Bull by the Horns
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Bank of Hawaii, 171
Bank of Italy, 268
Bank of New York (BoNY), 3–4, 5, 114
bank regulators, 27–28, 53, 155, 158, 159, 165, 244, 247, 258, 282, 301, 304, 309, 324, 327, 341, 363–64
as career positions, 343–45
see also Federal Deposit Insurance Corporation (FDIC); Federal Reserve Board; Office of the Comptroller of the Currency (OCC); Office of Thrift Supervision (OTS)
bank runs, 81, 155, 299
in Bair’s childhood, 316
Citi and, 168, 173
bankruptcy, 75, 175, 179, 218, 327, 328–29
Lehman’s, 107, 118, 194–95
living wills and, 240–42
loan restructuring through, 64
lobbying on, 193–94
prepackaged, 179–80
banks:
FDIC premium for, 14, 21–25, 82, 100
insured, see insured banks
lending by, 156, 259, 271
loan restructuring favored by, 59–60
mortgages and, 57
most valuable customers of, 277
profitability of, 17, 23
state-chartered, 175
terrorist financing and, 12
see also large national banks; small community banks
bank stocks, 210
BankUnited, 279
Barclays, 225
Libor scandal at, 361–62, 363, 364
Barr, Michael, 142, 144, 147–49, 196–98, 214, 222, 224, 226–27
Bartlett, Steve, 24
Basel, Switzerland, 27
Basel Committee on Banking Supervision, 27, 30, 33–36, 145, 353, 366n
Financial Stability Board (FSB) of, 268–70
Governors and Heads of Supervision (GHOS) of, 261, 262–64, 266–72
Basel I agreement, 30, 38
Basel II advanced approaches, 26, 27, 30–40, 47, 145, 193, 237–38, 257–58, 263, 265, 356, 357, 366n, 367n
Dodd-Frank financial reform law and, 40, 219–20
Basel III framework, 257–72, 340, 357
Bates, Cheryl, 298
Bear Stearns, 3, 36, 74, 90, 124, 199
bailout for, 107
as “shadow bank,” 186, 330
Bernanke, Ben, 27, 86, 89, 92, 128–29, 147, 158, 161, 176, 191, 228, 235, 239, 241–42, 245–46
at Bair’s farewell party, 318–19
balanced regulatory policies under, 41, 48
Basel II and, 38–39
Basel III proceedings and, 258, 262, 264, 266–67, 271
Citi and, 122, 126–27, 171, 173–74
on FDIC guarantees, 109–11, 118–19, 301–2
on subprime mortgages, 67
Wachovia crisis and, 97–99, 103
and Wall Street bailouts, 2, 4–5, 116, 142
Bernstein, Peter, 150
Better Business Bureau, 309
Bies, Susan, 31–32, 39
Black, William, 208
“Black Cottage, The” (Frost), 359
Blankfein, Lloyd, 2–3, 6, 179, 287–89
Bloomberg, Michael, 37, 365n
Bloomberg News, 143, 144, 163, 172, 187
Blue Mosque, 262
Bolten, Josh, 99
Bonderman, David, 77–78, 91
bondholders, 139, 370n
bad-bank structure and, 169
protection of, 99–100, 118–19, 167, 239
bonuses, 28, 29, 207, 231, 242, 266
of AIG, 153, 181–83, 190, 362
ban on, 165
of Citi, 205
Born, Brooksley, 188, 304, 308
borrowers, 256
delinquent, 250–51
waiver of claims by, 250
Boston, Mass., 227
Boston Federal Reserve Bank, 246
Botín, Emilio, 281–82
Bovenzi, John, 19, 101, 293
Bowles, Erskine, 353
Bowles-Simpson commission, 353
Bowman, John, 236, 339
Branson, Richard, 310
Broadway Bank, 283–84
Brosnan, Michael, 96
Brown, Richard, 49, 58, 65, 131, 313, 317
Brown, Scott, 224, 227, 229
Brown, Sherrod, 270, 385n
budget deficit, 339, 351–52
Buffett, Warren, 3, 98, 114, 157, 287
stress tests attacked by, 159
Bundesbank, 261, 267, 271
Burton Foundation, Regulatory Innovation Award of, 309–10
Bush, George H. W., 13
Bush, George W., 13, 99, 116, 126, 136
Bush (GHW) administration, 13
Bush (GW) administration, 12, 13, 99, 101, 103, 134, 139, 147, 148–49, 152, 303, 346, 372n
tax cuts under, 353
