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Tag Archives: banking

With a Moslem Beat?

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Looking back through history may not seem like a good way to determine our future, but it’s all we have.  We can reasonably guess that if all the trends continue the current Depression will run its course by 2017, give or take a few years or a major meltdown. We can also be pretty sure that this current period of evening out between the developed and developing world will be followed by relatively low growth as working age populations flatten across the planet.

Where this gets tricky is the realization that Western finance, including stocks and bonds and constant price inflation, is not remotely set up for a low-growth world.  Something has to change.  The best recommendation any of us can make is what is working in economies built around sustainability and resilience today as well as strategies that functioned well before the great wave of industrialization.  And that’s where I’m going to start with a few suggestions and predictions as to how finance as we know it could change.

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Dodd-Frank, a Non-Issue

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The first presidential debate went over a lot of topics – taxes, Medicare, budgets – that were very much worth spending a lot of time on.  But one of the things that came up far more than I ever thought possible was the Dodd-Frank Act, aka the Wall Street Reform and Consumer Protection Act of 2010.  Mitt Romney called it “the biggest kiss to New York banks I’ve ever seen.”  He went on at some length about it, too, claiming “We need to get rid of that provision because it’s killing regional and small banks.”

Some of you know far more about this than I do, but this absolutely shocked me.  Dodd-Frank is really a non-issue, a half-step where a bold march forward is called for.  About half the world thinks it went too far and half thinks it didn’t go far enough, meaning it’s a rough compromise.  And, in practice, it doesn’t seem to have really changed very much.

How did this come up as an issue?  Dunno.  But I’m asking all of you to correct me if I have this wrong.

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What, Nothing’s Wrong Here …

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Another day, another bank in trouble.  It might be easy to do little more than roll your eyes at the news that Standard Chartered of the UK is caught in a scandal, except this one is very different for many reasons.  To start with, the allegation is that they were the launderer in chief for the nation of Iran over a period of at least a decade, helping them hide $250B in money transfers around sanctions.  This is also one of the largest banks in the world, with total assets around $600B and operations around the globe.

But where this gets especially interesting is through the still developing role of the firm Deloitte & Touche.  They are one of the “Big Four” auditing firms that has been in the crosshairs of a large number of people convinced that the lack of truly independent assessment is one of the main problems in the teetering financial industry.  This scandal, different as it is, could be the one that coalesces a diverse group of detractors into a movement – even though auditing had very little to do with it directly.

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