Category Archives: regulation

Why Big Banks Should be Smaller

Posted on March 30, 2009 by Felix

James Kwak wants to make US financial institutions smaller: There are a few main things that made companies like AIG and Citigroup systematically important. One was interconnectedness: they did business with lots of counterparties. One was complexity: when push came … Continue reading →

Posted in banking, regulation | 5 Comments

Did Chanos Break the Law?

Posted on February 13, 2009 by Felix

The best way of getting lots of angry comments on a blog entry is to be rude about Apple. But the second-best way is nice about short sellers. So it’s hardly surprising that after I made sympathetic noises about Jim … Continue reading →

Posted in fraud, regulation | 3 Comments

SEC vs Chanos: Another Silly Sideshow

Posted on February 13, 2009 by Felix

Has the SEC learned nothing? Its investigations of David Einhorn, rather than the companies he was shorting, were idiotic. Its ban on short-selling financial stocks was idiotic. (The XLF financials ETF was at $22 when the ban was implemented; it’s … Continue reading →

Posted in regulation | 1 Comment

Why We Need Federal Insurance Regulation Now

Posted on February 9, 2009 by Felix

Rolfe Winkler has a great post on Allstate’s finances today, which underscores two things: the urgency of massive regulatory overhaul in the financial sector, and the necessity of including insurance companies under the unified financial-services regulatory umbrella. Unless and until … Continue reading →

Posted in insurance, regulation | 2 Comments

More on Lehman Revisionism

Posted on January 28, 2009 by Felix

I’ve been thinking a bit more about the Lehman Brothers revisionism coming from the likes of Bernanke, Paulson, and Geithner: the fact that although they were quite clear about letting Lehman fail at the time, they subsequently have backtracked on … Continue reading →

Posted in regulation | 1 Comment

Phil Gramm’s U-Turn

Posted on January 24, 2009 by Felix

Phil Gramm, November 2008: “There is this idea afloat that if you had more regulation you would have fewer mistakes,” he said. “I don’t see any evidence in our history or anybody else’s to substantiate it.” He added, “The markets … Continue reading →

Posted in economics, fiscal and monetary policy, regulation | 1 Comment

Bank Regulation Datapoint of the Day

Posted on January 22, 2009 by Felix

From Binyamin Appelbaum: Since 2000, about 240 banks have converted from federal to state charters… About 12 percent of the banks that moved to state charters escaped federal regulatory actions, and experts on bank oversight say such cases are the … Continue reading →

Posted in banking, regulation | 1 Comment

Citigroup: Where Was Geithner?

Posted on January 15, 2009 by Felix

The toughest question for Tim Geithner, at his confirmation hearing, will be something along these lines: "The single most important job of the president of the New York Fed is to prevent the collapse of a systemically-important bank. No bank … Continue reading →

Posted in banking, regulation | 1 Comment

The Problems With Mary Schapiro

Posted on January 15, 2009 by Felix

Mary Schapiro is going to face some very tough confirmation hearings on her way to taking over the SEC, and in the wake of a big WSJ article today, her confirmation is by no means a foregone conclusion. Th article, … Continue reading →

Posted in regulation | 1 Comment

Where are the Risk Auditors?

Posted on January 13, 2009 by Felix

As Roger Lowenstein says, Ezra Merkin was (is?) "a Wall Street sage, noted philanthropist and professional money manager". And yet for all his protestations that he was risk-conscious and diversified and an expert at due diligence, he still ended up … Continue reading →

Posted in banking, hedge funds, regulation | 1 Comment

Bernanke’s Unconvincing Confidence

Posted on January 13, 2009 by Felix

Ben Bernanke’s speech in London this morning constitutes a clear overview of the various bullets that the Fed has fired into the onrushing crisis. But he starts off with a bold and puzzling claim: I believe that the Fed still … Continue reading →

Posted in fiscal and monetary policy, regulation | 1 Comment

Will FHLB Atlanta’s Failure Spark a Major Regulatory Overhaul?