business loans, 361
capital equity for, 30
business transaction accounts, 109–10, 112, 115
California, 68, 81, 102
housing market in, 53, 76
subprime mortgage market in, 68
California Reinvestment Coalition, 309
Calomiris, Charles, 135
CAMELS ratings, 22–24, 78, 126, 168, 170, 193, 365n
Canada, 245, 260, 349
leverage ratio for banks in, 34
Cantwell, Maria, 385n
Cao, Joseph, 228
capital, 73, 96
asset sales for, 203
banning of government investments in, 202
under Basel I, 30
common-equity, 28–30, 161, 165–66, 258, 270
CRE lending and, 42
equity, 221, 370n
financial stability and, 35
GSE debt and, 56
private-equity, 77–78
raising of, 28–29, 79, 88
risk-based, 265–66
and TARP exits, 201–3, 206–7
tax deductible hybrid instruments and, 349
Capital Assistance Program, 158–59
capital conservation buffer, 258
capital gains, 350, 353
capitalism, 66, 202
crony, 358
capital levels, 7, 26, 27–28, 101, 145, 225, 231, 271, 323–26, 355, 357, 366n-67n
in bank failures, 275
in Basel III, 257–72, 324
of Citi, 101, 121, 125, 160, 165–66, 169, 170–71, 374n
economic fluctuations and, 34, 35
in Europe, 31, 33–40
fluctuations in, 34
in foreign-owned holding companies, 220
government-supported funding and, 29
industry pressure on, 356
international raising of, 245
for investment banks, 36, 39, 40
for large banks, 27, 32, 219–21, 237–38, 271, 312, 356, 364
lowering of, 31–40
regulators of, 222
for securities firms, 186
at small banks, 219–21, 279, 371n
statutory, 221
stress tests and, 155–61
TARP money and, 115–17, 131
in U.S., 34
capital reduction:
capping over transition period of, 32, 37, 38, 39
permanent capping of, 32–33, 37, 39
Capitol building, 38
Carlyle Group, 27, 279
Carroll, David, 97
Casey, Thomas, 88
Cassano, Joseph, 162–63
Cave, Jason, 31, 34, 113, 160, 168, 206, 232, 259–60, 261–62
CBO, 353
CDOs, see collateralized debt obligations
CDSs, see credit default swaps
Center for Responsible Lending, 232
checking accounts, business, 110
Cheney, Dick, 208
Chessen, James, 24
Chicago, Ill., 142, 289–90, 311
Chicago Sun-Times, 283
China, 263, 280–81
deposit insurance absent from, 123
Chinese Banking Regulatory Commission (CBRC), 280
Christie, Chris, 305
Chrysler, 175
<
br /> CIT, 178–80, 326, 355
Citibank, 123, 167–68, 170–73, 256, 339, 374n
Citigroup (Citi), 1–2, 4, 5–6, 79, 86, 88, 107, 199, 207, 320, 331, 366n, 369n, 374n
bad practices of, 121
bailouts of, 74, 114, 115–16, 118–19, 121–27, 143, 144, 165–74, 187, 241, 270, 304, 339, 359
Basel II consequences for, 33
CDO exposure of, 54
complex structure of, 240–41
dividends paid by, 121–22, 169, 205, 256
favorable treatment toward, 158, 160–61, 184, 186, 327
foreign deposits of, 98, 121, 123, 168, 169, 173
fragile, unstable condition of, 167, 172, 192, 233, 259, 267, 271
Geithner’s favoring of, 122–25, 165, 166–67, 169–71
good bank/bad bank restructuring for, 123, 165–67, 169–70
high-risk lending by, 121
holding company of, 168, 171, 374n
management information systems of, 124
management of, 169–74, 205, 208, 254, 304–5, 307, 355
ratings downgrade of, 165–66
ring fence of, 122, 125, 126, 165–66, 169, 205–6
short-term lending and, 114
stress tests and, 159–61, 165
structured investment vehicles of, 73–74
subprime operations of, 56, 98, 121
TARP and, 121, 125, 126
TARP funds not repaid by, 167–68, 201–3, 205–8
TLGP misused by, 169, 170
toxic assets of, 79, 99, 126, 156, 166, 167, 170, 205
