Capital Flow Watch » Financial Market Regulator

Dodd-Frank won’t make better markets - Phony financial reform

John Schroy — Sat, 17 Jul 2010 14:02:42 +0000

Unfortunately, instead of a 'game-changing' confidence-inspiring reform, the Obama administration presented the United States with the Dodd-Frank Act — a legislative miscarriage that has the potential to hold back recovery and impair the position of New York as a world financial center for decades — unless repealed or drastically amended.

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Banks accept California IOUs for deposit - State finance:

John Schroy — Mon, 06 Jul 2009 14:26:06 +0000

On July 2, 2009, the Federal Reserve announced that it was aware that the State of California was issuing its own currency to pay its bills.This, of course, is consistent with the lack of fiscal discipline which is the hall mark of far left Californian politicians, of which Nancy Pelosi is a prime example.California has experience with nut-case economics, having been the home of the famous Emperor Norton who issued his own currency to pay his bills in the mid-19th century.

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Bank stress tests: aftermath and consequences - Good and bad banks

John Schroy — Fri, 08 May 2009 22:42:08 +0000

In May 2009, the Obama administration divided some of America's largest banks into 'good banks' and 'bad banks'.This broke a long-standing practice of protecting the reputation of the US banking system. The Obama government seized TARP funds as an instrument of political power.Banks, large and small, are now eager to escape the trap of taking TARP funds, which will require them to raise $74.6 billion, either by selling equities on the market, or from profits.

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Is big bank complexity irreversible? - The McKinsey Heresy

John Schroy — Mon, 06 Apr 2009 17:55:58 +0000

The root problem with big banks today is organizational and product line complexity. Excessive complexity in banks can be traced to the reorganization of Citibank in 1956, under Walter Wriston, following the advice of McKinsey and Company.Under the McKinsey structure, banks were transformed into industrial-type marketing institutions with matrix organization by product line. Bank managers were paid to meet budgetary targets, rather than for being prudent bankers.

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Some banks are too complex to manage - The decline of Citicorp

John Schroy — Sun, 05 Apr 2009 17:54:08 +0000

It is no secret that Citicorp no longer earns the same respect in financial circles as in days of yore. The problem is excessive complexity. This article describes the simplicity of the Citibank operation in 1956 when the bank was the world's most powerful financial institution.It will not be easy, maybe not possible, for Citicorp to simplify operations and relearn the principles of sound banking.

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Mark-to-market nonsense - The 'insolvent bank' oxymoron

John Schroy — Wed, 01 Apr 2009 18:59:30 +0000

Banks, by their nature, are insolvent, requiring government guarantees of their liabilities to protect against bank runs. Over the last fifty years, the percentage of bank liabilities guaranteed by the government has fallen considerably, while banks, free from the shackles of the Glass-Steagall Act, have become increasingly complex.Mark-to-market rules do not provide useful information to either bank depositors or investors, but may increase bank capital requirements, reducing the capacity to lend in the midst of a recession.

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Will your assets survive an atomic blast? - Questionable SIPC Guarantees?

John Schroy — Mon, 24 Jul 2006 15:50:00 +0000

Millions have brokerage accounts with SIPC protection and think this means they have government insurance of up to $500,000 on securities in custody with a broker-dealer, plus $100,000 on cash balances — similar to the FDIC guarantee on bank accounts.In this, millions of investors are mistaken.

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Pension fund accounting rules tightened - FASB

John Schroy — Sat, 01 Apr 2006 10:08:20 +0000

FASB concept statement No. 5 represents a further slow tightening of the screws as to the way pension liabilities are reported — one step in a long, excruciating journey that has been underway for decades. This rule is expected to have an incremental negative impact on old, unionized companies, further decline in private defined-benefit plans, and higher state and local taxes.

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