We have pointed out more than once that a major impediment to reform of the financial services industry is that a small number of firms control infrastructure crucial to modern capitalism: 1. Credit is essential to any society beyond the barter stage 2. Debt markets are now at least as important in providing credit as […]
Read more...From the Independent: Chief executives from the world’s banks discussed the plans at a secret dinner held at Claridge’s, the London hotel, last October, at which several leading British bankers are said to have suggested that the sector should take greater responsibility for its part in the crash, and do more to reduce the vast […]
Read more...By Edward Harrison of Credit Writedowns Over the past few days, a number of major European banks have announced earnings results. Two of the most dismal results were registered at the British company Royal Bank of Scotland (RBS) and at Germany’s Commerzbank. However, the similarity ends there because, while Commerzbank investment bankers received no bonus, […]
Read more...Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits. Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing […]
Read more...As readers may recall, we had argued over a series of posts that the proposed Volcker rule, to bar proprietary trading at commercial banks, did not go far enough in reducing systemic risk. While the concept was so sketchy that it was difficult to be certain what it meant, it appeared to have two serious […]
Read more...By Marshall Auerback, a fund manager and investment strategist and L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City In recent weeks there has been much discussion about what to do about Greece. These questions become all the more relevant as the country attempts to float a multibillion-euro bond issue later […]
Read more...From “Financial Economics, Deregulation and OTC Derivatives: Interview with Yves Smith of Naked Capitalism,” The Institutional Risk Analyst, February 22, 2010 “Wall Street once ran from a graveyard to a river. It now runs from an ocean to an ocean, and beyond. It has become, in Dr. Charles A. Beard’s measured words, a new Appian […]
Read more...By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Surprise, surprise: Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece, Spain, Portugal, and undermined the euro by enabling European governments to hide their mounting debts. This has now […]
Read more...It turns out some businesses are thriving in the downturn, with lobbyists a prime example. According to the Center for Responsive Politics, lobbyist revenues increased 5% in 2009 versus 2008. As The Hill noted (hat tip DoctoRx): Lobbyists have said business for them managed to remain upbeat throughout 2009 despite the poor economy because of […]
Read more...The latest “Goldman [appears to be] behaving badly” incident reflects either uncommon boneheadedness (the only question is whether by an employee or the firm itself) or a very clever ruse to further discredit the reputation-challenged bank. Well-known British film director/producer/screenwriter Richard Curtis (Four Weddings and a Funeral, for instance) and actor Bill Nightly started a […]
Read more...Can someone shut these banking industry narcissists up? The one and only time I met Steve Schwarzman was in 1986, when he and Pete Peterson had just started the Blackstone Group. I was a manager (meaning a mid level working oar) at McKinsey. We had teed up a deal and were assisting our foreign client […]
Read more...The top story at the Financial Times at this hour, “‘Volcker rule’ gives Goldman stark choice,” is a accurate report of Paul Volcker’s latest remarks, but gives a wildly misleading impression of the “choice” facing Goldman: Goldman Sachs and other banks should give up their bank status if they want to avoid the ban on […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Gretchen Morgenson has a lengthy article tonight at the New York Times, “Testy Conflict With Goldman Helped Push A.I.G. to Edge.” While it provides some useful new tidbits, it peculiarly focuses on an aspect of Goldman’s dealings with AIG that, particularly with the […]
Read more...On the one hand, debating the merits of the Volcker Rule may seem a tad academic, given the rousing opposition it is encountering from Congress (and you have to love the world of politics: the biggest obstacle is, basically, “We sorta have a deal, you can’t retrade it!” Funny how banks and AIG get to […]
Read more...Hhhm. Even though the UK 50% bonus “supertax” was deemed to be a bit of a failure (the banks just grossed up bonuses to compensate for the levy), Senators Barbara Boxer and James Webb have proposed a similar measure, and one wonders how it might fend off the sort of gaming that plagued the UK […]
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