Category Archives: Hedge funds

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

Read more...

Don Quijones: The Financial Takeover Of “Our” Newspapers

In a newspaper like El País it is no longer possible to criticize the main Spanish banks. And you have to be very careful when talking about the Government, in case it gets angry: its benevolence is needed in order to avoid bankruptcy.”

The above words are from Enríc González, one of Spain’s most respected journalists. With more and more media groups struggling to make ends meet in this new age of Internet journalism and plummeting advertising revenues, one can’t help but wonder just how many other newspapers will soon fall into the clutches of the big banks and corporations.

Read more...

Mary Jo White About to Get Off to a Bad Start

Your humble blogger was surprised when Obama nominated Mary Jo White to head the SEC, since her reputation as a tough prosecutor is at odds with Obama’s well established pattern of catering to banks (the fact that he gives them only 97% of what they want is nevertheless offensive enough to their tender sensibilities). I surmised that there had to be an angle here…

Read more...

Occupy the SEC Weighs in on Nomination of Mary Jo White to Head the SEC

Occupy the SEC has released one of its characteristically well-though-out and documented letters, in the form of questions it would like to see raised during the Senate hearings on the nomination of Mary Jo White to head the SEC.

Read more...

Questioning Health Care Cost/Budget Fearmongering: Consumer Revolt Against Prescription Drug Costs Already Underway

As we discussed last weekend, two Federal Reserve Board economists shot gaping holes the CBO’s health care cost increase assumptions in CBO’s long term fiscal forecasts. As technical as this sounds, these long-term cost increase assumptions are the big driver of the much ballyhooed deficit explosion. And as the Fed economists’ paper discussed in considerable detail, the CBO’s assumptions on the rate of increase look indefensibly aggressive, which in turn means the hysteria about entitlements eating the economy deserves far more scrutiny than it is getting.

Some evidence on the pressures against health care cost trees growing to the sky comes in a new post by Wolf Richter.

Read more...

Mirabile Dictu! The SEC Finally Investigates Magnetar

More than four years after Serena Ng and Carrick Mollencamp of the Wall Street Journal first took notice of the highly destructive ways of the Chicago hedge fund Magnetar, which created a series of toxic CDOs, the SEC finally appears to be taking a serious look at some of their deals.

Read more...

On Andrew Schiff’s “Middle Class Lifestyle” in New York City

Felix Salmon has been bending over backwards listening to and reporting on Andrew Schiff’s claim that he’s suffering making ends meet on $350,000 a year and only wants to give his kids a “middle class lifestyle” in New York City. I offer an sanity check as a long standing Manhattan resident and financial services industry denizen/scorekeeper.

Read more...

Satyajit Das: Pravda The Economist’s Take on Financial Innovation

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)

In the old Soviet Union, Pravda, the official news agency, set the standard for “truth” in reporting. Discriminating readers needed to be adroit in sifting the words to discern the facts that lay beneath. Readers of The Economist’s “Special Report on Financial Innovation” (published on 23 February 2012) would do well to equip themselves with similar skills in disambiguation.

Read more...

Occupy the SEC Discusses Volcker Rule on RT

It’s always a pleasant surprise to see a TV program have a long form discussion on a fairly technical topic. Readers should enjoy the RT interview of Caitlin Kline and Alexis Goldstein of Occupy the SEC on its Volcker Rule comments. They discussed the major areas they were concerned with and some loopholes in the draft regulations.

Read more...

So Why Hasn’t SEC Enforcement Chief Robert Khuzami Resigned? SEC Only Now Investigating CDOs Created on His Watch at Deutsche Bank

I’d heard from German speaking readers about the Der Spiegel report of an SEC investigation in its German edition over the weekend and they’ve now released it in their English language version.

Der Spiegel is careful about its sourcing, so readers should take this account seriously.

Read more...

Wolf Richter: CEO of Dexia – ‘Not A Bank But A Hedge Fund’

By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.

Dexia SA, the Franco-Belgian mega-bank that collapsed and was bailed out in 2008 and that re-collapsed in early October, is a big deal in Belgium where it employs 10,000 people and has over 21 million bank accounts. Its assets of $715 billion dwarf Belgium’s $395 billion economy.

Read more...