Tag: Banking

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My company used to contract with Sungard in Philadelphia for backup data-center services. Every year we would head to Philly laden with data backup tapes for our annual disaster recovery tests. The question arose, however, about Sungard’s capacity in the face of a black swan event in which hundreds of companies needed their facilities at […]

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I read an article recently by Theodore Dalrymple that he titled ‘Bad Form’. He was not pleased that his bank, that is big, wrote him (who is small) to say that he needed to update certain of his personal information for his accounts at the bank. He then used some part of the article to […]

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We’re Calling You Out, JPMorgan Chase

 

Last week I learned that JPMorgan Chase donated $500,000 to the Southern Poverty Law Center and I was disgusted. I’ve been writing for weeks that we need to speak out against foolish and dangerous Leftist activities. Well, my husband and I have accounts at Chase, and I had to speak up. I doubt that the following letter will have an impact, but if we don’t take a stand in our own lives, we have no reason to complain about the state of the United States. Here is what I wrote:

Dear Mr. Dimon,

In this AEI Events Podcast, AEI’s Peter J. Wallison welcomes Sanjai Bhagat of the University of Colorado Leeds School of Business to discuss Dr. Bhagat’s new book, Financial Crisis, Corporate Governance, and Bank Capital (Cambridge University Press, March 2017).

Dr. Bhagat emphasizes the Dodd-Frank Act’s costs to the US economy and highlights that, despite its stated intentions to eliminate “too big to fail,” investors and economic policymakers still believe that banks are still too big to fail. To address systemic risk and prevent a future financial crisis, bank executive compensation needs to be addressed. To this end, Dr. Bhagat emphasizes the importance of aligning management incentive with sound financial practices, and he suggests restructuring bank executive and director incentive program to include only restricted stock and restricted stock options with long vesting periods. He also underlines the importance of financing banks with considerably more equity. He clarifies that the 2007–08 financial crisis was not exacerbated by misalignment of corporate management incentive, but that this misalignment exacerbated the financial crisis.

In this AEI Events Podcast, a group of financial experts and historians meet to evaluate the Glass-Steagall Act and the extent to which it can address current and upcoming challenges in American finance in an event hosted by AEI’s Paul H. Kupiec. In the keynote address, Dr. Richard Sylla (New York University Stern School) points out that the real problem of the financial banks was shadow banks – not universal banks – which the Glass-Steagall Act would fail to address.

In a following panel discussion, experts assess the prospects of passing the Glass-Steagall Act, in addition to the implications for banks and their respective bank holding companies. Panelists include Martin Baily, (The Brookings Institution), Oliver Ireland (Morrison and Foerster LLP), Paul H. Kupiec (AEI), and Norbert Michel (The Heritage Foundation). The discussion is moderated by Alex J. Pollock (R Street Institute).

In this AEI Events Podcast, AEI’s Peter J. Wallison hosts Chairman Jeb Hensarling (R-TX) of the House Financial Services Committee at AEI to discuss the Financial CHOICE Act. They evaluate the causes of the 2007–08 financial crisis and how the Dodd-Frank Act fails to address those causes.

Mr. Wallison and Chairman Hensarling consider the Dodd-Frank Act’s role in reducing lending activities — especially among small and community banks — and the ensuing slow recovery. They then discuss the challenges for the CHOICE Act in the House and Senate.

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Since this is the anniversary of the opening of the Erie Canal, it gives me an excuse to plug a book I narrated for Audible last year: Building the Empire State. It starts with the process of “settling the Revolution,” deciding how much of royal government structure to retain while designing a new country and economy. […]

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Fed Bank Boss Kashkari Reignites Debate Over too Big to Fail

 

Neel-KashkariNew Minneapolis Fed boss — and TARP boss during the George W. Bush administration — Neel Kashkari gave a blockbuster speech yesterday. Despite Dodd-Frank financial reform, Kashkari said he believes “the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy.” What’s more, he’s eventually going to present a plan to end Too Big To Fail once and for all. But not just yet.

Starting in the spring, the bank is going hold some symposiums, issue some policy briefs, gather some feedback, and then assemble a plan. But Kashkari did offer some policy options during his speech. And they’re biggies:

  • Break up large banks into smaller, less connected, less important entities;
  • Turn large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail (with regulation akin to that of a nuclear power plant); and,
  • Tax leverage throughout the financial system to reduce systemic risks wherever they lie.

Kashkari said he wants “transformational measures,” and these would seem to qualify. They have already transformed the debate, reigniting conversation about next-gen financial reform among policymakers, industry, and activists.

Hamilton Was Asking For It

 

shutterstock_252138229I understand Mona Charen’s outrage at the Treasury Department’s announcement that it will eventually replace — or at least demote — Alexander Hamilton as the face of the ten dollar bill.

The Treasury move certainly fits right into the Obama Administration’s craven “identity politics” strategy, presumably intended to shore up Democratic support among key constituencies. As if the switcheroo wasn’t sufficiently poll-driven to begin with, the clincher of course is that Hamilton will be replaced by a woman to be selected… by popular demand.

But I cannot feel too sorry for Hamilton. The Department of the Treasury is, after all, the House that Hamilton built. No individual is so responsible for consolidating national power over economic affairs as Hamilton. He managed to have the central government assume the states’ debts and then establish a Bank of the United States, despite the utter lack of any constitutional authorization for the federal government to get into the banking business (as James Madison and many others pointed out at the time). He did not manage to wipe out state currency in his lifetime, but his political heirs — the Republicans and erstwhile Whigs who emerged victorious from the Civil War — did so with national currency legislation that taxed state legal tender out of existence. This aspect of Hamilton’s legacy is well documented in Thomas DiLorenzo’s book: Hamilton’s Curse.

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I first learned of this through Chicks On the Right: According to this, Eric Holder’s US Dept of Justice might be behind this effort, in something called Operation Choke Point, which is supposedly a targeted program designed to shut down as many as THIRTY separate industries by closing them out of banks. The American Bankers […]

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Wall Street Should Stop Complaining About New Bank Capital Rules

 

Wall Street is kvetching up a storm over modest toughening of megabank capital requirements by federal regulators. “This rule puts American financial institutions at a clear disadvantage against overseas competitors,” Tim Pawlenty, chief executive of The Financial Services Roundtable and former GOP presidential candidate, told Reuters.

The new rule increases the required leverage ratio – the amount of equity capital a bank holds as a share of assets — to 5% versus the 3% ratio in the international Basel III agreement. Under the new rule, megabanks could borrow only 95% of money they lend versus 97% under Basel. By 2018, they would have to rely more on selling stock or retained earnings.