Wall Street Journal (February 6)
“The Greek effort to divide and conquer by negotiating individually with other EU members instead of with the bloc as a whole is going nowhere.” Nevertheless, there may still be “room for a prudent compromise that might involve a bridge deal to allow time for a permanent agreement, followed by some easing of the terms of bailout loans in exchange for a commitment to economic reform.”
Tags: Bailout, Compromise, Economic reform, Effort, EU, Greek, Loans, Negotiations
The Economist (October 18)
At 250% of GDP, China has a debt problem. Still, this “is unlikely to cause a sudden crisis or blow up the world economy. That is because China, unlike most other countries, controls its banks and has the means to bail them out.” The lack of crisis may drive China down the same road Japan took in the post-bubble decades. “The biggest risk is complacency: that China’s officials do too little to clean up the financial system, weighing down its economy for years with zombie firms and unpayable loans.”
Tags: Banks, China, Complacency, Crisis, Debt problem, Economy, Financial system, GDP, Japan, Loans, Risk, Zombie
Forbes (May 5, 2013)
Urging financial institutions to adopt one-size fits all risk models has can be disastrous. “We have real-life proof of the folly in this kind of forced uniformity: the Basel Accords. For years regulators around the world have been concocting uniform risk assessments to judge bank loans. The results of this exercise have been disastrous. Banks had to hold no reserves against government debt yet hold hefty set-asides for business loans. Greek government bonds were seen as infinitely safer than a loan to, say, IBM. Mortgage-backed securities also got preferred regulatory treatment–and we all know where that led.”
Tags: Banks, Basel Accord, Government debt, Loans, Mortgage-backed securities, Regulators, Reserves, Uniform risk assessment
Forbes (February 28, 2012)
U.S. banks “took in nearly $120 billion in net income last year, the most since 2006, but that doesn’t mean they are back in their glory days.” What’s the problem? “Banks can’t seem to increase their top line numbers.” Profits are stemming from layoffs, cost cutting and loss provisions. “Banks are having a tough time making money off the loans they make.” Net operating revenue has actually dropped during three of the last four quarters and “full-year net operating revenue declined for only the second time since 1938.”U.S. banks “took in nearly $120 billion in net income last year, the most since 2006, but that doesn’t mean they are back in their glory days.” What’s the problem? “Banks can’t seem to increase their top line numbers.” Profits are stemming from layoffs, cost cutting and loss provisions. “Banks are having a tough time making money off the loans they make.” Net operating revenue has actually dropped during three of the last four quarters and “full-year net operating revenue declined for only the second time since 1938.”
Tags: Banks, Loans, Loss provisions, Net income, Operating revenue, U.S.
