WBEZ | Finance http://www.wbez.org/tags/finance Latest from WBEZ Chicago Public Radio en Morning Shift: How service members seek conscientious objector status http://www.wbez.org/programs/morning-shift-tony-sarabia/2013-07-24/morning-shift-how-service-members-seek-conscientious <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/Marine-Flickr- United States Marine Corps Official Page.jpg" alt="" /><p><p>Now that the armed forces is voluntary enlistment, we may think that service members no longer seek conscientious objector status. That&#39;s not the case. We learn more about the application process for conscientious status.</p><script src="//storify.com/WBEZ/morning-shift-29.js?header=false"></script><noscript>[<a href="//storify.com/WBEZ/morning-shift-29" target="_blank">View the story "Morning Shift: How service members seek conscientious objector status " on Storify</a>]</noscript></p> Wed, 24 Jul 2013 07:54:00 -0500 http://www.wbez.org/programs/morning-shift-tony-sarabia/2013-07-24/morning-shift-how-service-members-seek-conscientious Clever Apes #28: The critter economy http://www.wbez.org/blog/clever-apes/2012-03-20/clever-apes-28-critter-economy-97474 <img typeof="foaf:Image" src="http://llnw.wbez.org/blog/photo/2012-March/2012-03-20/THUMBNAIL_Gorrilla.png" alt="" /><p><p><img alt="Dario Maestripieri studies how humans behave compared with primates." class="caption" src="http://llnw.wbez.org/blog/insert-image/2012-March/2012-03-20/DARIO pic for post.png" style="width: 600px; height: 484px;" title="Dario Maestripieri studies how humans behave compared with primates. (WBEZ/Gabriel Spitzer)"></p><p>It seems like economics is a purely human invention, far removed from the jungle. But scientists say our ancestors were spending and investing for millions of years. So our behavior when we manage our portfolio or climb the corporate ladder resembles nothing so much as the interactions of apes or monkeys. In the latest installment of Clever Apes, we consider how our financial activity has deep parallels in the primate world. And furthermore, many of our most important financial decisions come from even more primitive impulses, deep in our lizard brains.</p><p>The University of Chicago’s <a href="http://primate.uchicago.edu/dario.htm">Dario Maestripieri </a>is a professor of comparative human development, evolutionary biology, neurobiology and psychiatry and behavioral neuroscience. (I usually abbreviate titles, but his makes me happy). He studies the intersections among our minds, our primate cousins, and evolution. In his new book <a href="http://www.amazon.com/Games-Primates-Play-Investigation-Relationships/dp/046502078X">Games Primates Play</a>, he details how the mechanisms of economics have their origins in our deep past.</p><p>Apes and monkeys play the market by choosing whom to groom and whom to attack, whom to sleep with and what food is worth risking a fight for. As Yale psychologist Laurie Santos explains, the psychology that governs those decisions didn’t begin with humans. So we see monkeys making the same kinds of classic mistakes that humans make, like “loss aversion,” where we work harder to avoid losses than to achieve equivalent gains. (<a href="http://www.ted.com/talks/laurie_santos.html">check out her TED talk </a>for a great explanation.)</p><p><img alt="(WBEZ/Gabriel Spitzer)" class="caption" src="http://llnw.wbez.org/blog/insert-image/2012-March/2012-03-20/THUMBNAIL_Gorrilla.png" style="width: 250px; height: 188px; margin: 10px; float: right;" title="(WBEZ/Gabriel Spitzer)">We’re also subject to the same quirks of biology as many non-human primates. Biologists have found that <a href="http://www.biologicalpsychiatryjournal.com/article/S0006-3223%2895%2900675-3/abstract">monkeys with high levels of testosterone and lower levels of the brain chemical serotonin </a>tend to take more risks: taking longer leaps between trees, challenging unfamiliar males, and so on. Maestripieri and his colleagues set up a <a href="http://insight.kellogg.northwestern.edu/index.php/Kellogg/article/the_biochemistry_of_financial_risk">similar experiment with business school students. </a>There too, those with higher levels of testosterone were more likely to make long-shot investments or go into a riskier profession.