Category: Banks

Great stuff at Keith Hennessey.com
A friend recently alerted us to Keith Hennessey’s blog, which he pitches as “your guide to America’s economic policy”. And quite the guide it is, full of myth-busting facts, charts, and graphs like this terrific piece contrasting the Bush and Obama deficits. (Doesn’t alter our rating of Bush as worst President [...]

Not surprisingly our old friend Andy Kessler gets it exactly right. Forget smarter regulators or smarter banks; that’ll never happen. Raise capital requirements, limiting the banks ability to create money and fund poor investments. More people read Andy than read us, by a couple orders of magnitude, so now all we have to do is [...]

The only thing surprising about Frank Luntz’s suddenly famous memo on how to oppose Obama’s financial reforms, is that anyone is surprised. Of course the House bill establishes permanent bail-out authority, and of course it sticks taxpayers with at least part of the bill. And the Senate bill will be even worse on this point.

Language [...]

It seems like whenever the government or its apologists want to distract attention from government’s responsibility for the financial crisis they start talking about hedge funds. Thus Bloomberg’s headline today about Volcker’s testimony: “Volcker Says Hedge Funds Should be Allowed to Fail”
Well, when weren’t they? The only hedge fund that ever moved the U.S. government [...]

It was a disappointing but not surprising piece in the NYT today from the man we still regard as the greatest Fed Chairman in history. Paul Volcker’s long and rambling commentary re-states one inoffensive but irrelevant reform proposal and another that would perpetuate the worst in the current system.
The small but irrelevant proposal is to [...]

Stiglitz, smart as he is, is allowing himself to be distracted by the President’s tendency to wander off in to irrelevant details that make good sound bites. Sure, forbid proprietary trading by commercial banks if you like; it won’t hurt. But it was utterly irrelevant to the crisis. Also the rule would tend to extend [...]

Here’s the President’s problem. It’s not just that he is far to the left of the average American. It’s that for all his high-mindedness he is operating in a different ethical scheme than most Americans—and he does not seem to know it.
What the President really seems to regard as the defense of high principle Americans [...]

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// That’s the only conclusion one can come to after reading Rep. Scott Garrett’s bonehead quote in the WSJ report on Obama’s financial reform speech. The WSJ reported Garrett as saying:
“This renewed focus on financial-services reform by the Obama administration is clearly a transparent attempt at faux-populism, in light of the outcome of the [...]

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Andrew Redleaf and Richard Vigilante Call for Clarity, Full Disclosure and Raised Capital Requirements
Wall Street Journal today reports, “President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country’s biggest banks, marking the administration’s latest assault on Wall Street in what could mark a return, [...]

If supporters of free markets are to grapple effectively with the fallout of the late crisis, they need to start by getting one thing clear in their heads: Modern banks, especially the big banks, are not free market institutions. They are agencies of the government.

Creating and maintaining the value of the currency is a core function of government, laid out right in the Constitution (c.f. “and regulate the Value thereof”). In a modern, credit based financial system the mechanism through which dollars are created and their value regulated is the banking system.