Category Archives: Banking industry

Perry Mehrling: What Does Repo Do? And Can We Do Without It?

Repo is the system that failed during the financial crisis, leading the Fed to ride to banks’ rescue. Is repo any safer now?

Bill Black: Now the Justice Department Admits They Got it Wrong

By issuing its new memorandum the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed.

Why Are Fannie and Freddie Raising Their Foreclosure Timeline?

One of the major fallacies skillfully employed by the lending industry since the foreclosure crisis is that the meddling defense attorneys and pro se litigants were clogging the courts with their dilatory motions and challenges, unnecessarily prolonging the foreclosure process, creating neighborhood blight and costing homeowners billions in property values by preventing “market clearing.” This […]

Nomi Prins: Mexico, Federal Reserve Policy and Danger Ahead for Emerging Markets

Mexico’s problems could again ripple through Latin America where eroding confidence, volatility, and US dollar strength are already hurting economies and markets.

Nomura Wins Sad-Sack Bank of the Week After Overpaying on Court Loss to FHFA, Having Bond Traders Indicted

So yesterday was a bad day if you were a Japanese bank with stubborn executives.

Why Tax Havens Will Be at the Heart of the Next Financial Crisis

Examining an excellent in-depth investigation by Reuters into global financial stability issues, and the role of tax havens in this giant game of pain and plunder.

Congressional Black Caucus Still Trying to Hurt Their Constituents By Killing the Labor Department Fiduciary Rule

Last year, the Huffington Post published the definitive take on the Congressional Black Caucus’ frequent sellouts to Wall Street, and how Maxine Waters has attempted to shut it down. Their public image as the conscience of the Congress belies a coziness with bank lobbyists and an open willingness to do their bidding. Ten CBC members […]

Aguilar Proposes Transparency Fix for Broken SEC Waiver System

Since Kara Stein became a commissioner on the SEC, we’ve heard a lot about the agency’s waiver policy. Basically, if a financial institution commits a crime, the SEC has a series of automatic penalties that are “automatic” in name only, because the agency routinely waives the penalties. Stein’s outcry at this turn of events always makes people like Matt Levine, in his usual role of intentionally missing the point, completely befuddled, because the punishments wouldn’t fit the crimes, and banks would lose access to entire lines of business for some unrelated transgression, and that just wouldn’t be fair, now would it?

The point, of course, is that automatic penalties are either automatic or not. If the punishment of banning institutions from managing mutual funds or working with private companies to find investors, or forcing SEC approval for any stocks or bonds that the firm issues on its own behalf, is simply too harsh as a consequence of committing a crime, then the SEC can go ahead and eliminate the automatic trigger. But having them in place, and then routinely waiving them, makes a mockery of any sort of accountability whatsoever. I personally believe that having these penalties in place are a solid way to ensure compliance across business lines, with the only threat that matters – a threat to the pocketbook – in reserve. If it would be too costly for banks to break the law, well maybe they’ll be a little more careful. But I would rather just eliminate the penalties altogether than have the SEC bow and scrape to ensure that committing fraud doesn’t lead to anything bad happening to the perpetrator.

Perry Mehrling: Defending the RMB

It’s hard to short China, but not so hard to short China’s currency, and that’s a problem for the central bank.

More on Why Bank IT and Payment Systems Matter

The IT challenges of a Grexit are important not only in and of themselves, but as a window into the creaky state of bank IT and the systemic risk it poses.

Michael Hudson: Smoke and Mirrors of Corporate Buybacks Behind the Market Crash

Hudson clearly differentiates what is happening in the Chinese versus the US markets, with emphasis on the role of corporate buybacks here.

Louis Proyect: A Brief Response to Joe Firestone on IT/Grexit

Why believing that there must be an easy way for Greece to pull of a Grexit does not make it so.

Louis Proyect: Once More on IT and a Return to the Drachma

Why selling magic sparkle ponies, in the form of presenting a conversion to the drachma as easy when it isn’t, makes for bad IT and even worse policy prescriptions.

Michael Pettis: Do Markets Determine the Value of the RMB?

A thorough discussion of the background and implications of the so-far modest devaluation of the RMB.

Yet More Private Equity Grifting: The SEC Enables “Broken Deal Expense” Con

There’s so much chicanery afoot in private equity that I sometimes don’t write about important aspects on a timely basis. One of the big ones that most investors manage to kid themselves about is how the general partners’ fee structures really work. The widely-cherished fantasy is that the prototypical 2% annual management fee (the “2” […]