Rolfe Winkler

Can crisis inquiry live up to 1930s trailblazer?

January 14, 2010

Ferdinand Pecora turned a tame United States investigation of the 1929 Crash into an exposé that spawned far-reaching banking reform. Despite flashes of incisiveness from Chairman Phil Angelides, the Financial Crisis Inquiry Commission’s debut with Wall Street bosses Wednesday lacked that kind of promise. It’s early days, but the panel needs to sharpen up.

Can crisis inquiry live up to 1930s?

January 14, 2010

- By Rolfe Winkler and Richard Beales -

Ferdinand Pecora turned a tame United States investigation of the 1929 Crash into an exposé that spawned far-reaching banking reform. Despite flashes of incisiveness from Chairman Phil Angelides, the Financial Crisis Inquiry Commission’s debut with Wall Street bosses Wednesday lacked that kind of promise. It’s early days, but the panel needs to sharpen up.

Afternoon links 1-13

January 13, 2010

Must ReadKyle Bass: Testimony before the FCIC (fcic.gov) Bass is a hedgefunder that made big profits betting against subprime. His testimony has many fascinating facts and figures. [The pie charts on page 9 look familiar.]

Crisis inquiry commission hearings today

January 13, 2010

UPDATE: Wow, if the questioning by Phil Angelides of Lloyd Blankfein is any indication of how these hearings are going to play out, they will be much fun to watch. He really pressed Blankfein and the two got combative. Too bad he didn’t have more time…

SEC shifts focus, but new complaint again fails Rakoff test

January 13, 2010

After Judge Jed Rakoff threw out its original $33 million settlement with Bank of America, the SEC shifted the focus of its case. In its new complaint filed today, the SEC still accuses BofA of misleading shareholders for failing to disclose material information. But the issue this time isn’t bonuses, it’s Merrill’s fourth quarter losses.

Of penny stocks and buried treasure

January 12, 2010

Last Friday bulletin-board traded Marine Exploration announced that it had discovered a shipwreck from 1690 off the coast of the Dominican Republic (ht Ari Weinberg). The company issued a press release trumpeting a “great discovery” and its stock popped 50%. But the release smells fishy…

Lunchtime Links 1-12

January 12, 2010

China surprises with bank reserve hike (Xin/Rabinovith, Reuters) The Fed could learn something from the PBOC. This sudden move to tighten bank lending maintains the PBOC’s reputation for acting without warning. If the Fed had a similar rep, U.S. lenders wouldn’t be so cavalier taking interest rate risk.

Yield curve can’t drive profits if banks won’t lend

January 11, 2010

A steep yield curve should mean fat profits for banks. It hasn’t.

Unable to find qualified borrowers and worried that interest rates have nowhere to go but up, banks are stockpiling cash and securities while letting loans dwindle. It turns out banks won’t lend till rates rise. The trouble is, if rates rise their capital will take another hit, leaving them little to support new lending.

Lunchtime Links 1-11

January 11, 2010

Shoddy tayloring (George Cooper) The author of my favorite book on the financial crisis now has a blog. His first post tears down Bernanke’s recent speech absolving his/Greenspan’s easy money policies for inflating housing bubble. It’s a bit technical, but very good.

CFPA can’t arrive fast enough for the elderly

January 9, 2010

Odd that AARP is only just now throwing its support behind the proposed Consumer Financial Protection Agency, after the House watered down many key provisions in its reform bill. WSJ’s Michael Crittenden reports that the lobby group for retirees wrote a letter to Senators Dodd and Shelby of the Senate Banking Committee which said:

Bank failure Friday

January 9, 2010

Only one failure last night (the first of the new year and the first since the week before Christmas).

Lunchtime Links 1-8

January 8, 2010

Bank regulators issue interest rate advisory (FFIEC) This may sound boring, but it’s rather important. The FFIEC — a collection of bank regulators including FDIC, OCC, the Fed, OTS and NCUA — hasn’t issued such a warning since 1996. It wants banks to make sure they can handle rising interest rates….which seems to me a HUGE disincentive to lend. 5% mortgages originated today will lose mucho value as rates go back up. This is a huge reason banks “aren’t lending,” because up is the only direction for rates to go!

Mosler’s 11 steps to fix the economy

January 8, 2010

by Warren Mosler

1.  A full ‘payroll tax holiday’ where the US Treasury makes all FICA payments for us (15.3%).  This will restore ‘spending power’ and, by allowing households to make their mortgage payments, will fix banks from the bottom up.  It may also keep prices down as competitive pressures may lead businesses to cut prices, passing on their tax savings to consumers even as sales increase.

FDIC nibbles nicely at bank risk

January 8, 2010

Rolfe Winkler2.jpgSheila Bair looks to be leading the regulatory race to the top. The agency she oversees, the Federal Deposit Insurance Corporation, has recently unveiled a handful of clever ideas to contain risky bank behavior and protect the nation’s deposit insurance fund. Rival watchdogs fighting for turf will find it difficult to ignore FDIC’s latest tactics.

Keynesianism, Monetarism and Complexity

January 7, 2010

by James G. Rickards

The debate between Keynesianism and Monetarism is over; they both won. Obama’s approach to the crisis is breathtakingly simple – print money and spend it fast. For Keynesians, stimulus substitutes for private demand until the latter is jump started and stimulus can be reversed.  For Monetarists, the logic is equally simple – increase the monetary base to expand GDP.  Don’t worry about inflation until you see the whites of its eyes. Then withdraw the money after the job is done.  Easy.