John Reed on Big Banks and Corporatism

Bill Moyers talks to former Citicorp and Citigroup head John Reed about what’s wrong in the banking sector. John Reed readily acknowledges his role in bringing down the Glass-Steagall Act (Hat tip finance Addict)

The SEC’s Day in Court

Judge Jed S. Rakoff of the United States District Courts of the Southern District of New York struck a blow against the Securities and Exchange Commission and in support of the “public interest.” The Securities and Exchange Commission had asked the Court to approve a Consent Judgment between Citigroup and the S.E.C. Judge Rakoff (cutting to the chase) wrote he could not do so

In defense of the SEC — no, really

The Finance Addict writes : “We need to put our cynic hats on and start questioning why it is that the SEC isn’t getting any. My guess–it’s no accident.”

Plus ça change – LDC edition

This blurb from Paul Krugman and Robin Wells’ review of Jeff Madrick’s book on the credit crisis sums up why the busts keep getting bigger

Simon Johnson: ‘We have done nothing that will prevent this from happening again’

Here’s the question: Can sovereignty and effective international supervision be reconciled when it comes to complex large financial institutions? Simon Johnson lays out a compelling case that they cannot. As he has said time and again, there is no meaningful resolution authority capable of dealing with large complex cross-border institutions like Lehman Brothers. We either let them fail like Lehman or bail them out.

Meanwhile people like Tim Geithner are arguing that financial institutions should be allowed to get even bigger.

Video below.

Black Says `Major Frauds’ Continue at Mortgage Companies

Short clip below. Regarding the comments about Citi, see this article here. This is not new news because Bowen testified in April (see here). Yet, nothing was done in the intervening six months until the foreclosure crisis precipitated damage control. Update: Here is a second video that includes Bill Black talking to Dylan Ratigan on

Citigroup’s Chuck Prince confirms that risky behaviour drives out prudent when risk is rewarded

Former Citigroup CEO Chuck Prince made what could be considered the most infamous statement of this credit crisis when he said: "as long as the music is playing, you’ve got to get up and dance. We’re still dancing." -Citi Chief on Buyouts: ‘We’re Still Dancing’, DealBook, July 2007 This statement was correctly interpreted as a

Citigroup can limit demand deposit withdrawals and money funds can too

Apparently, some of the ‘best reforms’ now being instituted in the U.S. to prevent a liquidity crisis in the future include limitations on demand deposits (hat tip Karl Denninger). What financial institutions are trying to prevent is a bank run in whatever form it can take – via depositors in the case of IndyMac and

Short sale fraud

CNBC’s Diana Olick has the breaking story on alleged fraud in the mortgage industry. She has been writing about this for a few days now.  See Big Banks Accused of Short Sale Fraud – Realty Check with Diana Olick at CNBC’s website. Basically, second liens on properties like home equity loans have a blocking interest

On releasing Citi from TARP and banking by accounting subterfuge

Credit Writedowns has made it clear how little will there is in Washington for substantive reform in financial services.  But, let’s be more explicit in this post about what policy makers are doing.  I will use the recent Citigroup TARP brouhaha and changes to the implementation timetable of accounting rules as the vehicle for this

U.S. forfeiting billions in future taxes to let Citi repay TARP

The Washington Post is reporting that the federal government has quietly decided to exempt Citigroup from a large future tax bill in allowing it to exit the TARP program.  This is a backdoor bailout worth billions and is an outrage that demonstrates the lengths to which government will go to gift these organizations taxpayer money.

Video: Abu Dhabi bails out Dubai

There will be no Dubai sovereign default. The government of oil-rich Abu Dhabi surprised investors this morning in announcing a $10 billion rescue package to pay for upcoming obligations of embattled Dubai World. Below Richard Stovin-Bradford of the Financial Times speaks about Abu Dhabi’s decision to finally come to Dubai World’s rescue.  I share his