Category Archives: Regulations and regulators

Guest Post: Bank Lobbyists Are Not Only Trying to Kill NEW Legislation, They Are Trying to Weaken EXISTING Regulations

By George Washington of Washington’s Blog. Everyone knows that the lobbyists for the financial giants are trying to kill any tough new regulations. But they are also trying to weaken existing regulations. Specifically, Robert Borosage notes: The [derivatives] bill that the House will consider on Wednesday creates a clearinghouse, not a publicly managed exchange. It […]

When a Politician Praises “Efficiency,” Hang on to Your Wallet (Financial Reform Headfake Edition)

A fair bit of ink has been spilled on the idea that what is often called “innovation” in financial services is a fancy way of saying “extortion racket.” I was cheered when Paul Volcker put the ATM on his list of banking innovations and seemed unable to come up with anything worthwhile since then. Similarly, […]

Guest Post: Congress Removes Authority to Ban Riskiest Derivatives Trades Because “There Was Concern That A Broad Grant To Ban Abusive Swaps Would Be UNSETTLING”

By George Washington of Washington’s Blog. According to Bloomberg, the original draft of Barney Frank’s derivatives legislation: would have given the Securities and Exchange Commission and Commodity Futures Trading Commission joint authority to “prohibit transactions in any swap” that they determine “would be detrimental to the stability of a financial market or of participants in […]

AIG Pays “Retention” Bonuses to Secretaries and Kitchen Staff; Execs Renege on Promised Repayments

An interesting contract in reporting today. Reader (Tom C) sent me the Wall Street Journal version of this story, by Michael R. Crittenden and Liam Pleven, titled “AIG Execs Returned Only $19M Of $45M In Pledged Repayments.” I decided to look at Bloomberg as well, as found one on the same subject, “AIG Should Trim […]

The Problem With Financial Services Compensation (AIG/Pay Czar Edition)

The Financial Times reports that the so-called pay czar Kenneth Feinberg, who is in charge of overseeing compensation at TARP recipients, is going to crack down on some of the bonuses paid at AIG: The Obama administration’s pay tsar has indicated he will take a tough stance on executive pay at AIG, the state-controlled insurance […]

New Accounting Rules May Undermine Consumer Lending

Repeat after me: the credit crisis was the result of too much cheap and easy lending. Ergo, any return to healthier practices means more expensive and less readily available debt. The problem is that the powers that be don’t quite grasp the implications, or to the extent they do, are still trying to have their […]

The FDIC is Not Buying What Citi is Selling

This news item verges on funny. Readers may have taken note of the fact that Citigroup was ordered by the FDIC to conduct a review of management. The floundering bank hired Egon Zehnder. The New York Times indicated that the resulting report was awfully favorable, given that the bank is one of the biggest messes […]

34 Banks Miss TARP Dividends and Almost No One Notices

I will confess I missed a post opportunity Thursday AM, when an alert reader sent a link to a USA Today story, “34 banks don’t pay their quarterly TARP dividends, ” but I decided to return to it precisely because it has gotten little attention: The U.S. taxpayers’ investments in smaller banks are increasingly at […]

Warning: Capital Controls Are in Your Future

When Jim Rogers taught classes at Columbia, he liked to tell students that the US had a proud history of implementing capital controls, and warned them against going on the merry assumption that it would ever and always be easy to make cross-border investments. For instance, taxes on foreign securities transactins are a soft form […]

Latvia in Crisis; Threatens to Stiff Swedish Banks With Mini-Jubilee

When markets were more agitated than they are today, one source of background worry was the Baltics. The countries went on a debt binge, borrowing heavily from Swedish banks. And while the amounts at issue are hardly earth-shaking by credit crisis standards, there is always the possibility that unexpected knock-on effects could lead to more […]

Securitization Drought Exposes Policy Bind, Threatens Recovery

The New York Times has a good update on the progress, or more accurately, lack thereof, in the efforts to return to normalcy in the credit markets. The story highlights the fact that the securitization markets, to the extent they are operating, are heavily dependent on government intervention and it does not appear likely that […]

Banks Under-reserving for Commercial Real Estate Losses

There has been a peculiar disconnect between the “the crisis is over, on with the recovery” drumbeat of news, and the sobering reality that a good deal of credit bubble overhang still remains to be dealt with. One of the biggest areas is commercial real estate. Various experts, including Apollo Management’s Leon Black warned of […]

Guest Post: Questions for Gary Gensler and Henry Hu

By George Washington of Washington’s Blog. Preface: CDS traders, read the note at the end… Tomorrow, the House Committee on Financial Services will be talking about regulating about over the counter derivatives. Committee Chair Barney Frank has already circulated a draft of the proposed legislation. The star witnesses are Commodities Futures Trading Commission chairman Gary […]

Why is Goldman allowed to game the system?

Submitted by Edward Harrison of Credit Writedowns. Marshall Auerback sent me a link to a recent Simon Johnson missive about Goldman Sachs. I had already seen and liked this article, but his e-mail prompted me to write this post. My question is: Why is Goldman a bank holding company? Goldman becomes a bank The reason […]

On the Inequity of Handing Mortgage Servicers $27,065,760,000

The media seems curiously indifferent to the continued and deserved anger of the public regarding bank bailouts. Of course, the fundamental problem is that we were sold a bill of goods. The money was clearly going to fill existing black holes in financial firms’ balance sheets. That would have been a legitimate use of taxpayer […]