Category Archives: Banking industry

David Dayen: IRS Confirms that $12 Billion in “Mortgage Relief” in National Mortgage Settlement Completely Worthless

The IRS settles something I noticed a while ago and has now been finally confirmed. In short: big banks who robbed homes from Americans got a penalty that entailed, quite literally, giving homeowners worthless allowances.

The issue concerns the Mortgage Forgiveness Debt Relief Act, which expires at the end of the year. After December 31, all mortgage relief that involves debt forgiveness of any kind will be taxable to the borrower. This affects principal reductions, of course, but also short sales, with the idea being that this involves the bank “forgiving” the difference between the total owed on the mortgage and the price of the short sale. There are hardships exemptions to this but they involve the functional equivalent of bankruptcy – you have to prove that your total liabilities exceed your total assets.

CFTC’s Bart Chilton Takes it to the (Position) Limits One More Time

Yves here. This post is important not simply because it describes where the fight over position limits stands and why it’s important, but it also gives some insight into regulator processes. It makes clear how even as few as two well placed officials, Bart Chilton and Gary Gensler, did a great deal to hold the line against predatory large financial firms. It also shows how hard regulators have to fight to do their job.

Ilargi: Deflation, A Stock Market Crash And Then Christmas

Yves here. I know I should write about Janet Yellen’s confirmation hearing, but I can’t stand to do it. Plus I am confident you’ll enjoy this piece more.

Michael Pettis: Forget the Plenum

ves here. Pettis highlights the difficulties of restructuring the Chinese economy to feature more small business lending and consumption and calls them “political.” I’m not sure I agree fully.

Gemmax Solutions’ Belated Admission About Carbon Credits Bought by Retail Clients of Gemmax’s Brokers

Carbon credit clearer Gemmax Solutions admits that it can’t clear carbon credits, and hasn’t been able to, for nearly a year.

David Dayen: FHFA Will Secure Up to $28 Billion From Banks in Its MBS Lawsuit

An analysis at Bloomberg Law puts some numbers down that I hadn’t seen all in one place previously. The headline effort is to pin down what other banks being sued by the FHFA over mortgage-backed securities passed to Fannie and Freddie with poor underwriting will have to pay, given the standard set by the JPMorgan Chase settlement for $4 billion. The report, by Nela Richardson, actually botches that job by adding the $1.1 billion that FHFA simultaneously received from JPMorgan through reps and warranties on raw mortgages, and doing the calculations based on a $5.1 billion award. Only the $4 billion has anything to do with the lawsuit, which was about $33 billion in Fannie and Freddie purchases of MBS. In other words, FHFA netted about 12 cents on the dollar from JPMorgan. Redoing Richardson’s work, you can calculate how much that means other banks would be expected to pay FHFA in any settlement if they paid 12 cents on the dollar:

Richard Alford: On Grading the Bernanke Fed

We are certain to hear more and more appraisals of Bernake’s tenure as Fed chairman as he approaches the end of his term. But will they use good benchmarks? We suggest measuring his performance against his claims for the Fed’s objectives and what he said the central bank could accomplish. Not surprisingly, we find that he came up short.

Yanis Varoufakis: Ponzi Austerity – A Definition and an Example

For a while now I have been arguing that Europe’s policies for reducing the public debts of fiscally stressed member-states can be described as a Ponzi austerity scheme. In this post I attempt precisely to define ‘Ponzi austerity’.

Student Debt is Crushing the Economic Future of the Young

If a bad job market wasn’t damaging enough, the cost of paying off student loans does much more harm to the long-term prospects of young people than is commonly realized.

Ilargi: Sometimes Humor Is The Best Way To Tell A Tragic Story

Yves here. This article is a portrait of official denial, which is then dutifully taken up and amplified by the media (well, not universally, but widely, as Ilargi’s post also demonstrates). It corroborates one of my pet theories: that we are at the end of an economic paradigm. The powers that be lack the will and imagination to do anything other than patch it up and put it back into operation. That simply assures more frequent breakdowns until the system is beyond repair.

Your Humble Blogger Discusses the Pending Trade Deals and JP Morgan on Le Show!

I really enjoy speaking with Harry Shearer, both for his engaging manner and his thorough preparation. I also hope you’ll see fit to circulate this interview, since the more attention we can bring to this plan to legalize corporate pillage, the better.

Bill Black: The U.S. Attorney Who Prosecutes JP Morgan Will Be Its First Witness

The lead investigator in the Federal prosecution against JP Morgan has said he doesn’t think it makes sense for banks to have made bad loans.

Why is Google Censoring Search Results to Nix Warnings Just Like Ones Issued by a UK Regulator?

Yves here. One of the things on our very long list of important issues we’d like to write about is the way Google, an unregulated information-screener, can dictate companies’ business models and keep information out of the public eye by how they handle search queries. Richard Smith give an example below.

Jamie Dimon, the Lance Armstrong of Finance

I’m sure some readers will protest that comparing Jamie Dimon to Lance Armstrong is unfair. After all, Dimon is better looking than Armstrong. But this post will demonstrate that the big reason that Armstong’s reputation has crashed while Dimon’s remains largely intact is first, that bank CEOs have a powerful and largely compliant messaging apparatus in the financial media and second, that we hold sports stars to much higher standards than titans of finance and commerce.