IEHI Feed: The Bank Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61763 Sat, 25 Feb 2017 00:13:34 GMT Deutsche Bank: How France scrapping the euro could go beyond a `Lehman moment' http://bankimplode.com/viewnews/2017-02-24_DeutscheBankHowFrancescrappingtheeurocouldgobeyondaLehmanmoment.html Le Pen has relied on [comparisons to the mild market reaction to Brexit] as a basis for rallying support during her campaigning, saying: "They told us that Brexit would be a catastrophe, that the stock markets would crash ... The reality is that none of that happened."... "Make no mistake, there is the world of difference between tearing up bilateral and multilateral trade agreements, and, unwinding a monetary union as far reaching in scope as the EMU (economic and monetary union) project," Deutsche Bank said in a note Tuesday. "It is the difference between a benign global risk event and something that has the potential to go beyond a 'Lehman's moment'.

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Investment bank Lehman Brothers is responsible for the U.S.'s largest ever bankruptcy filing, triggering the start of the 2008 financial crisis. It held assets of $600 billion -- a fraction of the estimated $46 trillion at risk under a break-up of the EMU.

While central banks could be expected to step in to secure the system, as they did during the 2008 crash, the long lead times and multiple legal obstacles of an EMU break-up would do little to manage the immediate aftermath of such a wide-reaching crash, said Deutsche Bank.

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The likelihood of a French referendum on its membership of the EU was called further into question Wednesday when independent candidate Emmanuel Macron, who is currently seen in second place to Le Pen in first round opinion polls, formed an alliance with Democratic Movement leader Francois Bayrou.

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iehi-feed-61762 Sat, 25 Feb 2017 00:11:36 GMT Odey: Trump Will Introduce a VAT; Spur 7% Inflation http://bankimplode.com/viewnews/2017-02-24_OdeyTrumpWillIntroduceaVATSpur7Inflation.html iehi-feed-61761 Fri, 24 Feb 2017 23:40:44 GMT In sweeping move, Trump puts regulation monitors in U.S. agencies (IT WON'T WORK) http://bankimplode.com/viewnews/2017-02-24_InsweepingmoveTrumpputsregulationmonitorsinUSagenciesITWONTWORK.html President Donald Trump signed an executive order on Friday to place "regulatory reform" task forces and officers within federal agencies in what may be the most far reaching effort to pare back U.S. red tape in recent decades.

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The sweeping order directs every federal agency to establish a task force to ensure each has a team to research all regulations and take aim at those deemed burdensome to the U.S. economy and designate regulatory reform officers within 60 days and must report on the progress within 90 days.

"Excessive regulation is killing jobs, driving companies out of our country like never before," Trump said before signing the order. "Every regulation should have to pass a simple test; does it make life better or safer for American workers or consumers?"''

We like the spirit behind this, and think it's a good idea to have a dedicated officer within each agency who is independent and is focusing on regulatory efficiency (kind of like the inspectors general system). However, Trump's remarks shows he doesn't really understand what the problem is -- the issue isn't that we aren't already taking enough time to weigh new regulations, get feedback from all sides, and weigh the pro's and con's (we already do this -- agonizingly-so): the real problem is that there's no compulsory force to cut through all the opposing interests and impose the optimal outcome based on the benefit to the general public (or whoever the intended stakeholders are). Instead, the preferences of the most powerful/vocal lobbies (or secondarily, the agency staff themselves) dominate. It isn't clear how yet ANOTHER monitor (we already have the GAO and CBO and CRS) is going to "right" the system. Generally, these oversight agencies already do amazing work -- it's just that "no one listens to them" (i.e., they have no power over the political process).

Thus, we don't expect this to work: while it might help in some cases for a while by adding some useful information to the public debate over particular regulations, it will likely just become another politicized facility that will become integrated into the DC sausage factory. Remember, the laws are being mandated by Congress in the first place, and the President can't simply refuse to implement them -- even if someone's analysis shows there's overall more cost than benefit.

To really make any meaningful, sustainable progress on this front, you'd need a law that puts enforcement behind the cost-benefit analysis of all future laws, and regulations implementing them; i.e., regulations can only be implemented if they can be done at a net benefit, and laws can only go into effect if their regulations can be implemented thusly (and this would be reviewed periodically over time, since you can't always tell from the outset). In essence, give the GAO's (and other oversight organizations) analyses some actual TEETH.

So, unfortunately, this just demonstrates another case where it is clear that Trump's people simply don't know how things already work, and what's already in place. You have to know what, in specific, is broken, to fix it. Oh, and you might have to actually work with Congress to get them to surrender some of their arbitrary power...

