Category Archives: Moral hazard

Why are Irish Political Leaders so Keen to Collude with the Bank Regulator in Covering Up Blatant Regulatory Breaches at Unicredit Ireland?

By Richard Smith Dublin, by way of the proudly-named International Financial Services Centre, a sparkling new development in the old docks, is “home to more than half of the world’s top 50 financial institutions”. But as the Irish financial crisis wears on, this glitter invites unpleasing comparisons: it simply looks meretricious. What Dublin and, let’s […]

Another nasty surprise from Ireland’s Anglo and AIB, via the EC

Tucked away in the EC’s press release on aid for Irish banks, we find this little gem: Anglo Irish Bank will furthermore receive a guarantee covering certain off-balance sheet liabilities (derivatives, clearing transactions and transactional arrangements) that will ensure that Anglo Irish Bank can continue its daily activities as a going concern. There’s nothing here […]

The British Mess (III): Bank of England Tiptoes Around Sovereign Risk Worries

By Richard Smith The latest Bank of England Financial Stability Report is worth decoding. My last post on the UK sketched a scenario in which the very large 2011 funding programme for UK banks, discussed in the June BoE FSR (back issues all available here), could be quite problematic, in adverse markets. I hinted that […]

With Friends Like Moody’s…

Good to see Moody’s rebuilding its franchise. Their aura of mystery is still reassuringly intact, two years after the subprime CDO ratings fiasco; as a bemused Firedoglake notes, in connection with two diametrically opposed, and politically charged, opinions about the tax cuts and their projected effect on the US credit rating: Can someone tell me […]

Debunking the Myth That Bigger Banks are More Efficient and Necessary

A very good op ed by Thomas Hoenig in the New York Times, “Too Big to Succeed” provides a solid recap of why the business of reining in the too big too fail banks is crucial. It isn’t simply that this is yet another version of “Mission Accomplished”; the bailouts actually made industry concentration worse, […]

The man with the magic words

…turns out to be Trichet, this week, anyway; the bond markets are soothed. Two key comments: We have got a monetary federation. We need quasi-budget federation as well. a statement which ought to have all the Eurosceptics, and many others, chorussing “told ya”; then Mr Trichet also hinted that the ECB could extend its purchase […]

The plank in Schäuble’s eye

From the look of it, the Irish bailout is taking another chunk of another one of FT Alphaville stalwart Neil Hume’s weekends. From Peston European finance ministers are struggling to reach agreement on the interest rate to be paid by Ireland for the €85bn of rescue finance it is set to receive from the EU […]

More on the Damaging Implications of Corporate Cash-Hoarding

John Authers of the Financial Times provides an update on corporate cash-hoarding. In brief, it’s getting worse due to probably-warranted executive nervousness about business prospects. As Authers puts it: Corporate chieftains the world over have lots of cash, and want to hold on to it. It is a critical symptom of a new Age of […]

Ramming home the lesson from Ireland

Spotted this just after today’s Ireland post. I reckon NC’s UK and US readers and others will have got the idea of ‘extend and pretend’ , aka ‘forbearance’ already; always good to see it getting called out again though.

“Waiting for Godot”, or “Endgame”?

No formal announcement yet, but some presumably well-sourced rumours about the size of the Irish bailout (EUR 85Bn), and the rate (7%, via the redoubtable Twitterer on all matters Irish @LorcanRK). While we await the budget statement, there are reasons to suspect, or hope, that the bailout, like Godot, will never come, because it’s failing […]

The British mess (II)

First, let’s have a quick trip down memory lane. The financial crisis got going properly in the UK in August 2007, with the ABCP seize-up leading to the run on Northern Rock in September. Congdon illustrates how dependent banks had become on wholesale funding: At June 2007 UK banks’ cash deposits at the Bank of […]

Part 2 of Real News Network Interview: “The Turkey Votes for Thanksgiving”

Hope you enjoy the second part of our discussion on Real News Network. Part 1 is here. More at The Real News

The Irish mess (V)

Back in July, Rebel Economist noted how the Greek bailout actions had compromised the ECB: The first concession made by the ECB was in the collateral requirements for its lending to eurosystem banks. These were set in terms of agency credit ratings, no doubt to distance the ECB from the task of differentiating between the […]

The Irish Mess (IV)

The domestic politics of Ireland are still on a tightrope. Their coalition government, which had has been studiously ignoring three empty parliamentary seats, has now been told by the Supreme Court to get on with it and hold by-elections for one of them, which has been unoccupied for a scandalous 18 months. The by-election is […]

A critical assessment of the Dodd-Frank Wall Street Reform and Consumer Protection Act

By Viral Acharya, Professor of Finance, Stern School of Business, New York University, Thomas F. Cooley Professor of Economics, Stern School of Business and Faculty of Arts and Science, New York University, Matthew Richardson, Professor of Applied Economics, Stern School of Business, New York University, Richard Sylla, Professor of Economics, Stern School of Business, New […]