</p><p>Finally, we check in with neuroeconomist <a href="http://www.kellogg.northwestern.edu/faculty/kuhnen/htm/">Camelia Kuhnen </a>of Northwestern University. She finds that our investment decisions are heavily influenced by some of the most ancient parts of our brains. She and a colleague did an experiment where they <a href="http://www.kellogg.northwestern.edu/faculty/kuhnen/htm/RESEARCH/KWKW_2008.pdf">activated the brain’s reward center </a>using something that had nothing to do with money – in this case, it was sexy pictures. In males, anyway, this led them to make riskier bets in an investment game. Just the whiff of reward was enough to make these guys high-rollers … something we can thank our reptilian ancestors for.</p></p> Tue, 20 Mar 2012 20:25:00 -0500 http://www.wbez.org/blog/clever-apes/2012-03-20/clever-apes-28-critter-economy-97474 Planning for the future in uncertain financial times http://www.wbez.org/episode-segments/2011-09-28/planning-future-uncertain-financial-times-92535 <img typeof="foaf:Image" src="http://llnw.wbez.org/segment/photo/2011-September/2011-09-28/RS2708_Money_Flickr_Elyce Feliz.jpg" alt="" /><p><p>The federal budget battle over the summer was not kind to U.S. markets and broader economic recovery efforts; but if there was a silver lining to the debt-ceiling debate, it was perhaps that Congress learned a lesson. They appeared to plan ahead this time around--a bipartisan spending bill is <a href="http://blogs.wsj.com/washwire/2011/09/27/house-is-poised-to-pass-stopgap-funding-bill-on-thursday/" target="_blank">expected to pass</a> before the Friday deadline. So the government looked like it had the financial cover it needed to avoid a shut down but <em>Eight Forty-Eight </em>wondered how everyone else should adjust to uncertain times. Can people protect their pocketbooks?<a href="http://www.matthewsapaula.com/" target="_blank"> Matthew Sapaula</a> joined <em>Eight Forty-Eight</em> with his ideas. Sapaula is the host of the <a href="http://itunes.apple.com/us/podcast/money-smart-show/id418825144" target="_blank"><em>Money Smart Show</em> podcast</a> and was recently a financial coach on MSN Money’s reality show <em>The Invested Life</em>.</p></p> Wed, 28 Sep 2011 14:12:00 -0500 http://www.wbez.org/episode-segments/2011-09-28/planning-future-uncertain-financial-times-92535 What Is The IMF, Anyway? http://www.wbez.org/story/2011-05-16/what-imf-anyway-86604 <p><p>Dominique Strauss-Kahn, the head of the International Monetary Fund, was arrested this weekend for allegedly sexually assaulting a maid in his hotel room. He has denied the allegations. For more on the criminal case, see this <a href="http://www.npr.org/2011/05/16/136348580/imf-head-to-be-arraigned-on-sexual-assault-charges" target="_blank">AP story</a>.</p><p>Strauss-Kahn's arrest leaves a vacuum at the top of the IMF at a key moment for the global economy. I'll get to that in a minute, but it's worth pausing here to answer a more basic question: What is the IMF, anyway?</p><p></p><p>I spoke this morning with <a href="http://prasad.dyson.cornell.edu/" target="_blank">Eswar Prasad</a>, a former IMF economist who now works at Cornell and the Brookings Institution.</p><p>You can think of the IMF sort of like a credit union for countries, Prasad told me. Its members — countries from around the world — put money in. And the credit union lends that money out to members that need it.</p><p>This makes the IMF sound all warm and fuzzy. And for several decades after the IMF was created at the end of World War II, it was pretty warm and fuzzy.</p><p>At that time, the world's major currencies were fixed — a dollar was always worth the same amount of British pounds, the same amount of French francs, etc. (This is a bit of an oversimplification, but it gives the basic idea.) This was known as the Bretton Woods system.</p><p>During this time, the IMF made short-term loans to help countries keep the value of their currency fixed. The biggest recipient of IMF loans during this era was the UK, according to Prasad.</p><p>But Bretton Woods was dismantled in the 1970s, and the world of money changed profoundly. In the new world, the value of global currencies changes constantly. (A year ago, <a href="http://www.google.com/finance?q=CURRENCY%3Agbpusd" target="_blank">one British pound bought you</a> $1.45; today, it buys you about $1.60.)