There is much confusion about what shadow banking is and why it might create systemic risks. This column presents shadow banking as ‘all financial activities, except traditional banking, which require a private or public backstop to operate’. The idea that shadow banking is something that needs a backstop changes how we think about regulation. Although it won’t be easy, regulation is possible
Read more...Not that we needed additional evidence, but the Consumer Financial Protection Bureau has found more fraud and theft inside the nation’s mortgage servicing operations. CFPB has examiners in both bank and non-bank servicers; this is the first time non-bank servicers have faced such scrutiny. And their new report on Supervisory Highlights for the summer shows that extremely little has changed, despite a gauntlet of settlements that were supposed to end this conduct (OK, not really).
Read more...By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth, Cross posted from Automatic Earth
No, I wasn’t going to write a third article on shale in 2 weeks, absolutely not. But what I’ve read these past few days doesn’t leave me much choice.
Read more...The big banks are desperate to prevent Janet Yellen from being appointed as Bernanke’s successor to run the Fed. Their sexist attacks have backfired.
Read more...Yves here. This is the latest installment of Bill Black’s forensic work into why the FBI, which had in the past been a critically important working oar in investigating banking industry frauds, was nowhere to be found before and after the global financial crisis. This post, on how the Mortgage Bankers’ Association, succeeded in getting the FBI focused solely on frauds made on banks, as opposed to by banks, is an ugly and critical bit of the story.
Read more...Yves here. Bill Black continues his forensic work about the dogs that didn’t bark in both the runup to and the aftermath of the crisis.
Read more...Yves here. We’ve written from time time about the latest plans underway to further degrade the lives of ordinary citizens in order to fatten the bottom lines of major multinationals, namely, two major US-led international trade pacts. Even though the US media has given these pending deals scant attention, they represent a far-reaching effort to restructure basic legal and regulatory frameworks.
Read more...Yves here. Black has written the sort of post I particularly like. He’s given a close reading of the FBI’s latest (and tellingly, not all that recent) mortgage fraud report and parses what its use of language and its omissions say about its assumptions and priorities.
Read more...Felix Salmon pointed out today that Larry Summers is now being touted as the odds-on favorite (65%, to be precise) to be Obama’s nominee as the next Fed chief. Felix stresses that Obama’s reason for favoring Summers is based on the sole criterion on which Summers could conceivably be depicted as preferable to the other widely-touted contender, Janet Yellen: he is believed to be better than Yellen would be in handling a crisis.
Read more...Bill Moyers has a wide ranging and lively chat with Richard Wolff, Professor of Economics Emeritus at the University of Massachusetts and author of many books including Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It. Wolff is a fierce advocate of the need for policies for fairer wages for workers and argues why better pay is salutary not just for the employees but the broader economy.
Read more...Yves here. To put none too fine a point on it, the most important steps to reduce carbon emissions would be a Marshall plan level effort to reconfigure living and resourcing arrangements so as to reduce energy demands, and to go particularly aggressively after the worst polluters (for instance, the cars you see spewing fumes, are surprisingly large contributors to total emissions from automobiles). But it’s much easier to go the Easter Island route and keep carrying on more or less as before until you hit insurmountable constraints.
Read more...The Eurozone’s debt crisis is getting worse despite appearances to the contrary. How can we end it? This column presents five major options for reducing crisis countries’ debt. Looking into the details, it seems the only option that is both realistic and effective is for countries to default by selling monetised debt to the ECB. Moral hazard aside, burying the debt seems to be the only way we can end the crisis.
Read more...Narrowly speaking, it’s good that the SEC won its case against ex-Goldman staffer Fabrice Tourre for his role in marketing a toxic CDO to bond insurer ACA. But let’s not kid ourselves as to what this verdict amounts to.
Read more...Too many of the ideas of what would make for a good Fed chairman are based on overly ambitious and wrongheaded goals for the central bank.
Read more...Jessica Silver-Greenberg at the New York Times has an important account of how a system created by banks to catch scam artists like check-kiters has morphed over 20 years into a shadow credit reporting system.
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