John Wasik

Why Elizabeth Warren needs your help to police the banks

Feb 28, 2011 15:14 UTC

Congressional Oversight Panel Chair Elizabeth Warren questions Assistant Treasury Secretary for Financial Stability Herbert Allison on the government's assistance to Citigroup during a hearing in Washington March 4, 2010. REUTERS/Richard ClementProf. Elizabeth Warren, who is starting up the new U.S. Consumer Financial Protection Bureau, is either Joan of Arc or Joan Rivers — depending upon your point of view.

The conservative majority in the House of Representatives doesn’t want to take her seriously. They are actively undermining her new consumer agency through attempts to gut her funding. They’d like to incinerate the bureau, which was created in the landmark Dodd-Frank financial reform law last year.

Warren is one of my favorite patron saints. She’s fighting the good fight against steep odds. She’s trying to protect millions who don’t have a voice. She deserves our unqualified support.

The Harvard Law School Professor and banking watchdog knows first-hand how banking abuses have hurt American families. Her classic “Two-Income Trap” showed how middle class folks were sinking into poverty just borrowing to keep up with everyday bills.

In a time in which middle class income is flat and medical, housing and transportation bills are climbing, it’s nearly impossible for families to keep their heads above waters economically. Oil prices around $100 make matters worse.

Save the badgers! When unions go bust, middle class follows

Feb 25, 2011 17:15 UTC

Protesters listen to members of the Democratic assembly speak from a live feed in the assembly chambers on day eight of protests against the budget cuts proposed by Wisconsin Governor Scott Walker (Rep.), at the state Capitol in Madison, Wisconsin February 22, 2011. REUTERS/Darren Hauck We are all Wisconsin badgers now. If collective bargaining goes, forget about personal economic progress for middle class Americans.

The huge demonstrations in Madison, Wisconsin, over the union-busting proposal of Gov. Scott Walker have impact on us all. Ditto that for similar moves in other states like Ohio and Indiana.

There’s something deeper and more malignant in efforts to strip public employee unions of collective bargaining. They are the last bulwark of organized labor in the U.S. Corporate interests want them crushed and are using budget deficits as a sledge hammer. That’s also the rallying cry of the majority of the GOP-dominated House, which voted to de-fund the National Labor Relations Board.

Glassman’s redemption: Find an investment safety net

Feb 21, 2011 16:07 UTC

James Glassman is seen in this American Enterprise Institute undated handout photo released December 11, 2007.  REUTERS/AEI/Handout It’s hard to climb out of an abyss in which you’ve predicted that the Dow Jones Industrial Average would hit 36,000 — only to see it crash twice and get pinned to the mat for years. James Glassman was one of the many bubbly U.S. stock cheerleaders who recommended stocks for the long term at the wrong time.

As most any stock investor will tell you, the last decade for U.S. stocks has been pretty dismal with the dot-com bust, 9/11 and the 2008 meltdown buffeting investors at every turn.

Yet Glassman has made an effort to redeem himself with his latest book Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.

Hello Citi: Get down to banking basics again

Feb 18, 2011 16:59 UTC

A woman uses an ATM inside a Citi bank branch in New York August 12, 2009.  REUTERS/Lucas Jackson What should big banks be doing now? Should they focus on mortgages, savings and business loans? Or have they crossed the Rubicon and continue to build their international portfolios? We’re in a time of reckoning and small can still be beautiful.

Welcome to Global Financial Reform 2.0 and the dilemma faced by chief executives like Vikram Pandit, the CEO of Citigroup, whom I heard speak at the Executives’ Club of Chicago on Feb. 17.

Once the world’s largest bank, Citi was humbled by the 2008 meltdown. Like so many other institutions, it made huge, unhedged bets on real estate and mortgage securities. The bank needed a $45 billion infusion in 2008 to stay afloat. The U.S. Treasury also bought 2.4 billion Citi shares, which it sold in December for a $12 billion profit.

