Jesse's Café Américain Mon 2010-08-16 16:09 EDT

Chris Whalen: Nothing Has Changed Because It's The Fraud and Corruption, Stupid

Jesse

...The dirty little secret of the Dodd-Frank legislation is that by failing to curtail the worst abuses of the OTC market in structured assets and derivatives, a financial ghetto that even today remains virtually unregulated, the Congress and the Fed are effectively even encouraging securities firms to act as de facto exchanges and thereby commit financial fraud. Allowing securities firms to originate complex structured securities without requiring SEC registration is a vast loophole that Senator Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) deliberately left open for their campaign contributors on Wall Street. But it must be noted these same firms have a captive, client relationship with the Fed and other regulators as well, thus a love triangle may be the most apt metaphor...a recent key supervisory officer appointment by the Federal Reserve Bank of New York (FRBNY)...choice of Sarah Dahlgren as Head of Supervision...Ms Dahlgren has been at the center of many of the Federal Reserve's most embarrassing failures in the area of bank supervision and in particular with respect to the failure of American International Group (AIG)...

change because; Chris Whalen; corruption; fraud; Jesse's Café Américain; Stupid.

Mon 2010-04-05 15:16 EDT

Eleven lessons from Iceland

Thorvaldur Gylfason

Iceland's economic crisis has destroyed wealth equivalent to about seven times its GDP. The damage inflicted on foreign creditors, investors, and depositors amounts to about five times its GDP, while the asset losses thrust upon Icelandic residents account for the rest. These figures do not include the cost of Iceland's increased indebtedness. Iceland's gross public debt, domestic and foreign, is estimated to increase by more than 100% of GDP as a result of the collapse of the banks, or from 29% of GDP at the end of 2007 to 136% by the end of 2010. In 2009, the government spent almost as much on interest payments as on healthcare and social insurance, the single largest public expenditure item. The damage due to Iceland's tarnished reputation is harder to assess...the absence of checks and balances that had led to an unbalanced division of power between the strong executive branch and the much weaker legislative and judicial branches came to haunt the country when unscrupulous politicians put the new banks in the hands of reckless owners who then found themselves in a position to expand their balance sheets as if there were no tomorrow -- and no supervision. Politicians who privatise banks by delivering them on a silver plate to their friends are not very likely to subject the banks to stringent supervision or other such inconveniences...What can be done to reduce the likelihood of a repeat performance -- in Iceland and elsewhere?

Iceland; Lessons.

Jesse's Café Américain Fri 2010-03-19 12:32 EDT

Risk? What Risk? We Don't See No Stinkin' Risk..

Jesse

"It is the absolute right of the state to supervise the formation of public opinion." Paul Joseph GoebbelsAs measured by the VIX, the volatility index, the perception of risk in US markets has declined significantly in the last twelve months from over 50 to current readings around 20...

Jesse's Café Américain; Risk; see; stinkin.

naked capitalism Wed 2010-01-13 11:54 EST

William Black'' ``Anti-Regulators: The Federal Reserve's War Against Effective Regulation''

...This essay focuses on Chairman Bernanke recent appointment of Dr. Parkinson to lead the Fed's examination and supervision. My central point is that Dr. Bernanke appointed Dr. Parkinson because he shared Dr. Bernanke's anti-regulatory ideology and has never changed those views, even in the face of the Great Recession. The anti-regulator policies that Bernanke and Parkinson championed were the principal drivers of the fraud epidemic that have produced recurrent, intensifying crises...First, Dr. Parkinson was a leading proponent of the obscene (and successful) effort to prevent Commodity Futures Trading Commission Chair Brooksley Born from taking regulatory action to prevent destructive credit default swaps (CDS). Second, Dr. Parkinson, like Greenspan and Bernanke, subscribed to the naïve view that fraud was impossible in sophisticated financial markets and that credit rating agencies were reliable. Third, Dr. Parkinson endorsed the international ``competition in regulatory laxity'' that Dr. Bernanke (belatedly) warned has degraded regulation on a global basis...

anti regulators; effectively regulated; Federal Reserve's War; naked capitalism; William Black.

New Deal 2.0 Mon 2009-11-30 13:44 EST

Geithner's Disgrace

Eliot Spitzer

he issue has been festering for months: Why were AIG's counterparties -- including Goldman Sachs, JPMorgan Chase, and UBS -- paid 100 cents on the dollar when the feds rescued the insurance giant, helping raising the cost of the bailout to nearly $200 billion? A new report issued by Special Inspector General Neil Barofsky now reveals that government officials, notably then -- New York Fed President and current Treasury Secretary Timothy Geithner, grievously damaged the nation and capitulated to the very banks they should have been supervising.

0; Geithner's Disgrace; new dealing 2.

Jesse's Café Américain Thu 2009-09-17 09:39 EDT

"It has now become clear that this was no ordinary crash."

Jesse

Here is an informative piece on the banking crisis in Iceland...in all banking collapses of this sort, fraud and duplicity are always at the heart of it, as larceny is in most great fortunes through history. Investigating Icelandic banking collapse, Icelandic economist Jon Danielsson believes the root of Iceland's problems that have now decimated its economy appear to have started when the government decided to privatize the banks in the early 1990s...the government had no understanding of the dangers of banks or how to supervise them. They got into the hands of people who took risks to the highest possible degree...Central banking IS an old boy's network. It is the best and biggest network of all. In this one, you actually get to print money...

becomes clear; Jesse's Café Américain; ordinary crash.

Fri 2008-11-07 00:00 EST

naked capitalism: Fed Hires Bear Stearns Risk Chief...To Supervise Bank Soundness

Fed Hires Bear Stearns Risk Chief; naked capitalism; Supervise Bank Soundness.

Thu 2008-06-19 00:00 EDT

Jesse's Café Américain: FDIC Criticizes Fed Handling of Bear Stearns: Says Banks Need Expanded Supervision

Jesse's Café Américain: FDIC Criticizes Fed Handling of Bear Stearns: Says Banks Need Expanded Supervision

Bear Stearns; FDIC Criticizes Fed Handling; Jesse's Café Américain; Says Banks Need Expanded Supervision.