moral hazard

Free Market Means Free From The Government

When so many politicians speak with one voice in support of the biggest act of government intervention in the economy in generations, I cringe. Bipartisianship is the death of liberty, but that is...

Looter

From an article on Goldman Sachs, from a conversation with the CEO, Lloyd Blankfein: He starts with a little humility. He understands that “people are pissed off, mad, and bent out of...

How to Explain Moral Hazard

It took me many years to understand the phrase "moral hazard." It's a fundamental tenet of economics, usually used to explain that, since consumers are untrustworthy, businesses need to charge them...

This is What a Giant Vampire Squid Looks Like

Via Greg Mitchell's Twitter feed, lying isn't just for the IB branch any more: Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender,...

McMegan, Discrimination, and Inappropriate Loans

Susan of Texas has an immortal post on the housing crisis, McMegan's ratiocination, and the persistence of ignorant memes. The money quote:McArdle doesn't refute facts, she hen-pecks at the methods...

Reverse Robin Hood applies to banks too

The next time someone tells you that "the banks need help," just refer them to Barry Ritholtz:Talk about burying the lead: The Times also noted — in the very last paragraphs — how the big incompetent...

Miami Vice

Reality (h/t Dr. Black):In certain ZIP codes in places like Homestead and Florida City, around 25 percent of the homes are in one stage of foreclosure or another. Countless others were built by...

Thought-Experiment: Assets and Securities

Ken Houghtonwants to sidebar today into looking at the general application and implications of an Accounting Identity:Assets= Liabilities + Equity (A=L+E, or the ALE Rule).Let us assume that, since...

You Can Lead a Horse's Arse to Water, but...

You can't make him think—or own to loan. Krugman notes:[L]ast week Joe Nocera of The Times pointed out a key weakness in the U.S. Treasury’s bank rescue plan: it contains no safeguards against...

So Why Did we Give SunTrust "bailout buying" money?

Via Dr. Black, Alpha Bank and Trust of Alpharetta is now FDIC-owned.In related news, PNC is paying about $5.6 billion for midwest-based National City, which was a major player in subprime until...

Wasting More Money

The leadership at Wells Fargo must be royally peeved at this point:Stable national players like Bank of America, JPMorgan Chase, and Wells Fargo are already digesting acquisitions. A second group of...