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tsuomela : banking   185

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Inside the New York Fed: Secret Recordings and a Culture Clash - ProPublica
"A confidential report and a fired examiner’s hidden recorder penetrate the cloistered world of Wall Street’s top regulator—and its history of deference to banks."
the-fed  banking  regulation  regulatory-capture  failure  too-big-to-fail  economics 
september 2014 by tsuomela
Bitcoin May Be the Global Economy's Last Safe Haven - Businessweek
"Along comes Bitcoin, a currency in which every transaction is stored by the entire network and every coin has its own story. There’s nothing to trust but math. Suddenly an idea that sounded terrible—a totally decentralized currency without a central authority, where semi-anonymous parties exchange meaningless tokens—becomes almost comforting, a source of power and authority."
online  economics  technology  banking 
may 2013 by tsuomela
Simon Johnson: The Federal Reserve and the Libor Scandal - NYTimes.com
Let’s hope he is starting to see issues in the financial sector more clearly: Too big to fail is too big to exist – or to behave in accordance with the law. This is a problem of vast, nontransparent and dangerous government subsidies
economics  banking  finance  crisis  law  deception  corruption 
july 2012 by tsuomela
Ben Bernanke House Testimony - The Casino's Rigged. Don't Forget Because They Say It Ain't. - Esquire
People may have very little confidence in the government's competence, but they have absolutely none in the financial system's honesty. People may have very little hope that government can fix things to even out the losses, now that all the serious people agree that the national economy should be run as though at were one of Sheldon Adelson's casinos in Macao, but they have no hope at all that the financial system even has any intention at all of reforming itself. Even though it's been ignored by most of the U.S. mainstream press, LIBOR is a significant tell. The people who rigged it, and the people who profited from the big fix, did so while the entire world financial system was tottering on the verge of utter ruin. These crooks knew exactly what the other crooks had done, and they were very aware of the consequences of what they were doing, and they organized their criminal profiteering anyway. This is a level of amorality that is almost staggering. But, once you accept that corruption is the system, there is a kind of mad logic to it. After all, does Adelson care about the poor schmucks gambling themselves into a hole at the blackjack tables? Caveat emptor, bitches.
politics  corruption  wall-street  finance  banking 
july 2012 by tsuomela
The Spreading Scourge of Corporate Corruption - NYTimes.com
"Just consider the scale of recent wrongdoing. Libor is one of the most important rates in the economy. It determines the return on the savings of millions of people, as well as the rate they pay on their mortgage and car loans. It is the benchmark for hundreds of trillions of dollars worth of financial contracts.

Bigger markets allow bigger frauds. Bigger companies, with more complex balance sheets, have more places to hide them. And banks, when they get big enough that no government will let them fail, have the biggest incentive of all. A 20-year-old study by the economists Paul Romer and George Akerlof pointed out that the most lucrative strategy for executives at too-big-to-fail banks would be to loot them to pay themselves vast rewards — knowing full well that the government would save them from bankruptcy. "
business  wall-street  finance  fraud  banking  corporate 
july 2012 by tsuomela
Stumbling and Mumbling: Left vs right: out of date
"In other words, the issue is not one of “markets vs. state” - “free” markets vs. “sand in the wheel” transactions taxes. It is: how can banks be better organized? And not just banks. The issue of NHS or schools reform poses the same questions.

In this sense, the traditional statist left and free market right are both wrong." Annotated link http://www.diigo.com/bookmark/http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/03/left-vs-right-out-of-date.html
organization  organizations  sociology  banking  business  management 
march 2012 by tsuomela
Stumbling and Mumbling: The "scarce talent" con
"Bank bosses have played a trick which countless ordinary workers do. The IT support guy who introduces lots of “security features” to his firm’s IT systems, or the secretary who has an incomprehensible filing system, make themselves indispensable by inconveniencing others."
banking  business  management  managerial  complexity  income  economics  rewards  incentives  talent 
february 2012 by tsuomela
interfluidity » Why is finance so complex?
