Tag: Satyajit Das
Have we arrived at a financial singularity?
A couple of things have happened recently that beg the question: do we truly understand the risks that our largest banks are taking? (And this matters because, 4 years on from the financial crisis, taxpayers on both sides of the Atlantic are still being asked to stand behind the banks. See recent events in Spain.)
Professor Henry Hu, from the University of Texas School of Law, believes that we don’t understand these risks. And that’s because the banks, themselves, don’t either. In fact, they couldn’t even if they wanted to. Continue Reading
Weekend wrap-up: 1/30 to 2/3/12
Here’s all the great stuff you missed on the Finance Addict this week. And also check out our GIF of the Week after the jump!
- Banks to face the RICO Act for robosigning credit cards? While the RICO Act’s usually exercised against organized crime rings, it may be used against banks who’ve supported credit card robosigning.
- Germany plays hopscotch over the rubicon. Angela Merkel of Germany is blithely hopscotching over a point of no return.
- Shareholder rights again under attack. What will the landscape look like if Carlyle Group wins its battle to erode shareholder rights?
- Are we going to own AIG forever? Here’s the thing: AIG is not so sure that we’ll ever get our $51 billion back.
- We don’t need no education. Another view of how the banks, the politicians and the press work together to keep in place a status quo favorable to banking interests.
- Sometimes the “long-term” never comes. It’s easy to forget the extraordinary, unprecedented amount of assistance being lent to the economy by the central banks.
- They *do* exist. A regulator who’s resistant to corporate lobbying? Hallelujah!
- Who really pays for the things we love? Many will watch the Superbowl and use our iPhones to share the experience. But if we’re honest we’ll take our wings with a side of guilt.
Sometimes the “long-term” never comes
Traders and other short-term oriented people in finance often use a certain acronym to describe and justify their myopic tendencies: IBGYBG. “I’ll be gone, you’ll be gone”, with the unspoken corollary being, “So why shouldn’t we do this profitable yet risky trade that might blow up somewhere down the line after we’re long gone?”
Now central bankers, regulars and other “responsible”-type folk would never quite put it that way. Still I couldn’t help being struck by the similar way in which they seem to be focusing exclusively on today’s problems with a possible consequence of storing up bigger problems for tomorrow. Continue Reading
Models behaving badly
By Photo-Fenix on Flickr
So it’s not just American banks playing fast, loose and fraudulent with figures. There’s a new ProPublica article out that raises serious questions about Deutsche Bank, picking up on a theme that was first reported on by Zero Hedge and by Dealbook, (who dropped it like it was hot), back in 2009.
The article highlights a junior Deutsche Bank analyst who was allegedly told to change the numbers in the financial models used to estimate how much cash would be generated by the mortgage-backed bonds that DB packaging up as CDOs. Ajit Jain was supposedly asked by mid-level management to pretty up the figures so that rating agencies would assign the CDOs a coveted AAA rating, which would allow Deutsche to sell them to a much broader base of investors. Continue Reading
