Quelle Surprise! Banks Getting Credit for What They Would Have Done Anyhow in Mortgage Settlement

Today, Joseph Smith, the official monitor for the Federal-state mortgage settlement entered into earlier this year with five major servicers, released a glossy initial report on program progress. Needless to say, my cynicism was piqued both by the glossy format of the document and the decision to release it well before the required date of second quarter 2013.

But the distressing part is the way the settlement is playing out according to script.


Why do Keynesians Think More Spending will Stimulate the Economy?

By Stephanie Kelton, Associate Professor of Economics at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.

My Twitter followers are constantly asking me if I think more spending would really help the economy recover. I understand their skepticism.


Debt and Its Discontents: The Depressing World of Collections Part Three

This series is by Patrick Sahr, a Naked Capitalism reader and a former debt collector. Sahr is a graduate of Buffalo State College’s Print Journalism Program.

[Matt here]: This series is running because it’s important to understand the culture of debt collectors, who are increasingly a form of policing in our society. One in seven Americans is currently being pursued by a debt collector.

Debtors:  From Credit Enthusiasts to Cleaned Out in Seven Years

Debtors are different today than they were in 2004.  In 2004, debtors were generally, in conversation, wildly arrogant and optimistic.  Many were wise enough to know that paying a “charge-off” sometimes adversely affects a credit score and others bragged about securing additional lines of credit despite having others in default.  The type of debtor you speak with is contingent on the product you are collecting.  The recently charged-off sub-prime portfolio, in 04, was filled with arrogant knuckleheads who bought the bank’s program of wealth transfer hook, line and sinker ignoring their modest wages and assets.  They leveraged everything they owned to the max just like the banks.  The defaulted amex black card portfolio contained penny-ante corporate villains and upper-middle class people at the beginning of an unpleasant journey, a titanic professional and financial storm.  Letting go of your credit cards is the recommended first step when you batton down the hatches in preparation for that storm.


Why The Big Issues Are Missing from the 2012 Race

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at

One of the reasons I loved Neil Barofsky’s book Bailout is because it is a clear explanation of the incentive structures in our political system. One element of his story that you might find surprising is how rarely elections actually come up among policymakers. Careerism, intellectual capture, subtle forms of bribery, institutional embarrassment, intimidation, bureaucratic jujitsu – all of these have a massive impact on policy outcomes. But elections? Yes, they matter as well. But they aren’t that important. And if you read Bailout, or really just pay attention, what you’ll find is that policy simply didn’t change when Obama took over from Bush, which is a fundamental challenge to our notion of democracy, perhaps even more so than corporate money flooding into our elections.

That is, the idea that all politicians want to do is get elected, and therefore they are worth despising, is actually untrue. If it were true, then you would find politicians constantly proposing and implementing popular policies, like free universal health care, high taxes on corporations, jail for Wall Street bankers, and higher minimum wages. But they don’t do this. The reason, as I wrote in June of 2011 in Beyond Elections – the Hedging Theory of Political Elites, is that political actors are only interested in winning elections to the extent that strategies for winning don’t jeopardize their place in the political class.


Spain Worse

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness

As I wrote early last week Antonis Samaras was to spend much of the weekend in talks with Angela Merkel and Francois Hollande about the future of his nation. As the Telegraph pointed out yesterday the results were, as expected, unconvincing:


Debt and Its Discontents: The Depressing World of Collections Part Two

This series is by Patrick Sahr, a Naked Capitalism reader and a former debt collector.

[Matt here]: This series is running because it’s important to understand the culture of debt collectors, who are increasingly a form of policing in our society.

Mixed Messages: High Turnover is bad, but it’s Music To the Collection Agency Owner’s Ears

Collection agencies are filled with a variety of people from different backgrounds like any other occupation.  Many are decent and hard-working.  Despite the popular conception that only the hateful and unpleasant seek employment as a debt collector, there are many in the industry who are honorable and kind.  They are capable of eking out a fair living under difficult circumstances in a local economy of dwindling opportunity.