A revealing article recently appeared in BusinessWeek. To cut to the chase, the authors found that there is no shortage of STEM (Science, Technology, Engineering, and Math) graduates in the United States. Instead:
U.S. colleges and universities are graduating as many scientists and engineers as ever, according to a study released on Oct. 28 by a group of academics. But that finding comes with a big caveat: Many of the highest-performing students are choosing careers in other fields. The study by professors at Rutgers and Georgetown suggests that since the late 1990s, many of the top students have been lured to careers in finance and consulting.
The House Financial Services Committee, along with the Treasury Department has proposed a new too big to fail piece of legislation.
The bill is titled The Financial Stability Improvement Act of 2009 and the bill text is here.
The bill creates an inter-agency regulatory agency called the Financial Services Oversight Council.
The bill appears to be once again, making the Federal Reserve super regulator but with wording to hide this fact.
Removes the Gramm-Leach-Bliley Act’s restraints on the Fed’s authority over companies subject to consolidated regulation and provides specific authority to the Fed and other federal financial agencies to regulate for financial stability purposes and quickly address potential problems.
The bill also seems to be not reinstating Glass-Steagall, instead putting some watered down restrictions, but only going forward. Seemingly existing institutions will not be broken up.
In my opinion, financial innovation should provide some social benefit and definitely outweigh the potential social costs. But for some that is a too rigorous of a standard. Arguably, "financial innovations" such as credit default swaps or collateralized debt obligations would fail such a standard. Or could it be that 'too much of a good thing is bad'. We truly need a national debate or discussion regarding financial innovation.
The median price was $204,800 with an average price of $282,600.
At the current rate there are 7.5 months of inventory with 251,000 new homes for sale.
Calculated Risk is calling the difference between new home sales and existing ones the distressing gap, for CR claims this is indicative of distressed sales and the government's first time home buyer credit.
We passed the milestone of 100 bank failures in a year on Friday. That hasn't been done since 1992, and we still have a couple months to go.
However, that isn't the best way to measure the problem.
More banks have failed in other years. The post-war record was set in 1989 when 534 banks went under. That was at the peak of the savings-and-loan (S&L) crisis, which erupted in the late 1980s and continued in the early 1990s. This year has seen more failures than any since 1992, but another 75 banks must go under to overhaul that year’s total.
The first question that comes to mind is why Timothy Geithner Treasury Secretary. Actually, we know the answer to that questions: protector of the financial oligarchy.
Back to the Bloomberg story:
In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.
According to this report from Huffpost, two Democrats will offer amendments to Sarbanes-Oxley Act to weaken it. John Adler and Carolyn Maloney are the guilty parties.
Sarbanes-Oxley was passed as a response to Enron, Worldcom and other past accounting scandals. It applies to publicly traded companies. The purpose was to restore some level of credibility to publicly disclosed information particularly financial statements. It requires a third-party audit of internal reporting controls.
But I guess that is too much for these two Democrats. First, Adler's potential amendment:
Adler, a member of the pro-business New Democrat Coalition, is proposing to exempt publicly-traded firms with market capitalization less than $700 million from a provision of Sarbanes-Oxley mandating an external audit of the firm.
If we screw up and get fired that becomes part of our permanent employment record. But if you are part of the financial oligarchy, well, they can practically destroy the entire financial system and get multiple do-overs. Several examples come to mind:
1) John Meriweather - founder of Long-Term Capital Management who after practically destroying the financial system with his high flying computer models went on to start several other hedge funds. and
2) Maurice "Hank" Greenberg - founder and former Chairman and CEO of AIG.
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