By Nathan Tankus, a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus
Many thousands of words have been spilled explaining just how horrible Lawrence Summers is and how terrible he would be as chair of the Federal Reserve. While this is true, I don’t think enough has been said on the precise ways he would be able to influence policy in a negative way.
Read more...With media and technology becoming faster and more pervasive at a rapid clip, it shouldn’t perhaps be a big surprise to see the ease with which war-mongering news flashes come to dominate the story of the day. But maybe this should be received with an increasing dose of skepticism…
Read more...Yves here. For the last four years, we’ve been highlighting research that has found that high levels of international capital flows are strongly associated with frequent and severe financial crises. Gaius describes how more economists are endorsing this idea, and how the proposed trade deals, the Trans-Pacific Partnership and the US-EU trade agreement, will only make matters worse.
Read more...The New York Times has one of those “inside” stories that unintentionally demonstrate the collapse of justice and financial reporting. This genre involves the media reporting gravely (and uncritically) the administration’s claims that its failure to prosecute any elite for the largest and most destructive financial frauds in history actually demonstrates the exceptional ethical rectitude of the non-prosecutors and non-enforcers.
Read more...The Fed chairman is the most powerful official Obama will pick— directly affecting each and every wallet in America. As much as anything, this appointment will shape our country’s future.
Obama appears to want Summers, and so do the most powerful people on Wall Street. But he is not the people’s choic
Read more...Yves here. Although Bill Black’s post starts with how the Republicans have linked their attacks on the IRS to a broad-brush effort to depict any and all government oversight as an evil plot to destroy the profitability of upstanding businesses, he includes how the Clinton-Gore “Reinvent Government” initiative set out to cripple the IRS, and how that has hurt enforcement generally. Readers may recall one example discussed regularly on this blog: how the IRS refused to penalize clear violations of REMIC (Real Estate Mortgage Investment Conduit) rules that resulted from the failure to convey borrower notes to securitization trusts as stipulated in the 1986 Tax Reform Act.
In general, as tax maven Lee Sheppard has pointed out, the US does little in the way of tax law enforcement. As if you believe in the broken glass theory of lawbreaking (that failing to prosecute minor violations of the law, like petty vandalism, broadcasts that policing is lax, which encourages more serious crimes), it’s not hard to see that having a barely-on-the-job IRS would tell the moneyed classes that they can push the envelope in other areas and probably get away with it there too.
Read more...There’s no way to possibly count the various ways in which Dodd-Frank rules have been watered down, even from their already waterlogged original intent. But we got another example of it yesterday, the product of a corrupt bargain between the mortgage industry and so-called “progressive” housing groups.
Read more...The President announced his “outside experts” for reviewing NSA surveillance policies last week, and everyone had a chuckle about the fact that the “outside experts” are apparently only “outside” in the sense that they no longer work for the President. An outside group featuring former OIRA head, rumored judicial appointment, longtime Obama friend and husband of the current UN Ambassador Cass Sunstein isn’t very outside.
Read more...The pitch-perfect parody of the year goes to The Onion for their editorial from CNN.com’s managing editor (whose actual name was used in the story), “Let Me Explain Why Miley Cyrus’ VMA Performance Was Our Top Story This Morning.”
It goes on from there, basically defining the phenomenon of click-bait, where websites run deliberately titillating stories with little or no redeeming value in a desperate stab for attention.
I think yesterday counts as the first-ever clickbait lawsuit, filed by New York Attorney General Eric Schneiderman.
Read more...Refinancing mortgages is a phenomenally profitable and nearly risk-free business for banks, and one of the few growth sectors that were actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees along the way before they’d dump most of these mortgages into the lap of government-owned and bailed-out Fannie Mae and Freddie Mac. And then they’d run.
Read more...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...Not that we needed additional evidence, but the Consumer Financial Protection Bureau has found more fraud and theft inside the nation’s mortgage servicing operations. CFPB has examiners in both bank and non-bank servicers; this is the first time non-bank servicers have faced such scrutiny. And their new report on Supervisory Highlights for the summer shows that extremely little has changed, despite a gauntlet of settlements that were supposed to end this conduct (OK, not really).
Read more...Paul Krugman last week wrote yet another response on the issue of “how banks work”. The problem is that Krugman’s critical source for his argument, James Tobin, in fact has taken the position the opposite of Krugman’s on monetary operations, as do central bankers.
Read more...The big banks are desperate to prevent Janet Yellen from being appointed as Bernanke’s successor to run the Fed. Their sexist attacks have backfired.
Read more...Yves here. This is the latest installment of Bill Black’s forensic work into why the FBI, which had in the past been a critically important working oar in investigating banking industry frauds, was nowhere to be found before and after the global financial crisis. This post, on how the Mortgage Bankers’ Association, succeeded in getting the FBI focused solely on frauds made on banks, as opposed to by banks, is an ugly and critical bit of the story.
Read more...