Tag Archives: too big to fail

Sheila Bair’s new book

17 Oct

An inside look at the financial meltdown, with shocking revelations!

I put this one in the jaw hits floor category, and for more than one reason. (Sheila ran the FDIC during the financial crisis and her book is titled Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself).

The book is remarkably full of information and substantive narrative. Few books pack in so much and I mean this in a very positive way. I learned something on virtually every page, even after having read many of the other crisis books.

Yet her running claim that she had a plan to end the bailouts, or abolish “Too Big To Fail” is absurd. (Though most of these people do.) She should be presenting only the more modest argument that it would have been better to distribute more losses on creditors, which indeed she did advocate. Her narrative overreaches by a long mile.

Second, to a remarkable degree, she sees everyone else in the process as filled with fault and herself as never at fault. She has zero qualms about ceaselessly flinging mud out the rear view mirror, and does so for even the tiniest and pettiest of squabbles, including ones the readers never knew or cared about. Geithner by the way is villain number one but no one else on the scene matches her virtue and common sense and scarcely a page flies by when we are allowed to forget this.

via Sheila Bair’s new book.

Too Central to Fail

18 Aug

A lot of attention has been put on “too big to fail,” the idea that big is risky. What really matters in a complex network system, however, is not bigness per se but connection centrality. In a network the liabilities of institution A become the assets of institution B whose own liabilities become the assets of institution C. An institution with high connection centrality can spread distress throughout a large portion of the network.

via Too Central to Fail.

Bank of America: Too Crooked to Fail | Politics News | Rolling Stone

14 Mar

It’s been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they’d be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, “robo-signed” evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn’t ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America’s bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank’s bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it’s also far too corrupt to survive.

via Bank of America: Too Crooked to Fail | Politics News | Rolling Stone.