The Wall Street Journal reports tonight on its website, and presumably tomorrow in its print edition, that Federal Reserve Chairman Ben Bernanke said Friday that ongoing issues in the subprime mortgage market could force bank regulators to rethink their enforcement of a 30-year-old law that requires banks to serve the credit needs in their communities…. […]
Read more...A story in Thursday’s Financial Times, “Global, universal, unmanageable? Why many are wary of bank mega-mergers,” by Peter Thal Larsen describes why most bank mergers fail to live up to their promise. Even though the srticle was prompted by the possible Barclays-ABN Amro merger, its logic applies to much smaller deals. Most advocates of banking […]
Read more...This comment, “A market correction is coming, this time for real,” comes from William Rhodes, senior vice-chairman of Citigroup, and chairman, president and chief executive of Citibank. Consistent with the headline, Rhodes takes a bearish view (in fact, he says he has been concerned about leverage and indiscriminate pricing of risk for some time, and […]
Read more...Faithful readers may have read our recent posts on the limits to the Fed’s regulatory authority, both relative to the subprime mess and to the proliferation of new instruments (see here and here and here). We had the spectacle last week of Roger Cole, the Federal Reserve’s director of supervision and regulation appearing before the […]
Read more...This is a great post by Tanta at Calculated Risk on the classic types of mortgage frauds and how they morphed into new forms due to a unique confluence of buyer naivete and broker/originator greed (oh, and sometimes buyer greed too). She clearly discusses recent versus traditional procedures. Tanta lays considerable blame at the lending […]
Read more...A post from a reader, “Toothless Fed,” argues that the latest wave of financial innovation has produced “profit grabs” by the few at the expense of the many, Ponzi schemes, and an erosion of traditional values like prudence. Overheated? Overwrought? Perhaps. Or maybe he’s just calling a spade a spade. Other people are coming to […]
Read more...Forgive us if we seem to be picking on New York Fed president Timothy Geithner. Actually, not that we know him, but he has a reputation (by Fed standards) for candor. So the problems we have with his speech should not be seen as an attack on him, but on the increasing difficulty of the […]
Read more...On Thursday, both Democratic and Republican members of the Senate Banking Committee chewed out Roger Cole, the Federal Reserve’s director of supervision and regulation, for failing to intervene in the rapid rise of the issuance of mortgages to customers who were clearly likely to default, and now are, losing their homes and their investment in […]
Read more...A Bloomberg story, “Homeowners, Lenders Skirt Default, May Curb U.S. Housing Slump,” highlights a practice used by banks with borrowers in default, the so-called short sale. Rather than foreclose on the property, banks accept a price below the loan balance on a quick sale. Although the Bloomberg piece doesn’t say so, this is a long […]
Read more...Now I am as fond of gloom and doom scenarios as the next guy. But some analysts are presenting fairly straight up the center scenarios of things will get bad (as opposed to how bad things will get) that don’t comport with facts. I like and have a lot of respect for the blog The […]
Read more...Robert Reich has an interesting post today, “Why China Announces Military Buildup the Same Week Paulson Visits,” about how China is pursuing inter-related economic and military strategies in its drive to become a superpower. Although much of what Reich says is cogent, I disagree with one point, namely, that “America’s indebtedness to China gives the […]
Read more...Louis the XIV’s finance minister, Jean-Baptiste Colbert once described the art of taxation as plucking the maximum amount of feathers from the goose with the least amount of hissing. Credit card companies have managed to do the tax man one better. They don’t care what the goose does, as long as they get their feathers. […]
Read more...Just a couple of posts ago, we complained about Bernanke talking up the stock market. While that may indeed have been what he was doing (and we don’t approve of that), he may also have been trying to slow action in the credit markets, and that is a legitimate use of his power of the […]
Read more...On the one hand, it’s a relief that the stock markets in the US stabilized today, although the Dow recovering only a bit more than 1/10 of its prior day tumble is hardly a rousing vote of confidence. On the other hand, we have to scratch our heads as to how even this wee bit […]
Read more...The Wall Street Journal reported today, in “No Worries: Banks KeepingLess Money in Reserve,” that banks have been lowering their reserves for loan losses to the point where regulators are now beginning to question whether they are adequate. Now this isn’t exactly surprising. Banks, despite their reputation for being conservative, follow the herd. And it’s […]
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