Archive
CRS — Multilateral Development Banks: U.S. Contributions FY2000-FY2013
Multilateral Development Banks: U.S. Contributions FY2000-FY2013
Source: Congressional Research Service (via Federation of American Scientists)
This report shows in tabular form how much the Administration requested and how much Congress appropriated for U.S. payments to the multilateral development banks (MDBs) since 2000. It also provides a brief description of the MDBs and the ways they fund their operations. It will be updated periodically as annual appropriation figures are known. The title of this report will also change annually, as new yearly appropriation figures are added.
For FY2013, the Administration has requested funds for several of the non-concessional lending facilities at the MDBs. Several of the MDBs are in the process of increasing the size of their nonconcessional lending facilities, a process frequently called a “general capital increase” (GCI). GCIs are relatively unusual, particularly for so many institutions at the same time. Contributions to the GCIs are expected to be spread out over a five- to eight-year period, depending on the institution. For most of the institutions, the funds appropriated in FY2012 were the first annual payment. In addition to funds for the GCIs, the Administration has requested for FY2013 funds for several MDB concessional lending facilities and more targeted MDB funds, such as those dedicated to environmental issues. The total Administration’s request for the MDBs is smaller than its requests in FY2011 and FY2012.
For further information about the MDBs, the GCIs, and relevant U.S. policy process, see:
• CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress, by Rebecca M. Nelson;
• CRS Report R41672, Multilateral Development Banks: General Capital Increases, by Martin A. Weiss; and
• CRS Report R41537, Multilateral Development Banks: How the United States Makes and Implements Policy, by Rebecca M. Nelson and Martin A. Weiss.
SIGTARP: Office of the Special Inspector General for the Troubled Asset Relief Program Quarterly Report to Congress (4/24/13)
SIGTARP: Office of the Special Inspector General for the Troubled Asset Relief Program Quarterly Report to Congress (PDF)
Source: Office of the Special Inspector General for the Troubled Asset Relief Program
In this report, we discuss “too big to fail” and HAMP. Too big to fail caused the TARP bailout and continues to be a threat because of the interconnections of the largest firms. To prevent a future crisis and bailout, regulators should use a tool in Dodd-Frank called “living wills” to roadmap interconnections that pose a grave threat to our financial system and break them off now, rather than waiting until a company’s deathbed. Additionally, SIGTARP is concerned that homeowners are redefaulting on HAMP permanent mortgage modifications at an alarming rate: 46.1% and 39.1% of HAMP modifications from Q3 and Q4 2009 redefaulted, 28.9% to 37.6% from 2010 redefaulted. SIGTARP recommended that Treasury research and analyze the causes of redefaults, develop an early warning system to try and prevent redefaults, and better help homeowners who have redefaulted.
New From the GAO
New GAO Reports
Source: Government Accountability Office
AUTOMATED TELLER MACHINES
Some Consumer Fees Have Increased
GAO-13-266, Apr 11, 2013
COMMERCIAL SPENT NUCLEAR FUEL
Observations on the Key Attributes and Challenges of Storage and Disposal Options
GAO-13-532T, Apr 11, 2013
INDIAN HEALTH SERVICE
GAO-13-272, Apr 11, 2013
THE FEDERAL GOVERNMENT’S LONG-TERM FISCAL OUTLOOK
Spring 2013 Update
GAO-13-481SP, Apr 11, 2013
COMMUNICATIONS NETWORKS
Outcome-Based Measures Would Assist DHS in Assessing Effectiveness of Cybersecurity Efforts
GAO-13-275, Apr 3, 2013
DEPARTMENT OF JUSTICE
Additional Actions Needed to Enhance Program Efficiency and Resource Management
GAO-13-505T, Apr 10, 2013
EMERGENCY PREPAREDNESS
GAO-13-243, Mar 11, 2013
SCIENCE, TECHNOLOGY, ENGINEERING, AND MATHEMATICS EDUCATION
Governmentwide Strategy Needed to Better Manage Overlapping Programs
GAO-13-529T, Apr 10, 2013
CRS — Financial Condition of Depository Banks
Financial Condition of Depository Banks (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
A bank is an institution that obtains either a federal or state charter that allows it to accept federally insured deposits and pay interest to depositors. In addition, the charter allows banks to make residential and commercial mortgage loans; provide check cashing and clearing services; underwrite securities that include U.S. Treasuries, municipal bonds, commercial paper, and Fannie Mae and Freddie Mac issuances; and other activities as defined by statute.
