Category Archives: Regulations and regulators

Coming Soon: Meaningless Financial Statements

This headline isn’t much of an exaggeration, as we learn from a front-page Wall Street Journal story, “Profit as We Know It Could Be Lost With New Accounting Statements.” The proposed changes (in the early stages of formulation and subject to quite a few approvals before it would take effect) would totally revamp income statements […]

Disturbing Conversation with Fed Official on Subprimes

I happened to meet an official in the Fed’s Banking Supervision and Regulation division at a cocktail party this evening and chatted him up. He helped brief Roger Cole before met with the Senate Banking Committee last month to defend the Fed’s conduct regarding subprimes, so he is up to speed on this topic. Readers […]

P/E Funds for Banks: Another Sign of a Market Top?

The Wall Street Journal’s Deal Journal tells us that former Comptroller of the Currency and later Bankers Trust Vice Chairman Eugene Ludwig is forming a (target size) $1 billion private equity fund to acquire banks. Now the bit the WSJ doesn’t seem to know is that Ludwig has been looking to form a fund in […]

The Fed: The Need for a Paradigm Shift

Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and of itself is a danger sign. The Fed’s […]

Larry Summers on Climate Change Realism

Larry Summers, in a Financial Times comment “We need to bring climate idealism down to earth“, takes up “the best is the enemy of the good” theme as it applies to global warming. He argues that the Kyoto accords haven’t accomplished much because neither the targets nor the penalties are binding, that carbon markets run […]

Lewis Ranieri on the Subprime Mess

Thanks to Tanta at Calculated Risk, we have a rush transcript from a presentation by Lew Ranieri at the Milken Institute conference on financial innovation. Ranieri is credited with creating the mortgage backed securities business, has continued to be active in the industry, and has sounded warnings on subprimes. I found three points to be […]

FT vs. WSJ on Financial Stability Report by Bank of England

While most US readers believe that the Journal’s ideological bias is limited to its editorial pages, we have repeatedly seen (and commented on) skewed reporting as well. Specifically, the Journal tends to put a positive spin on economic (as opposed to company-specific) reporting. Today’s object lesson is the Bank of England’s latest edition of its […]

EU Really Losing Patience With Microsoft

Microsoft’s bad behavior may finally catch up with it. The EU is now threatening new sorts of punishment for Microsoft’s intransigence and bad faith dealings in what in the US would be called the remedy phase of its antitrust case. To recap the story: in December 2004, Microsoft lost its final appeal on an EU […]

Risk Management Guru Warns About Brave New World of Finance

It’s one thing when people who have little to no experience in the financial markets worry about the risks posed by derivatives and other innovative financial products. It’s quite another when a concerned individual also happens to have been deeply involved in risk management at major Wall Street firms. The financial markets insider is Richard […]

Freddie Mac Subprime Legerdemain

Calculated Risk has a great post today, “‘Bailouts for UnterNerds: The Freddie Mac Story,” that says, in essence, that the “bailout” or “stabilization” for subprime mortgages announced by Freddie Mac today is much less significant and much less helpful to borrowers than it might seem. Freddie Mac stated that it will be purchase $20 billion […]

Mortgage Securitization Hinders Subprime Relief

One can debate whether and how much aid subprime borrowers deserve, but a pair of articles Wednesday illustrates how difficult it will be to come up with any form of relief. In an underreported story, the FDIC hosted a session that included banking and mortgage industry leaders, legislators, investment bankers, and representatives from the SEC, […]

Supreme Court Nixes Borrower Protection

In theory, Monday’s Supreme Court decision to bar state oversight of subsidiaries of federally chartered banks was simply a confirmation of the Office of the Comptroller of the Currency’s efforts to assert (and some would say extend) its authority, but the effect is to end the dual structure which permitted both federal and state regulation […]

Market Failure I: "Money-Driven Medicine"

I always take note when a writer takes a position that is contrary to his usual stance. Tyler Cowen of Marginal Revolution is an intelligent and thoughtful commentator, but hews too closely to free market orthodoxy for my taste. But his review of Maggie Mahar’s Money- Driven Medicine, a hard-hitting critique of health care, American […]

"Is the Fed’s Impact Waning?"

We’ve argued several times that the Fed isn’t what it used to be (see here and here and here), so we are gratified to see other commentators take up the theme. The headline the title of a post by Russell Wood at Seeking Alpha. It makes some important observations: the Fed regulates banks only, and […]