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Burning down the house

Burning down the house

They rated every deal, including the ones structured by cows. But were they fraudulent? Until last Tuesday, when Standard & Poor’s parent company McGraw Hill paid $1.3 billion to settle a US Department of Justice lawsuit, there existed the tantalising possibility that this question about S&P’s structured finance ratings business might be answered in court.

Continued

When the Old Lady slept: the Bank of England and the financial crisis

When the Old Lady slept: the Bank of England and the financial crisis

Among those responsible for UK regulation during the financial crisis, the Bank of England came out of it rather well. The Treasury had to bail out the banks (and unlike its US counterpart, it hasn’t yet been paid back). The Financial Services Authority was disgraced and dismantled. The BOE on the other hand, emerged with … Continued

Most-read articles of 2014

Is the sharing economy a new form of regulatory arbitrage? That was the question posed by my most popular article this year. Published in January, my take on Uber turned out to be prescient, as the ride sharing company attracted increasing regulatory headwinds around the world. The second most-read new article is actually a pair … Continued

The Imitation Game and The Interview

Jack Good

I saw The Imitation Game last week – the biopic of Alan Turing – and it prompted me to write something about Jack Good, one of the Bletchley park codebreakers depicted in the movie.

In April 2003, while researching my unpublished probability book, I visited him in Blacksburg, Virginia. I was in New York on … Continued

Review: House of Debt

House of Debt

by Atif Mian and Amir Sufi

(University of Chicago Press 2014)

The financial crisis that began in 2007 was accompanied by a Great Recession which in Europe may have never really ended. Until now, policymakers have acted on the basis that to bring about recovery in the wider economy meant fixing the troubled banking system and … Continued

RBS, leverage cycles and the pound of flesh

RBS, leverage cycles and the pound of flesh

I’ve been reading Atif Mian and Amir Sufi’s book ‘House of Debt’ (my review will be up soon) and one thing I’m grateful to them for is reminding me of the work of John Geanakoplos. I’ve been aware of his work for some time, particularly the collaboration with the Santa Fe Institute’s Doyne Farmer on … Continued

Regulating financial innovation

Regulating financial innovation

Imagine in 2004, when Goldman Sachs and Deutsche Bank structured the first fully synthetic ABS CDOs, there had been a public consultation on the social value of the products. Or if a consultation had taken place when UK banks began selling interest rate swaps to small British companies, with the banks being forced to explain … Continued

Basel in America

JPMorgan increases its op risk capital

Citigroup’s announcement last week that it would be restating its latest results downwards by $600 million to reflect the likely impact of regulatory probes into foreign exchange rigging prompted some bemused commentary. Matt Levine at Bloomberg wittily characterised it as ‘going back in time to lose more money’.

Amid the attention given to that restatement, … Continued