Congressional interest in the financial conditions of depository banks or the commercial banking industry has increased in the wake of the financial crisis that unfolded in 2007-2009, which resulted in a large increase in the number of distressed institutions. A financially strained banking system would have difficulty making credit available to facilitate macroeconomic recovery.
The financial condition of the banking industry can be examined in terms of profitability, lending activity, and capitalization levels (to buffer against the financial risks). This report focuses primarily on profitability and lending activity levels. Capitalization issues are discussed in CRS Report R42744, U.S. Implementation of the Basel Capital Regulatory Framework, by Darryl E. Getter.
The metrics related to asset performance and earnings show an increase in profitability for the banking industry although many small bank institutions are still experiencing distress. Noncurrent loans still exceed the capacity of the banking industry to absorb potential losses if they were all to become uncollectible. Consequently, lending activities are likely to be restrained until bank loan-loss capacity as well as overall economic conditions improve. Furthermore, profitability in banking is not likely to indicate that pre-crisis lending patterns have resumed. Given the required increases in capitalization buffers to absorb loan defaults as well as the (expected) costs associated with funding loans, profitability trends may differ for banks by size, particularly after accounting for differences in the revenue generating activities of small and large banks.
New From the GAO
New GAO Reports
Source: Government Accountability Office
1. Energy Efficiency: Better Coordination among Federal Programs Needed to Allocate Testing Resources. GAO-13-135, March 28.
http://www.gao.gov/products/GAO-13-135
Highlights – http://www.gao.gov/assets/660/653429.pdf
2. Wind Energy: Additional Actions Could Help Ensure Effective Use of Federal Financial Support. GAO-13-136, March 11.
http://www.gao.gov/products/GAO-13-136
Highlights – http://www.gao.gov/assets/660/652958.pdf
3. National Airspace System: Airport-Centric Development. GAO-13-261, March 28.
http://www.gao.gov/products/GAO-13-261
Highlights – http://www.gao.gov/assets/660/653426.pdf
4. National Science Foundation: Steps Taken to Improve Contracting Practices, but Opportunities Exist to Do More. GAO-13-292, March 28.
http://www.gao.gov/products/GAO-13-292
Highlights – http://www.gao.gov/assets/660/653420.pdf
5. Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-13-294SP, March 28.
http://www.gao.gov/products/GAO-13-294SP
Highlights – http://www.gao.gov/assets/660/653380.pdf
Podcast – http://www.gao.gov/multimedia/podcasts/653314
6. Export-Import Bank: Recent Growth Underscores Need for Continued Improvements in Risk Management. GAO-13-303, March 28.
http://www.gao.gov/products/GAO-13-303
Highlights – http://www.gao.gov/assets/660/653372.pdf
7. Major Automated Information Systems: Selected Defense Programs Need to Implement Key Acquisition Practices. GAO-13-311, March 28.
http://www.gao.gov/products/GAO-13-311
Highlights – http://www.gao.gov/assets/660/653418.pdf
8. Defense Contracting: Actions Needed to Increase Competition. GAO-13-325, March 28.
http://www.gao.gov/products/GAO-13-325
Highlights – http://www.gao.gov/assets/660/653405.pdf
9. Manufactured Homes: State-Based Replacement Programs May Provide Benefits, but Energy Savings Do Not Fully Offset Costs. GAO-13-373, March 28.
http://www.gao.gov/products/GAO-13-373
Highlights – http://www.gao.gov/assets/660/653410.pdf
JPMorgan Chase Whale Trades: A Case History Of Derivatives Risks And Abuses
JPMorgan Chase Whale Trades: A Case History Of Derivatives Risks And Abuses (PDF)
Source: United States Senate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs
JPMorgan Chase & Company is the largest financial holding company in the United States, with $2.4 trillion in assets. It is also the largest derivatives dealer in the world and the largest single participant in world credit derivatives markets. Its principal bank subsidiary, JPMorgan Chase Bank, is the largest U.S. bank. JPMorgan Chase has consistently portrayed itself as an expert in risk management with a “fortress balance sheet” that ensures taxpayers have nothing to fear from its banking activities, including its extensive dealing in derivatives. But in early 2012, the bank’s Chief Investment Office (CIO), which is charged with managing $350 billion in excess deposits, placed a massive bet on a complex set of synthetic credit derivatives that, in 2012, lost at least $6.2 billion.