"Finance has always been complex. More precisely it has always been opaque, and complexity is a means of rationalizing opacity in societies that pretend to transparency. Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear."
banking  complexity  opacity  transparency  game-theory  risk  money  economics 
january 2012 by tsuomela
Stumbling and Mumbling: Organizational failure
"Here’s a theory. It’s to do with organizational brittleness. Here are some background principles:
- The death rate for firms generally is high. Of the UK’s biggest employers in 1907, only three are still independent, stock market-listed companies today.
- Companies embody specific vintages of organizational capital. Their expertise depends upon the state of technology when they were formed. It’s rare for a firm to transform itself from one activity to a completely different one
banking  crisis  recession  knowledge  knowledge-management  failure 
august 2011 by tsuomela
The Historical Society: Banking was Contentious—Why Isn't Its History?
"This ongoing popular distrust of banks and bankers, however, seems not to be shared by many of the economic historians we look to for leadership on these issues, and who often treat historical bankers with respect verging on reverence. As a result, the stories of American banking that find there way into mainstream history often treat the objectives and goals of bankers as economically sound and politically neutral, even when they acknowledge popular dissent.
"
history  economics  banking  controversy 
april 2011 by tsuomela
Marxism, Liquidated | Savage Minds
Comments discuss the place of Marx in anthropology and social sciences.
anthropology  marxism  class  ethnography  banking  theory  comments  discussion  social-science 
march 2011 by tsuomela
interfluidity » Hangover theory and morality plays
The people who have sinned are not by and large the people being punished. Some people overconsumed relative to their income, and some people invested poorly. Those who overconsumed have mostly faced consequences for their misbehavior — they are either deeply in debt, or they have endured foreclosure or bankruptcy. But the people who invested absurdly, especially “savers” who lent money but permitted themselves ignorance and indifference to how their wealth would be mismanaged, have not suffered the costs of their recklessness. ... ...But rather than condemn them for negligence and permit their claims to be appropriately devalued, we applaud them for “prudence” and ...You don’t counter that sort of villainy with technocratic arguments about liquidity traps. You point out that the motherfuckers who are calling themselves prudent, who are blocking both writedowns and government action that might risk inflation, are hypocrites and thieves.
economics  moral  morality  rhetoric  debt  savings  money  banking  recession  crisis 
december 2010 by tsuomela
Inured to "Trillions" : CJR
I understand that there’s a lot already in the public domain about the emergency loan programs, but it’s important to take a step back on this. We’ve become inured to stuff that was unthinkable a few years ago. Think about how awesome (in the old sense of the world) this bailout was, how stark the contrast between what the banks got and what struggling homeowners got (the shaft), and how much risk the Fed took in our name and in secret. It’s too easy to succumb to a sort of savvy complacency here, but the press has to fight that urge.

For my money (which is ironic, because these are the two outlets here which have never got a dime from me), some of the best coverage comes from Bloomberg and—dare I say it—The Huffington Post.
banking  crisis  journalism  media  scale 
december 2010 by tsuomela
Interactive: Which Banks Got Emergency Loans from the Fed During the Financial Meltdown?
Wednesday the Federal Reserve released data on more than 21,000 loans and other deals it made through a dozen emergency programs created during the financial crisis. The Fed used trillions of dollars to stabilize the economy when the housing bubble burst and credit markets froze.

