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Results 51–100
of 145 found.
Systemic Regulator Risk: Does the Fed of New York Need a Haircut?
Given its second lease on regulatory life, one might expect that the Fed's bank supervision function would be gearing-up to take a fresh, smart, and tough line with respect to financial company oversight. However, the appointment of Sarah Dahlgren as head of supervision by the Federal Reserve Bank of New York indicates this may not be the case. Ms. Dahlgren has been at the center of many of the Federal Reserve's most embarrassing failures in the area of bank supervision, including the fiasco surrounding American International Group.
Will Basel III Crush the Global Economy?
This piece features a comment by Richard Alford on the evolving rules for the new Basel capital framework. Investors and bankers alike need to pay more attention to the machinations in the Swiss city of Basel to develop new bank capital guidelines, standards which could greatly constrict the supply of credit in industrial nations in the coming years. Christopher Whalen also comments on Q2 2010 bank stress test ratings, Japan, technology and the housing market.
Stress Test Zombies: Reverting to the Global Mean
Some of the big American zombie banks - Citigroup, JPMorgan Chase and Bank of America in particular - are seeing positive results from the Fed's net interest margin drip. Many, however, are reverting back to the global mean for performance due to the zero-interest rate policy maintained by the central bank. In the end, the carry trade enhancement allowed by low interest rates amounts to a subsidy for credit losses by banks that comes out of the pockets of savers.
Deflation: Should the Fed be Buying Gold? Hugo Salinas-Price on the Silver Peso
This piece features a commentary from Hugo Salinas-Price, founder of Mexican retailer Grupo Elektra, on his proposal for the introduction of a silver-backed peso. Legislation to that effect now is under serious consideration before the Mexican Congress. Salinas describes the Mexican peso as a 'derivative' of the dollar, a troubling prospect since the dollar itself is a derivative of nothing, at best a mere representation of a unit of work. Christopher Whalen also discusses the U.S. financial reform bill, and the latest Federal Open Market Committee meeting.
Country Risk: Building a New American Political Economy
In a column in yesterday's New York Times, economist Paul Krugman took Fed Chairman Ben Bernanke to task for not doing more to combat deflation. And what should the Fed do according to Krugman? Print more money. More quantitative easing via purchases of private debt is the urgent recommendation of this leading American economist. While Krugman criticizes Ben Bernanke for being a Republican, however, it is worth noting that Krugman himself is not quite the socialist that he pretends to be. In fact, Krugman was once considered to be in the same political party as President Ronald Reagan.
Paper Gold vs the Dollar? Interview with James Rickards
This commentary features an interview with James Rickards, senior managing director for market intelligence at Omnis, Inc., about the dollar and the outlook for the U.S. currency in the global economy. Mr. Rickards' career spans the period since 1976. He was a first-hand participant in the formation and growth of globalized capital markets and complex derivative trading strategies.
Talking the Economy: Alex Pollock, Bruce Bartlett and Josh Rosner
This commentary features snippets from interviews by IRA co-founder Chris Whalen for his upcoming book, Inflated: How Money and Debt Built the American Dream, which is scheduled for release in November. Alex Pollock of the American Enterprise Institute, Bruce Bartlett, a domestic policy adviser to President Ronald Reagan and Treasury official under President George H.W. Bush, and Josh Rosner, principal of Graham-Fisher, all discuss the economic outlook.
Bank Profile: Capital One Financial
This commentary features a profile of a profile of Capital One Financial, a multibank holding company that specializes in subprime credit cards and consumer banking. COF has a stress score for loan defaults that is more than two times the industry average. The bottom line for COF is that while it has a large and sophisticated treasury operation that includes hedges of its own assets and liabilities and has no Wall Street trading operation. In that sense, COF is more like a regional bank than a money center.
Rajiv Sethi on High Frequency Equity Trading
This commentary features a piece by Barnard economics professor Rajiv Sethi on high-frequency trading and its implications for the use of equity-market data, both for profit and risk management. Sethi notes that trading must be based on fundamental information rather than pure market data for prices to remain stable. Banning specific classes of algorithms is unlikely to provide a lasting solution to the problem, however, unless the advantage is shifted decisively and persistently in favor of strategies that feed information to the market instead of extracting it from technical data.
The Fallacy of Fair Value Accounting; Original Sin: Peter Wallison on Bear Stearns
In this issue of The Institutional Risk Analyst, we opine on the latest fair value accounting proposal from the FASB and why market structure is the causation of our collective woe. We then feature a comment by Peter Wallison of AEI talking about the ?original sin? of rescuing Bear Stearns and how it made the financial crisis far worse because of the importance of ?narrative? ? the very same issue that is the focus of Nassim Taleb?s book The Black Swan.