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iehi-feed-61760 Fri, 24 Feb 2017 23:24:39 GMT New home sales are up, but pace disappoints; Price slips http://bankimplode.com/viewnews/2017-02-24_NewhomesalesareupbutpacedisappointsPriceslips.html iehi-feed-61759 Fri, 24 Feb 2017 23:16:32 GMT GOP Draft Health Care Bill Loads Up on HSAs and the "Cadillac Tax", But Cuts Medicaid, Insurance Subsidies http://bankimplode.com/viewnews/2017-02-24_GOPDraftHealthCareBillLoadsUponHSAsandtheCadillacTaxButCutsMedic.html A draft bill detailing Republican plans to begin repealing and replacing many facets of the Affordable Care Act would provide expanded tax credits and health savings accounts for individuals while reducing federal spending on tax subsidies and Medicaid and practically eliminating both the current employer and individual mandate to provide and carry health insurance.

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What isn't included is a guarantee that people with pre-existing conditions are able to obtain coverage. Members of the House, however, introduced a bill last week to preserve the pre-existing condition ban, signaling that it would have to be passed separately.

The bill dismantles some major components of the ACA, including the expansion of Medicaid and the subsidies to purchase health insurance. In its place, Americans who need assistance to purchase health care will receive a tax credit - able to be received in advanced on a monthly basis - based on age. A person under 30 is eligible for a $2000 tax credit while a person over 60 is eligible for a $4000 credit.

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The measure also also creates state-based high risk pools for people who don't have access to insurance. The federal government would start in 2018 providing $15 billion to help fund the high risk pools, but the number decreases to $10 billion by 2020 and beyond.

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The measure does not directly get rid of the individual and employer mandate to purchase and provide health care, but it zeroes out the penalty, making violation of the mandate non-enforceable.

Republicans, struggling to figure out a way to pay for their health insurance plan, puts in place a tax on the most expensive employer-based health insurance plans, which is an expanded version of the so-called Cadillac tax.

The measure repeals unpopular taxes opposed by the business community and health field, including the medical device tax and the tax on health insurance, also known as the HIT tax, that helped to pay for the ACA.

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iehi-feed-61758 Fri, 24 Feb 2017 23:05:36 GMT Spain: Former IMF Chief and Dozens of Former Bank Execs Just Got Sentenced to Jail http://bankimplode.com/viewnews/2017-02-24_SpainFormerIMFChiefandDozensofFormerBankExecsJustGotSentencedtoJ.html The unimaginable just happened in Spain: two former bank CEOs, Miguel Blesa (CEO of Caja Madrid) and Rodrigo Rato (CEO of Bankia) were just awarded prison sentences of six years and four-and-a-half years, respectively, for misappropriation of company funds. Rato was also Managing Director of the IMF from 2004 to 2007. He was succeeded by another luminary, Dominique Strauss Kahn.

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Dozens more former Caja Madrid senior executives, most of whom are closely connected to either, or both, of the country's two main political parties and/or unions also face three to six years in prison. They were found guilty by Spain's National High Court of misusing company credit cards. Those cards drained money directly from the scarce funds of Caja Madrid, which at the height of Spain's banking crisis was merged with six other failed savings banks into Bankia, which shortly thereafter collapsed and ended up receiving the biggest bail out in Spanish history, costing taxpayers over €20 billion, to date.

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iehi-feed-61756 Fri, 24 Feb 2017 04:17:59 GMT Bitcoin is nearing its all-time high on ETF anticipation http://bankimplode.com/viewnews/2017-02-23_BitcoinisnearingitsalltimehighonETFanticipation.html Bitcoin came within $3 of its all-time high on Thursday as expectations mounted that the Securities and Exchange Commission could soon authorize the creation of the first bitcoin exchange-traded fund.

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The SEC is expected to deliver a decision on the proposed Winklevoss Bitcoin Trust by March 11. Two other bitcoin-focused ETFs are also under consideration.

Though some have speculated that the path to a bitcoin ETF may be easier under the administration of President Donald Trump, Spencer Bogart, a bitcoin analyst at Needham and Co., believes chances of approval are less than 1-in-4.

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iehi-feed-61755 Fri, 24 Feb 2017 04:15:28 GMT Mnuchin: Stock market 'absolutely' Trump admin's economic report card http://bankimplode.com/viewnews/2017-02-23_MnuchinStockmarketabsolutelyTrumpadminseconomicreportcard.html iehi-feed-61754 Fri, 24 Feb 2017 04:14:19 GMT Dow pulls off a stunt it hasn't done in 30 years http://bankimplode.com/viewnews/2017-02-23_Dowpullsoffastuntithasntdonein30years.html iehi-feed-61752 Thu, 23 Feb 2017 17:37:05 GMT Paris attempts to lure business from London with new skyscrapers; Streamlined rules http://bankimplode.com/viewnews/2017-02-23_ParisattemptstolurebusinessfromLondonwithnewskyscrapersStreamlin.html Paris will build seven new skyscrapers in its business district as part of an aggressive campaign to lure financial services companies from London after the UK leaves the EU.