We combined the Fed’s three programs that loaned directly to banks and other financial firms with the goal of getting them to start lending again. We hope to post on the Fed’s other programs soon.
data  media  federal-reserve  crisis  2008  business  banking  loans  journalism 
december 2010 by tsuomela
Why Do We Keep Indulging the Fiction That Banks Are Private Enterprises? « naked capitalism
Ambrose Bierce, in The Devil’s Dictionary, described a partnership as “When two thieves have their hands so deeply plunged into each other’s pockets that they cannot separately plunder a third party.” Pointing out that banks are de facto partners of the state, enjoying substantial privileges (that unlimited checkwriting on official coffers when things go bad, the ongoing subsidies, the lavish private sector pay) without commensurate duties opens a huge can of worms. It goes beyond the usual, relatively anodyne “privatized gains and socialized losses” and opens up the terrain of “What do we mean by private enterprise?” Part of the American ideology is that there is a hard line between government and business. But entire industries suck off the state with far too few strings attached. The black/white distinction is illusory; what we instead have is a gradient.
banking  private  enterprise  business  government  regulation  boundaries  double-standards  power 
september 2010 by tsuomela
Required Intellectual Capital « The Baseline Scenario
"However, at another level – in terms of the analytical consensus around these issues – there is a great deal of progress in the right direction. In particular, an important new paper by Samuel Hanson, Anil Kashyap, and Jeremy Stein, “A Macroprudential Approach to Financial Regulation” pulls together the best recent thinking and makes three essential points." 1. be more serious about capital requirements 2. set capital requirements by type of asset not type of lender 3. no evidence for adverse effects of increased capital requirements
economics  policy  financial-services  banking  capital  regulation 
july 2010 by tsuomela
interfluidity » The stickiest price
Among the stickiest prices, of course, is the wage rate. In practice, from the mid 1980s right up through 2008, the one thing modern central bankers absolutely positively refused to tolerate was “inflation” of wages. God forbid there be an upcreep in unit labor costs, implying that a shift in the income share away from capital and towards workers. Central banks jack up interest rates right away, because what if the change in relative prices is a mistake? We wouldn’t want that to stick, oh no no no no no. But when the capital’s share of income shifted skyward while deunionization and globalization sapped worker bargaining power? Well, we learned the meaning of an asymmetric policy response.
federal-reserve  banking  interest-rates  wages  monetary-policy  jobs  inflation 
july 2010 by tsuomela
Tremble, Banks, Tremble | The New Republic
James K. Galbraith reviews the economic crisis "The cause, at the deepest level, was a breakdown in the rule of law. And it follows that the first step toward prosperity is to restore the rule of law in the financial sector."
banking  economics  fraud  money  policy  regulation  reform  government  law  financial-services 
july 2010 by tsuomela
TheMoneyIllusion
A slightly off-center perspective on monetary problems.
weblog-individual  monetary-policy  banking  finance  economics 
july 2010 by tsuomela
FT.com / Comment / Opinion - On the brink of a new age of rage
by Simon Schama - "Historians will tell you there is often a time-lag between the onset of economic disaster and the accumulation of social fury. In act one, the shock of a crisis initially triggers fearful disorientation; the rush for political saviours; instinctive responses of self-protection, but not the organised mobilisation of outrage. Whether in 1789 or now, an incoming regime riding the storm gets a fleeting moment to try to contain calamity. If it is seen to be straining every muscle to put things right it can, for a while, generate provisional legitimacy."
economics  recession  crisis  business  banking  finance  justice  revolution  anger  emotion  politics  history 
june 2010 by tsuomela
interfluidity » Capital can’t be measured
So, for large complex financials, capital cannot be measured precisely enough to distinguish conservatively solvent from insolvent banks, and capital positions are always optimistically padded. Given these facts, and I think they are facts, even “hard” capital and leverage restraints are unlikely to prevent misbehavior. Can anything be done about this? Are we doomed to some post-modern quantum mechanical nightmare wherein “Schrödinger’s Banks” are simultaneously alive and dead until some politically-shaped measurement by a regulator forces a collapse of the superposition of states into hunky-doriness?

