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Write-Offs: 06.21.13

$$$ EU Finance Ministers Struggle With Bank Rules [WSJ]

$$$ Fund manager gets 11 years for Facebook, Groupon shares scam [Reuters]

$$$ Morgan Stanley Chairman and CEO James Gorman told CNBC on Friday the recent stock drop on Federal Reserve taper talk is an overreaction and investors shouldn’t let market fear take over. “Chairman Bernanke, I think, has done a tremendous job and is weening the country off as we’re seeing economic recovery,” Gorman said. “That the market would be skittish during this transition, given what we’ve been through the last five or six years, is not surprising to me.” [CNBC]

$$$ Did you take your dog to work today? You should have. [CNBC]

$$$ According to RadarOnline, U.S. Magistrate Judge G.R Smith has found Paula Deen and her codefendants in their $1.2 million lawsuit “in contempt of court” for allegedly failing to turn in outtakes of Deen “cussing up a storm” and “performing a sex act on a chocolate éclair,” the site writes. Lisa Jackson, the woman suing Deen and her brother Bubba Hiers, asked the court to rule that Deen violated an order to turn over a tape of “obscene and vulgar video outtakes,” according to documents filed in a Savannah, Ga., court obtained by the gossip site. That video is said to include the 66-year-old TV chef swearing and using profane language, including a description of meal that’s “just a syrup that’s gonna stick our balls together.” [NYP] Read more »

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  • 21 Jun 2013 at 5:18 PM
  • Banks

Gary Gensler Going Down Swinging

International regulatory amity, bipartisan concerns and common sense be damned: The (probably) outgoing CFTC chair is going to see to it that these swaps-trading rules go into effect next month, damn the consequences. Read more »

  • 21 Jun 2013 at 5:01 PM

Congressmen Have Some Advice For Ratings Agencies

The ideal financial regulatory regime would go like this:

  • Regulators would tell market participants not to screw up.
  • Market participants would not screw up.
  • Peace and harmony would reign throughout the land.

This is ideal not only because of the peace and harmony but also because it omits any work by the regulators. Why choose whether to set capital ratios based on risk-weighted or total assets when you can just tell banks not to lose any money? If they never lose money then it doesn’t matter how thinly capitalized they are.

These guys know what I’m talking about: Read more »

One of the country’s most notorious financial scandals came to a protracted legal conclusion Friday as ex-Enron Corp. CEO Jeffrey Skilling — already in prison for his role in the once-mighty energy giant’s collapse — was resentenced to 14 years as part of a court-ordered reduction and a separate agreement with prosecutors. Skilling has been in prison since 2006, when he was sentenced to more than 24 years by U.S. District Judge Sim Lake. But an appeals court vacated his prison term in 2009, ruling that a sentencing guideline was improperly applied. That meant a reduction of as much as nine years. However, Skilling’s resentencing was delayed for years as he unsuccessfully sought to overturn his convictions, including appealing to the U.S. Supreme Court…The Justice Department said that in an effort to resolve a case that’s gone on for more than 10 years, it agreed to an additional reduction of about 20 months as part of a deal to stop Skilling from filing any more appeals. [AP]

James Bullard was just wondering why certain genial, bearded men would set specific goals for a program and then ignore them. Read more »

A suburban Philadelphia pension fund drove a dozen miles to have Vanguard’s Jack Bogle tell them to invest in index funds. One imagines that Googling “Jack Bogle” would have had the same effect.

Then again, maybe the statue convinced them to give almost all of their money to Jack Bogle. Read more »

Despite reports that he was going to be released in time for Father’s Day, Nails actually ended up saying good-bye to his friends at the Victorville Federal Correctional Complex yesterday afternoon. Read more »

  • 21 Jun 2013 at 11:58 AM

Banks Might Be Undercapitalized, Depending How You Count

If you think that capital regulation is a good way to make banks safer then a pretty good form of capital regulation would go something like:

Regulator: You should have a lot of capital relative to your assets.
Banker: Okay, got it. Now how are you measuring assets?
Regulator: Oh, you know, different ways. Whatever makes sense.
Banker: Umm. Well … what counts as capital?
Regulator: I dunno. Capital-y things. Maybe stressed capital-y things.
Banker: I see. And what counts as a lot?
Regulator: Some number. Definitely a percentage. I guess a pretty high one?

Does that sound dumb? The thing is that most games have explicit clear rules, so some people just assume that any set of explicit clear rules constitutes a game, and then try to game it. Those people often work at banks. Kling’s Law of Bank Capital Regulation holds “that the capital measure used by regulators will, over time, come to be outperformed by a measure that the regulators are not using,” which suggests that the best capital measure for regulators to use is “all of them.”0 Actually using an infinity of measures is impossible but can be approximated through confusion. Read more »