Finish the Job on Financial Regulation

By José Viñals: Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl. At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global […]

Are Banks About to Win on Commodities Trading After Their Success in Watering Down Basel III Capital Rules?

You know it’s bad when Bloomberg’s editors attack the banks’ win against regulators, in this case, their success in watering down already-too-generous Basel III capital requirements. And they look primed to score a twofer on pending rulemaking on trading in physical commodities. One of the hard-fought battles of Basel III was establishing limits on total […]

Basel Committee Misses the Point in Redefining Leverage Ratios

The Basel Committee’s recent decision to change the definition of the leverage ratio is bad news for two reasons. There’s the obvious: A smaller denominator means less capital. The leverage ratio requirement says, in principle, that banks must have capital equal to at least X% of their total unweighted assets, where “assets” is supposed to include anything […]

NYTimes on ‘Wall Street-Academia Axis:’ A Lack of Ethics?

David Kocieniewski of the New York Times is guilty of some outrageously bad journalism in the form of a groundless ad hominem attack on the reputation of two professors for the sole purpose of reinforcing the prejudices of his misinformed readers. Kocieniewski’s article is titled “Academics Who Defend Wall St. Reap Reward”, and insinuates that academic research […]

The King Is Dead; The CFTC Limps On

  Outgoing CFTC Chairman Gary Gensler delivered his farewell speech on 27th December 2013, calling himself “darn proud” of pretty much everyone associated with his time at the agency, including his daughters and their “Captain Grandpa”. While he gave a full summary of the agency’s achievements under his tenure, he only alluded briefly to the many issues that will […]

401(k) Plan Abuses Finally Coming to Light

I doubt that I’m unusual in being a finance type who has heard about 401 (k) abuses and bad practices for a very long time. So it’s gratifying to see the Financial Times that something is finally being done to try to curb this behavior. But that is hardly the full extent of what is […]

European Council Deals Blow to Single Resolution Mechanism

  The Single Resolution Mechanism (SRM) proposed by the EU Commission in July has suffered a fresh blow (see this blog for SRM background).  On 7 October 2013, an opinion from the European’s legal service sheds serious doubt on the legality of giving a new agency wide discretion to close troubled banks under EU treaties, potentially undermining […]

Bank Failures Are “Inconceivable” Under the Latest Neoclassical Fantasy

Only theoclassical economics constantly recycles variants of its worst ideas that have proven disastrous when they have influenced policy.  Other fields advance because they embrace the scientific method.  Theoclassical economists repeat their worst errors because they embrace anti-governmental dogmas that blind them to the inherent weaknesses of the corporate form and limited liability.  This represents […]