The Economist (January 7)
Bank bashing has become routine, but Britain should also “prize” the important contribution of finance. “London is by many measures the world’s biggest financial centre, and weakening it is in nobody’s interest—least of all Britain’s. Better regulation of banks is certainly needed…. But running down one of the world’s most successful (and mobile) commercial clusters is folly—and it is surely not the legacy Mr Cameron would wish to leave his successors.”
Institutional Investor (November 1)
Iceland has bounced back faster than expected. Its top three banks collapsed in 2008, leaving the country in shambles. “But Iceland fought back—and won.” While its economy remains fragile, the Organization for Economic Cooperation and Development (OECD) now predicts Iceland will grow by 3% in 2012. “If there’s a lesson, it’s …that Iceland is in better shape than Ireland partly because it let its banks go bust.”
Boston Globe (October 25)
The state’s Supreme Judicial Court sent shock waves through the real estate industry last week. In a ruling which could impact thousands of other home purchases, the Court ruled that a man who purchased a foreclosed property five years ago “doesn’t actually hold title to the property…because the bank had illegally seized the property from its former owner.” Big banks failed to follow “the most basic, common-sense aspects of the law.” Now a cloud hangs over other homeowners who could face the same situation.
Tags: Banks, Foreclosures, Homeowners, Law
Financial Times (October 5)
In a better-late-than-never move, the EU is moving to ensure banks are adequately capitalized. The EU still needs to get to the heart of the matter, “given that the biggest systemic risk to the region’s banks is contagion from sovereign debt.” Eurozone policymaking continues to deny “how serious the problems are until there is no alternative…. By then the cost of action is greater than it might have been with a more timely response.”
Tags: Banks, EU, Risk, Slow response, Sovereign debt
Bloomberg (September 14)
“European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.” Deposits dropped 40% at Irish banks during the past 18 months, but the trend is affecting Greek, German, French, UK and Spanish banks as well. In turn, banks are showing a clear preference for the perceived safety of the Federal Reserve over the European Central Bank. “The cash that foreign banks keep at the U.S. Federal Reserve has more than doubled to $979 billion at the end of August from $443 billion at the end of February.”
“European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.” Deposits dropped 40% at Irish banks during the past 18 months, but the trend is affecting Greek, German, French, UK and Spanish banks as well. In turn, banks are showing a clear preference for the perceived safety of the Federal Reserve over the European Central Bank. “The cash that foreign banks keep at the U.S. Federal Reserve has more than doubled to $979 billion at the end of August from $443 billion at the end of February.”
The Independent (July 13)
“The nightmare of full eurozone contagion appears to have moved a step closer.” Yet policymakers remain in denial. Until they leave this denial behind, attempts to tackle collapse will remain elusive. European leaders must realize the debt crisis essentially renders many European banks insolvent, it is nearly impossible for indebted countries on the periphery to grow themselves out of crisis while hedged in by the common currency and, lastly, that the eurozone could indeed crumble.
Tags: Banks, Contagion, eurozone, Policymakers
Bloomberg (May 17)
“A Greek default would be “highly destabilizing” for banks, causing losses that “far exceed” the size of their loans and investments there, according to Moody’s Investors Service.” European banks hold approximately €95 billion of Greek assets. Moody’s calculated direct possible losses on these assets at €34.4 billion.
Financial Times (March 25)
Europe’s leaders have consistently fumbled in handling the European debt crisis. The most recent European Council summit should have taken steps to “decisively address the sovereign debt crisis in the eurozone.” Instead it opted for half measures and band aids, postponing difficult decisions. One hopes (against hope) that Europe’s leaders will eventually address the central issue and determine “pan-European policies for letting banks fail safely and forcing losses on creditors rather than taxpayers.”
Europe’s leaders have consistently fumbled in handling the European debt crisis. The most recent European Council summit should have taken steps to “decisively address the sovereign debt crisis in the eurozone.” Instead it opted for half measures and band aids, opting to postpone difficult decisions. One hopes (against hope) that Europe’s leaders will eventually address the central issue and determine “pan-European policies for letting banks fail safely and forcing losses on creditors rather than taxpayers.”
Tags: Banks, Debt criss, Europe
Wall Street Journal (March 5)
Many recent financial reforms are designed to prevent banks from becoming too big to fail. In fact, large banks and holding companies still enjoy “a lower cost of funds than banks in every other category.” The market still believes the banks are too big to fail. The Wall Street Journal believes there will be even more bailouts come the next crisis because, “Dodd-Frank is making the big banks bigger and more protected than ever against failure.”
Tags: Bailouts, Banks, Dodd-Frank, Financial Reform
Financial Times (December 17)
With preliminary agreement on a permanent crisis mechanism, the EU has finally moved “to avoid future crises.” The permanent mechanism is not quite a done deal. The pact would take effect in 2013, following approval by EU leaders in March and then by the EU’s 27 member states. In the meantime, however, market concern remains centered on the ability of EU states and banks to attain adequate debt financing, a potentially explosive issue the EU has continued to dodge. The Financial Times believes these immediate concerns must now be addressed. “Europe will only be able to enjoy tomorrow if it first deals with the problems of today.”
Tags: Banks, Crisis mechanism, Debt, EU