Archive for the ‘Banking System’ Category

Mark Carney: A common touch, an uncommon task   Leave a comment

An excellent  profile of Canada’s Central Banker and head of the Financial Stability Board.

“It’s very important [that] people understand the broader economic forces, and what realistic time frames there are for these forces to play out,” he tells me. “Unfortunately, in some countries, the range of policy options they have, given those broader forces and given their starting position, are pretty limited, and it’s a question of choosing the least bad option in the end. But that should take place in as informed a way as possible.”

His strong belief that the public must understand and support steps that their elected leaders take to right the global economy, combined with a steadily growing public profile, have provoked whispers in Ottawa that the next logical realm for Mr. Carney’s career might be politics.

There is no indication he entertains thoughts of a political career down the road and, even if he did, he couldn’t say so. The role of central banker is independent from the political process but, especially in times like these, people need to be sure the Governor and the government he serves are on the same page. Still, some commentators have hailed him as a rare truth-teller in Ottawa, unafraid to speak in unvarnished terms during an era dominated by spin and message control.

Yet, on questions about his long-term ambitions, he has mastered the art – crucial to the job – of keeping certain cards close to his chest. For policy, that means being clear about economic conditions and trends, but refusing to spell out exactly where interest rates are headed. Personally, that means insisting that Mark Carney, whose first terms at both the central bank and the FSB end about three years from now, is just too busy to think about what might come next.

via Mark Carney: A common touch, an uncommon task – The Globe and Mail.

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A new banking crisis: You can bank on it – Opinion – Al Jazeera English   Leave a comment

“You can bank on a banking crisis. You can bank on bankers who are primarily interested in their own portfolios. 

You can bank on banks remaining key behind-the-scenes players in our politics and outspoken when they sense that regulators are moving in on their permanent party of payouts.

You can bank on their outrage when someone, anyone, suggests that they should pay their fair share or that their greed has to be checked or practices punished.

Bankers are circling their guilded wagons to fight off attacks on many fronts.

In the public arena, they are increasingly fed up with the “imbecilic” – stronger language to come – critics from the likes of Occupy Wall Street that they fear are inspiring public hostility to the lords of finance.

There have even been protests at recruiting conferences on campuses where the MBA’s used to stand in line for a chance to rake in the outsized salaries that awaited kids blessed as bankster-worthy.

In-depth coverage of the global movement

This is upsetting to Jamie Dimon, the $23m a year CEO of JP Morgan Chase, who is taking umbrage, telling an investor’s conference: “Acting like everyone who’s been successful is bad and because you’re rich you’re bad, I don’t understand it.”

Bernard Marcus, a co-founder of Home Depot, and self-described “job creator” didn’t mince his words, according to Bloomberg News.

“If successful business people don’t go public to share their stories and talk about their troubles, they deserve what they’re going to get.” He said he isn’t worried that speaking out might make him a target of protesters.

“Who gives a crap about some imbecile?” Marcus said. “Are you kidding me?”

Marcus and Diamon and the small .01 per cent of the one per cent they are part of are not kidding about fighting back either. The protesters may piss them off, but they are fighting a deeper trench warfare now against regulators and central banks who say they want to save them from themselves.

Comments David Dayan on the website Firedog Lake:

“It should come as no surprise that this coterie of self-pitying “job creators” lines up pretty perfectly with right-wing Republicans and free-market fundamentalists. Just because this attitude completely crashed the economy about three years ago doesn’t mean they should be made to feel bad about it, however.”

He cites an article on the Roman Empire which says that, even with all its slaves, it had a more equitable income distribution than the US has today. Writes Tim DeChant:

“To determine the size of the Roman economy and the distribution of income, historians Walter Schiedel and Steven Friesen pored over papyri ledgers, previous scholarly estimates, imperial edicts and Biblical passages. Their target was the state of the economy when the empire was at its population zenith, around 150 CE. Schiedel and Friesen estimate that the top one per cent of Roman society controlled 16 per cent of the wealth, less than half of what America’s top one per cent control.”

Keeping wealth concentrated seems to be what the bankers do – but sometimes with enough excess and irresponsibility to bring themselves down.

In Washington, the Federal Reserve Bank, ironically founded and run by the very banks who have been blessed with secret subsidies in the trillions, fears another financial crisis driven by a banking crisis.

They want American banks to hold more capital – and to keep it more easily accessible. According to the New York Times, they have already compromised with pressure from their clients, adding that “the final capital rules were unlikely to be more stringent than international limits that were still under development. That is a small victory for banks who warned that they would be severely disadvantaged if capital requirements here were stricter than those governing overseas banks.”