Yes, we are doomed, unless and until we simplify the structure of the banks.
economics  banking  finance  financial-services  regulation  capital  law  measurement 
june 2010 by tsuomela
The Elephant in the Room
“Too Big to Fail” Financial Institutions Must Be Addressed
banking  financial-services  reform  finance  wall-street 
march 2010 by tsuomela
Gentrification Hangover | The American Prospect
How New York could create affordable housing from its empty glass condo buildings and failed takeover projects.
housing  economics  gentrification  recession  banking  real-estate  debt  class  city(NewYork)  city(SanFransisco) 
march 2010 by tsuomela
Secret Banking Cabal Emerges From AIG Shadows: David Reilly - Bloomberg.com
The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.
banking  reform  federal-reserve  government  bailout  aig 
january 2010 by tsuomela
Rick Bookstaber: Does Financial Innovation promote Economic Growth?
Do innovative products promote growth by increasing market efficiency?

If we were in an Arrow-Debreu world, the answer would be yes, since these products will help span that space of the states of nature. But the incentives behind innovation move in the other direction. The objective in the design and marketing of innovative products is not market efficiency, but profitability for the banks. And market efficiency is the bane of profitability.
economics  wall-street  markets  innovation  growth  information-asymmetry  banking  financial-engineering 
november 2009 by tsuomela
FT.com / Comment / Opinion - Mother of all carry trades faces an inevitable bust
This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall.
econometrics  banking  gloom-and-doom  bubble  international  trade  monetary-policy 
november 2009 by tsuomela
Can Citigroup Carry Its Own Weight? - Series - NYTimes.com
OVER the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup.
banking  government  bailout  regulation  wall-street  free-markets 
november 2009 by tsuomela
Interfluidity :: Asset inflation, price inflation, and the great moderation
So what's the problem? First, in exchange for apparent stability, the central-bank-backstopped "great moderation" has rendered asset prices unreliable as guides to real investment. I think the United States has made terrible aggregate investment decisions over the last 30 years, and will continue to do so as long as a "ride the bubble then hide in banks" strategy pays off. Under the moderation dynamic, resource allocation is managed alternately by compromised capital markets and fiscal stimulators, neither of which make remotely good choices. Second, by relying on credit rather than wages to fund middle-class consumption, the moderation dynamic causes great harm in the form of stress from unwanted financial risk, loss of freedom to pursue nonremunerative activities, and unnecessary catastrophes for isolated families. Finally, maintaining the dynamic requires active use of policy instruments to sustain an inequitable distribution of wealth and income in a manner that I view as unjust.
economics  asset-prices  inflation  inequality  policy  banking  income-distribution 
october 2009 by tsuomela
FT.com / Markets / Insight - Rally fuelled by cheap money brings a sense of foreboding
In the meantime, it is crystal clear that the longer that money remains ultra cheap, the more traders will have an incentive to gamble (particularly if they privately suspect that today’s boom will be short-lived and want to score big over the next year). Somehow all this feels horribly familiar; I just hope that my sense of foreboding turns out to be wrong.
economics  banking  recession  crisis  gloom-and-doom 
october 2009 by tsuomela
Big Is Bad Again - Economix Blog - NYTimes.com
In the 1912 presidential campaign, there were three main views on how to handle megatrusts: do nothing (President William Taft); build up federal power to counterbalance and regulate concentrated industrial power (former President Theodore Roosevelt, running as the Bull Moose Progressive independent candidate); and break up big companies to reduce their power (Woodrow Wilson, advised by Louis D. Brandeis).
history  government  regulation  monopoly  1910s  america  recession  banking  business 
october 2009 by tsuomela
Rick Bookstaber: Why Do Bankers Make So Much Money?
Why Do Bankers Make So Much Money?
