Tagged: Banks

The weak link in bank reform

July 8th, 2010 in Banks 0 comments

federal-reserve-400The financial regulatory reform legislation likely to be sent soon to President Obama calls for the biggest banks and hedge funds to put up some $20 billion in fees to pay the costs of additional oversight by regulators.  But even that won’t help regulators don’t quickly upgrade the training and standards of rank-and-file examiners, says Mark Williams, a former Fed examiner who now teaches finance in the School of Management.  In a Boston Globe op-ed, Williams — author of “Uncontrolled Risk” about the fall of Lehman Brothers — says if bank examiner performance over the last decade is an indicator, oversight may prove grossly inadequate unless the regulators become as financial sophisticated as those they’re supposed to regulate.

“Our entire financial system is dependent on strengthening regulator oversight and closing this sophistication gap.”

Contact Mark Williams 617-358-2789, williams@bu.edu

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Dealing with TBTF institutions

January 27th, 2010 in Banks, Finance 0 comments

U.S. moneyPresident Obama has proposed taxing banks that have benefited from TARP bailouts and restricting banking trading activities so depositor funds are not put at risk.  In a Boston Globe op-ed, Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says it would be more effective to make too-big-to-fail institutions return every dollar of the subsidy they get by being able to borrow funds at a lower rate than less complex institutions.

“We must remind ourselves and Obama that the subsidy comes out of taxpayers’ pockets.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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Protect taxpayers from TBTF firms

January 25th, 2010 in Banks 0 comments

money rollIn the wake of the great financial crisis/bailout of 2009, it’s in the U.S. taxpayers’ interest to again separate the “financial markets industry” from the “financial services industry.”  In a Reuters commentary, former deputy Comptroller of the Currency Robert Bench, now a senior fellow at the BU School of Law’s Morin Center for Banking and Financial Law, says now is the time for Congress to create an industry financed “Systemic Resolution Fund” as insurance against failures at those “too-big-to-fail” financial instutions.

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

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Volker's return to influence

January 22nd, 2010 in Banks 0 comments

USA/Paul Volker appears to be regaining influence in Washington as President Obama enbraces the former Federal Reserve chairman’s plan to keep banks from engaging in risky investment speculation.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says it’s about time.

“Obama’s listening to Paul Volcker is long overdue.  This is a hopeful sign of sounder proposals to come from the Administration on financial and economic matters.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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Wall Street's record compensation

January 15th, 2010 in Banks, Finance 0 comments

BUSINESS-US-FINANCIAL-ACCOUNTINGDespite fury over Wall Street’s pay culture, major banks and securities firms are headed toward a record compensation total of around $145 billion for 2009 when all the numbers are out.  Economics Professor Laurence Kotlikoff, a  senior economist in the Reagan administration whose new book, “Jimmy Stewart is Dead,” about the banking industry, will be published next month, says the idea of taxing Wall Steet now is a “transparent joke.”

“Wall Street is continuing to play craps with the taxpayers’ chips and to lay the ground for a financial earthquake of even greater magnitude than we’ve just experienced.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

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Wall Street CEOs 'splain the crisis

January 14th, 2010 in Banks 0 comments

U.S. moneyCEOs of four big Wall Street Banks were summoned to Washington to explain to the new Financial Crisis Inquiry Commission what role their institutions played in the Crash of ’08.  At one point, Goldman Sachs’ CEO Lloyd Blankfein got blasted for likening some of the crisis to a hurricane or similar acts of God.  Law Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s Business Culture at a Crossroad,” says it all about risk.

“Goldman’s CEO noted that management ‘manages’ risk – risk to shareholders, employees, communities, and the country.  It’s time management joined the risk takers and took the risk of its own actions.”

Contact Tamar Frankel, 617-353-7737, tfrankel@bu.edu

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Obama proposes bank tax

January 14th, 2010 in Banks 0 comments

generic bank buildingTo recoup taxpayer losses fom the Wall Street bailout, President Obama is proposing taxing about 50 big banks and major financial institutions for at least the next decade.  Former deputy Comptroller of the Currency Robert Bench, now a senior fellow at the BU Law School’s Morin Center for Banking and Financial Law, says payback is needed, but it should be separated from Treasury funds.

“The scheme should be an industry financed process, not a tax-code process. We want to separate the taxpayer as much as possible by keeping the resolution fund separate and distinct from general Treasury monies.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

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FDIC seeks to rein in banker's pay

January 13th, 2010 in Banks 0 comments

FDIC sealDespite opposition from other banking agencies, the FDIC wants to penalize banks for compensation packages that are based on bankers taking too much risk.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says it’s too bad the FDIC is unwilling to work with other U.S. and international regulators to find a rational approach to bank-compensation practices.

“At a time of financial crisis such as we are experiencing, it is more important than ever that the regulatory agencies coordinate major policy initiatives. The FDIC apparently disagrees and would prefer to blaze its own trail.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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AIG backlash heats up

December 24th, 2009 in Economics 0 comments

The heat continues to increase on insurance giant AIG, which got $182 billion in taxpayer bailouts yet gave out $165 million in bonuses.  New York Senator Chuck Schumer says President Obama’s pay czar should be given the power to recover the “outrageous” bonuses.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says taxpayers also must be concerned about AIG’s ability to unravel and the complex debt obligations that led to the financial meltdown.

“Refusing to pay back ’08 bonuses, and maneuvering for ’09 payouts, gives us little confidence that their efforts at unwinding the complex products they created will be done in the best interests of the company’s taxpayer-shareholders. Why should we be trusting the same AIG folks that created these products to drive the hard bargain with counterparties to AIG?  Where is Elizabeth Warren and her TARP oversight white hat when needed?”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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AIG breaks bonuses promises

December 23rd, 2009 in Banks, Finance, Financial crisis 0 comments

AIG logoInsurance giant AIG, bailed out by taxpayers to the tune of $180 billion, had promised to return $45 million of the $165 million in bonuses it paid despite the bailout.  But most of that remains unpaid, the Washington Post reports.  Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance at BU’s School of Management and whose book “Uncontrolled Risk” about the fall of Lehman Brothers will soon be published, says AIG is just greedy.

If these executives do not want to honor their obligation to refund bonuses, then the government should impose an AIG bonus tax to have these funds returned.  At minimum, the government needs to remind AIG executives who they are now owned by.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

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