Meanwhile, overseas, the same battle royale is underway. In England, regulators are considering new rules that would outlaw investment banking by commercial banks. This is the very problem that America’s Glass-Steagal Act was passed to prevent in the l930s.

When that law was “modernised” – ie dumped as unnecessary – by Congress with Bill Clinton’s blessing, the banks rushed into the game of largely unregulated speculation with disastrous consequences clear for all to see.

The international regulators have their own too big to fail list of 29 banks they call “G Sifis” to insure higher capital levels. The risky banks that first opposed the designation, are now using it to market themselves as safer. Go figure!

While many in the world support a tax on financial transactions, the US bank lobby has killed it here. They also colluded with subprime lenders, and before them, red-lining discriminatory lenders to scalp borrowers and promote fraudulent loans with little push back by politicians who were clearly bought off.

In Switzerland, Europe’s bank capital, a central banker trying to make the industry more prudent has come under sustained personal attack by his colleagues.

The New York Times reports:

Mr (Phillip M) Hildebrand, the president of the Swiss central bank, was called “arrogant” and “egotistical” by bankers quoted anonymously in the pages of Swiss newspapers. His supposed sin: Wanting banks to hold extra capital. The fact that Mr Hildebrand was himself a former hedge fund manager in New York seemed only to heighten the sense that he had betrayed his profession.

“He’ll never find another job in Switzerland”, the Swiss newspaper Der Sonntag quoted an unnamed high-ranking banker as threatening Mr. Hildebrand in 2010.

The unusually bitter attacks on a central bank chief were a measure of what was at stake. Mr Hildebrand, 48, had a high-visibility role in a struggle between bankers trying to preserve their most lucrative business practices and regulators trying to defuse a system that, many believe, nearly blew up the world economy.

This very public food fight offers a window into why bankers are fighting – and often winning their war on politicians and the public. They are relentless in pursuit of their interests and have the ability to pay for the best law firms and PR flacks.

The bankers are trying to come with theories for our depressing economic woes that places the blame on everyone but them. Fedhead Ben Bernanke says it was all a “global savings glut” that did us in. Hence, anyone that was more of a saver than an investor is responsible.

Hyun Song Shin, another Princeton professor, says bullocks to his colleague Benanke in a detailed paper refuting his strawman, arguing the crisis was caused by “a ‘global banking glut’, ie the rise in cross-border lending, than the ‘global savings glut’.”

Without falling down the rabbit hole of endless well-footnoted debates, the truth is that millions of savers have seen their savings shrink and most bankers, thanks to bailouts and cheap money, watched their holdings rise.

Blaming the victim for the crime has a long and dishonourable history,

As bad as the economy gets, and most forecasters suggest little hope for a rebound in the year ahead, even as there are blips of “positive data”, the bankers seem determined to save themselves if and when the ship sinks.

They already own the lifeboats.

The challenge facing the 99 per cent is how to organise more broadly and build the political muscle to break up the big banks, dissolve the “zombies” (failed banks on borrowed time) among them and rebuild an economy that works for all of us.”

via A new banking crisis: You can bank on it – Opinion – Al Jazeera English.

Posted December 26, 2011 by arnoneumann in banking, Banking System, Economic

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Global Bank Capital Regime at Risk as Regulators Spar Over Rules – Bloomberg   Leave a comment

This will be noted as being of of grand historical significance.

“Capital standards designed to fortify the global financial system are eroding as European officials, beset by a debt crisis, rewrite the regulations and U.S. rulemaking stalls.

The 27 member-states of the Basel Committee on Banking Supervision fought over the new regime, known as Basel III, for more than a year before agreeing in December to require banks to bolster capital and reduce reliance on borrowing. Now, as they put the standards into effect in their own countries, European Union lawmakers are revising definitions of capital, while the U.S. is struggling to reconcile the Basel mandates with financial reforms imposed by the Dodd-Frank Act.

“The game on the ground has changed in Europe and the U.S.,” said V. Gerard Comizio, a former Treasury Department lawyer who is now a senior partner at Paul Hastings Janofsky & Walker LLP in Washington. “The realists in Europe realized that their banks cannot raise the capital they’d need to comply. U.S. banks have reversed course and are more assertively fighting against it. The future of Basel III looks less certain now than it did when it was agreed to.” ”

via Global Bank Capital Regime at Risk as Regulators Spar Over Rules – Bloomberg.

Posted August 19, 2011 by arnoneumann in Banking System

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