Category Archives: Banking industry

HR 5424, “Investment Advisers Modernization Act,” a “Get Out of Madoff and Other Frauds for Free” Bill, Passes Financial Services Committee

HR 5424, intended to make life even easier for potential securities law abusers, got considerable support from Democrats on the Financial Services Committee.

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Cyber Risk as Systemic Risk

The threat to the financial system posed by cyber risk is often claimed to be systemic. This column argues against this, pointing out that almost all cyber risk is microprudential. For a cyber attack to lead to a systemic crisis, it would need to be timed impeccably to coincide with other non-cyber events that undermine confidence in the financial system and the authorities. The only actors with enough resources to affect such an event are large sovereign states, and they could likely create the required uncertainty through simpler, financial means.

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Hensarling’s “Market Regulation” Replacement to Dodd Frank Proves He Does Not Understand Banking

Yves here. Steve Waldman wrote a definitive post in 2009, Capital can’t be measured, on a core issue that Black discusses here. A key section: So, for large complex financials, capital cannot be measured precisely enough to distinguish conservatively solvent from insolvent banks, and capital positions are always optimistically padded. Given these facts, and I […]

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