Posted on January 8, 2009 by Felix

Over a year ago, Chuck Schumer said (and I agreed) that the Federal Home Loan Bank of Atlanta was an all-but-unregulated nightmare of enormous proportions. Now, HousingWire’s Paul Jackson tweets a rumor that FHLB Atlanta is going to be taken … Continue reading →

Posted in banking, regulation | 1 Comment

Meagan Chung Pleads Innocent

Posted on January 7, 2009 by Felix

In one of the longest news articles I can remember reading in the New York Post, the SEC’s Meagan Chung — the woman who investigated Bernie Madoff in 2005 and cleared him of fraud — tries, unconvincingly, to defend herself. … Continue reading →

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How Did Madoff Fool the SEC?

Posted on January 5, 2009 by Felix

Kara Scannell has been looking at the SEC’s Madoff memos: The 2005 review and Mr. Markopolos’s report prompted the SEC to open an enforcement case, a notch more serious in the SEC’s world than the previous examination. "The staff is … Continue reading →

Posted in fraud, regulation | Comments Off on How Did Madoff Fool the SEC?

Why Elizabeth Warren is an Inspired Choice to Oversee TARP

Posted on December 8, 2008 by Felix

Tom Brown has a peculiar column today taking issue with the inspired choice of Elizabeth Warren to chair the panel overseeing the TARP program. The problem, in his eyes, is that Warren is a fighter for consumers, rather than banks. … Continue reading →

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Spitzer vs Big Finance, Part 2

Posted on December 4, 2008 by Felix

Eliot Spitzer is blogging! Or he has a column at Slate, anyway: For years, we have accepted a theory of financial concentration–not only across all lines of previously differentiated sectors (insurance, commercial banking, investment banking, retail brokerage, etc.) but in … Continue reading →

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The Failed Subprime Clampdown

Posted on December 2, 2008 by Felix

Matt Apuzzo’s excellent article on how the goverment failed to reign back subprime mortgage lenders paints a picture of deregulation run amok: The administration’s blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces … Continue reading →

Posted in housing, regulation | Comments Off on The Failed Subprime Clampdown

Blame Citigroup’s woes on the Citi-Travelers Merger

Posted on December 2, 2008 by Felix

Justin Fox — rightly, I think — reckons that the repeal of Glass-Steagal was on net a good thing, not a bad thing, for the US banking system, if only because it has allowed big commercial banks like Bank of … Continue reading →

Posted in banking, regulation | 4 Comments

Credit Card Crunch

Posted on December 1, 2008 by Felix

Meredith Whitney has a piece in the FT which is full of extremely large numbers: Capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and … Continue reading →

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Has the FDIC Bumped Up its Deposit Insurance Again?

Posted on November 24, 2008 by Felix

At 6am this morning, I got a peculiar email from Citibank — not as a journalist, but just as one of their depositors. The subject line was startling: Unlimited FDIC Insurance Coverage on your Citibank Checking Account The email continued: … Continue reading →

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Did the End of the Investment Banks Cause the Latest Sell-Off?

Posted on October 27, 2008 by Felix

Robert Peston thinks that much of the recent sell-off can be attributed to the decision by Goldman Sachs and Morgan Stanley to convert into banks: It was caused, to a large extent, by an exceptional and unprecedented shrinkage in the … Continue reading →

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USA: The Biggest Obstacle to Global Banking Regulation

Posted on October 18, 2008 by Felix

David Galbraith goes down the litany of problems with US banks which is familiar to any European in the US or, most likely, to anybody who even knows a European in the US. Most of it surrounds the ridiculous difficulty … Continue reading →

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Annals of Regulatory Arbitrage, German Structured Products Division

Posted on October 15, 2008 by Felix

What is it about German banks selling credit derivatives to their retail customers? Back in 2000 I wrote about a scandal involving Dresdner bank and many others, who used credit derivatives to transform Ecuadorean PDI bonds (dollar denominated, coupon 3.5%, … Continue reading →

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TARP for CP

Posted on October 7, 2008 by Felix

Hey, the Fed has a new acronym! It’s called the CPFF (commercial paper funding facility) and it’s basically the TARP, only instead of buying toxic mortgage-backed securities, the government is buying commercial paper. The new facility is backstopped by the … Continue reading →

Posted in bonds and loans, regulation | Comments Off on TARP for CP

The Duplicitous Sheila Bair

Posted on October 6, 2008 by Felix

After Wachovia agreed to be bought by Wells Fargo on Friday, the FDIC’s Sheila Bair put out a press release saying that her agency "stands behind its previously announced agreement with Citigroup". Except, it wasn’t quite as simple as that. … Continue reading →

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