Felix Salmon

Counterparties

Just when you thought you knew just how dysfunctional the SEC was, it turns out to be even worse — WaPo

Reacting to the Obama plan

The reactions to the Volcker-Obama bank plan seem to be veering off to extremes. On one side, the Financial Services Forum is talking about how it’s a bad idea to “preemptively break up large, well-managed, and well-capitalized banking companies”, which is wrong on two levels: no it’s not, but in any case no one’s proposing any break-ups at all. It’s also making the point that prop trading didn’t cause the financial crisis, which is true, but beside the point: the idea here isn’t to prevent a play-by-play rerun of the last crisis, but rather to reduce systemic risk more generally. And prop traders at too-big-to-fail institutions undoubtedly increasing the systemic risk in those institutions. To a large degree, that’s their job.

The devil in the NYT meter’s details

One issue which I’m sure has yet to be settled inside NYT headquarters is the status of blogs vis-a-vis the nytimes.com paywall. On the one hand, blogs are a central part of the website’s value proposition — exactly the sort of extra digital content that they want people to pay for. On the other hand, blogs simply don’t lend themselves to paywalls in general, or to metering in particular. While newspaper articles are self-contained entities — visit once, get the information, you’re done — blogs are conversations. As a result, participating in any one conversation — reading any one blog — will in and of itself use up whatever pageview quota the NYT might be willing to give you.

Make that two cheers for Obama

In public, Barack Obama was stern and tough:

Never again will the American taxpayer be held hostage by a bank that is too big to fail…

Quote of the day, Goldman edition

Quote of the day comes from Goldman Sachs CFO David Viniar, responding to confusion over whether the squid’s 36% compensation ratio for 2009 is here to stay:

Bair’s mortgages

The Huffington Post Investigative Fund has done a lot of hard journalistic work in nailing down the facts about Sheila Bair’s mortgages, and I’m glad they did. Bair does seem to have received something of a sweetheart mortgage from BofA when she refinanced her Amherst house, and she shouldn’t have been negotiating in her FDIC capacity with BofA at the same time.

Three cheers for Obama’s banking reforms

Barack Obama is coming out swinging today, and good for him for doing so. Let’s go through the press release line by line:

Cutting pay at Goldman

Goldman Sachs has always prided itself on leading the investment-banking pack in terms of compensation. Because it’s richer and more successful than anybody else, it can pay more than anybody else can afford, forcing them to spend money that would be better used elsewhere on bonuses. That in turn improves its competitive position. It’s a bit like the US-Russia arms race during the cold war.

Counterparties

The Brownian-motion-and-greater-fools theory of the old GM’s share price — TED