Banking's Past, Present, and Future
It looks the banking news from Britain will continue to be interesting for a while. The Treasury and Bank of England Governor Mervyn King are lining up in support of the as-yet unreleased report of the UK Independent Commission on banking headed by Sir John Vickers. The commission is expected to recommend that UK financial … Read more
The Financial Times reports that Oswald Grübel, chief of the Swiss bank UBS, “…has attacked the UK government for its public neglect of the City of London, warning that tougher regulations will see Britain and the rest of Europe cede investment banking business to Asia and the US.” Yes, by all means, let’s not overdo … Read more
I do. The Financial Times reports today that Northern Rock will begin making loans against 90% of a property’s value as early as Monday. Northern Rock, which was established 30 years ago as the result of a merger between two large British building societies (roughly equivalent to savings and loans), was bailed out almost exactly … Read more
…and his name is Andrea Enria. The former Bank of Italy official has taken over as chairman of the brand new chairman of the European Banking Authority. The Financial Times reports that Enria said that the financial crisis had highlighted the weakness of consensual efforts to co-ordinate banking regulation in Europe and that the EBA … Read more
The Financial Times reports that a study conducted by Bank of England researchers finds that the current level of risk-weighted capital held by banks (about 7 percent) is woefully inadequate to protect against future financial crises. Calibrating their model with data from 1821-2001, the authors find that an astounding 53 percent capital to risk-weighted assets … Read more
The 600-plus page report of the US Financial Crisis Inquiry Commission should make for interesting reading for those with the patience to read it. It would be useful to wade into the argument between the Commission, which argues that the crisis was “avoidable” and the Financial Times, which argues that it was not. Maybe later. … Read more
Goldman Sachs second-in-command Gary Cohn warned those assembled at the World Economic Forum in Davos, Switzerland that the drive to impose more regulation on banks could cause the next crisis by pushing risky activities towards hedge funds and other lightly supervised entities. According to the Financial Times, Cohn said: “In the next few years, the … Read more
Let’s hope. Just as there are recurring themes in literature—and flies in the wake of a garbage truck–there a few things that we can reliably count on in the wake of a financial crisis. In the immediate aftermath comes damage control. The central bank intervenes. The legislature and executive agree on emergency measures. Bankers keep … Read more
In his Financial History of the United States (1879), Albert Bolles wrote “Thought but little more than a century has passed since the first Continental Congress met, in September, 1774, the financial history of the United States during the subsequent period is thickly strewn with financial experiments amply rewarding investigation.” Recent European Union efforts to … Read more
Barry Eichengreen has some deservedly sharp words for European Commission, the European Central Bank, and the German government over the Irish “rescue package.” Likening it to the punitive reparations burden imposed on German at the end of World War I, Eichengreen points out that the bailout does not, in fact, reduce Ireland’s debt one bit, … Read more