troubled-banks list and, 121, 125, 126, 167–68
Wachovia and, 96–105, 124
WaMu acquisition considered by, 90–92
Clark, Ed, 357
clearinghouses, 222–23
Clinton, Bill, 14, 142, 287, 295
Clinton, Hillary, 142
Clinton administration, 16, 142
CNBC, 74, 144, 314–15
CNN, 216
Coalition for Fair and Affordable Housing, 46
Codepink, 310
collateral, 85, 179, 194, 199
Lehman’s dumping of, 108
collateralized debt obligations (CDOs), 54–55, 98, 121, 333–34
synthetic, 55
collateral values, 59
Collins, Susan, 216, 219–21, 224, 228–29, 238, 344
Collins Amendment, 220–22, 224–25, 229, 231, 237–38, 264, 325–26
commercial banking organizations, broker-dealer operations and, 385n
commercial banks, 122, 166, 170, 173, 328, 330–31, 341
capital levels of, 6
capital requirements for, 40
commercial lenders, 178–80, 326
commercial loans, 43
commercial paper, 73, 114
commercial real estate (CRE), 101
delinquencies on, 367n
loan restructuring in, 59–60
loans, 41–43, 276, 312
poorly underwritten loans for, 121
Commodity Futures Trading Commission (CFTC), 12, 13–14, 142, 147, 188, 222, 304, 341–43, 344, 356, 362
common equity, 28–29, 201, 203
preferred shareholders and, 167
common-equity ratio, 167
common stock, 156, 207, 374n
community development financial institutions (CDFIs), 285–86
compliance practices, 247
Confidence Men (Suskind), 170
Congress, U.S., 23, 80, 92, 111, 119, 191, 201, 237, 250, 270, 281, 286, 291, 294, 309, 310, 318, 325, 326, 330, 332–33, 335, 337, 342, 351, 356, 357, 363
banking authority delegated by, 157
banking industry trade groups and, 22
bankruptcy and, 108
desire to help distressed homeowners in, 131, 136
FDIC premiums in, 24
Glass-Steagall repealed by, 328
GSEs created by, 55
hearings of, 247–48
mortgage-lending abuses and, 50
PPIPs opposed in, 163–64
TARP in, 92–93, 99, 109, 111, 113, 131, 372n
on Walmart ILC request, 25–26
see also House of Representatives, U.S.; Senate, U.S.
Congressional hearings, 247–48
construction and development (C&D) loans, 42, 283
Consumer Federation of America, 309
Consumer Financial Protection Bureau (CFPB), 198, 223, 232, 251, 345, 365n, 381n
consumer protection, 323, 336–37
contingent loss reserve (CLR), 82
Cooke, Arthur, 298
Cooper, Colleen, 12, 14, 15, 124, 143–44, 308, 309, 319
Cooper, Preston, 12, 14, 15, 35, 83, 319
Cooper, Scott, 12, 14, 67, 209–11, 300, 310, 319
Copa, Kym, 224, 232
Corker, Robert, 188, 191, 214–15, 226
corporate governance, 12, 161, 215
Corston, John, 87–88, 160, 168, 173, 206
Council of Economic Advisers, 147
Council on Foreign Relations, 271
Countrywide Financial, 2, 43, 76, 77
covered bond structure loan, 127
Cox, Christopher, 86
Crapo, Mike, 37
credit, access to, 107, 120, 150, 325
credit cards, 43, 210, 349, 361
designer, 121
fees for, 336
rates on, 325
unsecured, 30
WaMu’s losses on, 77
credit default swaps (CDSs), 356
insurable interest in, 333–35
market, 54–55, 95, 121, 333–35, 338
protection for, 333
spread, 122–23
creditors, 195, 240
bankruptcy and protection of, 195
losses absorbed by, 184, 324
protection of, 99–100
run by, 169
secured, 198
unsecured, 241, 328
credit spreads, 6, 114
Credit Suisse, 138
crisis of 2008, 314, 323, 351–52, 355–56
see also bailouts; Great Recession of 2008
Crowley, Candy, 216
Crudup, Billy, 319
Curl, Gregory, 210
currency trading, 381n
Curry, Thomas, 21, 23, 112
Dallara, Charles, 259
Dallas, Tex., 311
