This Bloomberg interview gives a nice high-level overview of why the mortgage settlement is terrible. It’s particularly useful if you are looking for a few key issues to present to someone who has bought the Obama administration PR or is late to the topic.
Read more...Yves here. As much as the odds still favor clueless or complicit board members bearing no consequences of their misdeeds, the authorities in England are moving forward on the HBOS failure far more seriously than anything we’ve seen in the US. That is no small measure due to the fact that leadership of both the Bank of England and the FSA recognize that banks need to be curbed and have proposed and pushed hard for some serious remedies, such as a version of Glass Steagall (their more aggressive version was beaten back thanks to concerted lobbying by the banks and the Treasury).
By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser.
Last Friday was an extraordinary day in the world of banking.
Read more...Yves here. This post echoes some of the messages of Nassim Nicholas Taleb’s article The Fourth Quadrant and our piece Management’s Great Addiction
By David Apgar, the co-founder of GoalScreen LLC, which has a free cell phone app in testing at www.goalscreen.com that helps you test what you think drives results in your job, fitness program, love life, investments, and upcoming sports events in order to determine which assumptions are helping you succeed and which ones are undermining you
Jeff Sachs has always been the most outspoken advocate of development aid so it would be out of character if he were not outspoken about becoming the head of the World Bank. But there has always been a lingering concern about his projects and his approach to development. And it sheds a lot of light on where development, economics, and politics are heading even if it’s the wrong concern.
Read more...By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange
Cui Bono from High Prices?
If there is one thing that the history of commodity markets tells us it is that if producers can support and manipulate prices in their favour, then they will.
Read more...I ducked out of the Atlantic Economy Summit to see Lauren Lyster of RT TV. We talked about the hot story of the day, the New York Times op-ed by departing Goldman executive director Greg Smith that decried what he saw as a deterioration in the firm’s values over his 12 year career.
Read more...By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
About a year ago a couple of friends and I were sitting around drinking beer and talking. As so often happens today in day-to-day Irish conversation, the economic situation and the repayment of debts was raised. One of my friends said that, naturally, the debts had to be repaid. I pointed out to him that by repaying the debt we were just sending away money to be effectively destroyed.
Read more...I know I owe readers some comments on the mortgage settlement, but that will have to wait a few days, since I need to pack to go to DC later this AM. But that will give me more time to digest the voluminous filings, and at least as important, the onslaught of spin.
For a good overview, read The Subprime Shakeout (hat tip Deontos), with one major caveat: he is far too positive about the servicing reforms. Servicers have not only never met these standards, they cannot meet these standards. The sorry history has been that servicers lose boatloads of money servicing highly delinquent portfolios, make a hash of it and cheat to recoup the losses.
But I couldn’t let this bit of propaganda go without comment. From the settlement FAQ:
Read more...I bet JP Morgan wishes it never hired Linda Almonte.
American Banker has released the first in what will be a series of stories on debt collection abuses by the New York bank. It confirms critics’ worst accusations against the financial services and belies Jamie Dimon’s tiresome assertions that JP Morgan is better than its peers. Dimon may still be right if you think excelling in abusing and extorting customers is commendable.
Read more...We were more than a little surprised to read a Bloomberg story on March 10, which reported that the Federal Reserve was giving banks a hard time over its latest stress tests, particularly on the possible losses on consumer debt if the economy were to take a dive. The story indicated that if the Fed held tough, major banks would be restricted in making dividends and buying stock. This seemed to be quite a volte face from the Fed’s previous “give banks everything they ask for and then some” posture. But some Fed defenders argued, no really, once the banks were out of confidence crisis land, the regulators always planned to get tougher with them about building up their capital bases.
If today’s Bloomberg story is accurate, whatever resolve the central bank had was awfully short lived:
Read more...One in a while, you can discern a linchpin lie on which other important lies hinge. We can point to quite a few in America: the notion of a permanent war on terror, which somehow justifies vitiating not just the Constitution, but even the Magna Carta, or the idea of an imperial executive branch.
Now the apparently-to-be-filed-in-court-today Federal/state attorneys general mortgage settlement is less consequential than matters of life and limb. But it still show the lengths to which the officialdom is willing to go to vitiate the law in order to get its way.
Read more...Lambert here: The “tough medicine” is proposed in China 2030, by the World Bank and a Chinese government think tank, scheduled to be released Monday, March 12. Excerpts appear in the text.
By Michael Pettis, a Senior Associate at the Carnegie Endowment for International Peace and a finance professor at Peking University’s Guanghua School of Management. Cross posted from China Financial Markets
Contrary to some recent research reports cited in the press I do not think we have seen any substantial rebalancing of the economy towards consumption in 2011. This is largely an argument being made by economists who did not see why Chinese consumption repression was all along at the heart of the growth model. These economists are now too quick, I think, to hail evidence of a surge in consumption, but I find the evidence very weak and more importantly I am convinced that there cannot be a sustainable surge in consumption as long as the investment-driven growth model is maintained and as long as debt continues to rise unsustainably.
And as for debt, it is still rising quickly. As regular readers know I have always argued that the rise in Chinese debt, as bad as it is, was not going to lead to a banking collapse or any other sort of financial collapse because of the way local and specific debt problems would be “resolved”. Debt would simply be rolled onto the government balance sheet.
Read more...We’ve been focusing on the bigger picture scams in mortgage land, and realized it might be helpful to also provide occasional examples of what is happening on the ground level.
Despite the fact that the Treasury-sponsored mortgage modification program known as HAMP has been roundly decried as a disaster. Not only were too few mods done but banks also lied about program features, including that many borrowers were assured foreclosure efforts were not moving ahead when they were, with the result that quite a few program participants wound up losing their homes.
Given the program’s sorry history, struggling borrowers have good reason to be wary. Lisa Epstein of Foreclosure Hamlet, points out a new wrinkle that she worries may be a harbinger of bad things to come, namely, that HAMP trial mod offers, which once described in some detail what the permanent mod would look like if the borrower made all the trial mod payments and was approved, have suddenly gone silent on the back end terms.
Read more...I hate beating up on Gillian Tett, because even a writer is clever as she is is ultimately no better than her sources, and she seems to be spending too much time with the wrong sort of technocrats.
Read more...By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
Perhaps the most obvious indicator that the US has become a society of debtors is the ever-expanding market for student loans.
Read more...By Matt Stoller, former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at@matthewstoller
The Government Accountability Office continues its subtle war on the talking point used by Treasury that “TARP made money”.
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