Category Archives: Regulations and regulators

The Real Regulatory Revolving Door

A reader who has first hand knowledge of some of the major US financial regulators flagged a CounterPunch article by Pam Martens as the best discussion of the “revolving door” problem that he had ever seen. The interesting thing about this article is that it highlights a problem that is not widely recognized and therefore […]

Party Time! Wall Street Back to Its Old Highly Levered Ways

Bloomberg reports that Wall Street is back to its free-wheeling, high-levered ways. This is a classic example of moral hazard in action. Why worry about blowing up the bank when you know the taxpayer will bail you out? From Bloomberg (hat tip DoctoRx): Banks are increasing lending to buyers of high-yield company loans and mortgage […]

FSA’s Lord Turner Walks into Buzzsaw by Suggesting Finance Industry Needs to Shrink

Candor is clearly not a good quality in a regulator. Lord Turner, the chairman of the UK’s Financial Services Agency, had the temerity to challenge the notion that rule by the Masters of the Universe was a good idea. From the Financial Times: The head of the City of London watchdog says Britain’s “swollen” financial […]

Mirabile Dictu! Is It Becoming Respectable to Challenge the Finance Brain Drain?

A new and welcome front may be opening in the efforts to rein in an overly powerful and now explicitly state-backed financial services industry: challenging its claims that its activities are good for society. While the provision of credit is important to any economy beyond the barter stage, finance should be the handmaiden of commerce, […]

Judge Rakoff is Not Buying What SEC and Bank of America Are Selling

Judge Jed Rakoff is illustrating what an independent judiciary should look like, and the fact that his actions are being depicted as “unusual” says how spineless many jurists have become. Sports fans may recall that Bank of America and the SEC came before the bench to approve a $33 million settlement of the failure to […]

Volcker Wants to Regulate Money Market Funds Like Banks

Paul Volcker clearly wasn’t kidding when he said the most important banking innovation in the last 30 years was the ATM. Although money market funds go back further than that, to the early 1970s, Tall Paul is not so keen about them either. This isn’t the first time he had gone after money funds, and […]

Goldman Gives Preferred Clients Stock Trading Tips Early, Defends Practice

Ooh, so there is gambling in Casablanca! I’m shocked, shocked! An excellent bit of sleuthing comes at the Wall Street Journal, on how Goldman has for the last two years has had “trading huddles” that lead to ideas being presented to clients before analysts changed their grades on a stock. Proprietary traders also attend the […]

Guest Post: Review of Walter Bagehot’s Lombard Street

By Robert P. Baird of digital emunction When, back in March, the Bank of England announced that it was adopting a program of quantitative easing, The Economist reported the news with some trepidation. While recognizing that the threat of deflation was real and imminent, the magazine gave voice to the fear that “that the border […]

Quelle Surprise! Banking Industry Faring Worse Than Stress Test Assumptions

This blog is a card carrying hater of the stress test farce of earlier this year, The Treasury said from the start that the purpose of the stress tests was to restore confidence and show that the 19 banks tested, which hold 70% of the nation’s deposits, were well capitalized, and then said more or […]

Rogoff Shreds "When in Doubt, Bail It Out" Policy

Grr. It was so obvious and it never occurred to me…:”When in doubt, bail it out.” I am jealous. Kenneth Rogoff, who among other things has (with Carmen Reinhart) has created a large dataset on financial crises through history, today takes on the exceedingly permissive posture the US has adopted to the banking industry, simply […]

Guest Post: Obama’s Teflon Melting as Outrage Over Health Care Heats Up

From Marshall Auerback, an investment management and commentator who writes for New Deal 2.0. No more free passes. A number of the President’s supporters who expressed concerns about the pro-Wall Street tilt of his early administration decisions were prepared to give him the benefit of the doubt so long as he came through on healthcare. […]

"Pay Czar" Refusing to Back Down Over Possible $100 Million Citi Bonus

Ooh, this is getting interesting. Sports fans may recall that as of last week, Citigroup was refusing to back down on the issue of the contract for Andrew Hall, the head of commodities trading unit PhiBro, which could be worth as much as $100 million this year. A side comment: Hall seems to be trying […]

Colonial Bank Fails, Biggest Since WaMu

I have generally not posted on Friday night bank seizures, unless there is a noteworthy element to them. The US has around 8000 banks, and with 70% of the deposits in the 19 banks that participated in the dubious stress tests, we can have a lot of little banks get merged into slightly less little […]