Felix Salmon

The upside of regulatory paralysis

Joe Nocera explains one downside to having a single powerful regulator:

Our problems would have been much, much worse if we had implemented Basel II. I guess this is one of those times when the paralysis created by all our overlapping bank regulators saved us.

What were the consequences of the CFMA?

Newsweek.com is doing a big month-long series on the end of the decade, and, inevitably, it’s going to feature lots of listicles. One of them is a list of the top ten “history altering decisions” — seemingly-small moves that had massive consequences. Each one is going to be written up, and Newsweek has asked me for a very short essay (just 200 words or so) on the consequences of Bill Clinton signing the Commodity Futures Modernization Act in 2000.

Regulatory reform: The pessimism panel

I enjoyed the discussion last night about financial regulation between Joe Stiglitz, Jesse Eisinger, and Roberta Karmel.

Spin at the FDIC

No one seems to be a fan of the trial balloon which went up on Tuesday, suggesting that the FDIC borrow money from “healthy” banks. No one, that is, except for Jamie Dimon, who jokingly told Sheila Bair at the Clinton Global Initiative this morning that he thought she was a good a credit and that he would probably be willing to lend her some money if she needed it.

The weird resignation of Brandeis’s president

The latest chapter in the Brandeis fiasco is that president Jehuda Reinharz is resigning, just one year after signing a new five-year employment contract. The official letters don’t once mention the name “Rose”, which is insane: how can Reinharz say with a straight face that he “will leave the University in good condition with a strong foundation on which to build in the future”, even as there’s still enormous uncertainty over the question of whether the university will have to sell millions of dollars from the Rose’s art museum just to make up its funding shortfall?

Counterparties

Indiviglio defends securitization by saying it should have been done right, in which case it would never have taken off — Atlantic

The uses of Kiva

In the wake of my blog entry last month saying that people shouldn’t invest in microfinance, I had the opportunity to meet yesterday with Premal Shah, the president of Kiva. Kiva is an interesting case, and I don’t consider Kiva’s lenders to be microfinance investors — not least because they get no interest on their money. The best-case scenario is that they’re paid back what they lend, and the worst-case is that they lose it all. That’s not much of an investment.

Putting insolvent banks back on their feet

Paul Volcker, in his testimony today, talks at some length about the necessity that the government has a new form of resolution authority:

Against the securitization contrarians

As Stacy-Marie Ishmael says, “there has been an outbreak of contrarian thinking on the links between ratings, securitisation and the mortgage market” of late. She points to a paper by Ronel Elul, while Zubin Jelveh, who has been following the contrarian line for a while now, picks up on a different paper by Ryan Bubb and Alex Kaufman.