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.
- 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)