At the Buttonwood Conference sponsored in New York by the Economist, Governor of the Bank of England Mervyn King just gave an elegant and candid speech in which he noted that policymakers might even have to look at splitting up the very large banks–an approach many observers, including me, believe is essential for managing the…
At what point do we ask ourselves whether our economic system has lost its integrity? Day in and day out one reads reports that regulators or the Justice Department have settled with major banks and other well known corporations for the payment of massive criminal and civil penalties. Today GlaxoSmithKline PLC agreed to pay civil…
Guest post by Maciej Borowicz. This is the final part in a three-part series. Here are Parts 1 and 2. What do the regulators make of that? In the US, October is the month when the SEC and the CFTC begin finalizing rules on OTC derivatives in accordance with the Frank-Dodd act. In the EU,…
Guest post by Maciej Borowicz. Part 1 is here. Notwithstanding the criticism of the use of the regulatory capture metaphor made in the first part of this post, this metaphor is not to be seen as being entirely unavailing. I would propose an alternative formulation of the capture approach: capture exits when the poachers turn…
Guest post by Maciej Borowicz. This post will be published in three parts over the next few days. The regulatory capture metaphor – and to the extent it is has been embraced as a theory by critics from left (Theodor Lowi) and right (George Stigler, Richard Posner) – has the unfortunate consequence of obscuring much…
Asked whether the alleged foreclosure fraud by mortgage lenders is the next shoe to drop, Ohio Attorney General, Richard Cordray exclaimed, that this is “so much bigger than a shoe.” Indeed, with a penalty of $25,000 per fraudulent foreclosure, the situation is more analogous to “dropping the nuke,” explained Bill Black, Professor of Economics and…
Jérôme Kerviel, the former Société Générale trader who lost EUR 4.9 billion in unauthorized trading in 2008 was sentenced to three years in prison today and ordered to repay the bank the entire amount of his losses. From the FT: By his deliberate actions, he put in peril the existence of the bank that employed…
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