The CIO’s losses were the result of the so-called “London Whale” trades executed by traders in its London office – trades so large in size that they roiled world credit markets. Initially dismissed by the bank’s chief executive as a “tempest in a teapot,” the trading losses quickly doubled and then tripled despite a relatively benign credit environment. The magnitude of the losses shocked the investing public and drew attention to the CIO which was found, in addition to its conservative investments, to be bankrolling high stakes, high risk credit derivative trades that were unknown to its regulators.
The JPMorgan Chase whale trades provide a startling and instructive case history of how synthetic credit derivatives have become a multi-billion dollar source of risk within the U.S. banking system. They also demonstrate how inadequate derivative valuation practices enabled traders to hide substantial losses for months at a time; lax hedging practices obscured whether derivatives were being used to offset risk or take risk; risk limit breaches were routinely disregarded; risk evaluation models were manipulated to downplay risk; inadequate regulatory oversight was too easily dodged or stonewalled; and derivative trading and financial results were misrepresented to investors, regulators, policymakers, and the taxpaying public who, when banks lose big, may be required to finance multi-billion-dollar bailouts.
The JPMorgan Chase whale trades provide another warning signal about the ongoing need to tighten oversight of banks’ derivative trading activities, including through better valuation techniques, more effective hedging documentation, stronger enforcement of risk limits, more accurate risk models, and improved regulatory oversight. The derivatives overhaul required by the Dodd-Frank Wall Street Reform and Consumer Protection Act is intended to provide the regulatory tools needed to tackle those problems and reduce derivatives-related risk, including through the Merkley-Levin provisions that seek to implement the Volcker Rule’s prohibition on high risk proprietary trading by federally insured banks, even if portrayed by banks as hedging activity designed to lower risk.
See also: Exhibits (PDF)
Triple-Digit Danger: Bank Payday Lending Persists
Triple-Digit Danger: Bank Payday Lending Persists
Source: Center for Responsible Lending
Banks pitch payday loans as short-term borrowing that allows their customers to deal with a financial emergency, repay the loan, and move on. In fact, CRL’s research shows that their triple-digit interest rate loans trap borrowers in a long-term cycle of repeat loans.
Banks that market payday loans continue to claim that these products are intended for short-term emergencies rather than long-term use, but this report shows that short-term loans are not typical. Although some participating banks have made small, recent changes in the product, bank payday loans are continuing to trap borrowers in high-cost, triple-digit debt.
Key Findings
- Bank payday loans carry an annual percentage rate (APR) that averages 225 to 300 percent.
- In 2011, average bank payday borrower took out 19 loans.
- Bank payday borrowers are two times more likely to incur overdraft fees than bank customers as a whole.
- Over one-quarter of all bank payday borrowers are Social Security recipients
New From the GAO
New GAO Reports
Source: Government Accountability Office
DEPARTMENT OF ENERGY
Concerns with Major Construction Projects at the Office of Environmental Management and NNSA
GAO-13-484T, Mar 20, 2013
FINANCIAL INSTITUTIONS
Causes and Consequences of Recent Failures of Community Banks
GAO-13-476T, Mar 20, 2013
U.S. ASSISTANCE TO YEMEN
Actions Needed to Improve Oversight of Emergency Food Aid and Assess Security Assistance
GAO-13-310, Mar 20, 2013
CRS — Multilateral Development Banks: U.S. Contributions FY2000-FY2013
Multilateral Development Banks: U.S. Contributions FY2000-FY2013
Source: Congressional Research Service (via Federation of American Scientists)
This report shows in tabular form how much the Administration requested and how much Congress appropriated for U.S. payments to the multilateral development banks (MDBs) since 2000. It also provides a brief description of the MDBs and the ways they fund their operations. It will be updated periodically as annual appropriation figures are known. The title of this report will also change annually, as new yearly appropriation figures are added.
For FY2013, the Administration has requested funds for several of the non-concessional lending facilities at the MDBs. Several of the MDBs are in the process of increasing the size of their nonconcessional lending facilities, a process frequently called a “general capital increase” (GCI). GCIs are relatively unusual, particularly for so many institutions at the same time. Contributions to the GCIs are expected to be spread out over a five- to eight-year period, depending on the institution. For most of the institutions, the funds appropriated in FY2012 were the first annual payment. In addition to funds for the GCIs, the Administration has requested for FY2013 funds for several MDB concessional lending facilities and more targeted MDB funds, such as those dedicated to environmental issues. The total Administration’s request for the MDBs is smaller than its requests in FY2011 and FY2012.
