Euro crisis forces change on Russia

By Kathy Lally – While the euro zone stands on the precipice of financial disaster, Russia looks on with a safely balanced budget, very little debt, a steady ruble — and a shudder of fear.

Russia’s economy relies on oil — 60 percent of gross domestic product — and a deep recession in Europe would drastically slash demand and price, forcing major cuts in government spending and threatening to provoke widespread social protest. For several years, the leadership has been talking urgently about its intentions to diversify beyond natural resources, without actually doing anything.

Now, the threat of a deeper crisis in Europe is forcing Russia to get serious. more> http://tinyurl.com/csdw327

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U.S. banks haunted by mortgage demons that won’t go away

By Rick Rothacker – Lenders like Bank of America Corp and Wells Fargo & Co say they are facing mounting pressure to buy back bad mortgages they sold to investors, signaling that banks‘ home-loan headaches could continue for years.

When selling the mortgages, banks made promises or “representations and warranties” about the loans. Investors can ask banks to buy back soured mortgages if these promises were evidently broken, for reasons such as poor underwriting, insufficient verification of income or other documentation errors.

Banks have fought some of these claims, but most lenders still expect to have to buy back many of the mortgages. more> http://tinyurl.com/7vab96n

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How the FDIC can curb banks’ reckless speculation

By Barry Ritholtz – Let’s be blunt: Banking has devolved into an unruly mess.

After years of deregulation, it has become all but impossible to re-regulate modern banking. There was a brief window during the credit crisis, but that has passed. Today, profits trump soundness. Safety and security are secondary to risk-taking and speculation.

I have been wondering what we, as a democratic nation, are going to do about this. Are we going to rule banks, or are bankers going to rule us? more> http://tinyurl.com/cbeyqa4

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Germany finalizing face-saving aid deal for Spain

By Annika Breidthardt and Andreas Rinke – While Berlin remains firm in its rejection of Spain’s calls for Europe‘s rescue funds to lend directly to its banks, the officials said that if Madrid put in a formal aid request, funds could flow without it submitting to the kind of strict reform program agreed for Greece, Portugal and Ireland.

Instead, Spain would only have to agree to new conditions tied to the reform of its banking sector. more> http://tinyurl.com/cbp35pt

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How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan

By Azam Ahmed – It was last November, and Boaz Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the Atlantic. In an obscure corner of the financial markets, prices seemed out of whack. It didn’t make sense.

At the time, traders in London had no real idea that JPMorgan was behind the trades that were skewing the market in credit derivatives. In fact, they weren’t even sure that it was a single bank or trader. But soon the City of London, Europe’s financial hub, was buzzing. Whoever the mysterious trader was, he or she kept selling derivatives intended to rise in value in the event that certain corporate bonds became riskier. The volume of trades was off the charts. Who could possibly sell so much? And, what if the trade reversed, as it inevitably would? more> http://tinyurl.com/8xcutkj

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