Financial Institutions

Safe Harbors Gone Wild


Yesterday's decision from the District Court court in the Madoff-Mets litigation is yet another example of why Congress desperately needs to revisit the safe harbors which exempt a host of financial transactions from the workings of the Bankruptcy Code (in this case, the Code as incorporated into SI


Believing Pain and Fear Outside


But this whole living will thing actually has a way to go -- my latest Dealbook column, up now.


Housing Finance: Role of the Government Guarantee


I'm testifying before the Senate Banking Committee on Tuesday about the role of the government guarantee in housing finance (a/k/a wtf do we do with Fannie and Freddie). My testimony is here.


CDS News


I've got a Dealbook post up about an interesting dispute that has cropped up with regard to the definition of "Bankruptcy Credit Event" as used in the ISDA CDS definitions.


Nevada AG: Securitization Fail


The Nevada AG is looking to reopen the 2008 AG settlement with BoA:  the AG alleges rampant and immediate non-compliance with the settlement.  The NYT coverage missed what is arguably the bigger story:  the Nevada AG came out and alleged a securitization fail.  The NY AG moved in this direction in his BNYM settlement action intervention, but was a little more oblique on that point.


More on Refinancing Plan


Chris Mayer, one of the authors of the refinancing plan, a version of which is currently being considered by the administration, wrote in to the comments on an earlier post, protesting my characterization of his proposal. I have no argument with Chris about there being too many frictions in the refinancing process. I'm not sure that this is the best way to fix them, however, and I'm also puzzled by what problem the proposal aims to solve.


Conflicts on the New York Fed Board


The regional federal reserve banks are weird, hybrid creatures, both private bankers' banks and public governmental agents. This hybrid existence means that they have conflicts baked into their DNA--they are both supposed to serve and regulate their member banks. These conflicts have been most patent with the New York Fed. During the AIG bailout, it was represented by the very lawyer who minutes before had been representing the private bank consortium that was trying to arrange a bailout of AIG and which benefitted from the public bailout.


Feds to AGs: Can't Touch This


As this NYT story notes, the administration has been putting pressure on the AGs, particularly NY AG Schneiderman, for several weeks now, urging them to fall in line with the administration's hear-no-evil, see-no-evil position on MBS and servicing fraud.  The NYT story makes it sound as if the feds were jolted into intervening because of pleas from the banks.  It's enough to make one think that we're back in 2005.


Any Bright Ideas?


Jean Braucher has noted the FHFA's RFI on foreclosure prevention. A huge problem with any proposal is the time to implementation for anything. It took months to develop flops like FHASecure, Hope4Homeowners, and FHAShortRefi.


The Systemic Risk Industry


There seems to be a cottage industry now in proposals to solve and/or mitigate systemic risk. I'm myself somewhat of a guilty party. The producers here are law profs and economists (and probably some other disciplines as well). These proposals fall into three buckets. One focuses on executive compensation as the key area for reform, a second on activity and/or size limitations, and the third on changing banks' capital structures.