</p><p>So in the 1980s and 1990s, the IMF took on a new role: Lending to developing countries in that were going through major economic crises. During this era, the world's opinion of the IMF became decidedly less warm and fuzzy.</p><p>The Fund is based in Washington, and it's largely controlled by the U.S. and Europe, which contribute a big chunk of the fund's loan pool. What's more, IMF loans always come with strings attached — recipients typically have to make big spending cuts, among other things.</p><p>Not surprisingly, having an institution controlled by rich countries dictate harsh terms to poor countries during times of intense crisis created a lot of tension and resentment.</p><p>So in the past decade, developing countries that didn't want to be beholden to the IMF started saving up their own rainy-day funds, full of dollars and euros.</p><p>"What the Asian financial crisis [of the late 1990s] did was it gave emerging market economies a very strong desire to stay out of the clutches of the IMF," Prasad said.</p><p>The total value of foreign-exchange reserves held around the world has risen from $2 trillion in 2000 to $6 trillion now, according to Prasad — and almost the entire increase has come from countries in the developing world.</p><p>But as developing countries like China, India and Brazil were stashing aside money for a rainy day, countries at the edges of Europe were heading for fiscal disaster.</p><p>And so, over the past year, the focus of the IMF has shifted back to Europe.</p><p>The IMF has been a key player in the bailouts of Greece, Ireland and Portugal. For one thing, it has contributed a significant chunk of the money. For another, the presence of the IMF has also made it politically more palatable for the recipients to agree to the terms of the bailouts.</p><p>But, in the past few weeks, a big, new problem has arisen: It's become clear that Greece is so far in the hole that it probably won't be able to pay off all its debt on time.</p><p>Strauss-Kahn's arrest means Greece's day of reckoning — and the potentially widespread fallout — may be coming sooner, rather than later.</p><p>Strauss-Kahn has been pushing for Europe and the IMF to be lenient, and to lend Greece more money, Prasad said. German leaders, on the other hand, have been resisting lending more to Greece.</p><p>What's more, the IMF has been accused of maintaining a double standard — of being more lenient with countries in Europe than it is with countries in the developing world.</p><p>"Given the fact that Greece has missed virtually every target, if it was an emerging market, the program would not be going forward," Prasad said.</p><p>So without Strauss-Kahn running the IMF and pushing for leniency, Greece's immediate future is less secure.</p><p>Greece is a relatively small country. But if it declares to the world that it can't pay off its debts, the ripple effects could be big. Banks in other European countries that hold Greek debt could suffer losses, which could in turn affect the broader financial system.</p><p>What's more, a Greek restructuring could spook investors, and make them less willing to lend money to other troubled European countries. That could lead to broader, deeper financial troubles around Europe and, perhaps, beyond. Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1305565069?&gn=What+Is+The+IMF%2C+Anyway%3F&ev=event2&ch=93559255&h1=Finance,Planet+Money,Europe,Economy,Business,World,Home+Page+Top+Stories,News&c3=D%3Dgn&v3=D%3Dgn&c4=136341873&c7=1017&v7=D%3Dc7&c18=1017&v18=D%3Dc18&c19=20110516&v19=D%3Dc19&c20=1&v20=D%3Dc20&c31=127413671,93559255&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Mon, 16 May 2011 11:24:00 -0500 http://www.wbez.org/story/2011-05-16/what-imf-anyway-86604 The Island That Ran Out Of Money http://www.wbez.org/story/2011-05-09/island-ran-out-money-86298 <p><p>During the financial crisis, only one Western country experienced a true collapse of its banking system: Iceland.<br /> <br />Things got so bad that the country actually ran out of foreign currency. Even today, years later, foreign money is still scarce, and the government controls how much anyone can get.</p><p>The strange story of how Iceland ran out of money begins in 2003. The country had just privatized its banks. These sleepy state run institutions suddenly grew, and started running ads in foreign countries. For example:</p><p></p><p>Foreigners responded, pouring money into Icelandic banks. The banks' balance sheets became 10 times larger than the entire country's economy.