Simon Johnson deserves tons of kudos for pointing out that the US is in the hands of financial oligarchs, via his celebrated Atlantic article, “The Quiet Coup.” But having recognized a clear and present danger, he seems peculiarly willing to confuse non-solutions with meaningful measures. In an article at Project Syndicate, he incorrectly celebrates a […]
Read more...By Wallace C. Turbeville, the former CEO of VMAC LLC and a former Vice President of Goldman, Sachs & Co. who writes at New Deal 2.0 William D. Cohan’s op-ed piece in the July 7th New York Times had the same title as this article, but for the word “Don’t.” At first glance, I thought […]
Read more...We’ve pointed out from time to time that the financial services industry has lost sight of its role. While helping companies borrow and raise money, providing investment and saving vehicles and payment services are all useful activities, the cost of financial intermediation is ultimately a tax on commerce. Perversely, some businessmen complain bitterly about how […]
Read more...The Financial Crisis Inquiry Commission grilled Goldman chief operating officer Jonathan Cohn and CFO David Viniar this week, with today’s session focusing on AIG, and in particular, whether Goldman’s collateral calls were abusive and damaged the insurer. Readers know that I have perilous little sympathy for Goldman. However, it is important that investigations focus on […]
Read more...The New York Times has unearthed a damning tidbit about the bailout of AIG: When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman, Société Générale, Deutsche Bank and Merrill […]
Read more...The New York Times yesterday featured an article by Yale economist Robert Shiller in which he discussed how financial reform had fallen short of addressing the conditions that caused the crisis. He focused on the failure to implement effective pay reform at the large financial firms that too big or otherwise too crucial to fail: […]
Read more...Readers of this blog may know that we broke story in our book ECONNED of the role that the hedge fund Magnetar played in increasing the severity of the subprime bubble through its program of hybrid CDOs (meaning composed of actual tranches of subprime bonds plus credit default swaps). To recap: Magnetar embarked on an […]
Read more...Bloomberg notes that Goldman’s president Gary Cohn has stated that the firm is not close to a settlement of the SEC’s fraud case against it for one of its Abacus CDOs. Note that this is contrary to rumor and speculation as recent as last week and suggests talks are pretty close to dead. The SEC […]
Read more...The latest shoe to drop on the Goldman front is the report on Wednesday that the SEC was investigating yet another one of its synthetic CDOs, this one a $2 billion confection called Hudson. It isn’t clear whether the SEC will file charges, but this one has the potential to be particularly damaging in the […]
Read more...Bloomberg reports that the FCIC subpoenaed documents from Goldman: The U.S. panel investigating the causes of the financial crisis issued a subpoena to Goldman Sachs Group Inc. after the Wall Street firm failed to hand over documents in a “timely manner.” The Financial Crisis Inquiry Commission “has made it clear that it is committed to […]
Read more...I’ve seen some eye-poppin’, credulity-stretchin’ accounts in my time. The report “The Budgetary Impact and Subsidy Costs of the Federal Reserve’s Actions During the Financial Crisis,” just released by the Congressional Budget Office, ranks with the most extreme. It claims that the budgetary cost (which corresponds roughly to expected losses) of the Fed rescue facilities […]
Read more...We’ve taken the liberty of designating the biggest money pits of the financial crisis as “black holes.” And one the characteristics of black holes is that anything that crosses the so-called “Schwarzschild radius” does not escape. That means that it is impossible to obtain any information from inside the Schwarzschild radius. That feature seems particularly […]
Read more...Wow, the Obama Administration is less than a year and a half old, and it’s already twiddling with the record. I was gobsmacked to see this section in a post by Felix Salmon today, on a new book by Jonathan Alter and a New York Magazine cover story by John Heilemann: Both Alter and Heilemann […]
Read more...Just when you thought financial firm accounting couldn’t get more dubious…it gets worse. Deux Ex Macchiato (hat tip FT Alphaville) tells of the disconcerting changes to what was formerly called FAS Rule 157, which brought us Level 1, 2, and 3 accounting. A brief recap: Readers may recall that the Financial Standards Accounting Board implemented […]
Read more...Wolfgang Munchau, in the Financial Times, revives a line of thought that was voiced from time to time during the financial crisis: that some countries (the UK, Germany, the Netherlands, Switzerland) had banking sectors that were so large that it was an open question as to whether they could credibly backstop them. One of the […]
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