12/29/10

More Links on the Banks and Racketeering

Just a few links, rather heavy on banks.

The ‘Subsidy’: How a Handful of Merrill Lynch Bankers Helped Blow Up Their Own Firm ProPublica. Traders sticking it to another department of their own bank is nothing new, but the impudent nihilism of the looting here is impressive. They didn’t have to look very far afield to find the fool in the market. With Iceland, Ireland (and maybe others to come) in mind, look out for variations of this article in due course, with different bank names, and ‘Country’ instead of ‘Firm’ in the title.

To make up for no post from me on the latest regulatory iterations (I felt my life force ebbing away as I contemplated yet another bunch of slowly-changing and presumably flawed regulatory docs last week, definitely a 2010 theme, that, and promising to stretch out until about 2020; lovely), here are some variations on the “Basel III/Dodd Frank no good” idea.

Basel liquidity rules, going neo-medieval FT Alphaville. Zero risk weights hobby horse, but this time, applied to liquidity rules, not capital rules.

The privatisation of liquidity ops FT Alphaville. A dubious looking liquidity enhancement mechanism, via insurers. Basel III is already outpaced by innovation, and it won’t “go live” for another 8 years.

Gaming The Bank Regulation System: A Primer CNBC. Sketch of a mechanism that migrates bank credit exposure to the shadows, and how Basel III makes no difference. All it needs is a pliant or deluded insurer (again); they are admittedly a little thinner on the ground after the demise of the monolines and AIGFP, so incentives might be needed. Aha! Devised by ProPublica’s ex-Merrill people perhaps?

Floored (homophonically) Deus Ex Macchiato. A goofy piece of Dodd-Frank rule making that requires two capital computations to be performed, but ensures that only one of them, and always the same one, applies.

Zombie banks FT. Lex wondering about those toxic bank balance sheets.

The Curious Incident of Financial Theft in the Broad Daylight Modeled Behavior puzzling about how banks actually “socialize the losses”.

Stop Servicer Scams, 1: Why You Should Care and Stop Servicer Scams, 2: Dissecting the Letter and Its Requests. Mike Konczal explicating this political campaign.

The Limits to Racketeering Attempter’s take on the endgame, from a much wider perspective than banking.

via:Naked Capitalism



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