The new Walgreens in Washington D.C.'s glitzy Gallery Place neighborhood, as has been amply documented, is a wonderland. It's got frozen yogurt, a juice bar, a manicure station, a decent selection of craft beers, a health-care clinic, a "yoga needs" aisle, refrigerated displays full of fresh prepared food, plus everything else you'd expect from a regular corner drugstore. Like other convenience chains, it's becoming a general store for a world in which it's all too easy to buy routine items with a click of a mouse, providing as many amenities as possible -- including groceries! -- to keep you walking through the doors.
The possibility of using eminent domain to reduce underwater mortgage debt in the city of Richmond California survived several tough challenges a week ago. As Lydia DePillis reported, the City Council decided to go ahead with the process after a long hearing that could have possibly derailed it. Meanwhile an attempt by Wells Fargo and Deutsche Bank to have the action shut down even before it properly started was tossed out by a U.S. District Court (Judge: “Isn't this, as we say in the trade, a no-brainer?").
After 7-hour meeting, it’s on: Richmond sticks with its plan to seize mortgages through eminent domain
After a marathon hearing that wrapped up in the wee hours of Wednesday morning, the City Council of Richmond, Calif., voted to allow the use of eminent domain to seize underwater mortgages, becoming the first city in the nation to take such a concrete step toward the novel and risky strategy for helping people avoid foreclosure.
The fate of the housing market, and the banks that profit from it, could come down to a single city council meeting in Richmond, Calif.
Tonight, the foreclosure-stricken town will decide whether the city will forcibly take underwater mortgages away from the investors that own them to keep people in their homes.
With the confirmation of Richard Cordray, the financial industry has stopped trying to destroy the young agency he runs, the Consumer Financial Protection Bureau. But that doesn't mean it's stopped complaining about what the Bureau is up to.
In particular, banks and their advocates say that new rules requiring stricter lending standards are making it harder for everyone to get a mortgage, not just those who actually can't afford to pay it back. Essentially, they charge, bureaucrats trying to protect consumers have in some ways done the opposite.
Sunday is the third anniversary of the Dodd-Frank Act. To get a sense of how implementation has been going, I asked 16 people at the forefront of the debate to answer two questions: What has gone better than you had expected? And what has gone worse? Mike Konczal
Sheila C. Bair served as the 19th chairman of the Federal Deposit Insurance Corp. for a five-year term, from June 2006 through June 2011.
Few policy ideas have energized activists in recent years quite like calls to bring back the Glass-Steagall Act of 1933. Nobel laureate economist Joe Stiglitz, among many others, fingered 1999 s partial repeal of the law as a contributing factor behind the financial crisis. Signs calling for its return, such as the one that Gossip Girl and Margin Call star Penn Badgley's holding in the above photo, were a common sight at Occupy protests in late 2011. Sens. John McCain (R-AZ) and Maria Cantwell (D-WA) proposed legislation in 2009 to bring back the repealed parts of the law, as did Reps. Maurice Hinchey (D-NY) and Marcy Kaptur (D-OH).
Bank branches have long been a trusty space-filler for commercial landlords. They'll pay whatever rent you charge, pretty much. Though nobody's particularly excited about a new bank branch in their neighborhood, residents usually won't resist them, either.
And weirdly, despite the seeming ubiquity of ATMs and online banking, bank branches haven't gone the way of the travel agency or even the real estate office. They're still all over major cities, taking up prime corners, to the point where New York City's Upper West Side passed a zoning overlay to limit their growth (although of course, there are still plenty of poor neighborhoods that don't even have a single one).
The rumor is that Gary Gensler, the Goldman Sachs trader turned Wall Street regulator, may see his time atop the Commodities Futures Trading Commission end in July. The question is whether he can finish perhaps the most important piece of financial reform before he's out or whether the House will manage to stop him.
Sherrod Brown and David Vitter have a new bipartisan bill to end Too Big to Fail. Here's what it does.
Sens. Sherrod Brown (D-Ohiol) and David Vitter (R-La.) have been working on a bill to block the largest banks and financial firms from receiving federal subsidies for being deemed Too Big to Fail. On Friday, a draft version of that bill was leaked to Tim Fernholz of Quartz, much to Vitter's chagrin. So, what does the bill do?
Is Washington likely to break up the country's biggest banks? No, not right now. But perhaps soon.