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Marie-Célie Guillaume, chief executive of Defacto La Défense, the body responsible for managing the financial hub in western Paris, said that they wanted to send a "powerful message to businesses that are uncertain about their future in London".

Paris is vying with Frankfurt, Luxembourg and Dublin to attract banks, insurers, start-ups and other companies worried about what will happen when Britain leaves the political bloc. Paris has been one of the most aggressive in its efforts.

Immediately after the June 23 referendum, President François Hollande's socialist government changed the tax rules for expatriates in Paris to make it more generous, and put together a high-level team to lobby international companies.

...

In January, HSBC became the first big bank to confirm plans to move jobs out of London after the Brexit vote, saying it aims to relocate 1,000 roles in its London-based investment bank to Paris.

UBS said about the same number of its London employees could be affected by Brexit, while Jamie Dimon, chief executive of JPMorgan Chase, said that more than 4,000 of his bank's 16,000 UK staff could be displaced. Neither has yet said where they might move, however.

In September, French financial regulators said they were simplifying the process of registering new financial companies in Paris, in part by allowing documents to be filed in English. They said this came "in the context of the Brexit vote".

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iehi-feed-61751 Thu, 23 Feb 2017 00:27:07 GMT Prudential May Charge Wells Fargo as Fake-Account Fallout Spreads to Other Business Lines http://bankimplode.com/viewnews/2017-02-22_PrudentialMayChargeWellsFargoasFakeAccountFalloutSpreadstoOtherB.html Prudential "has provided notice to Wells Fargo that it may seek indemnification," the Newark, New Jersey-based insurer said in a Feb. 17 regulatory filing, referring to their agreement to sell MyTerm life coverage to Wells Fargo customers. Prudential didn't quantify the sum that it might pursue.

Wells Fargo's sales practices are being scrutinized on multiple fronts after authorities fined the bank $185 million in September for signing customers up for bank accounts and credit cards without permission. On Wednesday, ProPublica said the firm placed the head of a mortgage-lending unit in Los Angeles, Tom Swanson, on leave while examining allegations some customers were charged to lock in low interest rates when the bank delayed applications.

Prudential suspended MyTerm sales through Wells Fargo in December ... That case, in which the ex-workers say they were fired for blowing the whistle on misconduct, is one of several Prudential headaches from the Wells Fargo relationship. The insurer is also facing a suit from a customer seeking class-action status. And regulators from New Jersey and California have announced probes.

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ProPublica raised the separate concern about Wells Fargo's mortgage practices last month. Some branches in Los Angeles and Oregon broke with the company's policy of eating fees to lock in low interest rates when it was at fault for delays in mortgage applications, the publication said in its report on Wednesday, citing current and former employees. Swanson didn't respond to a message seeking comment.

Wells Fargo is conducting an internal review to ensure it handled rate-lock extensions consistently and with "customers' best interests in mind," company spokesman Tom Goyda said, declining to comment on Swanson. "While that process has not been completed and we can't discuss the results, we want this review to be comprehensive." The firm may take additional steps and "make things right for customers" as warranted, he said.

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iehi-feed-61750 Thu, 23 Feb 2017 00:21:46 GMT U.S. home sales hit 10-year high, prices soar on low inventory http://bankimplode.com/viewnews/2017-02-22_UShomesaleshit10yearhighpricessoaronlowinventory.html U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, signaling rising confidence in the economy and bolstering expectations of a pickup in growth in the first quarter.

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Though the nation's housing inventory increased from December, it remained near a record low. As a result, the median house price vaulted 7.1 percent from a year ago to $228,900 in January. That was the biggest increase since January 2016.

Demand for housing is being underpinned by a strengthening labor market, which is improving employment opportunities for young adults and, in turn, boosting household formation... But a persistent shortage of properties available for sale, which is lifting house prices, remains an obstacle to a robust housing market. That is likely to put pressure on homebuilders to ramp up construction.

Last month, the number of homes on the market rose 2.4 percent to 1.69 million units, still remaining close to an all-time low of 1.65 million units in December. Housing inventory was down 7.1 percent from a year ago. It has declined for 20 straight months on a year-on-year basis.

Economists say homebuilders are struggling to plug the inventory gap because of difficulties securing funding as well as shortages of land and labor. The NAR estimates housing starts and completions should be in a range of 1.5 million to 1.6 million units to alleviate the chronic shortage.

