Category Archives: Banking industry

Obama Administration Again Sides With Abusive Loan Servicers, This Time on Student Loans

A corrosive development is the ease with which lenders steal extract income which is not properly theirs from borrowers through what is at best incompetence and in far too many cases is fraud. This pattern has repeats itself again and again: in mortgage servicing, with debt collection, and more and more with student loan servicing.

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Mathew D. Rose: “We Need A Banking Revolution”

Yves here. Please note that Don’t Start from Here: We Need a Banking Revolution has been released in the UK and was scheduled for publication in the US in early September but apparently is not yet for sale. I hope readers will keep an eye out for it, because it appears to fill a void, that of describing in high-level accurate terms why the banking system no longer works for society at large, how post-crisis banking reforms missed the mark, and what measures need to be put in place.

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Bill Black: Roger Cohen’s Ode to Colonialism and Imperialism: Why is It “Insidious” to Want Justice for Banksters?

A remarkable (in a bad way) New York Times op-ed shows that Roger Cohen is so deep in the banksters’ pockets that he cannot see that he is a leader in the movement to ensure that no bankster will ever “pay for his sins.”

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Finance Sector Wages: Explaining Their High Level and Growth

Individuals who work in the finance sector enjoy a significant wage advantage. This column considers three explanations: rent sharing, skill intensity, and task-biased technological change. The UK evidence suggests that rent sharing is the key. The rising premium could then be due to changes in regulation and the increasing complexity of financial products creating more asymmetric information.

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Too Big to Be Saved: Systemic Risk Alive and Well in Europe

With the recent Global Crisis, the interest in systemic risk and the interconnection between financial institutions has increased. This column investigates the case of European financial firms, where several factors can jeopardise a firm’s financial health. Using data since 2000 to evaluate the firms’ systemic risk, the authors find that for certain countries, the cost to rescue the riskiest domestic banks is too high. They might be considered too big to be saved.

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An Accident Waiting to Happen: The $1 Trillion Leveraged Loan Market

A new article in Bloomberg gives a well-researched overview of a mess-in-the-making that regulators are choosing to ignore: the leveraged loan market. For newbies, “leveraged loans” means “risky loans to big companies”. For the most part, they fund private equity buyouts and restructurings. The juicy fees on these financings, 1% to 5% of the amount raised, versus an average of 1.3% for junk bonds, is a big reason why none of the incumbents is particularly eager to change a market that is working just fine for them in its current, creaky form.

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On the Vote Against Scottish Independence

We’re expecting to have some more thoughtful commentary in the next day or so from some close observers of the Scottish independence vote. On the surface, the results look more decisive than expected earlier. The margin of victory, at 55% against and 45% for, was wider than the forecast 54%/46% split. And the English press looks to be rubbing it in, with most UK media outlets showing celebratory images of the victors.

But keep a few things in mind….

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Who Wins in the Financial Casino?

I received a message last week from a savvy reader, a former McKinsey partner who has also done among other things significant pro-bono work with housing not-for-profits (as in he has more interest and experience in social justice issues than most people with his background). His query:

We both know that financialization has, among so many other things, turned large swaths of the capital markets into a casino

Here’s my thought/question: is there a house?

The common wisdom is that the ‘house wins’ in casinos.

So, who or what was really the ‘house’?

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US Corporate Executives to Workers: Drop Dead

The Washington Post has a story that blandly supports the continued strip mining of the American economy. Of course, in Versailles that the nation’s capitol has become, this lobbyist-and-big-ticket-political-donor supporting point of view no doubt seems entirely logical. The guts of the article: Three years ago, Harvard Business School asked thousands of its graduates, many […]

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What Drives Obama’s Foreign Policy?

The intensity of US efforts to foment conflict in Ukraine and the Middle East continue to be treated by Mr. Market as a nothingburger, as witnessed by a continued slide in oil prices and continued complacency in global stock markets. Yet it’s hard to miss that there are significant microeconomic implications of the uptick in warmongering. The Administration is clearly going all in for the guns part of the classic guns versus butter budgetary tradeoff.

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World Bank Pays $500 Million to Ukraine Central Bank Despite Warnings of World Bank Board and IMF Staff

Yves here. We are pleased to introduce Naked Capitalism readers to John Helmer, a Moscow-based analyst and journalist who, in the words of Mark Ames, “writes about the murky convoluted world of the extraction industry, its politics, and its oligarchs.” Given that the extraction industry is increasingly driving geopolitics, his beat overlaps with our “follow the big money” orientation. For instance, Helmer did original reporting on the IMF-Ukraine relationship which provided crucial to a recent Michael Hudson post on Ukraine that was first published at NC. Today he continues his look at how the US is funneling money into Ukraine, this time via a sus World Bank loan.

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