This week the trial of former UBS trader Kweku Adoboli, arrested in September 2011 on charges of fraud and false accounting, takes center stage in the banking world. Adoboli was arrested in connection with a $2 Billion trading loss at UBS in 2011. Adoboli had been contacted by compliance officers with questions about some of… Continue Reading
Following recent lawsuits, court decisions, and presidential debates, more Americans than ever are becoming familiar with the Dodd-Frank Act, which was passed in 2010 to increase the government’s ability to regulate big banks. Many politicians and lobbyists have argued for repealing the Dodd-Frank Act, but a recent New York Times editorial poses an interesting question:… Continue Reading
A couple days ago, Paul Volcker (of “Volcker Rule” fame) testified before the British Parliament’s Commission on Banking Standards Joint Committee on Wednesday. Volcker answered questions about the Volcker Rule and bank regulation, but the most interesting part was his answer to a question we’ve all wondered about: “What is it that makes it so… Continue Reading
Has anything really changed since the financial crisis of 2008? It seems that the too-big-to-fail banks are still too-big-to-fail. If you are reading this now, you are obviously aware of JPMorgan Chase’s disclosure of more than $2 billion in losses last week as a result of what time and time again are referred to as… Continue Reading
JPMorgan’s troubles related to its $2 billion-plus trading loss are just getting started. Now, executives find themselves unwittingly playing “pink slip duck-duck-goose.” First, losses are expected to ultimately exceed $3 BBBBillion. Second, the feds are involved, as in the FBI (guns, badges, sunglasses, and yes handcuffs). Ouccchhh. I hate when that happens. Add the SEC… Continue Reading
The Volcker Rule got some free advertising yesterday, courtesy of JPMorgan Chase. Quicker than you can say “here we go again,” the too-big-to-fail bank announced a two billion dollar trading loss. Just as the American economy has begun to turn around and gain confidence, its second-largest bank puts us through “déjà vu all over again.” … Continue Reading
All aboard and full steam ahead on the Volcker Rule Train. Next stop: Final Draft. ETA: September, 2012? At least that’s what an article by Ben Protess and Peter Eavis predicts, citing anonymous sources with knowledge of the issue (a journalist’s best friend). The Dodd-Frank Bill initially set a deadline of July 2012, but there… Continue Reading
Every time banks asked, “Well what do we do if X, Y, or Z happens,” a contingency was written into the rule. And when asked: “Hey, how is this going to be interpreted,” definitions and interpretations were spelled out. (Okay, maybe not every time. But how on earth did a plan as simple as “No risking taxpayer money on proprietary trading” reach 500 words, not to mention 500 pages?)
It will be okay, big guys. Investment banks will allow for the liquidity you supposedly so dearly fear losing. The market will adapt and the reduced risk in the U.S. financial system will restore confidence and integrity to the markets. The economy grew for decades under the Glass-Steagall Act. Would we really be upset to see that growth again–growth all can benefit from, not just traders?
Heads: the risks pan out, the executives look like geniuses, and they have “earned” their multimillion dollar bonuses and Cuban cigars. Tails: the uberderivative financial instruments that these “geniuses” have concocted crash, as in the subprime mortgage crisis… There are simply no negative consequences. Financial institutions, three years since the beginning of the global financial… Continue Reading
Wall Street: put people to work, and then collect your bonuses with your heads held high. And stop trying to destroy any sensible speed limits and caution signs (such as the Volcker Rule). Regulation keeps cars on the road. Without it we are doomed to repeat the mistakes of the last boom…
You’d think banks would have a lot more to worry about than an unemployed octogenarian. Perhaps a portfolio of worthless subprime mortgage securities? Nope. The government will bail us out. How ’bout dwindling revenues in the face of a continued economic downtown? No worries, we’ll just start charging fees for everything our customers do, from… Continue Reading
Today, TCO brings back Quick Links, which keeps our readers updated in the world of consumers. UBS, one of the largest banks in the world, had one of its employees arrested for allegedly losing over $2 billion, which would essentially eliminate the company’s quarterly profits. The New York TImes’ DealBook asks the question we all should:… Continue Reading
After the 2008 financial meltdown, former Federal Reserve Chairman and legend Paul Volcker gave the country simple advice: let banks do what they do best–or at least what the public expects them to do–bank. That is, make loans to support long term growth and prosperity.
Finally, at the heart of his wisdom is a moral compass that cannot be bought or compromised. Eighty three years young, he is not looking for a job in “industry” or to be feted by Wall Street chiefs at black tie dinners. He will not suffer fools lightly or be bamboozled by high-priced consultants and convoluted explanations about how failures to disclose financial risks to consumers is somehow a good thing.
The Volcker Rule: A key piece of the financial reform legislation, which President Obama signed into law earlier this week. The rule will help ensure a dividing line between commercial and investment banks.