Category Archives: Banking industry

Pimco’s El-Erian Warns of Central Bank Put Bubble

Earlier today, El-Erian in the Financial Times released a short and apt note on the limits of the central bank put.

Election 2012: One Out of Every Ten Political Ad Spending Dollars Goes to Attacking Wall Street

More than one out of every ten dollars spent this election cycle from mid-April to mid-September has gone to attacking the financial sector.

Even Schneiderman’s Staff Shows Doubts by Voting with Their Feet

Last week, we saw a host of commentators rush to defend the mini October surprise of a sign of life from the heretofore moribund Mortgage Task Force, in the form of a filing by Eric Schneiderman against JP Morgan for fraud charges under New York’s Martin Act, even though we and others took a dim view of the suit. And even though a bit more information has come out, it doesn’t change our view that this and parallel cases (which the Mortgage Task Force has said it will launch) will be settled quietly, well after the election, perhaps even after Schneiderman’s current term expires, for comparatively little.

New York Times Profile of London Whale Boss, Ina Drew, Camouflages Dimon’s Risk Management Failures

A New York Times profile of Ina Drew, the former head of the JP Morgan Chief Investment Office, almost certainly produced high fives in the bank’s corporate communications office. This piece is the best sort of PR you can get: it treats the trading losses as yesterday’s news, of interest only as point of entre into the downfall of a heretofore unknown but once hugely successful and personally appealing trading manager.

Randy Wray: The World’s Worst Central Banker

By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, New York. Cross posted from Economonitor

OK, I know you think this is yet another critical column on Chairman Ben Bernanke.

Why Breaking Up MegaBanks Would Help Investors

During the Microsoft antitrust case, some institutional investors were keen for Microsoft to lose, and not because they were short its stock. They felt that Microsoft being in both the operating systems business and the applications business had become a negative. They believed that separating the two businesses would not only produce higher multiples over time for each as “purer” plays, but having each new business more narrowly focused would be better for growth in the long term.

We have a similar discussion taking place regarding the big banks, and the pro-breakup case is even stronger there than for the software giant.

Do We Really Need Freddie to Subsidize Rental Investors?

Just because the banks are on one side of an issue does not always mean they are wrong, just that they might be right for the wrong reason.

Schneiderman Suit Against JP Morgan: A Rehash of Other Lawsuits, Likely to Produce Meager Settlement

It looks like Eric Schneiderman is living up to his track record as an “all hat, no cattle” prosecutor. Readers may recall that he filed a lawsuit against the mortgage registry MERS just on the heels of Obama’s announcement that he was forming a mortgage fraud task force. The MERS filing was a useful balm for Schneiderman’s reputation, since it preserved his “tough guy” image, at least for the moment, and allowed his backers to contend that he had outplayed the Administration.

By contrast, we were skeptical of the suit, both in timing and in substance, and thought it had substantial hurdles to overcome. Indeed, despite invoking an impressive-sounding $2 billion in lost recording fees and other harm, the suit settled for a mere $25 million.

Schneiderman has churned out another lawsuit that the Obama boosters and those unfamiliar with this beat might mistakenly see as impressive.

Blatant Violation of Mortgage Settlement Elicits Predictable Limp-Wristed Response From Mortgage Monitor

Gretchen Morgenson has a good piece up today which again proves that no matter how bad you think the mortgage settlement is, it’s worse.

Quelle Surprise! Mortgage Settlement Monitor Advocates Going Easy on Servicers Since We Don’t Dare Ask Them to Spend Money to Meet Their Contractual Obligations

The mortgage settlement looks to be every bit as bad as cynics predicted. The most exacting and detailed reporting on the settlement terms came from attorney Abigail Field, who undertook the painful process of reading the entire agreement and making sense of what the detailed terms meant. And the latest word from the settlement monitor Joseph Smith is yet another confirmation of the settlement process as enforcement theater.

Did Scott Brown Have Patient Zero of the Foreclosure Fraud/Robosigning Scandal, Lender Processing Services, as a Client?

Established Naked Capitalism readers may have noticed that I’ve avoided commenting on the Elizabeth Warren/Scott Brown race in Massachusetts. That’s largely because this is a finance and economics blog, and aside from the fact that the Warren candidacy has led lots of out of state financial firms to pour money into the Brown campaign, the discussion of issues in that particular race hasn’t entered into terrain that would merit a stand-alone post (and Lambert’s able campaign coverage has chronicled their noteworthy dust-ups). And we criticized her decision to run for the Senate; we’ve said repeatedly that there were better uses for her talents and access to media if she wanted to help ordinary Americans.

But in a new post, Adam Levitin raises an issue that warrants more disclosure from Brown.

Robert Jenkins: Puncturing Bankers’ Myths

In this speech,Robert Jenkins of the Bank of England blows apart the self-serving myths that ‘old guard’ bankers and their lobbyists have been peddling since the financial crisis ripped apart the global financial system in 2007.

On FICO’s Dubious Explanation of Why it Treats Short Sales the Same as Foreclosures

April Charney sent me a link to a post which had a condescending explanation of a recent piece by FICO that warrants further discussion. The FICO article attempted to justify its position that someone who enters into a short sale gets his credit score dinged as badly as for a foreclosure. Yes, you read that correctly. One of the reasons many borrowers go to the effort to arrange a short sale, as opposed to the faster and easier process of “jingle mail” is that they assume that the damage to their credit score will be lower.

Here is the rationale….

Sheila Bair Gives Her Account of the Crisis, and (Quelle Surprise!) the Bailouts and Geithner Do Not Look Pretty

Sheila Bair’s new book Bull by the Horns is out and based on early reports, it looks like it skewers the bailouts in general and Tim Geithner in particular. But it also gets a lot into the weeds in what still needs to be fixed in bank-land, which is a part of these crisis post-mortems and retrospectives that too often get short shrift.