Category Archives: Regulations and regulators

OCC Probe of JP Morgan Debt Collection Abuses Will Show if Agency Can Be Reformed

As readers probably know all too well, the Office of the Comptroller of the Currency has long been the most cronyistic of all bank regulators. So the default assumption when it cranks up an investigation is to assume that it’s just a window-dressing exercise or worse, a stealth bailout of some sort.

Yet the Washington Post tells us that the OCC is widening an investigation into debt collection, where alleged robosigner JP Morgan is the sinner-in-chief. What gives?

Time to Put the Heat on the Fed and FDIC to Fix Lousy Governance at TBTF Banks

Adam Levitin makes a sensible recommendation in a new post:

…what’s at stake in the corporate governance of a too-big-to-fail bank like JPMorgan Chase is not just the share price, but also the public fisc. There is a strong federal regulatory interest in having good governance at too-big-to-fail banks because of our explicit (FDIC) and implicit (bailout) insurance of too-big-to-fail banks.

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More on the Trumped-Up Charges Against Cyprus

As readers may recall, the Eurozone decided to make an example of Cyprus by using it to set the precedent of raiding deposits to fund a bailout (query: is a self-bailout even properly called a bailout?). But the moralists said Cyprus had it coming, since it was a seedy tax haven. A recently released official report summary supports those charges. Or did it?

IMF Rethinks Sovereign Defaults, Again

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness

Dan Kervick: Reserve Balance Misconceptions

Yves here. While it may seem a bit unfair to make an example of Mark Thoma, since the statement he makes about bank reserves is conventional, Kervick’s post is a useful reminder of why this sort of thinking is misleading.

Gretchen Morgenson on Bill Moyers: Why Too Big to Fail Still Lives

This Bill Moyers segment gives a welcome view of Gretchen Morgenson recapping the sorry state of the “too big to fail” problem.

Wolf Richter: Government By Eurocrats – The Olive-Oil Dispenser Debacle

Yves here. This post illustrates a chief reason why regulation has become a bad word.

David Dayen: FSOC Annual Report Shows Continued Interest in Austerity Bargain Over Reducing Financial System

With Jack Lew now installed at Treasury, I decided to take a look at the annual report of the Financial Stability Oversight Council (FSOC), the Dodd-Frank creation that’s supposed to monitor systemic risk. We already know the leanings of the not-so-new regime at Treasury: they think Dodd-Frank worked to secure a more stable financial system, an opinion reiterated Tuesday at a Senate Banking Committee hearing.

Is Jamie Dimon Really Out of the Woods With Shareholder Thumbs Down on Splitting CEO/Chairman Roles? (Updated)

There’s a surprising degree of blogosphere acceptance of JP Morgan’s messaging on the shareholder vote today regarding whether to split the CEO and Chairman roles, that this result was a vote of confidence in his prowess as CEO. Huh?

David Dayen: SEC Convenes Foot-Dragging Roundtable on Rating Agency Reform, While Securities Issuers Return to Familiar Rating-Shopping Tricks

A few months ago, I wrote a story for The American Prospect about the credit rating agencies, and their thus-far successful effort to ward off any change to their business model, despite their wretched performance during the crisis. This is true even though Dodd-Frank contained a measure, written by Al Franken, to alter the issuer-pays model that incentivizes higher ratings in the pursuit of future profits. The Franken-Wicker rule (the “Wicker” is Republican Senator Roger Wicker) would create a self-regulating organization to randomly assign securities to accredited rating agencies, with more securities over time going to the agencies that rated the most accurately.

Josh Rosner on How Dodd Frank Institutionalizes Too Big to Fail

Josh Rosner of Graham Fisher testifies before a subcommittee of the House Financial Services committee today on why Dodd Frank has not ended too big to fail, but also has managed to entrench the megafirms’ advantaged position.

Mel Watt, Nominee to Head FHFA, Opposes Administration by Voting to Deregulate Derivatives

Good progressives like MoveOn, New Bottom Line, the Alliance of Californians for Community Empowerment, AFR, Elizabeth Warren, and Richard Trumka, head of the AFL-CIO have all fallen in line with Obama’s nomination of Mel Watt, Representative from ~~Bank of America~~ North Carolina.

It might help if they looked harder at Watt. If they were honest about it, there’s not much to like.

The Limits of Governing Budgetary Policies by Rules

By Daniela Schwarzer, who heads the research unit European Integration at the German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP) in Berlin. Cross posted from Triple Crisis

The European squabble over budgetary austerity reached a new peak a good week ago when a document drafted by leading representatives of the French Socialist Party, which reportedly had been seen by Elysée officials close to President Hollande, personally attacked German Chancellor Angela Merkel. Less mediatized, but more telling about the nature of the governance problems facing the euro area, are the statements made by Finance Minister Pierre Moscovici this weekend.

Bill Black: Brown-Vitter Will Not and Cannot Work but it is Criminogenic

Yves here. Like Black, I see Brown-Vitter as well-intended but seriously flawed.