Tag: economics

Models behaving badly

| January 20, 2012 | 1 Comment

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

Has banks’ bonus culture really changed?

| January 19, 2012 | 0 Comments

Today’s the big day at Goldman Sachs. Employees of the so-called Vampire Squid will find out whether they’re getting a bonus for last year’s performance and, if so, how much. For what it’s worth I’ve heard rumors from the firm’s own employees that 40% of staff will not be getting bonuses this year.

Here’s how the compensation picture looks to be shaping up so far for the major Wall Street houses.

Continue Reading

If SOPA wins, the banks win and you lose

| January 18, 2012 | 0 Comments

Charles Ellis Schumer is the senior United States senator for New York. A Democrat, he has represented New York on the national level since he became a member of the House of Representatives in 1998. He started his political career in 1974 when, at the age of 23, he became the youngest person to join the New York State Legislature since Teddy Roosevelt. When it comes to establishment politics it doesn’t get much better than good ol’ Chuck Schumer.

So what should we make of it when we hear that the upstanding gentleman from New York is “in favor of censoring the internet”? Continue Reading

Have banks been robosigning credit cards, too?

| January 17, 2012 | 9 Comments

By chrisjohnbeckett on Flickr

The following statement scared me more than the thought of a Rick Perry presidency. From American Banker:

“If sloppy record keeping and problems with false affidavits is a problem with mortgages, it’s 100 times bigger in credit card accounts,” says Michelle Weinberg of the Legal Assistance Foundation of Metropolitan Chicago.

Worse than mortgages, even? Continue Reading

Will high oil prices bring the economy low again?

| January 16, 2012 | 2 Comments

By ollesvensson on Flickr

It’s always the unintended consequences that get you in the end.

The West seems committed to putting pressure on Iran over its nuclear enrichment program. (A program, I should add, that has been so far found to be purely non-military.) The pugnacious attitudes on both sides have increased tensions near the Straits of Hormuz, the tiny passage through which a third of the world’s oil passes. Which has naturally led to higher oil prices, as OPEC states in its January report. Continue Reading