William Black, in a lecture in Iceland, discusses how the role of fraud in the financial crisis has been virtually ignored when he contends it was a major factor, and is also overlooked in the regulation of financial institutions. He also argues that standard econometric models produces the worst possible when a financial bubble is […]
Read more...The Capital Markets, Insurance, and Government Sponsored Enterprises subcommittee of the House Financial Services committee held hearings on how the Federal government should oversee insurance, a timely question since we’ve discovered the Federal government is backstopping a state regulated activity. What is noteworthy about this session is that five experts were asked to opine on […]
Read more...The TARP elicited a firestorm of criticism at its inception, and at various points of its short existence, particularly the repeated injections into “too big to fail” Citigroup and Bank of America, plus the charade of Paulson forcing TARP funds onto banks who were eager to take them once the terms were revealed. Now, however, […]
Read more...Stanford Law Review has a great interview with Warren Buffett’s longstanding partner, Charlie Munger. Munger offers much less corn pone and more direct opinion than Buffett does. The entire piece is very much worth reading, but I wanted to hone in on some key topics. One is the neglect of the role of what amounts […]
Read more...Before anyone gets hysterical, the focus of the efforts by Team Obama on financial services industry pay appears to be to force the industry to stop rewarding undue risk taking. As much as I have been critical of many Administration plans, this, at least in concept, is a good one. Why? Because I sincerely doubt […]
Read more...This post is from reader Gonzalo Lira. Although I beg to differ with him on a couple of his observations, it’s certainly colorful and thought provoking. I give my quibbles at the end. Insofar as this burgeoning Millennial Depression goes, I’ve noticed there are two sorts of people: Ones such as myself, obsessively following every […]
Read more...While I harbor considerable doubts about whether the idea of having a modern version of the so-called Pecora Hearings, the 1930 Senate Banking Committee sponsored probe of the financial services industry, will be as serious and as thorough as it needs to be. The fact that the Pecora initiative got as far as it did […]
Read more...We hate to keep harping, but more details of the stress test farce are coming to light. It was bad enough that the Treasury came up with an adverse case that is hardly a worse case scenario. As we pointed out, it is considerably more optimistic, both in duration and intensity of the downturn, than […]
Read more...The unduly charitable coverage of the stress tests continues. Even though the New York Times does raise a few questions, it still features industry preening and misses some of the important lapses: Industry executives reacted with jubilation, as if they had proved their critics wrong and passed the tests with flying colors. “The results off […]
Read more...I continue to be amazed at the bank cheerleading in the press. Admittedly, article writers are not responsible for headlines, so I do not know who to hold responsible for this New York Times item, “As Stress Tests Are Revealed, Markets Sense a Turning Point.”. How much have bank stocks rallied since March 9? Declaring […]
Read more...The drip drip drip of stress test rumors is disconcerting, and I am perplexed at the logic. I could have seen leaks early on, to box the banks in, particularly since the markets are insisting on rallying on what ought to be bad news (and if you think the bank capital raises are over, I […]
Read more...So much for the cheery assumption that Citigroup and Bank of America each needed only $10 billion, based on leaks of Citi’s likely $10 billion need. This amount of funding is not available from private sources, absent massive dilution of existing shareholders. And assuming, as we and some others, such as Nouriel Roubini, do, that […]
Read more...I really should be past being surprised at misconduct in the securities industry, but when it extends to supposed regulators, it is a clear sign that the entire system is hopelessly beyond redemption. The case example is FINRA. Some excerpts from its website: The Financial Industry Regulatory Authority (FINRA), is the largest non-governmental regulator for […]
Read more...History repeats itself, the first time as tragedy, the second time as farce. But when it’s your farce, sometimes it’s hard to appreciate the humor. We’ve railed about the stress tests since they were announced, but the chicanery, starting with the March 10 Citi and Bank of America pronouncements that they had had a decent […]
Read more...I am coming to realize there might be method in the seeming madness of changing dates and shifting sneak previews via favored members of the press as to what the stress tests might entail. Tire out the critics, numb the casual followers, and leave the boosters in firm control of share of mind. Let’s face […]
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