</p><p>But as the world slid into a financial crisis, investors turned on Iceland.</p><p>One night in January 2008, Ásgeir Jónsson, chief economist at Iceland's largest bank, got a call telling him to go to a certain hotel bar, to meet with foreign investors.</p><p>The investors were hedge fund guys who had come to the conclusion that Jónsson's bank was doomed. They told him they'd placed big financial bets that everything would crash.</p><p>The problem the hedge fund guys had spotted was in fact, the joke that John Cleese commercial: Iceland is a very small country. It's the smallest in the world to have its own currency. And it had borrowed huge amounts of foreign currency.<br /> <br />Normally that wasn't a problem. Icelandic banks could always change their domestic currency, the krona, for dollars or euros on the world market. But now the world was worried. And no one wanted krona.<br /> <br />In a bigger country, banks might get some foreign currency from their own central bank. But Iceland's central bank also ran out of dollars and euros. <br /> <br />"The central bank used all it had in a desperate attempt to save one of the banks," the economist <a href="http://notendur.hi.is/gylfimag/eng.html" target="_blank">Gylfi Magnússon</a> says. "But that only kept the bank afloat for another couple of days."</p><p>Even if you had gone around Iceland and collected every euro on the island, there wouldn't have been anywhere near enough money to pay off the debt. <br /> <br />So Iceland, unlike other countries, couldn't bail out its banks. Jónsson remembers the day his bank collapsed in October of 2008:</p><p><blockquote></p><p>And the funny thing is, during the panic it was so crazy. All the phones were ringing at the same time. But after the bank went down, all was silent. ... We were basically completely cut off from the outside world.</p><p></blockquote></p><p>Eventually, the International Monetary Fund had to step in and lend Iceland a ton of foreign currency. In 2012 Iceland will have to start paying that foreign currency back. Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1305011255?&gn=The+Island+That+Ran+Out+Of+Money&ev=event2&ch=93559255&h1=Currency,Finance,Planet+Money,Europe,Economy,Business,World,Home+Page+Top+Stories,News&c3=D%3Dgn&v3=D%3Dgn&c4=136149022&c7=1004&v7=D%3Dc7&c18=1004&v18=D%3Dc18&c19=20110510&v19=D%3Dc19&c20=1&v20=D%3Dc20&c21=3&v21=D%3Dc2&c31=127429648,127413671,93559255&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Mon, 09 May 2011 23:01:00 -0500 http://www.wbez.org/story/2011-05-09/island-ran-out-money-86298 Good Morning, Reykjavik! http://www.wbez.org/story/debt/2011-04-07/good-morning-reykjavik-84909 <p><p>Icelanders go to the polls this weekend to decide whether to pay the debts of a failed bank. Planet Money's David Kestenbaum is in Reykjavik, and he spoke with Renee Montagne.</p><p><strong>For more</strong>: Read our post, "<a href="http://www.npr.org/blogs/money/2011/03/28/134424502/should-i-pay-for-bankers-mistakes" target="_blank">Should I Pay For Bankers' Mistakes?</a>" Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1302266236?&gn=Good+Morning%2C+Reykjavik%21&ev=event2&ch=93559255&h1=Government,Finance,Debt,Planet+Money,Economy,World&c3=D%3Dgn&v3=D%3Dgn&c4=135217267&c7=1017&v7=D%3Dc7&c18=1017&v18=D%3Dc18&c19=20110407&v19=D%3Dc19&c20=1&v20=D%3Dc20&c21=3&v21=D%3Dc2&c31=127414454,127413671,127413573,93559255&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Thu, 07 Apr 2011 16:04:00 -0500 http://www.wbez.org/story/debt/2011-04-07/good-morning-reykjavik-84909 Should I Pay For Bankers' Mistakes? http://www.wbez.org/story/business/2011-03-24/should-i-pay-bankers-mistakes-84197 <img typeof="foaf:Image" src="http://llnw.wbez.org/icesave.jpg" alt="" /><p><p><em>This post was written by Planet Money intern Baldur Hedinsson.</em></p><p>I'm facing an economic dilemma, and I want your advice.</p><p>I'm from Iceland. On April 9th, my country is holding a <a href="http://www.reuters.com/article/2011/02/25/us-iceland-idUSTRE71O6HW20110225" target="_self">referendum</a> to decide whether to pay back the $5 billion one of our bankrupt banks owes to people in the Netherlands and the U.K.</p><p>How should I vote?