Whenever a scandal of sufficient magnitude arises at a bank, it’s standard practice to hire an “independent” third party to conduct an investigation and give a report to senior management and the board. But now even bank friendly regulators are starting to suspect that banks are hiring attorneys do to this work, not to come clean, but to facilitate a cover-up.
Read more...Yves here. Although Keen’s use of the Godzilla metaphor is fun, the unvarnished facts he presents are plenty alarming. Bank of England Governor Mark Carney is actually gleeful at the prospect that England’s banking sector might grow to be as large relative to its economy as Iceland’s and Cyprus’ on the eve of their busts. But even worse, Carney’s enthusiasm for a banking sector that continues with its cancerous (or as Keen would have it, monstrous) growth gives license to bank lobbyists in the US and Europe to press for high rates of growth in their finance sectors so as to defend their national champions.
Read more...One thing we’ve discussed repeatedly is that the activities of large banks, as presently constituted, are purely extractive. And to add insult to injury, GDP calculations exaggerate what in the way of value they arguably do add.
Read more...Martha R wrote to tell me that a serious effort is underway in Vermont to launch a state bank.
Read more...Bloomberg has an intriguing story about a bit of lobbying the big dealer banks are engaged in via a group called the Treasury Borrowing Advisory Committee, which represents 15 out of the total of 22 primary dealers (a primary dealer, among other things, gets to bid for its own account at Treasury bond auctions). Of course, the object of their efforts is to improve their profitability, here by putting parties they regard as competitors at more of a disadvantage.
Read more...ves here. Having lived through some of these developments, I concur with Krippner’s observation that financial deregulation was well underway prior to the Reagan era and the most important driver was interest rate volatility, which wreaked havoc with interest rate caps and other policies that made sense only if inflation stayed within a limited and not all that high range. But similar deregulatory forces were underway in the securities industry side as well.
Read more...Funny what a difference a few days makes.
Read more...The public interest group Better Markets today filed suit against the Department of Justice and Eric Holder, alleging that the so-called $13 billion settlement that the Federal government entered into with the nation’s biggest bank was improper due to its secrecy and lack of third-party review.
Read more...One of the noteworthy elements of Davos, at least according to media accounts, was the cheery, self-congratulatory tone among the Davos Men, at least until the final day, when the emerging markets rout began. But one of the front they thought they’d gotten under control, Europe, may be about to enter a new phase of political stress.
Read more...This was not a world-record revolving door stint, but the head-spinning was of the good sort for a change.
Read more...It’s been so long that America has had a regulator that is serious about regulating that it’s hard to remember how they operate.
Read more...Yves here. This has been such a busy week that I’ve been remiss about commenting on how Dimon’s board rewarded him despite the London Whale fiasco and the revelation of pervasive regulatory abuses. Clearly, they thought he bought the bank’s way out of trouble on the cheap, disproving the wailing in the financial firm toadying media that the Morgan bank had been ill-treated by the Administration.
Read more...As Bernanke is about to take leave of office, attacks on his policies are becoming louder, thanks to financial markets turmoil resulting from the Bernanke/Geithner approach to the crisis: do whatever it takes to restore as much of status quo ante as possible. The problem, of course, is that status quo ante is what got us in this mess in the first place.
Read more...In the runup to the global financial crisis, George Magnus, who was then chief economist at UBS, was one of the most insightful commentators and was early to call how bad things might get. He’s back to sound alarms about the emerging markets turmoil.
Read more...A brief surge of optimism, in the form of a short-lived rally in the belegured Turkish Lira and South African rand after their central banks raised interest rates to try to halt the plunge in currency values, has fizzled. And the Fed reducing its dosage of market tonic, in the form of QE, only soured investors’ already bad mood.
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