Wow, I should not be surprised, but this is a stunner nevertheless. It had generally been assumed that the AIG payouts of 100% on credit swaps (when the insurer was under water and bankrupt companies do not satisfy their obligations in full) was the result of some gap in oversight plus traders at AIG exercising […]
Read more...Robert Johnson, former chief economist to the Senate Banking Committee, submitted testimony to a House Financial Services Committee hearing on OTC derivatives. His written testimony is to be posted today. While his remarks are worth reading in their entirety, one bit that caught my attention was his discussion of TDTR, or “Too Difficult to Resolve.” […]
Read more...You are a teacher at a local primary school. Each school day you and some of your colleagues watch over the children at the school playground to make sure all of the children follow the rules and keep their hands to themselves. Your role is to keep the children safe. Mind you, this is a […]
Read more...Watch the hour-long retrospective which aired last night on PBS’s Frontline. It should be very enlightening in regards to the seeds of the bubble and meltdown. It examines who the players in the 1990s and 2000s were, what their attitude to regulation was, and how lax regulation created a bubble and a bust. Also see […]
Read more...Paul Volcker wants to roll the clock back and restore Glass Steagall, the 1933 rule that separated commercial banking from investment banking, but Team Obama is politely ignoring him. Mervyn King, the Governor of the Bank of England, is giving a more strident version of the same message, calling on the biggest financial firms to […]
Read more...One of the horrorshows that has been moving along in the background is the disaster of the funding of a sewer project in Birmingham, Alabama, which looks pretty likely to produce the biggest municipal bankruptcy since Orange County back in the mid 1990s. Orange County did have one Robert Citron to blame for its woes. […]
Read more...By George Washington of Washington’s Blog. Everyone knows that the lobbyists for the financial giants are trying to kill any tough new regulations. But they are also trying to weaken existing regulations. Specifically, Robert Borosage notes: The [derivatives] bill that the House will consider on Wednesday creates a clearinghouse, not a publicly managed exchange. It […]
Read more...By George Washington of Washington’s Blog. According to Bloomberg, the original draft of Barney Frank’s derivatives legislation: would have given the Securities and Exchange Commission and Commodity Futures Trading Commission joint authority to “prohibit transactions in any swap” that they determine “would be detrimental to the stability of a financial market or of participants in […]
Read more...An interesting contract in reporting today. Reader (Tom C) sent me the Wall Street Journal version of this story, by Michael R. Crittenden and Liam Pleven, titled “AIG Execs Returned Only $19M Of $45M In Pledged Repayments.” I decided to look at Bloomberg as well, as found one on the same subject, “AIG Should Trim […]
Read more...By George Washington of Washington’s Blog. Preface: CDS traders, read the note at the end… Tomorrow, the House Committee on Financial Services will be talking about regulating about over the counter derivatives. Committee Chair Barney Frank has already circulated a draft of the proposed legislation. The star witnesses are Commodities Futures Trading Commission chairman Gary […]
Read more...Submitted by Edward Harrison of Credit Writedowns. Marshall Auerback sent me a link to a recent Simon Johnson missive about Goldman Sachs. I had already seen and liked this article, but his e-mail prompted me to write this post. My question is: Why is Goldman a bank holding company? Goldman becomes a bank The reason […]
Read more...By Satyajit Das, derivatives expert and author of Traders, Guns, and Money. Tom Wolfe writing in Bonfire of the Vanities created the term – ‘Masters of the Universe’: “He considered himself part of the new era and the new breed, a Wall Street egalitarian, a Master of the Universe, who was only a respecter of […]
Read more...Submitted by Edward Harrison of Credit Writedowns. Janet Tavakoli was a recent guest on “On the Edge with Max Keiser” and had some troubling things to say about the state of the present U.S. financial system. She believes the liquidity pumped into the system will not be sufficient to reflate the economy because of over-leveraged […]
Read more...(Yves should be back – and so the site should return to normal – tomorrow. If all goes according to plan, you’ll be hearing a lot less from me for a week or so. Yves’ book – Econned – will be quite valuable, and so well worth the wait. ) By George Washington of Washington’s […]
Read more...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 […]
Read more...