For further information about the MDBs, the GCIs, and relevant U.S. policy process, see:
• CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress, by Rebecca M. Nelson;
• CRS Report R41672, Multilateral Development Banks: General Capital Increases, by Martin A. Weiss; and
• CRS Report R41537, Multilateral Development Banks: How the United States Makes and Implements Policy, by Rebecca M. Nelson and Martin A. Weiss.
New From the GAO
New GAO Reports
Source: Government Accountability Office
BORDER SECURITY
Additional Actions Needed to Strengthen CBP Efforts to Mitigate Risk of Employee Corruption and Misconduct
GAO-13-59, Dec 4, 2012
FINANCIAL INSTITUTIONS
Causes and Consequences of Recent Bank Failures
GAO-13-71, Jan 3, 2013
Bank Debt in Europe “Are Funding Models Broken”
Bank Debt in Europe: “Are Funding Models Broken”
Source: International Monetary Fund
The crisis in Europe has underscored the vulnerability of European bank funding models compared to international peers. This paper studies the drivers behind this fragility and examines the future of bank funding, primarily wholesale, in Europe. We argue that cyclical and structural factors have altered the structure, cost, and composition of funding for European banks. The paper discusses the consequences of shifting funding patterns and investor preferences and presents possible policy options and bank actions to enhance European bank funding models’ robustness.
CRS — U.S. Implementation of the Basel Capital Regulatory Framework
U.S. Implementation of the Basel Capital Regulatory Framework (PDF)
Source: Congressional Research Service (via OpenCRS)
The Basel III international regulatory framework, which was produced in 2010 by the Basel Committee on Banking Supervision at the Bank for International Settlements, is the latest in a series of evolving agreements among central banks and bank supervisory authorities to standardize bank capital requirements, among other measures. Capital serves as a cushion against sudden financial shocks (such as an unusually high occurrence of loan defaults), which can otherwise lead to insolvency. The Basel III regulatory reform package revises the definition of regulatory capital and increases capital holding requirements for banking organizations. The quantitative requirements and phase-in schedules for Basel III were approved by the 27-member jurisdictions and 44 central banks and supervisory authorities on September 12, 2010, and endorsed by the G20 leaders on November 12, 2010. Basel III recommends that banks satisfy these enhanced requirements by 2019. The Basel agreements are not treaties; individual countries can make modifications to suit their specific needs and priorities when implementing national bank capital requirements.
In the United States, Congress mandated enhanced bank capital requirements as part of financialsector reform in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203, 124 Stat.1376). Specifically, the Collins Amendment to DoddFrank (1) amends the definition of capital; (2) establishes minimum capital and leverage requirements for banking subsidiaries, bank holding companies, and systemically important nonbank financial companies; and (3) establishes an implementation timeline shorter than that agreed to in the Basel III Accord. In addition, Dodd-Frank removes a requirement that credit ratings be referenced when evaluating the creditworthiness of financial securities. Instead, the Federal Banking Regulators (i.e., the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) are required to find other appropriate standards by which to determine the financial risks of bank portfolio holdings when enforcing the mandatory capital requirements.
On June 7, 2012, the Federal Banking Regulators announced the final rule for implementation of Basel II.5 and the proposed rule for the implementation of Basel III. As required by Dodd-Frank, the federal regulators implemented risk-weighting methodologies in both sets of rules that would replace credit ratings. Although smaller institutions with total assets under $500 million may still follow some of the regulatory requirements based upon the Basel I capital framework, all banks would be required to use the risk-weighting methodology established by federal regulators in the recent proposed rule. Banks must also increase capital holdings to withstand adverse macroeconomic and financial scenarios. The U.S. federal banking agencies, however, have announced that the proposed rule will not become effective on January 1, 2013.
The call for higher capital requirements on the banking system could arguably translate into more expensive bank credit for borrowers or even decline. Whether higher capital requirements would result in a reduction of overall lending and systemic risk, however, is unclear. Prior to the financial crisis, banks maintained capital levels that exceeded the minimum regulatory requirements and the economy still saw widespread lending. Bank capital reserves may not have been an effective financial risk mitigation tool especially given that a significant amount of lending took place outside of the regulated banking system. Bank capital may grow more effective at mitigating lending risks in the economy given that lending from non-bank sectors has since diminished, but credit availability may also become more contingent upon the transition to the higher capitalization levels.
