Yearly Archives: 2011

A Rare Bit of Cheery News on the Banking Front

Posts will probably be thin tonight because I lost a big chunk of the afternoon getting to and from and then doing a filming session for a French TV documentary on Goldman Sachs to be broadcast in the fall. The focus is whether the firm is too dangerous and powerful. They are interviewing some of the other logical suspects on this topic, such as Nomi Prins, John Carney, and Anat Admati. The session was fun even though it put me behind the eight ball.

One amusing tidbit: they were desperately pumping me to put them on to anyone credible who would say something positive, or even mixed, on camera about Goldman. They have been unable to find anyone independent of even moderate stature who will defend the firm.

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William Hogeland: Hamilton Speaks Out on the Debt Ceiling! (Or Not)

By William Hogeland, the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History who blogs at http://www.williamhogeland.com. Cross posted from New Deal 2.0

The father of the founding debt may have been most concerned with his wealthy friends, but his ideas spawned the liberal view of government.

At FrumForum, Kenneth Silber has posted a funny interview with Alexander Hamilton, deploying actual Hamilton quotations in order to suggest how our first Treasury Secretary, the founding architect of U.S. finance policy, might advise us in the current debate on national debt.

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So How Exactly Does Buffett Get Information Like This?

Reader Hubert soliders on in the lonely task of continued Lehman spadework. He highlighted this section of FCIC testimony from Warren Buffett:

I think that if Lehman had been less leveraged there would have been less problems in the way of problems. And part of that leverage arose from the use of derivatives. And part of the dislocation that took place afterwards arose from that. And there’s some interesting material if you look at, I don’t exactly what Lehman material I was looking at, but they had a netting arrangement with the Bank of America as I remember and, you know, the day before they went broke and these are very, very, very rough figures from memory, but as I remember the day before they went broke Bank of America was in a minus position of $600 million or something like that they had deposited which I think J.P. Morgan in relation to Lehman and I think that the day they went broke it reversed to a billion and a half in the other direction and those are big numbers.

Hubert muses:

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At Least One Country With Big Banks is Not Afraid of Them

This development, which was cited in last week’s Eurointelligence, has not gotten the attention it warrants:

The Swiss government wants to impose capital requirements on their two internationally active big banks UBS and Credit Suisse that by far exceed what European or American regulators intend to ask their banks to do, Frankfurter Allgemeine Zeitung reports.

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Your Humble Blogger Asked Larry Summers a Question He Did Not Like

A funny thing happened at the INET conference. First, I got to ask Larry Summers a question because Martin Wolf, who was moderating the session, is a good sport. Normally, at this sort of event, only At Least Semi Big Names get to interact with Big Names. Yours truly is a minimum of a rank or two below At Least Semi Big Names.

You will find our question at 55:40.

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Mirabile Dictu! Economists Agree All the Fed Has Done is Goose Financial Markets!

You heard it first in the blogopshere. From the New York Times:

The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates.

But most Americans are not feeling the difference, in part because those benefits have been surprisingly small….

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Latest “New Normal” Sighting: Divorce Rebound

A Financial Times article discusses an unlikely indicator of recovery: divorce rates have risen. One divorce attorney commented, “There is huge pent up demand.” Another lawyer, who was apparently a decent representative, said her business had increased 25% compared to the same period last year.

But the post crisis economy has led to some changes in tactics:

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Guest Post: Predicting the Improbable– Evidence from Playing the Lottery

By Claus Bjørn Jørgensen , Sigrid Suetens, and Jean-Robert Tyran. Cross posted from VoxEU.

Japan’s trio of tsunami, earthquake, and nuclear disaster has left the world stunned. As this column points out, even the experts were shocked. But while these events were highly unlikely, they were still possible. This column uses evidence from the Danish lottery to show that people tend to adjust their expectations of future events based on only small pockets of recent experience, often at their cost.

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We Speak on BNN About the S&P Negative Watch for US Debt

I had hesitated to post this video, since I wasn’t too happy about it. Just before the segment was about to start, I got a cross feed on the audio, which meant I was listening to another show! I had to open the door to my itty bitty booth and yell to the production guys to fix it (I was already tethered so I couldn’t really go anywhere). This happened twice. The remote video was also on a big delay, so I couldn’t watch it to see my hosts.

I think that got me sufficiently adrenalined up that I got a bit stroopy and also invoking ideas (like gold standard versus fiat currency constraints) without explaining them enough.

Oh well. One reader thought it was OK and chided me for not linking to it. Hope you like it.

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Another Class Action Suit Filed in Federal Bankruptcy Court Against Lender Processing Services

The noose is tightening around Lender Processing Services.

Last week, various news outlets revealed that Federal banking regulators had issued consent orders against major servicers, MERS, and LPS. Kate Berry of American Banker pointed out that LPS is exposed to making payments to servicers:

In addition to the 14 biggest mortgage servicers, two of the biggest vendors to the industry received cease-and-desist orders from regulators Wednesday. One was stronger than the other.

Lender Processing Services Inc. and Merscorp Inc.’s Mortgage Electronic Registration System were both cited for “significant compliance failures” and “unsafe and unsound business practices” related to foreclosures. Regulators are requiring both companies to hire independent consultants, take remedial steps to address past failures and hire additional staff.

But only LPS, a publicly traded company in Jacksonville, Fla., that provides foreclosure-related services to banks, faces the possibility of having to reimburse servicers and borrowers if an independent review finds anyone was financially harmed by its failure to properly execute mortgage documents….

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