In another sign that China’s slump is serious enough to evoke crisis responses from the officialdom, banking officials there announced that they were relaxing rules on bank bad debt ratios. The objective is to encourage banks to continue to extend credit to borrowers experiencing short-term difficulties who have viable businesses. The concern, of course, is […]
Read more...Our new hero Elizabeth Warren (we had always liked her posts at Credit Slips, and it’s to see her kicking ass and taking names) pointed to a paper “Bullshit Promises,” by Curtis Bridgeman and Karen Sandrik. It looks at the concept of “bullshit” as defined by philosopher Harry Frankfurt and discusses the implications for contract […]
Read more...In late December, banking regulators agreed to new rules to limit actions by credit card issuers that consumer advocates deemed to be abusive. While the new rules do not take effect until July 2010, regulators claim they will press banks to comply earlier (see here for a summary of the main provisions). Experts argued that […]
Read more...The Wall Street Journal tonight says, “Citigroup Takes First Step Toward Breakup.” But what does that mean, exactly? Or had the Journal gone a bit far with the notion that the bank is doing some way, way overdue housecleaning? The eye-popping bit is that the asset dispositions are reportedly at the instigation of the Federal […]
Read more...Rubin’s departure from Citigroup would seem to imply that his continued service there, amid the newly critical commentary on his failure to rein in the bank’s pursuit of risk, was no longer a plus. But the real question is: not a plus for him, or not a plus to the bank? Citi has also decided […]
Read more...No, the headline above is not goofy, and I presume it did get your attention. In a concise and suitably critical piece, Floyd Norris of the New York Times tells us that the corporate dividends paid in the seemingly good years depended far more on bank largess than was widely realized. And as credit is […]
Read more...Although the Fed has resorted to increasingly unconventional approaches for combatting our financial crisis, one it has used that is widely endorsed is the generous provision of liquidity. Luis I. Jácome H. in a VoxEU post, contends that the liberal use of central bank liquidity to stanch crises actually increased instability. One issue that will […]
Read more...Economists Carmen Reinhart and Kenneth Rogoff have been publishing various findings from a large-scale data set they have constructed of past financial crises. They have looked back as far as 800 years, but not surprisingly, most of their output has consisted of analyses of modern crises (you can find some earlier discussions here and here). […]
Read more...Wellie, the incumbents are not yet out of office, yet the Bush Administration blame shifting spin doctoring is already in high gear. Henry Paulson gave an interview to the Financial Times that appears either to have been remarkably brief (even the 10 minute Bloomberg videos typically yield more quotable material) or Paulson has gotten very […]
Read more...Dwight Cass at BreakingViews makes some astute and troubling observations about the GMAC rescue, which spurred a market rally in the face of truly awful economic releases (one might take the cynical view that, given how thin trading is this week and the tape-painted appearance of the end-of-day recovery in stocks yesterday, that a rally […]
Read more...A useful piece at the Wall Street Journal discusses the poor prospects for the US banking industry, which will in aggregate post a fourth quarter loss despite heroic interventions by the Fed and Treasury. The article makes much of recent and almost-certain-to-get-worse bank credit losses as the economy continues to deteriorate. Commercial real estate vacancies, […]
Read more...Wolfgang Munchau has a good piece in todays’ Financial Times delineating his economic policy wish list for 2009. It has the merit of being to the point and pragmatic. His preamble contains some some striking tidbits. Munchau considers himself relatively optimistic about US housing, despite anticipating a 40 to 50% peak to trough decline, and […]
Read more...A New York Times report on WaMu’s Grande Bouffe in the mortgage market is worth reading for the former employee quotes alone. For instance, use of controlled substances was acceptable as long as they were the productivity-enhancing sort: “I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, […]
Read more...Mortgage applications are up sharply as homeowners try to take advantage of low 30 year fixed rates. But tighter lending standards means that a fair number will be disappointed. Moreover, the surge in mortgage applications is for refinances rather than new home purchases. And while refis will indirectly help the economy by increasing consumer discretionary […]
Read more...Proponents of mortgage modifications contend that the cost of even a deep principal reduction still puts the lender ahead of foreclosure, and experience in past real estate downturns would bear that contention out. So why is this time different? Data from the Office of the Comptroller of the Currency show that 55% of mortgage mods […]
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