A tenet of economics is that in competitive markets there are no economic rents. That is, people get fairly paid for their efforts, their capital input, and for bearing risk. They are not paid any more than is necessary as an incentive for production. In trying to understand the reason for the huge pay scale within the finance industry, we can either try to justify the pay level as being a fair one in terms of the competitive market place, or ask in what ways the financial industry deviates from the competitive economic model in order to allow economic rents.
talent  banking  money  income  free-markets  markets  competition  work  labor 
october 2009 by tsuomela
The Consensus On Big Banks Is Beginning To Crack | The New Republic
Links to a couple of authors talking about banking reform: Paul Volcker, Martin Wolf, Mervyn King (Great Britain)
banking  reform  regulation  government  too-big-to-fail 
october 2009 by tsuomela
Interfluidity :: Vanilla afterthoughts
Governments and markets are dissimilar in the form and causes of their mistakes, and the badness of their errors is not uniformly rankable.
regulation  economics  banking  government  markets  free-markets 
october 2009 by tsuomela
"So You Just Squandered Billions . . . Take Another Whack at It" By Steven Pearlstein
The bad stuff happened after I left. . . . The losses that occurred on my watch were more than offset by our profits during the boom. . . . I saw it coming and sold off most of it before the crash. . . . Our securities performed better than most.

There is probably some truth to these excuses, but taken as a whole, they are really nothing more than a cop-out. It's hard to believe that large organizations could really go from being smart and honest one day to being stupid and deceitful a year later. Nor is it credible that the money they earned during the good years was the result of individual brilliance while the money lost in the bad years was the result of uncontrollable market forces. It is also a peculiar moral code that says it is okay to traffic in crappy securities, just as long as you don't get stuck with them in your own portfolio when the market finally craters.
economics  finance  elites  power  wealth  meritocracy  success  money  banking  morality  ethics  business  business-as-usual  behavior 
september 2009 by tsuomela
The Limits of Arbitrage « The Baseline Scenario
...arbitrageurs, the very smart and talented traders at hedge funds who will take prices that are out of line and bring them back into line, making a good fee and making prices reflect all available information, the very building block necessary for EMH to work, can’t do their job if they are time or credit constrained. Specifically, if they are highly leveraged, and prices move against their position before they return to their fundamental value – if the market stays irrational longer than they can remain solvent – they’ll collapse before they can do their jo
finance  arbitrage  money  wall-street  banking  financial-engineering  limits  efficiency  markets  free-markets  debt  leverage 
august 2009 by tsuomela
I, Cringely » Blog Archive » Is Technology Evil? - Cringely on technology
TRADING has winners and losers but Goldman is an INVESTMENT bank (worse still, they are now a bank holding company) pretending to be on the side of economic growth. Trading relies on finding and exploiting inefficiencies in the system while investing grows the economy. Trading is a parasite on investing. I’m not saying to ban it, I AM saying that technology has enabled outfits like Goldman to be such efficient parasites that they threaten the survival of their hosts.
technology-effects  technology  banking  business  finance  evil  investment  high-frequency-trading 
august 2009 by tsuomela
Filling the Financial Regulatory Void « The Baseline Scenario
I would argue that the fundamental flaw in financial regulation is that it is based on the assumption that regulators are not self-interested individuals like the rest of us. We think about regulation only in terms of how to engineer the incentives of the regulated and ignore the fact that regulators themselves rarely have a stake in doing their job well, which in any other occupation would limit the motivation and types of individuals a position attracts.
government  regulation  regulatory-capture  reform  failure  banking  finance  financial-services  incentives 
august 2009 by tsuomela
Don't Dismiss Taibbi : CJR
Mainstream financial journalism is doing its level, eye-rolling, heavy-sighing best to stuff Matt Taibbi back into the alt-press hole he came from, but he’s not going along with it, and the mainstreamers in any case are making a big mistake.

