- The FDIC approved the merger of Chemical Financial Corporation and Lake Michigan Financial Corporation
- The New York Federal Reserve published two papers entitled: Intermediaries as Information Aggregators: An Application to U.S. Treasury Auction & Credit Supply and the Housing Boom
- The CFTC charged Florida resident Dorian A. Garcia in association with a Forex Ponzi Scheme
- The Securities and Exchange Commission (SEC) charged BlackRock Advisors, LLC (NYSE: BLK) with failing to disclose a conflict of interest.
- William C. Dudley gave a speech entitled The U.S. Monetary Policy Outlook and its Global Implications.
- The feds funds effective rate is up.
The CFTC charged Florida resident Dorian A. Garcia in association with a Forex Ponzi Scheme. Garcia's companies, DG Wealth Management, Macroquantum Capital LLC, and UKUSA Currency Fund LP are being charged as well. Garcia is accused of steeling $2.5 million from invested funds by customers. The CFTC will seek "restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of federal commodities laws, as charged."
The Securities and Exchange Commission (SEC) charged BlackRock Advisors, LLC (NYSE: BLK) with failing to disclose a conflict of interest. The company has agreed to pay a mere $12 million to settle the charges. Of course this is just a drop in the bucket for the New York based investment management firm. As the world's largest asset manager it manages over $4.6 trillion in assets. The order claims that Daniel J. Rice III was managing accounts at BlackRock when he founded Rice Energy (NYSE: RICE) based in Pittsburgh. Rice invested approximately $50 million in the company and then formed a joint venture with coal producer Alpha Natural Resources Inc. (NYSE:ANR), based in Abingdon, Va. Alpha Natural Resources soon became one of the largest holdings of BlackRock's Energy & Resources Portfolio, which also happens to be Rice's largest managed fund. The conflicts of interest here abound.
In the post Credit Supply and the Housing Boom,
the fundamental factor behind that boom was an increase in the supply of mortgage credit, which was brought about by securitization and shadow banking, along with a surge in capital inflows from abroad....
an expansion in credit supply was the fundamental driver of the surge in household debt and that borrowing against the increased value of real estate accounts for a significant fraction of this build-up in debt.This may not seem like much a revelation, but it's taken 7 years for the Fed to distance themselves in leadership and program enough to be able to scrutinize itself. This paper does a fine job of doing just that, but begs the question: why didn't the Fed figure it all out sooner. An article I wrote a few days ago entitled Is The FOMC Too Reliant On Macro-Economic Principles? looks into this question.
William C. Dudley gave a speech entitled The U.S. Monetary Policy Outlook and its Global Implications. Dudley is President and Chief Executive Officer at the Fed. The speech was given at the Bloomberg Americas Monetary Summit in New York City. Look for an analysis of this speech coming soon from us.
Thursday, April 23, 2015