Lehman Brothers

The data from the Federal Reserve audit is full of frightening revelations about U.S. economic policy and those who implement it. When Wall Street went off the rails in the fall of 2008, policymakers told the public we had a certain kind of problem, knowing all along that the actual nature of the problem was very different—and far more severe. This was a terribly destructive lie. more »

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I frequently disagree with Megan McArdle, but her WikiLeaks post yesterday on struck me as simply delusional. The basic argument: megabank financiers haven’t committed any crimes, because if they had, we’d already know about it. There’s a kind of efficient-market-hypothesis ring to this, and like the efficient-market-hypothesis, it has no basis in reality. more »

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Over at bloggingheads, my CAF colleague Bill Scher discusses the new international banking standards with Conn Carroll, a conservative blogger for The Heritage Foundation. Carroll actually agrees with a lot of what I have to say about Basel III, but I he draws conclusions from my post that overemphasize the role of regulation and ignore the insane lobbying and outright fraud that Wall Street deployed to create a crisis.

The fact that Carroll and I can agree on this stuff (to an extent) shouldn't come as a terrible shock—Wall Street reform is about the basic functioning of the economy—it's not an issue that needs to ignite ideological conflict. Here are his key comments:

"I like the acknowledgement that the problem of this last financial crisis had to do with a problem of regulation."

Nothing wrong there. You'd have to be insane to believe that financial regulations—or the regulators who implemented them—were up to snuff. But here's where I part ways with Carroll:

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It's been two days, and the new Basel III bank regulations are still lousy. more »

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International bank regulators have finally agreed to a new set of rules to rein in financial excess, and the reviews thus far are cautiously more »

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The Washington Post has published a very silly op-ed by Chrystia Freeland accusing President Barack Obama of unfairly "demonizing" Wall Street. Freeland wants to see Obama tone down his rhetoric and play nice with executives in pursuit of a harmonious economic recovery. more »

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3:45

Clearly the best FCIC hearing to date. Tough questions all around. Everybody comes out of it looking bad, bankers and regulators alike, as they should.

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3:30 more »

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What is the penalty for bankers who tell $40 billion lies? Somewhere between nothing and a rounding-error on your bonus. more »

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Tuesday's hearing on Lehman Brothers' now infamous Repo 105 scam was only tangentially related to the megabank's accounting deceptions and subsequent collapse. That story is simple: Lehman almost certainly committed fraud, regulators failed to stop it, and many of the people who screwed up under President George W. Bush inexplicably remain in power under President Barack Obama. more »

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4:40

Black just said Repo 105 was not just fruad, but a felony. It was a deliberate misrepresentation of the company's financial condition that was "material" to investors. more »

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