</p><p><em>(This is not a rhetorical question! Cast your online vote at the bottom of this post.)</em></p><p>Here's the background.</p><p></p><p>During the boom, lots of Europeans opened online savings accounts with a big Icelandic bank called Landsbanki. When things fell apart in 2008, Landsbanki went bankrupt.</p><p>Officials in the Netherlands and the U.K. decided to reimburse their citizens who saw their Landsbanki savings accounts wiped out. In all, the governments paid back about $5 billion in deposits.</p><p>Now the U.K. and the Netherlands want their money back.</p><p>Some of the money will come from Landsbanki, which is in the process of selling off its assets. But that's unlikely to cover the total — a report by an independent consultant estimated that the banks are likely to come up anywhere from $200 million to $2 billion short. (Our Icelandic-speaking readers can read the the full report <a href="http://www.gamma.is/media/skjol/GAMMA-umsogn-Icesave.pdf" target="_blank">here</a>.)</p><p>The governments of Iceland, the Netherlands and the U.K. worked out a deal for the Icelandic government to repay whatever Landsbanki's assets don't cover. And last month, Iceland's legislature passed a bill to go ahead with it.</p><p>But, in a dramatic move, the Icelandic president refused to sign the bill into law. So now, under Icelandic law, it's up to the voters to decide.</p><p>Here are my choices as a voter:</p><p><strong>YES</strong>: I agree that the government should pick up a tab — brought on by a private bank — that could add up to $2 billion.</p><p>That's over $6,000 for each of Iceland's 320,000 inhabitants.</p><p>Ouch.</p><p><strong>NO</strong>: I refuse to pay.</p><p>In that case, Iceland's public debt would be <a href="http://news.yahoo.com/s/afp/20110223/bs_afp/icelandnetherlandsbritainbankingratingpolitics_20110223185309" target="_self">downgraded to junk status</a> by the big rating agencies. That would make it more expensive for the government to borrow money and likely slow down economic growth.</p><p>A no vote could also derail Iceland's application to join the European Union.</p><p>Ouch.</p><p>My vote gets shipped off to Iceland in the first week of April. We'll keep this online vote open for a week, until Thursday, March 31st. Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1300987339?&gn=Should+I+Pay+For+Bankers%27+Mistakes%3F&ev=event2&ch=93559255&h1=Government,Finance,Planet+Money,Europe,Business,World,Home+Page+Top+Stories&c3=D%3Dgn&v3=D%3Dgn&c4=134424502&c7=1006&v7=D%3Dc7&c18=1006&v18=D%3Dc18&c19=20110324&v19=D%3Dc19&c20=1&v20=D%3Dc20&c31=127414454,127413671,93559255&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Thu, 24 Mar 2011 10:51:00 -0500 http://www.wbez.org/story/business/2011-03-24/should-i-pay-bankers-mistakes-84197 Japan Moves To Prevent Financial Panic http://www.wbez.org/story/asia/2011-03-14/japan-moves-prevent-financial-panic-83686 <p><p>Japan's <a href="http://www.boj.or.jp/en/" target="_blank">central bank</a> dumped a massive amount of money into the country's economy today in an effort to prevent a financial panic.</p><p>The bank's message, according to <a href="http://www.iie.com/staff/author_bio.cfm?author_id=26" target="_blank">Marcus Noland</a>, an economist at the Peterson Institute for International Economics:</p><p><blockquote></p><p>We're going to backstop this thing. If you want to sell, fine. But the market will not fail.</p><p></blockquote></p><p></p><p>The message, apparently, got through. Though Japan's <a href="http://finance.yahoo.com/q?s=^N225" target="_blank">Nikkei stock index </a>fell sharply when the market opened, it remained stable through the rest of the day. And the basic financial systems that people and businesses use every day continued to function.</p><p>Specifically, the Bank of Japan poured 15 trillion yen — about $183 billion — into the economy, largely by making very short term loans to banks and corporations. (In finance jargon, this is what it means to "inject liquidity" into the market.)</p><p>It was a massive move, and one that filled a classic role for a central bank: Buyer of last resort in times of panic. Noland told me that the bank's announcement alone may have gone a long way toward settling the financial system:</p><p><blockquote></p><p>They simply announce, "We've got 15 trillion yen in our wallet, and we're going to spend it." ... Everybody calms down. The idea is, the market will begin to reflect the underlying reality of the Japanese economy post-earthquake, not some kind of pure panic, speculative seizure.