Five Years After The Financial Meltdown, The Water Is Still Full Of Big Sharks

By Steve Denning – The problem at the core was a lack of transparency. After Lehman’s collapse, no one could understand any particular bank’s risks from derivative trading and so no bank wanted to lend to or trade with any other bank. Because all the big banks’ had been involved to an unknown degree in risky derivative trading, no one could tell whether any particular financial institution might suddenly implode.

Financial reform didn’t work. Banks today are bigger and more opaque than ever, and they continue to trade in derivatives in many of the same ways they did before the crash, but on a larger scale and with precisely the same unknown risks.

Another global financial crisis is on the way. more> http://tinyurl.com/aegxa2v

Related articles

• Prop Trading, the Bogeyman That Didn’t Take Down Wall Street – Bloomberg (go.bloomberg.com)
• Executives At Collapsed Iceland Bank Jailed For Fraud (libertycrier.com)
• Crony Capitalism: UBS, LIBOR, Phil Gramm, And The Junk Bond King (mayo615.com)
• Former Glitnir bank heads jailed in Iceland (icenews.is)
• Jesse Eisinger: We’ve built a system that rewards bankers for lying and cheating (ianfraser.org)
• Dear Steve Liesman: Here Is How The US Financial System Really Works (zerohedge.com)
• What’s inside America’s banks? (banklesstimes.com)
• There is an alternative: what Venezuela can teach us about the banking sector (alethonews.wordpress.com)
• How complex are big banks, and should you be leery? (banklesstimes.com)

SEC’s Schapiro: U.S. risk council must push for money market reforms

English: Lehman Brothers headquarters in New York City (Photo credit: Wikipedia)

Reuters – The new financial risk council must consider what reform actions it can take to reduce the continuing systemic risk posed by money market funds, Chairman of Securities and Exchange Commission Mary Schapiro wrote in an Wall Street Journal op-ed.

Money funds were long a sleepy corner of the fund industry, collecting money from investors and serving as leading buyers of short-term debt from corporations, municipalities and the U.S. government.

But in September 2008, the Reserve Primary Fund, one of the largest money funds, suffered losses on Lehman Brothers debt and could not maintain its $1 per share price, known as “breaking the buck.”

That ignited a run of withdrawals from investors across the industry, cutting off a major source of overnight funding for many corporations. more> http://tinyurl.com/8f7z2f4

Related articles

• REFILE-SEC’s Schapiro: U.S. risk council must push for money market reforms (uk.reuters.com)
• SEC’s Schapiro fails to win votes for money funds reform (uk.reuters.com)
• Changes to Money Market Funds Stall (nytimes.com)
• Levitt Says SEC Inaction on Funds `National Disgrace’: Tom Keene – Bloomberg (bloomberg.com)
• How Money Market Reform Would Affect Your Investments (money.usnews.com)
• Money Market Funds: Stable, Until They’re Not (businessweek.com)
• Money Funds Test Geithner, Bernanke as Schapiro Defeated (bloomberg.com)
• RIP Money Market Reform (money.usnews.com)
• In Effort to Curb Money Market Funds, a Plan B Is Considered (dealbook.nytimes.com)

Banks Need ‘Push’ to Avoid Prolonging Crisis, BIS Says

English: A model that describes the competitive environment of a company’s business model.
(Photo credit: Wikipedia)

By Boris Groendahl – Lenders, almost four years after the collapse of Lehman Brothers Holdings Inc., still hold overvalued assets and are postponing necessary recapitalizations while relying on official funding, especially in Europe, the BIS said in its annual report released yesterday. Banks are also returning to risks akin to those that led to the crisis.

“Public policy must move banks to adopt business models that are less risky, more sustainable and more clearly in the public interest,” the BIS said in the report. more> http://tinyurl.com/6v8hw7p

Related articles

• Report: Big Banks Take Risks Expecting Taxpayers To Cover Losses (huffingtonpost.com)
• The Bank for International Settlements Calls QE a Palliative (dailycapitalist.com)
• When Will They Learn? (theneteconomy.wordpress.com)
• Credit boom stokes risks in emerging markets: BIS, Reuters

Iceland court charges ex-PM for 2008 financial meltdown

Reuters – An Icelandic court on Monday (Apr 23, 2012) ruled that former Prime Minister Geir Haarde was guilty on one charge related to the nation’s 2008 financial collapse, but no punishment was handed down. He is the only world leader to be tried over the financial crisis.

“It is absurd,” Haarde told reporters after the verdict.

“It is obvious that the majority of the judges have found themselves pressed to come up with a guilty verdict on one point, however minor, to save the neck of the parliamentarians who instigated this,” he added.

Iceland’s biggest banks were all taken over by the state in
late 2008 after the credit crunch sparked by the collapse of
Lehman Brothers froze their access to funds. Iceland ring-fenced the banks’ domestic operations, letting their international operations go bankrupt. more> http://is.gd/s8yxzy

Related articles

• Iceland ex-PM Geir Haarde found guilty of banking crash failure (guardian.co.uk)
• Iceland’s ex-PM Cleared of Negligence. But What’s Really Going On? (the2012scenario.com)
• Former Iceland PM Spared Punishment Over Role in Financial Crisis (theepochtimes.com)
• Former Iceland PM guilty on negligence charge (theglobeandmail.com)
• Iceland court to give verdict on ex-prime minister (ctv.ca)
• Iceland court to give verdict on ex-prime minister (sfgate.com)
• Iceland court to give verdict on ex-prime minister (seattlepi.com)
• Background: Trial of Iceland Ex-PM Haarde over 2008 Crisis Begins (the2012scenario.com)
• Iceland’s ex-PM guilty on one financial crisis charge, Rupert Neate, irishtimes.com
• Iceland’s former Prime Minister found guilty over country’s 2008 financial crisis but will avoid jail, Rob Cooper, Mail Online
• Bloomberg: “Money, Power & Wall Street” “Takes No Prisoners”, Azmat Khan, FRONTLINE/PBS