Comment: Clifford Rossi on the Need for the Office of Financial Research
This commentary features a contribution by Clifford Rossi, managing director of the Center for Financial Policy at the Robert H. Smith School of Business, University of Maryland. Rossi writes in support of a proposal by Senator Chris Dodd to establish the Office of Financial Research, which would aggregate enterprise-wide views of risk at large financial firms. Critics say the OFR would represent an unwarranted breach of privacy. The new division was included in the Senate financial reform bill, but is in danger of being dropped during the final reconciliation process.
Submerged Seconds: Zombie Love and the Failure of Mortgage Modification
Fannie Mae and Freddie Mac, and the Federal Housing Administration have sucked out most of the credit problems from the banks. Now they are mutating into hideous, cash-eating monsters as loans go bad and federal guarantees are honored. The losses at Fannie, Freddie and the FHA come in large part because of the underwriting decisions made by the banks. Literally millions of homeowners are in various stages of delinquency or default on their mortgages - and for many, the federal government is now the guarantor.
Value at Risk: Equity Market Volatility is All About Liquidity
Stress indices indicate that the U.S. banking industry is officially on the mend in terms of building reserves, but the credit cleanup continues even as new events climb over the horizon. The volatility last Thursday was a reminder of the huge uncertainty that remains in markets today, uncertainty that produced a liquidity-driven downdraft in prices for some very large cap names. One of the big drivers of the equity volatility is the Fed's zero rate policy, which is forcing investors to search for yield in some very strange places.
Do a Good Job: Interview With Senator Ernest Hollings
This commentary features an interview with former senator Ernest Hollings, a Democrat from South Carolina. Hollings was elected to the Senate in 1966. He is a social liberal and a fiscal hawk who regularly puts his Senate colleagues to shame on issues such as Social Security and the budget, according to Institutional Risk Analyst. Hollings supports new limits on campaign donations in exchange for lower corporate taxes. He also supports a new Value Added Tax, as well as tariffs to protect domestic industries and prevent the offshore outsourcing of jobs.
Reputational Risk: In Goldman Sachs We Trust
Last week during the media feeding frenzy surrounding Goldman Sachs disclosures we saw once again how the efforts in the 1980s and 1990s to deregulate Wall Street created extraordinary risks for all concerned: bankers, traders and investors. We all seem to suffer from a common, self-inflicted wound that can be summed up simply as a lack of trust. To solve this crisis, we need to restore basic rules of behavior and compensation in financial markets so that it is once again in the best interest of firms like Goldman Sachs to exercise a duty of care to all clients.
Goldman SEC Litigation: The End of OTC?; Alan Boyce on the Duration of Fed Open Market Operations
This piece features a comment from Alan Boyce, chief executive officer of Absalon, on the impending end of the Fed Purchasing Program. Boyce says that as FPP ends, there is the real potential for unintended consequences in domestic and foreign markets. If markets were to become unglued, the Fed may purchase more mortgages and Treasury debt. Foreign central bankers will likely snap and become sellers, however, if the Fed decides to monetize more debt. Markets would likely take it as a sign that the Fed is politically unable to exit the mortgage market, or quantitative easing.
Richard Field on Covered Bonds and the Need for Better ABS Disclosure
This commentary features a piece by Richard Field of TYI, LLC, a consulting and technology firm focused on filling information gaps created by financial innovation, on the need to level the disclosure playing field in the asset-backed security markets. Field says that giving investors anything less than daily data on loan portfolio performance is unfair. Meanwhile, the basic tools of machine-to-machine data transfer make daily reporting possible today, as evidenced by the XML-enabled Report of Condition and Income submission system at the Federal Deposit Insurance Corporation.
Ben Bernanke: The REPO Man and Castles Made of Sand
Without the implicit backing of the U.S. Treasury and Federal Reserve System, the remaining large dealers of over-the-counter assets and derivatives could not function in the post-crisis marketplace. This reality is most visible in the tripartite market for repurchase agreements or REPOs, the basic tools Wall Street uses to finance its working capital book. Now that it's April and the Fed's quantitative easing purchase program is ending, it seems fair to ask: What trick is Fed Chairman Ben Bernanke going to perform next to maintain the stability of market prices?
