SEC Report on Credit Ratings Highlights Conflict of Interest Inherent in Issuer-Pays Model

By: Wednesday December 19, 2012 11:39 am

The Securities and Exchange Commission released a report on the method for how credit rating agencies get their business, something mandated by the Dodd-Frank financial reform law. And just as expected, it showed a serious conflict of interest in the current business model, where rating agencies are paid by the issuer of securities, and have to compete for their business, adding all sorts of distortions into the kinds of ratings they give. A better model, envisioned by Dodd-Frank at first but then put into this study, would allow an oversight board to dole out to qualified ratings agencies the securities that would get rated, removing the conflict of interest entirely.

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), [...]

Obama vs. Taibbi: Obama’s Defense of Dodd-Frank Falls Short

By: Monday October 29, 2012 9:15 am

Taibbi is pretty polite about it, but Obama’s defense involves a lot of misdirection. It assumes that Lehman Brothers, by virtue of having failed, was the only financial institution out there responsible for the collapse, rather than an example of industry-wide behavior.

Study: Time to Stop Banks from Risky Trading

By: Wednesday October 10, 2012 12:59 pm

Via Mark Gongloff, the IMF has released a new study showing that, in essence, the world would be a much safer place if international banks stopped trading in the financial markets. Why can’t banks just trade like George Soros and everybody else? Why can’t they have any fun? A few reasons: First, banks have tons [...]

Obama-Appointed Judge Strikes Down CFTC Commodity Speculation Limits

By: Friday September 28, 2012 3:59 pm

Everybody get on the commodity speculation train. A federal judge today threw out the Dodd-Frank provision that empowered the Commodity Futures Trading Commission to set position limits on commodity trading. Judge Robert Wilkins said in his ruling that the CFTC did not prove the necessity of position limits to curb runaway speculation, and that the [...]

Randy Neugebauer Angry that CFPB is Compensating Their Employees Decently

By: Thursday September 20, 2012 12:23 pm

Rep. Randy Neugebauer (R-TX), who chairs the House Subcommittee on Oversight and Investigations in the House Financial Services committee, writes up a hatchet job on the Consumer Financial Protection Bureau in today’s Wall Street Journal. He’s really concerned about the CFPB’s salary structure: Pursuant to the Dodd-Frank Act, the bureau’s director may set and adjust [...]

The Real Beneficiary of the Moocher Society – Wall Street

By: Thursday September 20, 2012 10:16 am

The Daily ShowGet More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook The not-as-funny way to make the point Jon Stewart made about the Republican conception of the entitlement society and where it fails to intersect with reality comes from Simon Johnson. The true “moochers” in American life are, not surprisingly, [...]

American Bankers Association Creates Slush Fund for Secret Campaign Spending

By: Thursday September 6, 2012 1:59 pm

The American Bankers Association, a trade group for thousands of banks headed by former Oklahoma Governor Frank Keating, voted to start a legal entity for this federal campaign cycle, adding millions of dollars into an already overstuffed election. The ABA entity would reportedly donate to existing Super PACs, so that the member banks can keep [...]

Banks Want Another Account to Disguise Their Risky Trades

By: Wednesday August 29, 2012 12:58 pm

Whither the Volcker rule? After a flurry of discussion about it in the wake of JPMorgan Chase’s Fail Whale trades, we’ve heard significantly less of late. In fact, regulators blew through a July deadline on finalizing the Volcker rule. The last word we had was that the deadline was pushed back to the end of [...]

Portman Conspiracy Theory Neglects Fact That Obama Administration Has Consistently Dragged Feet on Regulations

By: Friday August 17, 2012 12:55 pm

Spurned VP candidate Rob Portman has an opinion piece in the Wall Street Journal today arguing that the Obama Administration has delayed regulations from taking effect until after the 2012 elections, when the hellfire will come down and the jackbooted thugs at the EPA will force us to stop using our smart phones and eat [...]

Banks Have “Recovery Plans,” A Second Living Will, to Deal With Their Demise

By: Friday August 10, 2012 11:46 am

Reuters uncovers a scoop, that there’s apparently a second-layer living will process, a secret one beyond the public living wills we know about. To refresh your memory, banks are required to fill out living wills that detail how they would be unwound in the case of a financial failure. The initial public living wills that [...]

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