"Between 2002 and early 2008, roughly $1.4 trillion worth of sub-prime loans were originated by now-fallen lenders like New Century Financial. If such loans were our only problem, the theoretical solution would have involved the government subsidizing these mortgages for the maximum cost of $1.4 trillion. However, according to Thomson Reuters, nearly $14 trillion worth of complex-securitized products were created, predominantly on top of them, precisely because leveraged funds abetted every step of their production and dispersion. Thus, at the height of federal payouts in July 2009, the government had put up $17.5 trillion to support Wall Street's pyramid Ponzi system, not $1.4 trillion." ("Shadow Banking", Nomi Prins, The American Prospect)
Shadow banking emerged so that large cash-heavy financial institutions would have a place to park their money short-term and get the best possible return. For example, let's say Intel is sitting on $25 billion in cash. It can deposit the money with a financial intermediary, such as Morgan Stanley, in exchange for collateral (aka MBS or ABS), and earn a decent return on its money. But if a problem arises and the quality of the collateral is called into question, then the banks (Morgan Stanley, in this case) are forced to take bigger and bigger haircuts which can send the system into a nosedive. That's what happened in the summer of 2007. Investors discovered that many of the subprimes were based on fraud, so billions of dollars were quickly withdrawn from money markets and commercial paper, and the Fed had to step in to keep the system from collapsing.
Regulations are put in place to see that the system runs smoothly and to protect the public from fraud. But banking without rules is more profitable, so industry leaders and lobbyists have tried to block the efforts at reform. And, they have largely succeeded. Dodd-Frank – the financial reform act -- is riddled with loopholes and doesn't really resolve the central issues of loan quality, additional capital, or risk retention. Banks are still free to issue bogus mortgages to unemployed applicants with bad credit, just as they were before the meltdown. And, they can still produce securitized debt instruments without retaining even a meager 5 per cent of the loan's value. (This issue is still being contested) Also, government agencies cannot force financial institutions to increase their capital even though a slight downturn in the market could wipe them out and cause severe damage to the rest of the system. Wall Street has prevailed on all counts and now the window for re-regulating the system has passed.
President Barack Obama understands the basic problem, but he also knows that he won't be reelected without Wall Street's help. That's why he promised to further reduce "burdensome" regulations in the Wall Street Journal just two weeks ago. His op-ed was intended to preempt the release of the Financial Crisis Inquiry Commission's (FCIC) report, which was expected to make recommendations for strengthening existing regulations. Obama torpedoed that effort by coming down on the side of big finance. Now, it's only a matter of time before another crash.
Here's an excerpt from a special report on shadow banking by the Federal Reserve Bank of New York:
BBC Online is meeting its obligation to commission 25 percent of eligible production work from external suppliers - but must make wide-ranging changes to the process, a review by its regulating BBC Trust has concluded (release, review)
The BBC has met the quota requirement every year since it was recommended by the 2004 Graf report. Last year, it commissioned external interactive producers for work totalling £20 million.
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or add an alert for future coverage of Companies.But a Deloitte review in to the quota commissioned by the trust slates the system for lack of transparency, management, direction and value for money.
Consequently, the trust - whilst it is not raising the quota - has ordered BBC Online to “discuss with industry what form strategic goals for a quota system might take”, and to simplify the current process.
This BBC Trust review has been many months in the making - the BBC executive had already known the outcome and recommendations before Friday’s publication and has partly responded - it has already agreed to give the trust, after speaking with industry, a review within three months. The trust says the whole issue requires “urgent attention”.
Deloitte’s review (highlights):-
“The BBC is complying with the requirements set out in the BBC Agreement. However, the Online independent supply quota does not appear to be working well in practice. Whilst steps have recently been taken to remedy the issues surrounding it, both the BBC and the independent sector recognise there is a lack of: communication around how the commissioning for online takes place, clarity around how the quota is calculated and tracked; and, consistency and efficiency in commissioning practices. Most significantly, interviews demonstrate a strong belief in the independent sector that BBC online commissioners select suppliers to pitch for commissions based on the commissioners’ personal knowledge, rather than any rounded evaluation of who is equipped to deliver quality and value for money.
“There is a high degree of external scepticism as to whether reported performance is real or the result of an accounting allocation.
“Overall BBC Online expenditure is expected to go down rather than up
“There are issues with the management of the current arrangements that impact the value for money and quality BBC Online achieves for licence fee payers
“BBC Online has failed to provide sufficient transparency to the sector in terms of: strategic direction, emerging opportunities, decision making processes, and reporting of performance relative to the quota.
“An average commission size in FY 2009/10 of less than £5,000 and only 17 commissions over £100,000
“The revenues of the top 100 interactive agencies totalled c. £790m in 2009. In 2009/10 the BBC spent c. £20m externally as part of the BBC Online quota. Although the BBC will spend more on digital content (for example on those areas excluded from the eligible base), in absolute terms the impact that the BBC makes on the online content sector is limited.
“In this context, BBC Online’s c. £20m of ‘eligible’ annual spend lacks the scale to have as significant an impact on the shape of market as the BBC does in TV broadcasting.”
bench craft company reviewsWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company reviewsWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company reviewsWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company credit cardWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company meWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company reviewsWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company credit cardWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company credit cardWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
bench craft company meWeekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
CBS <b>News</b>' Lara Logan in hospital after sexual assault in Egypt <b>...</b>
CBS News announced Tuesday that correspondent Lara Logan — who was on location in Egypt covering the protests against now former President Hosni Mubara...
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
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