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iehi-feed-61749 Thu, 23 Feb 2017 00:15:52 GMT Fed Officials Not "Losing Patience" Fast Enough to Hike in March http://bankimplode.com/viewnews/2017-02-22_FedOfficialsNotLosingPatienceFastEnoughtoHikeinMarch.html iehi-feed-61748 Wed, 22 Feb 2017 23:53:46 GMT A Simple Subpoena For Trump's Tax Returns Could Sink Him http://bankimplode.com/viewnews/2017-02-22_ASimpleSubpoenaForTrumpsTaxReturnsCouldSinkHim.html iehi-feed-61746 Wed, 22 Feb 2017 15:24:17 GMT Deutsche Bank Says Next Big Short Is on CMBS as Malls Suffer http://bankimplode.com/viewnews/2017-02-22_DeutscheBankSaysNextBigShortIsonCMBSasMallsSuffer.html iehi-feed-61744 Wed, 22 Feb 2017 15:03:42 GMT Banks Retreat From Apartment Market http://bankimplode.com/viewnews/2017-02-22_BanksRetreatFromApartmentMarket.html Swelling supplies of apartment units are prompting big banks to pull back from new projects, forcing developers to scramble for capital, in a sign that the U.S. apartment industry headed for a downturn.

The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. Since 2010, average U.S. apartment rents have increased by 26%, according to data tracker MPF Research, a division of RealPage.

But fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF.

"Our business has radically changed," said Toby Bozzuto, president and chief executive of the Bozzuto Group, which owns or manages 59,000 apartments in cities across the U.S. "I haven't seen anything this seismically different since 2008, when credit dried up."

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iehi-feed-61743 Wed, 22 Feb 2017 14:56:33 GMT Why Toronto (and Other Cities) Inflate Housing Bubbles to the Bitter End http://bankimplode.com/viewnews/2017-02-22_WhyTorontoandOtherCitiesInflateHousingBubblestotheBitterEnd.html ``Home prices in Greater Toronto have become "dangerously detached" from economic fundamentals and are soaring simply on the belief that they will continue to soar, he wrote. "The market is far too hot for comfort."...

... Toronto is just an a example. There are many jurisdictions in the US that face similar budget problems, and the only thing that keeps them from falling deeper into a financial and fiscal sinkhole is the rich tax revenue that the local property bubble extracts from the economy. Homeowners and investors might grumble, but they usually put up with it, mollified by soaring property prices. So this system works until suddenly, it doesn't.

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iehi-feed-61742 Wed, 22 Feb 2017 02:46:40 GMT Fumbling Towards Collapse - KUNSTLER http://bankimplode.com/viewnews/2017-02-21_FumblingTowardsCollapseKUNSTLER.html You ... have an American public, and a mass media, who do not question the premise of a massive "infrastructure" spending project to re-boot the foundering economy. If you ask what they mean by that, you will learn that they uniformly see rebuilding our highways, bridges, tunnels, and airports. Some rightly suspect that the money for that is not there -- or can only be summoned with more accounting fraud (borrowing from our future). But on the whole, most adults of all political stripes in this country think we can and should do this, that it would be a good thing.

And what is this infrastructure re-boot in the service of? A living arrangement with no future. A matrix of extreme car dependency that has zero chance of continuing another decade. More WalMarts, Target stores, Taco Bells, muffler shops, McHousing subdivisions, and other accoutrement of our fast-zombifying mode of existence? Isn't it obvious, even if you never heard of, or don't understand, the oil quandary, that we have shot our wad with all this? That we have to start down a different path if we intend to remain human?

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iehi-feed-61739 Tue, 21 Feb 2017 15:14:21 GMT Goldman Sachs: Market investors have a letdown coming http://bankimplode.com/viewnews/2017-02-21_GoldmanSachsMarketinvestorshavealetdowncoming.html iehi-feed-61737 Tue, 21 Feb 2017 15:08:12 GMT HSBC share run stumbles on writedowns, tough outlook http://bankimplode.com/viewnews/2017-02-21_HSBCsharerunstumblesonwritedownstoughoutlook.html HSBC's full-year profit slumped 62 percent and fell far short of forecasts on Tuesday as the bank took hefty writedowns from restructuring and flagged near-term brakes on revenue growth... HSBC made profit before tax of $7.1 billion in 2016 compared to $18.87 billion for the previous year, well below an average analyst estimate of $14.4 billion in Thomson Reuters data.

... the worse than expected profits took their toll on the bank's bonus pool, which it cut by 12 percent to $3 billion, and sets the stage for results this week from Lloyds, Barclays, RBS and Standard Chartered.

... A $3.2 billion impairment in its private banking business led HSBC to report a $3.4 billion fourth-quarter loss, against analysts' expectations for a profit, as the accounting valuation of the unit caught up with years of declining performance. HSBC effectively built out its Swiss private bank from its $10 billion purchase of Republic National Bank of New York and Safra Republic Holdings in 1999... But major compliance failures at those operations ate into the bank's bottom line and hurt its reputation, leading to a radical restructuring which mean the private bank is now viable as a slimmed-down operation providing advice to wealthy clients referred from the lender's other business lines.

Compliance problems at a unit associated with the late Safra... color us shocked...

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