Yves here. For the last four years, we’ve been highlighting research that has found that high levels of international capital flows are strongly associated with frequent and severe financial crises. Gaius describes how more economists are endorsing this idea, and how the proposed trade deals, the Trans-Pacific Partnership and the US-EU trade agreement, will only make matters worse.
Read more...The New York Times has one of those “inside” stories that unintentionally demonstrate the collapse of justice and financial reporting. This genre involves the media reporting gravely (and uncritically) the administration’s claims that its failure to prosecute any elite for the largest and most destructive financial frauds in history actually demonstrates the exceptional ethical rectitude of the non-prosecutors and non-enforcers.
Read more...The Fed chairman is the most powerful official Obama will pick— directly affecting each and every wallet in America. As much as anything, this appointment will shape our country’s future.
Obama appears to want Summers, and so do the most powerful people on Wall Street. But he is not the people’s choic
Read more...Yves here. Although Bill Black’s post starts with how the Republicans have linked their attacks on the IRS to a broad-brush effort to depict any and all government oversight as an evil plot to destroy the profitability of upstanding businesses, he includes how the Clinton-Gore “Reinvent Government” initiative set out to cripple the IRS, and how that has hurt enforcement generally. Readers may recall one example discussed regularly on this blog: how the IRS refused to penalize clear violations of REMIC (Real Estate Mortgage Investment Conduit) rules that resulted from the failure to convey borrower notes to securitization trusts as stipulated in the 1986 Tax Reform Act.
In general, as tax maven Lee Sheppard has pointed out, the US does little in the way of tax law enforcement. As if you believe in the broken glass theory of lawbreaking (that failing to prosecute minor violations of the law, like petty vandalism, broadcasts that policing is lax, which encourages more serious crimes), it’s not hard to see that having a barely-on-the-job IRS would tell the moneyed classes that they can push the envelope in other areas and probably get away with it there too.
Read more...The latest Fed confab at Jackson Hole is demonstrating that central bankers were so keen to avoid taking much blame for the global financial crisis that they also failed to learn critical lessons from it. That lapse in turn is directly related to the present emerging markets upheaval that has the potential to morph into something worse.
Read more...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.
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