Comments on: Financial heaven and hell Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: Steve Mon, 01 Jun 2009 21:45:13 +0000 The massive failure by the regulators reflects serious structural problems in the regulatory environment. I am a former senior bank regulator and I spent many years in the investment banking world involved in risk management, risk reporting and risk technology. There has been a failure to recognize that the regulatory process can only work if there are good regulatory people looking at the matters every day. Let me offer the following comments:

1. The bank regulators had the authority to examine any aspect of a bank¹s activities. They had the authority to figure out what was going on at the banks and to limit it. The regulators did nothing. So all the new regulations on paper or hiring additional analysts or creating new “early warning statistics” will mean nothing if the regulators cannot or will not do their jobs.

2. Sending a regulator who makes $60,000 dollars a year to examine the activities of sophisticated financial traders who make millions of dollars a year is not a fair battle. And if you have ever worked in a government agency, as I did for over 4 years, you will be intimately familiar with the viciousness of the turf battles among the senior officials. There are dim bulbs and deadwood at the top of the agencies and all of it needs to be cleaned out. A Herculean task if there ever was one.

3. We recently saw the regulators “stress-test” the major banks and compute the additional capital that the banks required to weather the economic turmoil. Then some of the largest banks complained vociferously about the additional capital requirements and the regulators backed off. So much for firm regulation.

By: stavros Sat, 30 May 2009 11:53:06 +0000 It seems that no one is really willing to address the culture of greed, high and quick returns equals even higher bonuses. That is a formula for disaster since there is no accountability in the system for irresponsible lending. In the rest of world if people screw up they usually pay for their mistake.
When top bankers become top regulators and back again that just creates an incestuous self protecting clique that will not improve for it only has the interests of it’s own at heart. Printing money which is no longer backed by gold, or anything else as a matter of fact, can only lead to inflation and debt to be paid by future generations which do not stand to reap any benefit at all.
Mortgages without down payment, ie a personal stake, is also a formula for disaster. It is human nature to want to protect what they have had to earn and to care much less for things just given to them.
In short the banking system in the US is still fundamentally flawed since the regulators can not point a finger at the bankers or they would be pointing at themselves.
The rest of the bankers outside the US who bought into what was obviously a balloon have no one to blame but themselves. It’s just a pity that the common folks are the victims, the ones on the hook for all that greed.

By: Patrick Fri, 29 May 2009 04:01:52 +0000 All countries listed as examples are living off of oil wealth. When this dries up, so will the “great” systems that have harbored them.

By: Drewbie Thu, 28 May 2009 20:45:28 +0000 Carmen-
most of the ‘money’ that was lost was never real. Items like houses are only worth what people will pay. Just because you pay $100,000 for a house doesn’t mean it’s worth it. When (most) people say they lost money in the crisis, it means they thought their possessions were worth more. There’s no money to be followed.

By: C.D. Walker Thu, 28 May 2009 17:44:07 +0000 William

I fail to see how banks carrying excess capitol could be a stress on the system. If anything, banks should carry excess capital to relieve stress on the system by shoring up their loans. The more capital a bank has, the stronger its position as a lender.

By: WILLIAM H SCOTT SR Wed, 27 May 2009 20:19:51 +0000 is u.s. banks being forced to carry excess capitol, on a what if basis, and is this a undo stress on the system?

By: Carmen Wed, 27 May 2009 18:58:35 +0000 Kudos to Christopher Swann. He nailed it. Let’s forget about the country comparison and look at the real meat of the story………. IT WAS ALL THE BANKS FAULT.

I absolutely agree, unadulterated greed, derivatives and swaps + lousy oversight courtesy of Barney Franks and his lover at FREDDIE MAC and Congress agreeing with Barney Franks are the reason for AAAAALLLLLL of our problems.

Of course us (most not all)commoners also agreed to buy what we knew we couldn’t afford hoping to flip it and get rich. Ha, ha, we bought into the hype.

Can anybody answer and prove my burning question: “WHERE IS THE MONEY?” I would love to know where all the money is and who has it. If it never existed in the first place then why do we miss it now?? Seems like a bunch of smoke and mirrors and deception to me. WHERE IS THE MONEY AND WHO HAS IT???? If I have $100.00 and you take it from me I am now poor but you have my 100 and are now rich. SO AGAIN, WHERE IS THE MONEY AND WHO HAS IT?? If it ever even existed. It’s like the endless trillions that we are printing to bring the economy back to life. Where did those trillions come from?? Do we pay them back??? Or do we pay with unfathomable inflation down the line?? Follow the money!!!!!!!!!!!!!!

By: C.D. Walker Wed, 27 May 2009 16:42:23 +0000 Don-

“Also because there are fewer large companies in Canada, institutional investors are forced to place a disproportionally higher amount of capital on the Canadian banking sector.”

Would we have a lack of CAPITAL in our CREDIT institutions if they were forced to carry a high amount of capital to INSURE investments of CREDIT?

By: J Fernandes Wed, 27 May 2009 15:23:24 +0000 China has to support the dollar in it’s own self interest. Replacing currencies takes decades ( 1-2) . US has to and will not true global player till it can hold an upper hand in anything.

By: Rufus Wed, 27 May 2009 14:31:40 +0000 The US banking system better learn something from someone, and fast. The Canadian model is strong because of tighter controls over their capitalization, and what risks they can take with it. Institutional investors are in no way “forced” to invest in banks. Major pension funds invest in banks because of their security and return but can, and do, invest strongly in other areas and other countries. Locally, real estate, energy, insurance, and communications come to mind. One of them seems to like international airports around the world. There’s good support for smaller-cap businesses as well. They have expanded into the US financial industry – and regretted it.
Less dependance on manufacturing, and more on energy, is not a good thing as you suggest. Energy is highly volatile, and not something that a bank needs a lot of in their portfolios. A lack of diversification is generally a negative, not a positive. A lack of exposure is due to the regulatory limits in place to protect the investments they hold for safekeeping, and is the whole point of the issue.
“The entity with the most has the most to lose” is true in absolute terms, but not in relative terms. 50% of a large pie is bigger than 50% of a small pie, but it’s still half of the pie.
World bankers trusted the US model and invested in it. They got their sensitive parts handed to them on a platter as a result. That’s not a distortion, that’s a fact. They won’t be doing that again. China (and other countries) is already replacing the US dollar with others in international trade.