Dallas Federal Reserve Bank, 188
Davis, Richard, 173
debt:
tax-deductible interest on, 349
taxes and, 349–50
debt guarantee:
FDIC’s program for, 4–5, 6, 111–20, 126, 131, 169, 176, 178–79, 187, 201–2, 208, 287, 301–2, 355, 374n
in UK, 117
debt issuance, 28–29
debt-to-income (DTI) ratios, 62, 71, 132, 145
deferred tax asset (DTA), 160
Deloitte & Touche, 64
DeMarco, Edward, 51, 147, 235
democracy, 363
Democratic party, 13, 21, 38, 129, 137, 250, 270, 286, 332
deregulation and, 16
financial reform bill supported by, 197–98, 215–17, 224, 227
ShoreBank and, 285
in 2008 elections, 129
Democratic Senatorial Campaign Committee, 38
deposit insurance, 12–13, 17, 27–28, 74, 157–58, 231, 273–74
under Dodd-Frank, 231, 233
foreign, 123
limits on, 28, 29, 109–11, 315
premiums on, 22–23, 312, 315
UK, 110, 274
see also insured banks; insured deposits
Deposit Insurance Fund (DIF), 89, 102–3, 157–58, 176, 197, 207, 223, 227–28, 279, 288, 290
depletion of, 24, 82, 110–11, 292, 295
prepaid assessments for, 293–95
deposits, 277, 328, 330
core, 79
withdrawals of, 84
deregulation, trend toward, 16–18, 187–88
derivatives, 119, 180, 312,
328, 329, 333, 361
credit, 8
deregulation of, 142
Lehman’s, 107–8
over-the-counter (OTC), 198, 304, 344, 363, 364
risk in, 31
see also specific derivatives
derivatives markets, 188, 341–43, 356
market making in, 328, 341
derivatives trading partners, 194
Diamond, Bob, 225, 228
Dickinson, Emily, 14
Dimon, Jamie, 2–3, 6, 86, 90, 93, 173, 270–71, 295
discount window lending, 28, 74, 90–91
discretionary spending caps, 353
dividends, 28, 29, 245–46, 256, 266, 350
of Citi, 121–22, 169, 205, 256
Dodd, Christopher, 38, 64, 131, 177, 188, 244, 381n
Bair supported by, 144, 247, 267
on banking regulation, 183, 185, 188–89, 192–93, 197, 213–16, 219–25, 228–29, 337
on FDIC resolution authority, 183
Dodd-Frank financial reform law, 40, 119, 160, 227–29, 251, 283, 326–31, 332, 333, 335, 336, 338, 345, 356, 357, 365n
Collins Amendment to, 220–22, 224–25, 229, 231, 237–38, 264, 325–26
in House of Representatives, 191–92, 199, 213, 217, 219, 222–29
implementation of, 231–42, 243, 312–13
mortgage servicing standards under, 244
QRM exception of, 234–35, 236
resolution authority in, 323–24
risk retention requirement of, 234–35, 236
section 203 of, 240
section 209 of, 240
in Senate, 213–29, 238
small banks and, 315
Volcker Rule and, 222–23, 227, 229
Dole, Elizabeth, 318
Dole, Robert, 12, 14, 141, 309, 318
Donovan, Shaun, 144, 149–50, 244, 255–56
Dow Jones Industrial Average, 92, 159
Draghi, Mario, 268–69
Dudley, William, 147, 168–69, 173, 174, 205–6, 258, 262, 269
due diligence, 56, 77, 87, 127
Dugan, John, 21, 23, 25, 67, 122, 126, 137–38, 168–69, 174, 258, 267, 279, 304–5, 318, 339
on Basel II, 31–32, 34, 39
on loan modification programs, 147–48, 372n
on mortgage standards, 41–42, 46
stepping down by, 235–36
TARP funds and, 115
Wachovia and, 96–97, 100
Duhigg, Charles, 138–39
Dulles Airport, 271
Dutch Central Bank, 258
Eakes, Martin, 48
earnings, taxes on, 349
East West Bank, 280–81
Economic Club of New York, 188
economic cycles, fluctuations in bank capital under, 34, 35
economic recovery, 164
economic self-interest, 60
Economist, 36
economists:
conservative, 110, 135
free-market, 134, 135, 139, 147
economy:
deterioration of, 155–56
loan default rates and, 276, 304
national, 313
real, 158
short vs. long-term view of, 317
slow growth of, 359