Congratulations to Hovnanian, Blackstone: Judge Rules Fancy CDS Trade Allowed

A federal judge denied a hedge fund’s request to stall a debt exchange closing tonight, saying they had provided insufficient evidence of irreparable harm to them or the market. U.S. District Court Judge Laura Taylor Swain denied the preliminary injunction request by Solus Alternative Asset Management in its quest against hedge fund GSO Capital Partners and homebuilder […]

Ending Too Big to Fail

Yves here. Remember the explosion of press coverage last year when incoming Minneapolis Fed member and former Goldmanite and Treasury official Neel Kashkari announced his intent to develop a plan to end the “too big to fail” problem. He not only was going to devote Minneapolis Fed researchers to his program, but solicited broad based […]

To Find the Cause of the Crisis, Answer These Questions!

Sometimes, when you lose a debate, you have to just let it go. That seems to be a problem for those who are unwilling to accept the complex realities of what actually caused the financial crisis. I have been saying for a long time that many elements contributed to the global financial meltdown. From ultralow… Read More The post To Find the Cause of the Crisis, Answer These Questions! appeared first on The Big Picture.

A Stylized History of Quantitative Finance

A Stylized History of Quantitative Finance Emanuel Derman       The evolution of a quantitative approach to finance has proceeded through many small but significant steps and occasional large epiphanies. Over the past 70 years financial models have quantified the notion of derivatives, diffusion, risk, diversification, hedging, volatility, replication, and no riskless arbitrage, and… Read More The post A Stylized History of Quantitative Finance appeared first on The Big Picture.

Does Wall Street Do “God’s Work”? Or Even Anything Useful?

Bank executives frequently proclaim that Wall Street is vital to the nation’s economy and performs socially valuable services by raising capital, providing liquidity to investors, and ensuring that securities are priced accurately so that money flows to where it will be most productive. There’s just one problem: the Wall Street mantra isn’t true.

No, the CRA Did Not Cause the Financial Crisis

Two of Donald Trump’s economic advisers, Lawrence Kudlow and Stephen Moore, have revived an idea about the source of the financial crisis that really should have been put to rest long ago. In a column published and rebroadcast by many politically sympathetic sites, they lay the blame for the credit crisis and Great Recession on the Community Reinvestment Act, a 1977 law designed in part to prevent banks from engaging in a racially discriminatory lending practice known as redlining. The reality is, of course, that the CRA wasn’t a factor in the crisis. What’s so wonderful about their article, which is an attempted take down of the Clintons, is that they miss the very obvious ways Bill Clinton’s administration did contribute to the financial crisis. But doing that would have been at odds with their anti-regulatory philosophy. Here’s the heart of the Kudlow and Moore case:
The seeds of
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