Banking on Arbitration: Big Banks, Consumers, and Checking Account Dispute Resolution
Banking on Arbitration: Big Banks, Consumers, and Checking Account Dispute Resolution
Source: Pew Center on the States
The report, Banking on Arbitration: Big Banks, Consumers, and Checking Account Dispute Resolution, reviews the 100 largest financial institutions’ dispute resolution clauses as well as consumer attitudes about these practices. It finds that:
- The larger the financial institution, the more likely that an account agreement will require mandatory binding arbitration.Over half of the 50 largest financial institutions have arbitration clauses in their account agreements, while only 30 percent of the next fifty contain such clauses.
- Seventy-five percent of banks with an arbitration clause also include a ban on class action lawsuits.
- Over half of the account agreements contain clauses where the consumer waives the right to a jury trial.
- Almost nine in 10 consumers disapprove of the procedural components of arbitration, but half of consumers also support the overall goal of arbitration—to be a simpler, less costly alternative to court.
Talking the talk: Cyber security cited as a top priority, but 25 percent of world’s banks still victimized in 2011
Talking the talk: Cyber security cited as a top priority, but 25 percent of world’s banks still victimized in 2011
Source: Deloitte
Deloitte Touche Tohmatsu Limited’s (DTTL) 8th global financial services industry security survey once again confirms information security is a top priority for financial services industry organizations globally. And despite the challenges of balancing the cost of improved security initiatives with perceived risk of sophisticated threats and emerging technologies, organizations say that have become more proactive in implementing innovative security measures and creating greater awareness within their business, which is hopefully good news for the 25 percent of financial institutions that suffered a breach in 2011.
Here’s a quick glance at the additional top three findings in this year’s survey:
- Increased coordinated activity among security and business groups: almost two thirds of respondents believe that their information security function and business are engaged; most organizations are using a Security Operation Center (SOC) model to monitor traffic and data and actively respond to incidents and breaches.
- Growing adoption of new technologies and security innovation: as the use of social media increases, 37 percent of respondents are revising organizational policies and 33 percent are educating users on social networking to address the security risks.
- Policing cyber threats and due diligence with data assets: almost half of the organizations surveyed (49 percent) claim to actively manage their vulnerabilities, with 82 percent also actively researching new threats to proactively protect their environment from emerging threats.
Foreclosure Externalities: Some New Evidence
Foreclosure Externalities: Some New Evidence
Source: Federal Reserve Bank of Atlanta
In a recent set of influential papers, researchers have argued that residential mortgage foreclosures reduce the sale prices of nearby properties. We revisit this issue using a more robust identification strategy combined with new data that contain information on the location of properties secured by seriously delinquent mortgages and information on the condition of foreclosed properties. We find that while properties in virtually all stages of distress have statistically significant, negative effects on nearby home values, the magnitudes are economically small, peak before the distressed properties complete the foreclosure process, and go to zero about a year after the bank sells the property to a new homeowner. The estimates are very sensitive to the condition of the distressed property, with a positive correlation existing between house price growth and foreclosed properties identified as being in "above average" condition. We argue that the most plausible explanation for these results is an externality resulting from reduced investment by owners of distressed property. Our analysis shows that policies that slow the transition from delinquency to foreclosure likely exacerbate the negative effect of mortgage distress on house prices.
Too big to fail? Canadian banks are not immune from global crises
Too big to fail? Canadian banks are not immune from global crises
Source: Canadian Centre for Policy Alternatives
A new report released by CCPA says that Canada is not immune to the banking problems we see abroad, and cautions that like all banks worldwide, Canadian banks are structurally vulnerable to instability.
The report, No More Swimming Naked: The Need for Modesty in Canadian Banking, examines how banks work, why they are inherently prone to instability, and how banking crises spread—even to banks and banking systems that appear to be stable.
According to the report, overconfidence is part of the problem. Complacency tends to encourage risk-taking among banks, while it deters Canadians from asking tough questions about banking. Yet this overconfidence ignores the fact that banking problems are often not apparent until systemic instability is growing.
The report cautions that current regulations have not eliminated these problems, and since governments have no alternative but to support large banks when systemic stability is threatened, this additional security creates a perverse incentive for banks to increase their appetite for risk.
CRS — The Consumer Financial Protection Bureau (CFPB): A Legal Analysis
The Consumer Financial Protection Bureau (CFPB): A Legal Analysis (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
In the wake of the worst U.S. financial crisis since the Great Depression, Congress passed and the President signed into law sweeping reforms of the financial services regulatory system through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), P.L. 111- 203.