</p><p></blockquote></p><p>Besides pouring all that money into the short-term market, the bank also promised to buy an additional $61 billion in stocks, real estate, and government and corporate bonds between now and June of 2012. (The stocks are in the form of index <a href="http://www.investopedia.com/terms/e/etf.asp" target="_blank">ETFs</a>; the real estate is through <a href="http://www.investopedia.com/terms/r/reit.asp" target="_blank">REITs</a>.)</p><p>This doubled the size of an existing program that was set to wind down this year. Japan's central bank has bought a wide range of assets, since the '90s, in a long effort to prop up the economy.</p><p>Before the earthquake, "there were expectations built up in the market that the Bank of Japan would start moving out of that policy," Noland said. "What [today's announcement] did was say, 'Not for a while.'" Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1300132335?&gn=Japan+Moves+To+Prevent+Financial+Panic&ev=event2&ch=93559255&h1=Japan+In+Crisis,Currency,Finance,Planet+Money,Asia,Economy,Business,World&c3=D%3Dgn&v3=D%3Dgn&c4=134531141&c7=1017&v7=D%3Dc7&c18=1017&v18=D%3Dc18&c19=20110314&v19=D%3Dc19&c20=1&v20=D%3Dc20&c31=134454848,127429648,127413671,93559255,134454848&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Mon, 14 Mar 2011 13:41:00 -0500 http://www.wbez.org/story/asia/2011-03-14/japan-moves-prevent-financial-panic-83686 The Bank Regulators' Book Club http://www.wbez.org/story/around-nation/2011-02-03/bank-regulators-book-club-81746 <img typeof="foaf:Image" src="http://llnw.wbez.org/doddfrank_0.jpg" alt="" /><p><p>Three women walk into a large carpeted office with their sweaters, coffee and reading glasses. Each woman is carrying under her arm a copy of The Book: The Dodd-Frank Wall Street Reform and Consumer Protection Act.</p><p>They spread themselves out at the table, offer me coffee, laugh generously at my bad jokes. It feels like we're all sitting down for the weekly Bank Regulators' Book Club. The members of the club — Roberta McInerney, Kymberly Copa and Ruth Amberg — are senior regulators at the FDIC, and their job is to make The Book come to life.</p><p></p><p>The Book — the big finance-overhaul bill Congress passed last year — calls for lots of changes in the financial system. But it only provides a general outline. All the key details have to be hammered out by people like Roberta, Kimberly and Ruth.</p><p>The FDIC is responsible for writing 44 new banking rules. As Roberta shows me her multi-colored tabs referring to key sections, Kymberly Copa nods and holds up an incredibly tattered copy of The Book.</p><p>"My book is very worn," she says. "It basically falls open where you need it to."</p><p>There are gatherings like this being held at bank regulatory agencies across Washington, D.C.</p><p>The Book says banks need to become safer by holding more capital. How much more? That's up the regulators. The Book says derivatives should be regulated. Which derivatives? And regulated how, exactly?<br /> <br />The FDIC is supposed to figure out how to make it so banks aren't too big to fail. Congress wants the FDIC to be able to take over and run enormous troubled banks, as they do with smaller banks.</p><p>This gives rise to today's book club conversation: If the FDIC does have to do this, where will the money come from to wind down one of these giants?</p><p>Roberta flips to section 206 for discussion, and says:</p><p><blockquote></p><p>The FDIC, after 30 days, we can borrow an amount that's equal to 90% of the fair value of the total consolidated assets of each company that are available for repayment.</p><p></blockquote></p><p>She stops here for emphasis, with raised eyebrows to indicate, well, obviously here is where the interesting part is:</p><p><blockquote></p><p>...this is maybe boring for people, but as a lawyer, well what does the term fair value mean? The term fair value is not defined.</p><p></blockquote></p><p>Discussion ensues. Does fair value mean market value? What was the intended meaning of the word "appropriate" in the next section? It's around this point that the Book Club starts to feel more like a Talmud study session.