Political momentum for dismantling them has been, in recent weeks, overstated. That unanimous vote in the Senate for a budget amendment critical of big banks? It was a nonbinding amendment to end "too-big-to-fail subsidies." As it happens, there isn't a line item in the federal budget titled "too-big-to-fail subsidies." The vote was a freebie against the abstract concept of taxpayers subsidizing Wall Street — that's why the outcome was unanimous. It was like a vote against halitosis.
Yes, the measure was purely symbolic and Congress isn't exactly known for following through on its promises, but the Senate's unanimous vote late Friday night to break up big banks has left some financial analysts wondering whether Washington might actually follow through.
During its marathon "vote-a-rama," the Senate took up a budget amendment from Sen. David Vitter (R-La.) to "end 'Too Big to Fail' subsidies or funding advantages for Wall Street mega-banks (over $500 billion total assets)." The non-binding amendment passed unanimously, 99-0. The $500 billion threshold would encompass the six largest U.S. banks.
This morning (early afternoon Frankfurt time), Mario Draghi, the president of the European Central Bank, took his seat in front of gathered reporters and took questions. Among other things, he said this: "The exchange rate is not a policy target, but it is important for growth and price stability. We want to see if the appreciation is sustained, and if it alters our assessment of the risks to price stability."
America is still spitting mad over the financial crisis that hit the country half a decade ago and that continues to hang over the U.S. economy. And in the last few months, there's been a new wave of calls to break up the "too big to fail" banks that were at the center of the crisis — and the beneficiaries of a massive wave of bailouts.
Talk about burying the lede. In the final two paragraphs of his New Republic review of Greg Smith's "Why I Left Goldman Sachs," Lewis, the most celebrated financial reporter in the country, calls for breaking up the big banks:
If Goldman Sachs is going to change, it will be only if change is imposed upon it from the outside—either by the market's decision that it is no longer viable in its current form or by the government's decision that we can no longer afford it. There is a bizarre but lingering aroma in the air that the government is now seeking to prevent the free market from working its magic in the financial sector-another reason that the Dodd-Frank legislation is still being watered down, and argued over, and failing to meet its self-imposed deadlines for implementation. But the financial sector is already so gummed up by government subsidies that market forces no longer operate within it. Could Goldman Sachs fail, even if it tried? If someone invented a cheaper way to finance productive enterprise, would they stand a chance against the big guys?
Along with the other too-big-to-fail firms, Goldman needs to be busted up into smaller pieces. The ultimate goal should be to create institutions so dull and easy to understand that, when a young man who works for one of them walks into a publisher's office and offers to write up his experiences, the publisher looks at him blankly and asks, "Why would anyone want to read that?"
Correction: A previous version of this story said that Lew worked at the Treasury Department during the Clinton administration. Lew was at the Office of Management and Budget.
It's not every day you get a Treasury secretary nominee who once worked at one of the country's biggest banks as it nearly imploded and took down the financial system. Yes, Jack Lew was a manager, not a financial trader at Citigroup [see my profile of Lew's tenure here]. And Citi's litany of problems began long before Lew became chief operating officer of the bank's alternative investments group. But even if Lew wasn't there for the bad decisions being made, he witnessed the aftermath. And the Senate Finance Committee has the chance to ask him what, if anything, he learned from the experience. After all, the Treasury secretary has new responsibilities for making sure something like the near-death of Citigroup never happens again.
Adam Copeland at the New York Fed has a great new paper out about how bank holding companies — the big conglomerates like JPMorgan and Citigroup that were made possible when the wall separating commercial and investment banking was torn down in 1999 — get their money.
He separates their revenue into three sources. On the one hand, there’s traditional banking — mortgage loans, credit cards, savings accounts, and so forth. Then there’s nontraditional banking, such as trading on the bank’s own account and investment banking. Finally, there’s securitization, which is the bundling of assets into more complex instruments, like the mortgage-backed securities whose crash caused the late 2008 financial meltdown. Interestingly, small, medium and big banks make roughly the same amount from securities, and the percent that big banks get has fallen considerably since the crisis hit:
Two Federal Reserve researchers have confirmed what many have long suspected: big banks that were bailed out by the government took on greater risk without increasing lending to businesses. In other words, after they were stabilized by an injection of government funds, the specific loans made by “too big to fail” became riskier, perhaps in an effort to recoup losses, but the total volume of loans they made did not increase, which is part of why the recovery proceeded so slowly.