Category Archives: Regulations and regulators

Regulators (and New York Times) Discover Bank Use of “Customer” Trades to Place Bets

The very minute the Paul Volcker, who proposed the sound idea that government backstopped banks not engage in proprietary trading, said that trades done on behalf of customers were meant to be excluded from this proposal, anyone familiar with trading could see he’d just deep sixed his idea. Proprietary trading existed LONG before banks decided […]

Satyajit Das: Cross Dressing in Political Economy

By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2010, FT-Prentice Hall). Anatole Kaletsky (2010) Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis; Public Affairs, New York In their song Lola, Ray Davies and […]

Corps’ Hissy Fit Works: SEC Move for Corporate Democracy Weakened (Updated and Amplified))

Frankly, now that financial markets reform has moved from the Congressional shadowboxing stage to the arm-wrestling in smoke-filled room sort-out-the-details-that-matter stage, the retreat from public scrutiny has, of course, served as a cover for further watering down of measures that were not very strong to begin with. Yesterday we noted that major companies were outraged […]

Corporate Hissy Fit Over New Proxy Rules Reveals “Shareholder Rule” to be a Canard

It’s simply astonishing how often the myth of shareholder rule is parroted by the business press. Let’s see, average CEO pay was 49 times average worker pay in 1980. As of the most recent tabulation, 2008, it was 319 times average worker pay. And since that was the worst year of the crisis, and top […]

Banks Enabling Fraud Against Retail Customers

I normally relegate stories that focus on personal finance to Links, but this article by Naomi Wolf, “Banks Siding Against the Customer in Fraud Cases,” (hat tip reader Francois T) is such an appalling illustration of how predatory the banking industry has become that I felt it was worth highlighting to readers. When a customer […]

Summer Rerun: CDOs: The Ticking Time Bomb

This post first appeared on November 10, 2007 The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of […]

Guest Post: Derivatives Clearing – At the End of the Beginning

Yves here. We were skeptical of derivatives reform efforts as inadequate to deal with the product that needed to be reined in, credit default swaps, and subject to evisceration depending on how various details were sorted out. And if the types of contracts that wind up being covered are reasonably broad, the new derivatives clearinghouse […]

Credit Card Companies Jack Up Rates Despite Flagging Economy, Super Low Funding Costs

The banks giveth and the banks taketh away, big time. This chart from a Wall Street Journal article on credit card interest rates says a great deal: Even though banks are getting all kinds of bennies from the Fed and regulators, such as a nice steep yield curve and lots of regulatory forbearance (econ-speak for […]

Summer Rerun: Martin Wolf: Banks Hold Central Bankers Hostage

This post first appeared on September 21, 2007 In an intriguing article today, “The Bank loses a game of chicken,” Martin Wolf, the Financial Times’ chief economics writer, followed the lead of the Bank of England’s Governor Mervyn King in backing down from their shared view that central bankers should be willing to let all […]

Some Econobloggers Visit the Treasury

Readers may wonder why I haven’t written about my visit on Monday to the Treasury, but truth be told, I headed out afterward with Mike Konczal and Steve Waldman to get a drink, and we all looked at each other quizzically. I said something along the lines of “I’m not certain there is anything to […]

Questioning the “The Authorities Did a Great Job in the Crisis” Meme

One of the minor aspects of the econoblogger session with the Treasury on Monday (more on that shortly) is that several of the invitees said something along the lines of, “You guys did a great job in the crisis.” What is disconcerting is how this view has now become conventional wisdom, despite the panicked Fed […]

Amar Bhide on the Stalinization of Finance

Full disclosure: I’ve known Amar Bhide for roughly 25 years (we both worked on the Citibank account at McKinsey, albeit never on the same project) and although we correspond only occasionally, I continue to regard his as a particularly keen observer and original thinker. He was briefly a proprietary trader, then an associate professor at […]

Boston Fed’s New Excuse for Missing the Housing Bubble: NoneOfUscouddanode

It is truly astonishing to watch how determined the economics orthodoxy is to defend its inexcusable, economy-wrecking performance in the runup to the financial crisis. Most people who preside over disasters, say from a boating accident or the failure of a venture, spend considerable amounts of time in review of what happened and self-recrimination. Yet […]

Are Bank Stocks Such a Good Buy?

A fund manager who will go unnamed mentioned to me that he is putting clients into bank stocks because they are trading at or below book value. Now of course, individual stocks can and do always outperform the outlook for their sector, so there are no doubt particular banks whose stocks are cheap right now. […]

Summer Rerun: Extreme Measures II: Gillian Tett at the Financial Times

This post first appeared on August 27, 2007 Recently, we’ve noticed a new theme among economics writers: Extreme Measures. Commentators have looked toward the end of the road we are on and fear it leads to a precipice. Hence the calls for radical course correction. Paul Krugman and Bill Gross of Pimco, each of whom […]