</p><p>Details, yes. But you could argue that this is the part of the bank reform process that really matters. At least that's what the bank lobbyists seem to think.</p><p>"Those folks, instead of focusing on Congress, because the bill has passed are now focusing on regulators," says another regulator — Commissioner Bart Chilton of the Commodities Futures and Exchange Commission.</p><p>"We are having meetings like crazy," Chilton says. "Folks are in talking with us about what they want. We are far outnumbered."</p><p>The women at the FDIC say they try their best to steer clear of undue influence as they write their 44 rules. They say they try to stick to The Book. Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1296806525?&gn=The+Bank+Regulators%27+Book++Club&ev=event2&ch=93559255&h1=Government,Finance,Planet+Money,Around+the+Nation,Business,U.S.,Home+Page+Top+Stories,News&c3=D%3Dgn&v3=D%3Dgn&c4=133476579&c7=1006&v7=D%3Dc7&c18=1006&v18=D%3Dc18&c19=20110204&v19=D%3Dc19&c20=1&v20=D%3Dc20&c21=3&v21=D%3Dc2&c31=127414454,127413671,94427042,93559255,4516989,127606515,127602855,127602596,103943429,127602855,127602596,103943429&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Thu, 03 Feb 2011 23:01:00 -0600 http://www.wbez.org/story/around-nation/2011-02-03/bank-regulators-book-club-81746 What Caused The Financial Crisis? http://www.wbez.org/story/business/what-caused-financial-crisis <p><p>The big report from the <a href="http://www.fcic.gov/" target="_blank">Financial Crisis Inquiry Commission</a> is due out tomorrow, and the <a href="http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html" target="_blank">NYT got a sneak peak</a>. Bottom line, according to the article:</p><p><blockquote></p><p>The 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street ...</p><p></blockquote></p><p>At least, that's the bottom line according to the six commission members appointed by Democrats.</p><p></p><p>Two separate, dissenting reports are coming from the four members of the commission appointed by Republicans, the NYT says. One report will focus on a "narrower set of causes," the other on "policies to promote home ownership."</p><p>This dissension has been clear for while now; back in December, the Republican-appointed commission members released their own "<a href="http://keithhennessey.com/wp-content/uploads/2010/12/Financial-Crisis-Primer.pdf" target="_blank">primer</a>" on the financial crisis. There was even partisan debate over <a href="http://www.bloomberg.com/news/2010-12-15/crisis-panel-s-split-on-blaming-wall-street-may-limit-impact-of-findings.html" target="_blank">banning certain words</a> — "Wall Street," "deregulation" and "shadow banking" — from the final report.</p><p>The FCIC was supposed to deliver a single, definitive story along the lines of the widely praised <a href="http://www.gpoaccess.gov/911/index.html" target="_blank">9/11 Commission Report</a>. But the partisan split means the nation won't get anything of the sort.</p><p>We'll have more on the FCIC's dueling narratives later this week.</p><p><strong>In other FCIC news</strong>:</p><p>The FCIC concluded that "several financial industry figures appear to have broken the law," the <a href="http://www.huffingtonpost.com/2011/01/24/financial-crisis-commissi_2_n_813415.html" target="_blank">Huffington Post reported</a>. The commission referred "multiple cases to state or federal authorities for potential prosecution." No names have emerged yet. Copyright 2011 National Public Radio. To see more, visit <a href="http://www.npr.org/">http://www.npr.org/</a>.<img src="http://metrics.npr.org/b/ss/nprapidev/5/1296054437?&gn=What+Caused+The+Financial+Crisis%3F&ev=event2&ch=93559255&h1=Government,Finance,Planet+Money,Economy,Politics,Business,U.S.,Home+Page+Top+Stories,News&c3=D%3Dgn&v3=D%3Dgn&c4=133237286&c7=1001&v7=D%3Dc7&c18=1001&v18=D%3Dc18&c19=20110126&v19=D%3Dc19&c20=1&v20=D%3Dc20&c31=127414454,127413671,93559255,133237971,127602331,125944306,103943429,132783213,132769262,132764894,127602855,127602446,103943429,133210745,127602855,127602596,103943429,129828651,133224715,133224713,130357600,129828651,126947705&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></p></p> Wed, 26 Jan 2011 08:53:00 -0600 http://www.wbez.org/story/business/what-caused-financial-crisis