Teaching and research distractions have again kept me from blogging for a while. I guess my defense is that learning the facts is always an important precursor to writing about them. This morning, however, I decided to divert from class preparation to add my praise for what is surely destined to be the BOOK OF…
The Irish Times is running a story today that provides a perfect example of why large, highly interconnected financial institutions can unexpectedly become very dangerous. Titled “Ulster Bank counts the cost of catastophic IT meltdown,” the report describes the misery being experienced by Ulster Bank’s customers and management as a result of a bungled software…
I tell my class that a crisis can spring from the most unexpected sources. You never see the lightning that strikes you. Now we focus on some of the most obvious risks, such as a sovereign debt default. As Howard Schneider reported in the Washington Post yesterday, “European banks are facing a reckoning over hundreds…
This is not an April Fool’s joke. Yesterday Dan Tarullo, one of Washington’s leading regulatory thinkers and a member of the Fed’s Board of Governors, gave a speech in which he directly addressed the question whether very large financial institutions are detrimental to financial stability–the great question of the moment for financial reform and financial…
Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, in a speech to the Women in Housing and Finance, just said it again: Separate risk taking from the safety net. If too big to fail organizations cannot be effectively supervised, capitalized, or resolved – which is exactly where I contend things stand right…
Once again very senior figures are proposing that the scale and structure of very large financial institutions be reconsidered. Nearly every major regulatory leader has raised the question, as have many economists across the political spectrum and in both the United States and United Kingdom. To explore, one can start here and here; I can…
Today the bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling released an advance chapter from its final report, to be published on January 11, and a summary of its findings on the blowout of BP’s Macondo well. The summary contains a number of conclusions of which two are critical. First,…
Der Spiegel has a highly critical article on the US activities of Deutsche Bank, calling the financial behemoth “America’s Foreclosure King.” Vince Veneziani predicts that Deutsche is about to become America’s new Public Enemy #1. I am ordinarily leery of the mob mentality that accompanies corporate demonization, but Deutsche and its haughty CEO, Josef Ackermann,…
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