TinyTim

Financial World: Atlantic Widens While Pacific Narrows

The irony here, which I'm sure isn't lost, is that the European countries have had a long standing rep as being politically liberal and economically socialist. In other words, leaning to the left.

The US, on the other hand, is demonstrating by its actions so far that it is further left than the Europeans. This has the same impact as a recent news story about an American Army officer in Afghanistan commenting on the toughness and perseverance of the French forces assisting there.

It should be well noted that the dichotomy is only in the financial area, and specifically in banking. It's no coincidence. Contrast with the current health care debate, comparisons with many European countries and screams of socialized medicine.

What is obvious to the Europeans, that smaller banks are less risky and cutting out the bad to leave the good, seems to be a blind spot for Congress and the Administration.
Is there any doubt that this is evidence of regulatory capture?

Is This the End of 'Too Big to Fail'?

"This should result in large amounts of "social pressure" to stop stupid actions, since the risk of them can fall on other large market participants."

LOL Social pressure versus greed and competition.
No contest.

More Goldman Outrage

John-
Didn't you have a post a while back that stated GS was making a tender offer for the US Treasury?

This is the stuff that Thomas Jefferson and Andrew Jackson were warning about 200 years ago. Now we have it in spades. Regulatory capture. Expect to see David Viniar on the $20 bill any day now.

This is especially upsetting after reading your article on the ING breakup.

ING Shows How Bank Dismemberment Is Done

It's embarrassing and enraging (to use the verb-du-jour) to see the Europeans making simple work out of something that sorely needs to be done here.

They have no issue with "Too Small To Compete"

Thanks for bringing this up.

Diana Farrell And The White House Theory Of Bank Size

Anyone without a keen appreciation of the acute hazards imposed by large loosely regulated national banks needs to reread their early American history, specifically the warnings and arguments of great men like Thomas Jefferson and Andrew Jackson.
They recognized the bankers for what they were, and that was before almost 250 years of financial engineering.

etext.virginia.edu/jef...

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -- Thomas Jefferson -- The Debate Over The Recharter Of The Bank Bill, (1809)"

"The bold effort the present bank had made to control the government
... are but premonitions of the fate that await the American people
should they be deluded into a perpetuation of this institution or the
establishment of another like it." Andrew Jackson To Congress in 1836, Jackson closed the second Federal Bank (est. 1816) with these comments

Diana Farrell And The White House Theory Of Bank Size

This is the most obvious symptom of regulatory capture. Unwillingness to do anything detrimental to the vested interest. These TBTF megabanks must be broken up. Reinstate Glass-Steigal to split by sector. Then use anti-trust to break down further.

The best example in recent history is Ma Bell in 1982. Broken up successfully under antitrust. It's the nature of capitalism that they're recombining almost 30 years later.

What Stories Aren't Being Told?

"With dud residential mortgage loans, modifications don’t work well unless there is a forgiveness of some of the principal."

This only applies to voluntary walkaways when the owner is under water.
Mods are worthless when the owner is jobless.
Locking the mtg against adjustments would help more.


"If we marked the value of commercial real estate loans to market for banks, using data from the CMBS market, some banks would be insolvent."
In other words, commercial developers and landlords are about to start walking away or filing BK.

Big Banks Commit to Transparency

Their version of transparency can't amount to much otherwise the CEOs of all our top financial institutions would be mounting massive PR campaigns against the proposals.

The TBTF megabanksters have accomplished regulatory capture and there is no one around to take the necessary antitrust actions.

Report from Europe for Friday, Sept. 4

LOL on the floor. Bob's Back.
This guy could sub for Cramer or the ShamWoW pitchman.

Have a good weekend

Ten Most Ignominious Reassurances from the Great Recession

Thanks for the quotes.
Demonstrates how much credibility big corporate execs have.
They knew what was coming.

The capper would have been just about anything Bernie Madoff had to say.

Ben Bernanke at Jackson Hole: The Panic, in Retrospect

"In my humble opinion he fails to note that the failure of AIG would have had a domino effect which would have endangered Morgan Stanley (MS) and Goldman Sachs (GS)."

That's it, in a nutshell. The taxpayers should own GS & MS.
Perfect way to piece them out.


"but sheds no light on the future course of monetary policy."

I really don't think he knows himself yet.

Who Watches over the New York Fed?

The Fed definitely needs a whole lot more transparency and if they don't feel like they're a part of government, get rid of 'em.
I like Ron Paul's (my man) proposal to audit them, just for the drama and entertainment value, then get rid of 'em.

Lastly, there are several other Fed districts around the country with supposedly equal weight to the NY Fed. Why does this not feel right?

Questioning Conventional Wisdom on Credit Default Swaps

Bottom line- there wasn't enough backing the CDS's so that when they were needed, they were worth something

TARP for Regulators

"increasing the status of regulators and reducing the threat of regulatory capture"

can't be done.
If these people could foresee hazardous events, they wouldn't be civil servants.

The best way to minimize systemic risk is to eliminate TBTF and keep things simple and transparent, including derivatives.

Does the Administration Care About Executive Compensation?

break em up using the tools of antitrust.
this will at least force them to work for the bonuses.