Title X of the Dodd-Frank Act is entitled the Consumer Financial Protection Act of 2010 (CFP Act). The CFP Act establishes the Bureau of Consumer Financial Protection (CFPB or Bureau) within the Federal Reserve System (FRS) with rulemaking, enforcement, and supervisory powers over many consumer financial products and services, as well as the entities that sell them. The CFP Act significantly enhances federal consumer protection regulatory authority over nondepository financial institutions, potentially subjecting them to analogous supervisory, examination, and enforcement standards that have been applicable to depository institutions in the past. The act also transfers to the Bureau much of the consumer compliance authority over larger depositories that previously had been held by banking regulators. Additionally, the Bureau acquired the authority to write rules to implement most federal consumer financial protection laws that previously was held by a number of other federal agencies.
Although the powers that the CFPB has at its disposal are largely the same or analogous to those that other federal regulators have held for decades, there is a great deal of uncertainty in how the new agency will exercise these broad and flexible authorities, especially in light of its almost exclusive focus on consumer protection. As a result, the CFP Act has proven to be one of the more controversial portions of the financial reform legislation.
The 112 th Congress is actively involved in conducting oversight of the implementation of the CFP Act. Additionally, the 112 th Congress has considered a number of bills that would significantly alter the structure of the Bureau. For example, H.R. 2434, the Financial Services and General Government Appropriations Act, 2012, would make the CFPB’s primary funding subject to the traditional appropriations process, and H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act, would convert the CFPB’s leadership structure from a sole directorship to a commission and would allow the newly established Financial Stability Oversight Council (FSOC) to overturn CFPB-issued regulations with a simple majority vote, as opposed to the current super majority requirement. H.R. 2434 was reported favorably out of the House Committee on Appropriations, and H.R. 1315 was referred to the Senate Committee on Banking, Housing, and Urban Affairs after passing the full House by a vote of 241 to 173. Additionally, 44 Senators signed a letter to the President expressing support for the Bureau-related objectives of H.R. 2434 and H.R. 1315.
This report provides an overview of the regulatory structure of consumer finance under existing federal law before the Dodd-Frank Act went into effect and examines arguments for modifying the regime in order to more effectively regulate consumer financial markets. It then analyzes how the CFP Act changes that legal structure, with a focus on the Bureau’s organization; the entities and activities that fall (and do not fall) under the Bureau’s supervisory, enforcement, and rulemaking authorities; the Bureau’s general and specific rulemaking powers and procedures; and the Bureau’s funding.
Deloitte Shadow Banking Index Debuts: ‘Only’ $9.53 Trillion in Size at End of 2011
Deloitte Shadow Banking Index Debuts: ‘Only’ $9.53 Trillion in Size at End of 2011
Source: Deloitte
The shadow banking system in the United States might not be as large today as regulators and market participants feared, according to a new quarterly index introduced today by the Deloitte Center for Financial Services. However, with regulatory changes and financial innovation looming, the shadow banking system could creep back very quickly, the Deloitte research group cautions.
The Deloitte Shadow Banking Index shows the volatile shadow banking system totaled $9.53 trillion at the end of 2011 ‒ more than 50 percent below its peak in 2008 ‒ and a figure considerably lower than many estimates.
The Big Banks’ Big Secret: Estimating government support for Canadian banks during the financial crisis
The Big Banks’ Big Secret: Estimating government support for Canadian banks during the financial crisis
Source: Canadian Centre for Policy Alternatives
From press release:
A study released today by the Canadian Centre for Policy Alternatives (CCPA) estimates the previously secret extent of extraordinary support required by Canada’s banks during the financial crisis.
According to the study, by CCPA Senior Economist David Macdonald, support for Canadian banks reached $114 billion at its peak—that’s $3,400 for every man, woman, and child in Canada.
“At some point during the crisis, three of Canada’s banks—CIBC, BMO, and Scotiabank—were completely under water, with government support exceeding the market value of the company,” says Macdonald. “Without government supports to fall back on, Canadian banks would have been in serious trouble.”
Between October 2008 and July 2010, Canada’s largest banks relied heavily on financial aid programs provided by the Bank of Canada, the Canada Mortgage and Housing Corporation (CMHC), and the U.S. Federal Reserve—all at the same time.
Over the entire aid period, Canada’s banks reported $27 billion in total profits between them and the CEOs of each of the big banks were among the highest paid Canadian CEOs. Between 2008 and 2009, each bank CEO received an average raise in total compensation of 19%.
