Tag Archives: Bank

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


Libor’s Trillion-Dollar Question

Banking District

Banking District (Photo credit: bsterling)

Editorial – Investigators are focusing on two kinds of manipulation. In one, bankers submitted false data to push Libor in a direction that would benefit their own traders. In the other, bankers intentionally lowered the reported rates, which are published daily, to make their institutions’ financial positions look better than they really were.

Such manipulation would represent a big gift to payers of Libor, such as financially stretched U.S. homeowners whose interest costs on floating-rate mortgages would have been lower. But for bond investors, municipalities, hedge funds and others on the receiving end of Libor, it would mean major losses. more> http://tinyurl.com/8pp2wef

Repeal of Glass-Steagall Caused the Financial Crisis

By James Rickards – The oldest propaganda technique is to repeat a lie emphatically and often until it is taken for the truth. Something like this is going on now with regard to banks and the financial crisis. The big bank boosters and analysts who should know better are repeating the falsehood that repeal of Glass-Steagall had nothing to do with the Panic of 2008.

In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. more> http://tinyurl.com/8ho36zt

Libor’s Risks Emerged From Clubby London Banking Culture

By Sean Vanatta – Libor represents the cost of one large bank borrowing unsecured funds from another, in various currencies and at varying maturities, in the London market. Each day, the British Bankers’ Association asks a panel of market participants, “At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 a.m.?” The answers are then compiled and published by Thomson Reuters Corp.

In recent months it has become clear that many bankers misreported rates, either to benefit trading positions or provide a false picture of stability to regulators, undercutting the market function Libor was meant to perform. more> http://tinyurl.com/9t63o7r

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 bankshome-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

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

Greeks not alone in bank savings exodus

By Steve Slater and George Georgiopoulos – It is not only Greeks who are worried about their savings. Data shows depositors have also taken flight from banks in Belgium, France and Italy. And on Thursday, Spain’s Bankia was reported to have seen more than 1 billion euros drained by its customers in the past week.

Greeks are afraid they could be hit by rapid devaluation if the country leaves the European single currency, while customers at Bankia have been rattled by the government’s takeover of the recently floated bank on May 9 and growing uncertainty about the final cost of Spain’s banking reforms. more> http://tinyurl.com/78lc5fz