Banking's Past, Present, and Future
Two high profile bipartisan budget commissions have been working on plans to return the US to fiscal balance. One, under the auspices of the Bipartisan Policy Center (a non-profit group), is chaired by former Senate Budget Committee Chairman Pete Domenici (R-NM) and former Clinton White House Budget Director (and former Federal Reserve Vice Chairman) Alice … Read more
Writing in the Financial Times, Stephen Roach concludes that it is “[t]ime to revamp the Fed’s flawed mandate.” Roach argues that maintaining financial stability should be added to the Fed’s current dual mandate of maximum employment and price stability. Such a change would be ineffective at best, destructive at worst. It would be ineffective because … Read more
[youtube]http://www.youtube.com/watch?v=e0dwxJayc4g[/youtube]
In a bitter editorial, The Irish Times laments the country’s financial difficulties in historical terms. Was it for this? IT MAY seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the … Read more
Citibank chief Vikram Pandit warns in the Financial Times against excessive increase in capital and liquidity requirements. This is a tough argument to make in the aftermath of a serious crisis in which banks and other financial institutions were caught short on both counts. The op-ed below was co-authored with Masami Imai, who is is … Read more
The Financial Times reports today that Portuguese banks have lashed out at Fitch Ratings after the rating agency repeatedly downgraded the banks over their funding and liquidity risks. According to the report: Banco Espírito Santo said it was terminating its contract with Fitch because there was “no valid justification” for downgrading its credit rating by … Read more
Writing in the Financial Times, World Bank President Robert Zoellick argues for greater economic coordination among the G20 nations. It was not clear from his op-ed exactly how coordinated a system he envisions. On the one hand, he calls for a monetary system to succeed Bretton Woods, implying a system of fixed exchange rates (and … Read more
One of the nice things I have discovered about doing jury duty is that when it is all over, the judge usually comes in to thank the jurors for their service (or for coming down to the courthouse, if they don’t end up on a jury). When the judge discovered that I am an economist … Read more
Since I will return to the subject of bank capital, it is probably worth spending a few lines describing what it is and why it is important. You can’t start a bank—or any new enterprise, for that matter—without some start-up funds. Or, as Gus Grissom says in The Right Stuff: “No bucks, no Buck Rogers.” … Read more
Carried away by ever-rising real estate prices and aided and abetted by new types of financial instruments, the financial system’s overindulgence in risk has left taxpayers with a nasty hangover, a hefty tab, and a desire to make someone pay. Commentators have blamed the financial meltdown on the attitude towards risk generated by banks’ corporate … Read more