How it’s done in the USA (Bank Regulation)

There are often calls for stricter regulation, in particular the idea that in the US they arrest people in banks with greater ease/faster (which is in itself not ‘regulation’ it is policing). Anyway, I thought it was worth mentioning that in the US it isn’t a ‘one Regulator fits all’, and that the problems we had in the past through division of regulatory responsibility [splitting Central Bank and Regulator] still exist there.

Below is a graph of how responsibility is divided out in America.

As you can see, the OCC takes care of national banks, then the very popular state & community bank sector is elsewhere. Taking State banks in particular, they either have access to the Federal Reserve or not, if they do they are SMB and the State Authority and Fed are the regulators, if not then they are SNMB and the State Authority and the FDIC are the regulators.

That is why you hear about the FDIC ‘going into banks’ – these are state banks that …

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After the crisis: A new financial structure

This is a speech given by Paul McCully of PIMCO at the annual Minksy Conference, it is a long one but well worth reading

Start:

Thank you very much. It is an absolute pleasure and honor to be here. I gave the keynote a couple years ago and it was my first time to be at the Minsky Conference. I feel that I’m part of a church, and it’s a good church in that we’re on the right side of history. And it’s absolutely wonderful to be attending services with you again.

I want to open up with a little story that should make everybody in the room feel particularly good, and then we’ll get into discussing economics. Harry Markowitz has been a friend of mine for about a decade. I became friends with Harry through two channels. Number one, Rob Arnott of Research Affiliates has an Advisory Panel of famous academics, such as Harry and Jack Treynor, that he gets together every year. I’m frequently invited to speak. We spend two or three days over a weekend together. I’ve …

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How far are we down the rabbit hole?

How far into the credit crunch and liquidity crisis are we? Banking stocks would have you think that it’s all upwards from here on in but how can you be sure? The Regulators in the USA were prepared for 100 to 200 bank closures in the 12-24 month period from the end of 07′. Thus far we have only seen eight actually close.

The total amount of assets involved is €38 billion. That might not seem like much when talking about bankers money, but keep in perspective that its 38,000 units of a million, its twice the size of AIB, its more than all of the lending market in Ireland for the whole year of 2007. And of course this is just the portion that have gone under, the actual ‘writedowns’ that other banks are surviving are (when added together) much larger, which means that some banks are just better able to take their blows than others. The worrisome thing in some cases …

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