Bank Profile: First Interstate BancSystem (FIBK); Achim Dübel on Covered Bond Legislation
This post features a comment from international mortgage finance consultant Achim Dubel of German financial think tank Finpolconsult. Dubel says that legislation proposed by Representative Scott Garrett of New Jersey to create a covered bond market in the U.S. needs to be changed if it is to restore investor trust and provide needed new liquidity to real estate markets. Legacy problems with shaky assets of all colors on bank balance sheets should be solved via bad banks and/or bank insolvency and restructuring, not through a new secondary market for bank mortgages.
The AIG Rescue: What Did We Bail Out and Why?
This article features a comment by Richard Alford, a former economist at the Federal Reserve Bank of New York's foreign department. Alford notes that AIG is back in the news again for successfully negotiating the sale of two significant operating units. The Fed will receive partial payment for the sales in stock of the acquirer. This shows that both the Fed and U.S. taxpayers are still providing capital and taking risk to support the business activities of insurance subsidiaries of financially sound parenting companies operating abroad, a year and a half after the crisis hit.
On OTC Derivaties: Interview with Bill King
The Institutional Risk Analyst interviews Bill King, founder of Chicago-based derivatives firm M. Ramsey King Securities. Their conversation centers on a new report by the bankruptcy court examiner in the Lehman Brothers liquidation that provides another piece of evidence linking over-the-counter derivative structures and accounting fraud in the style of Enron and WorldCom. The IRA also examines the FDIC's recent bank securitization reform efforts, as well as the recent rally of CitiGroup, Barclay's and other large-cap financials.
Mark-to-Market Accounting: OneWest and WaMu
One year ago, OneWest Bank Group purchased the banking operation of the IndyMac Federal Bank, which was being operated in conservatorship by the FDIC. As with the purchase of Washington Mutual by JPMorgan Chase, the subsidy in these deals came from the write-down of the assets of the failed bank. All of the potential claims against the parent companies of WaMu and IndyMac for rescission of securitized loans are sitting in bankruptcy court, where they will likely remain and die.
Reputational Risk: Living in a Derivative World
While bank securities holdings are rising in the aggregate, loan portfolios and overall assets are shrinking at a quickening pace. This is evidence that deflation remains the chief threat to the global economy. The only way to reverse the deflation of bank balance sheets is to restructure and recapitalize insolvent institutions and allow interest rates to rise to positive real levels. This, however, will require the Fed and Congress to admit the policies of the past two years were wrong.
Statement by Christopher Whalen Congressional Oversight Panel Hearing on GMAC TARP Assistance
Christopher Whalen tells a TARP assistance congressional oversight panel in a prepared statement that bank holding company GMAC Financial Services must restructure before it can support the growth of General Motors and its community of dealers and consumers, and that there is currently no compelling business or financial reason to rescue GMAC. GMAC banking unit Ally Bank received an "F" rating from the Institutional Risk Analytics Bank Stress Index for the fourth quarter of 2009.
Financial Economics, Deregulation and OTC Derivatives: Interview with Yves Smith of Naked Capitalism
This is an interview with author Yves Smith, the creator of Naked Capitalism. Smith?s new book explores the methodological shift of economics in the 1940s and 1950s, when economists decided to make their discipline more "scientific" and thus more mathematical. This methodological shift ignored the flaws neoclassical and financial economics, and led to the deregulation of financial services, which in turn allowed for predation and looting.
Is the Fed's Zero Interest Rate Policy Driving Global Deflation?
Christopher Whalen of Institutional Risk Analytics says the Federal Reserve's zero interest rate policy may be driving global deflation by holding down asset values. He says the central bank should allow interest rates to rise so banks and other investors may earn positive returns on assets.
Q4 2009 Preliminary Bank Stress Ratings; OTC Derivatives: Is the DTCC Too Big To Fail?
Christopher Whalen of Institutional Risk Analytics wonders whether The Depository Trust & Clearing Corporation, the post-trade financial services company that clears most of the free world's cash securities volume, is too big to fail. Big banks use centralized clearing provided by DTCC to lend credibility to over-the-counter derivatives.
Zombie Update: Loan Repurchases and REO Anyone?
Whalen addresses the implications of the judge?s actions in the Lehman bankruptcy case of denying seniority to claims of default on CDS contracts. This legal action will have implications for banks in the amount of reserves they must set aside for repurchase transactions, and that this may impair reported earnings. On the economy, he says ?There is no way to deal with the current [housing] backlog, much less the volume of new foreclosures in 2010, without immediate action by the financial industry on areas such as securitization and broad restructuring of current residential mortgages.?
Results 51–100
of 145 found.
