Monthly Archives: September 2013

Subprime lending execs back in business five years after crash

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“Five years after the financial crisis crested with the bankruptcy of Lehman Brothers Holdings Inc., top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis.  Some experts fear they won’t know where to stop. The Center for Public Integrity in 2009 identified the top 25 lenders by subprime loan production from 2005 through 2007. Today, senior executives from all 25 of those companies or companies that they swallowed up before the crash are back in the mortgage business.”

http://www.publicintegrity.org/2013/09/11/13327/subprime-lending-execs-back-business-five-years-after-crash

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Debt: Still Cheap, and Getting Looser

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“The industry is clearly rebounding. Guy Cecala, publisher of the trade magazine Inside Mortgage Finance, says, ‘You’re going to see a little more risk coming into the system’ as lenders permit smaller down payments and finance more investment properties. ‘Five years down the road and we’re back in the thick of it again. It’s a weird place to be,’ says Cliff Rossi, who was a high-level risk management executive at Countrywide, Washington Mutual, and Freddie Mac before the crisis. ‘In that intervening 20 years, we forgot what we learned in the ’80s,’ he says. ‘I fear right now, human nature being what it is, that downstream we could find ourselves in the same situation.'”

http://www.caseyresearch.com/articles/debt-still-cheap-and-getting-looser

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The Taper Caper

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“Under normal conditions, you’d be smart to assume that the Fed won’t taper until unemployment falls below 7% and inflation rises above 2%. But there’s a curveball: Bernanke will almost certainly step down as head of the Fed in January 2014. Rumors say that he wants to begin tapering before he leaves, for obvious reasons. Such action would increase the odds of history viewing him favorably. If Bernanke tapers, he can take credit for putting the US on a responsible path before handing the reins over to the next guy or gal. Whatever happens after that is Janet Yellen’s problem (or whoever-replaces-Bernanke’s problem).”

http://www.caseyresearch.com/cdd/the-taper-caper

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The FED Does Not Control the Federal Funds Rate

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“Because they are sitting on $2 trillion of excess reserves, banks rarely borrow money overnight. They do not have to. They have plenty of reserves.  Before late 2008, a bank would borrow overnight if its reserves threatened to fall below the legal requirement set by the FED. But now banks have so many reserves that they rarely borrow. So, there is little demand. So, the rate is low. The FOMC has increased the monetary base at times. In most of 2012, it decreased it. The FedFunds rate has not changed when FOMC policy has changed. Here is the inescapable conclusion: the Federal Reserve does not control this rate. The FED pretends that it does.”

http://teapartyeconomist.com/2013/09/19/fed-does-not-control-federal-funds-rate/

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David Stockman: Banks Too big to Fail, Another Bubble

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“David Stockman, former Director of the Office of Management and Budget under the Reagan adminstration and author of ‘The Great Deformation: The Corruption of Capitalism in America,’ discusses JPMorgan’s ‘London Whale’ case.”

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Forget premiums: A peer-to-peer network will cover you

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“An online insurance firm called Peercover lets groups of people insure each other on their own terms and at a fraction of the cost.  Insurance is the latest financial service to get a shake-up from peer-to-peer (P2P) dynamics. Already, individuals can lend money for a return with interest. Similarly, people wanting to exchange currency can avoid banks and instead use P2P services to find other people looking to make the opposite trade. ‘The changes in financial services that are happening now are happening more quickly and dramatically than anything we’ve seen over the last 100 years,’ says Ron Suber of peer-to-peer loan company Prosper. ‘Peercover is a great example.'”

http://www.newscientist.com/article/mg21929354.300-forget-premiums-a-peertopeer-network-will-cover-you.html

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BitScan’s exclusive Q&A with Roger Ver

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“If you look at bitcoin, it has all those same characteristics of gold in terms of it being easily recognizable, easily divisible and similarly, they both have a limited supply and can’t just be made out of thin air. Where bitcoin differs from gold is that it is easily transportable. You can send bitcoins anywhere on the planet instantly basically for free. It is incredibly expensive to ship gold around the world and if you do, you have to trust the shipping company or the delivery company, with bitcoin you don’t have to trust anybody at all. All you do, is send the bitcoins and they have been sent. So bitcoin has gold’s valuable characteristics as money but it is also transportable.”

http://bitscanfeatures.blogspot.com.au/2013/09/bitscans-exclusive-q-with-roger-ver.html

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Steve Beauregard CEO of GoCoin on Bitcoin and Starting Up in Singapore

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“Filmed at CAD Cafe in Bugis, Singapore, David Moskowitz talks with Steve Beauregard about Bitcoin, GoCoin, Start-ups and Singapore.”

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The biggest Bitcoin win in gambling history

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“In just one weekend of furious gambling, a single Internet high roller has taken home close to 11,000 bitcoins—or about $1.3 million. The man, known online as Nakowa, has turned one of Bitcoin’s most popular and profitable casinos into a loser. What no one can figure out: Is he a cheater, a genius, or the luckiest man on earth?  Just-Dice.com, a European-based cybercasino offering a set of dice games played for the highly valuable digital currency Bitcoin, has been on a roller coaster ride.  Nakowa’s weekend started on a losing streak that made Just-Dice richer than it had ever been, causing the site to hit its highest single profit point of all time (7,000 bitcoins or $862,400 on hand).”

http://www.dailydot.com/news/biggest-bitcoin-win-gambling-history-nakowa/

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Too Big To Fail Is Now Bigger Than Ever Before

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“Ever since the financial crisis of 2008, our politicians have been running around proclaiming that they will not rest until they have fixed ‘the too big to fail problem’, but instead of fixing it those banks have rapidly gotten even larger.   We are witnessing a consolidation of the banking industry that is absolutely stunning.  Hundreds of smaller banks have been swallowed up by these behemoths, and millions of Americans are finding that they have to deal with these banking giants whether they like it or not.  These banks have been unbelievably reckless, but when they fail, we will all pay the price.”

http://theeconomiccollapseblog.com/archives/too-big-to-fail-is-now-bigger-than-ever-before

Ever since the financial crisis of 2008, our politicians have been running around proclaiming that they will not rest until they have fixed “the too big to fail problem”, but instead of fixing it those banks have rapidly gotten even larger.  Just check out the following figures which come from the Los Angeles Times…

Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets. Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That’s up to $2.1 trillion.

And the assets of JPMorgan Chase & Co., the nation’s biggest bank, have ballooned to $2.4 trillion from $1.8 trillion.

We are witnessing a consolidation of the banking industry that is absolutely stunning.  Hundreds of smaller banks have been swallowed up by these behemoths, and millions of Americans are finding that they have to deal with these banking giants whether they like it or not.

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