Posts filed under “Crony Capitalists”

Debt Ceiling Debacle Has Already Damaged the U.S.

Dysfunction Is Limiting U.S. Position Abroad, Observers Say; ‘Sadness From Our Trading Partners’

click for ginormous graphic
BN-AA001_DEBTLI_G_20131015194502
Source: WSJ

 

 

Here is the problem with using the debt ceiling as a negotiating tactic: It does permanent, long lasting damage to the reputation of the US, and hastens the day when the US Dollar is no longer the world’s reserve currency.

The damage has ALREADY made US financing more expensive, impacted consumer confidence, and shaved a few bps off of GDP. The lasting ramifications of this are even greater, and future generations will spit expletives whenever they mention the 113th Congress.

The Tea Party has made it clear: Ideology first, party second, country last. They should be treated as hostile adversaries in all future negotiations.

 

See also
Why the U.S. Should Be Downgraded (MoneyBeat)
Salmon: The default has already begun (Reuters)
The Myth that U.S. Has Never Defaulted On Its Debt (TBP)
The debt-ceiling doomsday device (FT.com)
Some are born solvent, some achieve solvency, and some have solvency thrust upon them (FT Alphaville)

Contra:
Stop Fretting: The Debt-Ceiling Crisis Is Over! (New York Magazine)

 

Source:
Fiscal Uncertainty Chips Away at U.S. Prestige
Dysfunction Is Limiting U.S. Position Abroad, Observers Say; ‘Sadness From Our Trading Partners’
Thomas Catan
WSJ, October 15, 2013
http://online.wsj.com/news/articles/SB10001424052702304330904579137880639455254

Category: Credit, Crony Capitalists, Digital Media, Really, really bad calls

40% of Highest Paid CEOs Were Bailed Out, Booted, or Busted

Nearly 40% of CEOs on the highest-paid lists from the past 20 years were either bailed out, booted, or busted:

 

Click to enlarge
Graphic
Source: Executive Excess 2013

 

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Category: Corporate Management, Crony Capitalists

Is McKinsey to Blame for Skyrocketing CEO Pay?

In 2011, I posed the question “Is McKinsey & Co. the Root of All Evil ?” This was not a tongue-in-cheek query, but rather, a look at how so many recent disasters traced their origins back to McKinsey & Co. Which brings us to the latest issue negatively affecting the United States, skyrocketing CEO pay…Read More

Category: Crony Capitalists, Philosophy, Really, really bad calls, Wages & Income

The Daily Show on Goldman Sachs’ Aluminum Manipulation

Hilarious:

Goldman Sachs bets on the future price of aluminum while simultaneously goosing the future price of aluminum by creating a supply bottleneck in its aluminum warehouse.

John Oliver’s Arcane Details of Boron-Group Metals Pricing Update

(05:13)

Category: Commodities, Crony Capitalists, Federal Reserve, Video

Executive Pay by the Numbers

Click for full list Source: NYT

Category: Crony Capitalists, Wages & Income

Proposal for New Hedge Fund Fee Structure: 1% + 33% of Alpha

One of my pet peeves is the way that insiders — whether corporate CEOs, hedge fund managers, or elected politicos — capture compensation (or credit) for normal cyclical gains they had little or nothing to do with. This is the approach favored by the Crony Capitalists — those people pretending to be free market participants,…Read More

Category: Crony Capitalists, Hedge Funds, Investing, Really, really bad calls

Sizing Up CEO Pay

Click for ginormous graphic Source: WSJ

Category: Crony Capitalists

Jeffrey Sachs’ Speech on Wall Street Corruption

Columbia Economist Dr. Jeffrey Sachs speaks candidly about corruption in the United States: from Washington DC and Wall Street, including the entire financial/banking system

Category: Bailouts, Crony Capitalists, Legal, Video

GSE Investigation Into Force-Placed Insurance (finally)

Fannie & Freddie have finally begun to investigate the self-dealing and often fraudulent practice of Force-Placed Insurance. Both the New York State Insurance Regulator and the Consumer Financial Protection Bureau have been way ahead of the GSEs on this.

For those of you who may be unfamiliar with Force-Placed Insurance, it is an optional bank insurance product that sometimes gets forcibly jammed down the throats of home owners and mortgage investors at grossly inflated prices. As Jeff Horowitz detailed in 2010 (Losses from Force-Placed Insurance Are Beginning to Rankle Investors), most of the fees, commissions and revenues from this “product” went straight back to the banks holding the related mortgage, typically to wholly owned subsidiaries.

It was an abusive practice, and in quite a few instances, the additional costs actually tipped homeowners into foreclosure.

Here’s the WSJ:

“The Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) plans to file a notice Tuesday to ban lucrative fees and commissions paid by insurers to banks on so-called force-placed insurance . . .

Forced policies have boomed in the wake of the housing bust, as many homeowners struggled to keep up with mortgage payments. Some borrowers may try to save money by dropping the original standard coverage, only to be hit by policies with premiums that are typically at least twice as expensive as voluntary insurance, and sometimes cost as much as 10 times more. Nearly six million such policies have been written since 2009, insurance industry data indicate. Consumers are free at any point to replace a force-placed policy with one of their own choosing.”

The Consumer Financial Protection Bureau has issued new rules on this, but the real action seems to be the variety of civil suits from investors; additionally, New York State just reached a settlement with forced-placed insurer Assurant, including a $14 million penalty, and a long list of practice changes (after the jump). If it were up to me, I would have insisted on profit disgorgement and jail time for the CEO (But I am “unreasonable”).

Hopefully, this is the first of many . . .

 

 

Previously:
Latest Mortgage Scandal: Force-Placed Insurance (November 10th, 2010)

Rule of Law: Banker Criminality Demands Prosecution (May 20th, 2011)

A modern Pecora Commission could right Wall Street wrongs (February 5th, 2012)

Sources:
U.S. Cracks Down on ‘Forced’ Insurance
ALAN ZIBEL And LESLIE SCISM
WSJ, March 25, 2013
http://online.wsj.com/article/SB10001424127887323466204578382603826452198.html

Losses from Force-Placed Insurance Are Beginning to Rankle Investors
Jeff Horwitz
Amaerican Banker, NOV 9, 2010
http://www.americanbanker.com/issues/175_216/losses-from-forced-place-insurance-1028475-1.html

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Category: Bailouts, Crony Capitalists, Foreclosures, Legal, Real Estate, Really, really bad calls

Implementing the Volcker Rule via the FDIC

There has been much commentary (see this as a smart example) on the scathing Senate hearings on JPM and the London Whale last week. I wanted to take a moment to throw out a few ideas that relate to JPM’s embarrassing moment int he spotlight (again). The TBTF giant banks want to eat their cakes…Read More

Category: Bailouts, Corporate Management, Credit, Crony Capitalists, Regulation