Why gun insurance should be mandatory

Feb 15, 2011 17:44 UTC

MEXICO/It’s been over a month since the Arizona shootings rocked our nation’s soul and Congress still has yet to address gun control. What gives? Egypt is no doubt at the forefront for Obama, but Congress is alarmingly quiet on the issue. Is it that a Supreme Court ruling last year and the power of the National Rifle Association are still unmovable obstacles to real reform? Only New York Mayor Michael Bloomberg seems to be beating the drum for this serious issue.

There might be a way to reduce the incidence of gun violence if viewed through the unique lens of risk management: Require both gun buyers and sellers to purchase liability insurance.

Before you get up in arms (I mean this literally) about my views on the Second Amendment, I want to be clear: I’m not against people owning guns, hunters or the right to bear them. I’ve shot guns and enjoyed skeet and target shooting enroute to becoming an Eagle Scout. My father owned guns and kept them in the house when I was growing up. He encouraged me to learn how to use pistols and rifles. I’m well schooled in gun safety.

Best ETFs in 2010: Some surprises

Feb 14, 2011 16:51 UTC

Traders work on the floor of the New York Stock Exchange November 8, 2010.    REUTERS/Brendan McDermid Other than gold- and silver-based exchange-traded funds (ETFs), which funds produced the best returns last year?

A reasonable guess would be that anything invested in precious metals did well in 2010. You’d be right, but less-glamorous ETFs investing in Peru, Thailand and Colombia also made the top 10 of ETF Trends’ top-performing list .

I know these countries are hardly on most investors’ radar screens. And I certainly don’t endorse you jumping into these funds now because you won’t get last year’s returns. A broad-based approach, though, will serve you well.

Kill the mortgage deduction and give it to entrepreneurs

Feb 11, 2011 16:06 UTC

Prospective home buyer Jessica Doctoroff (C) visits a condominium for sale with her real estate agent Brenda Bremis in Medford, Massachusetts April 2, 2009.   REUTERS/Brian Snyder  Somehow I don’t think President Obama had the home-mortgage interest deduction in mind when he mentioned the U.S. tax code before the U.S. Chamber of Commerce this week.

Yet winding down and eliminating this write-off for homes would be good for business. It’s unfair, doing nothing to revive the housing market and can be put to better use shifting it to entrepreneurs to create jobs.

Most of the job creation in the U.S. economy comes from small businesses, which typically have no public shareholders to sate and are not primarily interested in fattening pay packages of overpaid executives.

Forex folly: Why you shouldn’t be trading currencies

Feb 7, 2011 15:27 UTC

A picture illustration of crumpled kuna, Dollar and euro banknotes, taken in Zagreb January 18, 2011. REUTERS/Nikola Solic Late-night infomercials and Internet ads are like sirens, calling would-be trading wizards with this alluring pitch: “You, too, could make a fortune trading currencies!”

There’s little doubt that there’s money being made in this market. Just ask legendary investor George Soros, who “broke the bank of England.”

Yet currencies are hard to track by even the most seasoned traders and it’s not for the average investor. And you’re no George Soros, although you’ll surely end up breaking something — your own bank account. Even institutions can get scammed.

Egypt: Mummy’s curse or economic boom?

Feb 4, 2011 16:21 UTC

Anti-government protesters wave an Egyptian flag during a mass demonstration in Tahrir Square in Cairo February 1, 2011.   REUTERS/Yannis Behrakis Did the Egyptian rebellion open up a gold mine for civil reforms or a mummy’s tomb of economic perils?

I choose to think there are some robust opportunities presenting themselves as Egypt and other countries press their demands for freedom from oppression. On the political side, if you subscribe the “big wave” theory that Egypt’s mass protests will trigger similar revolts in other Arab states, then the resulting reforms — should they happen — may fuel prosperity and greater distribution of wealth.

The markets, of course, have a laser focus on Egypt and its ramifications. There’s a huge commodities rally going on; some of it is guided by fear and speculation but most of it is driven by demand.