Today in Our Completely Captured Financial Regulatory Apparatus

By: Thursday November 29, 2012 11:40 am

Adding to the spate of delays on finalizing rules from the Dodd-Frank financial reform law, the final Volcker rule will probably not get finished until 2013. This is at least six months past due, as the original law called for a final Volcker rule in July. Five separate government agencies – the FDIC, the Federal [...]

Shadow Banking System Grows Larger After Financial Crisis

By: Monday November 19, 2012 10:46 am

Most experts agree that one of the major causes of the financial crisis was the rise of the shadow banking system, an unregulated sector of financial transactions that often stand in for traditional banking operations. This includes money market funds, insurance products like credit default swaps (as well as much of the unregulated derivatives market), [...]

Sherrod Brown, David Vitter Team Up to Press Federal Reserve About Capital Requirements

By: Wednesday August 8, 2012 12:25 pm

On financial regulatory issues, Republicans have recently retreated back to the idea that all we need to do is to ensure adequate capital requirements at the largest banks. If they can handle anything that comes across with their own reserves, then taxpayer money is secure and the free market can sort out everything else. There’s [...]

Moody’s Downgrades 15 Big Banks

By: Friday June 22, 2012 8:55 am

The ratings agency Moody’s reduced the credit ratings of 15 large banks yesterday, in an action that cast a poor light on both the banks and the ratings agencies, if that’s possible. First, here are the facts, and you’ll see that this was expected for some time: The credit agency, Moody’s Investors Service, which warned [...]

European Recession Spilling Over Into Global Economy

By: Tuesday June 5, 2012 10:17 am

I can’t believe that anyone tried to trot out as conventional wisdom the idea that Europe’s troubles would cause no economic turmoil in the US. We don’t export much to Europe, the story went. The financial channel is more dangerous, but US banks have insulated themselves from the problems over there. Wrong and wrong. In [...]

JPMorgan Ignored Risks in Pursuing Fail Whale Trade

By: Tuesday May 15, 2012 8:15 am

One thing to understand about the Fail Whale debacle at JPMorgan Chase is that there were lots of warning signs. The trades were public knowledge for over a month; in fact, that’s part of the reason they failed so spectacularly, as hedge funds got wind of the trades and started taking the other side of [...]

Glass-Steagall or Bank Size? Why Not Both, And More?

By: Monday May 14, 2012 12:19 pm

In the wake of JPMorgan Chase’s Fail Whale trade, proponents of stiffer regulation on Wall Street than what was ushered in with Dodd-Frank have offered a variety of solutions. In truth all of them could be beneficial in tandem to reduce risk and political influence from the financial system. For instance, Elizabeth Warren, who has [...]

Levin and Merkley Confirm: We Didn’t Intend Fail Whale Trades To Be Legal

By: Friday May 11, 2012 1:39 pm

Politicians using Jamie Dimon’s Fail Whale trade as a pretext to call for tighter banking regulations are performing exactly the correct public service in their job description. They’re supposed to respond to events as they happen, and create appropriate safeguards to minimize the risk from those events. And Senators Levin and Merkley make the point [...]

JPMorgan’s $2 Billion Loss Shows Impotence of the Volcker Rule

By: Friday May 11, 2012 6:18 am

I spent most of yesterday afternoon laughing my ass off about Jamie Dimon’s London Whale loss, but it’s actually not all that funny. JPMorgan Chase revealed a $2 billion loss on a bad bet they made on a credit default swap index trade. They described it as an egregious, self-inflicted mistake. I think Felix Salmon [...]

Dimon’s Jerk Move Leads to Early Release of Fed’s Stress Tests

By: Tuesday March 13, 2012 1:55 pm

The Federal Reserve, which released the details of its Federal Open Market Committee meeting today (no changes to monetary policy), did not plan on also releasing the results of their stress tests today. But they did in a hurry just a few minutes ago. The reason why is indicative of the incredible arrogance on the [...]

Banks Continue to Wriggle Out of New International Standards

By: Tuesday January 10, 2012 8:55 am

Major banks caught a break when federal regulators determined that financial institutions could plunge below international liquidity levels in the event of a financial crisis. Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties. “During a period of stress, banks would be expected to [...]

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