Category Archives: Banking industry

Fed’s Preferential Treatment in Lehman BK Highlights Ambiguity of its Status

It must be nice to be like the Fed and be able to chose when you are public or private to suit your convenience. Many readers like to rail that the Fed is a private institution, but it has a weird public/private structure that has the nasty effect of putting it beyond the reach of […]

MBIA’s CDO Misadventures Continue (Commercial Real Estate Edition)

Monoline insurers were last year’s story, but I have a prurient interest in some of the smoldering hulks of the credit crisis. Readers may recall that in January-Feb of last year, seemingly imminent demise of monolines looked to be ready to set off financial armageddon, since monoline (and AIG) credit enhancement was critical to a […]

Guest Post: “Martin Wolf, the FT’s rebel with a cause, and the future of finance

By Swedish Lex, an expert and advisor on EU regulatory and political affairs: If you belong to those who believe that the debate on how to fix finance is mightily underwhelming when compared to the latter’s monumental failure, then I suggest reading Martin Wolf’s latest column in the Financial Times. Wolf essentially trashes the financial […]

Guest Post: Why Concentration in the Banking Industry Threatens Our Economy

By George Washington of Washington’s Blog. As everyone knows, the big banks have gotten bigger and bigger. Noted economist Mark Zandi says we have an oligopoly of banks, and that “the oligopoly has tightened”. The TARP Inspector – Neil Barofsky – told Huffington Post yesterday that, because of the consolidation in the banking industry: I […]

Obama caves to pressure on consumer financial protection

Submitted by Edward Harrison of Credit Writedowns At issue here is the news that the Obama Administration dropped plans to force financial institutions to offer “plain vanilla” financial products that are simple enough for consumers to understand. My headline is editorial enough on this issue. So, rather than editorialize this latest announcement, I’ll quote from […]

Paul Volcker, Lord Turner & the EU’s new take on the intoxicating effects of global finance

The following is a submission from Naked Capitalism contributor Swedish Lex. While some observers of U.S. politics lament the lack of progress in reforming the country’s financial system, the European financial industry has abruptly awoken to the EU’s new resolve re-shape the continent’s financial system. How far and how fast the EU intends to go […]

Guest Post: William K. Black’s Proposal for “Systemically Dangerous Institutions”

By George Washington of Washington’s Blog. William K. Black, Associate Professor of Economics and Law at the University of Missouri – Kansas City, and the former head S&L regulator, has written the following fantastic new proposal concerning the giant, insolvent banks. Posted/reprinted with Professor Black’s permission. William K. Black Associate Professor of Economics and Law […]

The FDIC to get credit from banks even while banks restrict lending

Submitted by Edward Harrison of Credit Writedowns In the latest inexplicable move to extricate the U.S. banking system from crisis, the FDIC is reportedly close to asking the very banks it regulates for a loan to top up its balances. The plan is “strongly supported by bankers and their lobbyists” according to the New York […]

Guest Post: If Credit is Not Created Out of Excess Reserves, What Does That Mean?

By George Washington of Washington’s Blog. We’ve all been taught that banks first build up deposits, and then extend credit and loan out their excess reserves. But critics of the current banking system claim that this is not true, and that the order is actually reversed. Sounds crazy, right? Certainly. But as PhD economist Steve […]

Bank of America: 40% of Junk Bonds to Default by 2013

During the tense months of the crisis, every so often there would be a story on the looming threat of mounting corporate debt defaults. With more than half the corporate bonds rated junk, thanks to highly-levered takeovers, it wasn’t hard to imagine that a protracted economic bad spell could lead to a lot of defaults. […]

Wells’ Commercial Real Estate “Ticking Time Bomb” And Coming CRE Woes

Reader Scott pointed out this BankImplode story, “Exclusive – Wells Fargo’s Commercial Portfolio is a ticking time bomb.” I can’t verify it, but it sounded plausible and contained some juicy details: Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few […]

Fed Plays Politics on Banker Pay

The Wall Street Journal has a headline that would warm the cockles of any populist’s heart: “Bankers Face Sweeping Curbs on Pay.” And even more impressive, who is going to rein in banker compensation? The Fed. That alone should tell you there is less here than meets they eye. Let’s look at the outline of […]

Quelle Surprise! Regulators Starting to Worry Re Bank Commercial Real Estate Exposures

Let’s see, Leon Black of Apollo Management, which is a very savvy real estate player, warned of a coming “black hole” in commercial real estate six months ago. US bank regulators seem to be taking warnings of his sort seriously only now. The Fed is poking its nose into the portfolios of some banks, oddly […]

Guest Post: Ambrose Evans-Pritchard & the City’s hard EU choices

By Swedish Lex, an expert and advisor on EU regulatory and political affairs. The City’s political clout in Brussels is waning as the UK’s financial industry model has gone from being the envy of the European peers to being a liability. Meanwhile, the EU will in the future probably be proposing new banking and financial […]

Guest Post: Reflections on Blowups and Bailouts

By Thomas Adams, at Paykin Krieg and Adams, LLP Denial Was Rampant in the Buildup to the Financial Crisis. Arguments that Lehman Should Have Been Bailed Out Show that Denial Continues Today While this week marks the first anniversary of the shocking collapse of Lehman Brothers, it is also the second anniversary of the events […]