The Rolling Stone writer cemented his status as the enfant terrible of the business press with “The Great American Bubble Machine,” a 10,000-word excoriation of Goldman Sachs, a muckraker’s-eye view of Goldman history, exploring the bank’s and Wall Street’s contributions to various financial disasters
journalism  banking  crisis  recession  norms  behavior 
august 2009 by tsuomela
Op-Ed Columnist - Rewarding Bad Actors - NYTimes.com
It’s hard to imagine a better illustration than high-frequency trading. The stock market is supposed to allocate capital to its most productive uses, for example by helping companies with good ideas raise money. But it’s hard to see how traders who place their orders one-thirtieth of a second faster than anyone else do anything to improve that social function.
wall-street  banking  financial-services  high-frequency-trading  benefits  economics 
august 2009 by tsuomela
Ah, Wall Street. Seeing the real you at last. » New Deal 2.0
Financial innovation was presented to us in a way that suggested that great things were happening for mankind. The presentations were usually vague. To understand them, we had only the power of our own imaginations, or perhaps, failing that, our awe in the face of this powerful expertise, confidently propelling us to a greater future....

Malarky. This is all code for defer to the wishes of those who make money from these techniques.
finance  financial-engineering  financial-services  banking  money  mythology  religion  capitalism  innovation  gloom-and-doom  regulation 
august 2009 by tsuomela
Dismantling the Temple
The remote technocrats at the Fed who decide money and credit policy for the nation are deliberately opaque and little understood by most Americans. For the first time in generations, they are now threatened with popular rebellion.
banking  federal  the-fed  economics  future 
july 2009 by tsuomela
Matt Taibbi - Taibblog - The real price of Goldman’s giganto-profits - True/Slant
Taibbi gives a good rant on the subsidies that boosted Goldman Sachs profits to record levels.
business  business-as-usual  economics  regulatory-capture  banking  finance  profit  subsidy  rant 
july 2009 by tsuomela
Stumbling and Mumbling: Regulation vs nationalization
4 arguments for strong regulation of banks. "But we regulate banks not because they'll make too much money, but for fear that, left to themselves, they'll lose too much."
government  regulation  nationalization  banking 
july 2009 by tsuomela
naked capitalism: Why Big Capital Markets Players Are Unmanageable
What makes capital markets businesses different from any other form of enterprise I can think of is the amount of discretion given of necessity to non-managerial employees, meaning traders, salesmen, investment bankers, analysts. In pretty much any other large scale business, decisions that have a meaningful bottom line impact (pricing, new sales campaign, investment decision) are deliberate affairs, ultimately decided at a reasonably senior level.
banking  finance  financial-services  business  business-model  power  employee 
july 2009 by tsuomela
Michael Lewis on A.I.G. | vanityfair.com
profile of AIG FP and speculations on why it failed, especially the personality of Joe Cassano.
economics  wall-street  crisis  banking  financial-engineering  finance  aig 
july 2009 by tsuomela
SILOs --more action needed? ~ Angry Bear
Tax advantaged "sale-leasebacks" with strapped-for-cash municipalities (SILOs, in the ever-present tax acronym set) came back to light when the Washington Metro train crashed a week ago. The cars were ones that were involved in the metro authority's SILO deals with various banks, and the authority didn't have any spare cash left to fund replacements
economics  city  taxes  banking  law  crisis  stupidity 
july 2009 by tsuomela
FT.com / Columnists / Martin Wolf - The cautious approach to fixing banks will not work
If institutions are too big and interconnected to fail, and no neat structural solution can be identified, alternatives must be found: much higher capital requirements and greater attention to liquidity are the obvious ones.
economics  banking  regulation  crisis 
july 2009 by tsuomela
naked capitalism: Richardson and Roubini Call for Bank Resolution, Diss Stress Tests
Having companies look viable as the result of massive, and seeming open ended subsidies does not say much about how they'd be faring ex life support. And even worse are the distortions. We've seen that large scale banking with score based credit paradigms has fared badly. Yet these companies are being subsidized to the detriment of smaller regional and local players who are closer to their communities and can incorporate local knowledge into their credit decisions. But no, just as old style computer jockeys had trouble accepting that big iron might be inferior to PC and distributed processing, so to the powers that be seem unduly fond of very large banks when the superiority of that model is in question.
banking  economics  stress-test 
may 2009 by tsuomela
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