Paulson says Russia urged China to dump Fannie/Freddie holdings (McKee/Nicholson, Bloomberg)
Avatar breaks $2 billion worldwide box office mark (Box Office Mojo) Very impressive of course, though on an inflation-adjusted basis, Avatar ranks just 25th all time. Nothing will ever beat Gone with the Wind.
Volcker Op-Ed: How to reform the financial system (NYT) Unfortunately not a lot of additional detail over his proposed reform plan. But for those not already familiar with it, this does offer a helpful articulation of Volcker’s reform philosophy. Yves is happy Volcker has entered the fray, but believes he needs to go beyond his current thinking.
Frank says banks “recognize reality” by throwing support behind wind-down fund (Howell, Reuters) Am I alone in my fear that a wind-down fund will make matters worse? The idea that new “resolution authority” must be accompanied by a pool of funds to bail out systemic failures compounds moral hazard greatly. Even assuming that banks will be charged high enough insurance premiums to give the fund sufficient financial heft — how well has that worked with the Deposit Insurance Fund? — the very existence of this fund will provide an implicit guarantee to the creditors of the firms’ backed by it. The DIF already creates major moral hazard by removing all depositor incentives to worry about the health of their banks. Now an even larger slice of creditors would be insulated from risk.
PDF — TARP inspector general says program will cost less than expected, warns that little has changed (SIGTARP) In his latest quarterly report, Neil Barofsky acknowledges that TARP won’t cost as much as once expected. But he also warns that “even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.” Section 3 of the report emphasizes that present government policy risks re-flating the housing bubble.
PDF – Treasury releases first quarterly PPIP report (Treasury) A breakdown of the the legacy securities program, which combined public and private capital in order to support the price of toxic assets. The use of non-recourse government leverage, plus Treasury’s equity investment, shifted principal risk on these assets to the public’s balance sheet. It took a while to get off the ground, and the program isn’t very large — less than $25 billion of investments. So far the funds are breaking even.
Justice, medieval style (Leeson, Boston.com) Interesting article, though the author offers little evidence to support his claim that trials by “ordeal” worked. (e.g. judging innocence/guilt based on whether the accused sank/floated when tied up and thrown in water.) ht reader Paul M.
New amateur video of Challenger disaster (LiveLeak)
Your brain on football (Time) Is brain trauma the rule more than the exception?
Awesome impressions (Funny Ordie) Comedian does DeNiro, Ahnold, Stallone and Morgan Freeman
Actor Rip Torn arrested drunk, armed in bank (Michaud, Reuters)