Credit Crisis Spurs Calls for New Oversight

Market capitalism can ride out the crisis, writes former Fed boss

(NEWSER) - The credit crisis is far from over, and more banks and financial institutions might require government bailouts along the way, Alan Greenspan acknowledges. The crunch will relax only when home prices, "the ultimate collateral support for much of the financial world’s mortgage-backed securities," begin to stabilize, the ex-Fed chairman writes for the Financial Times. Until then, governments must resist the temptation to respond to the downturn with heavy-handed regulation. More»

Feds now effectively the only lender in town

(NEWSER) - The teetering of Fannie Mae and Freddie Mac has underscored a major shift in US finance, writes Peter S. Goodman in the New York Times—once simply another guarantor, the government has effectively become the only lender in town "for millions of Americans engaged in the largest transactions of their lives." As commercial banks flee the market and credit dries up, Fannie and Freddie are now buying two-thirds of new mortgages. More»

(NEWSER) - The irony is, well, rich. Former executives of Countrywide Financial—the bank whose risky loans to homeowners have become synonymous with the subprime mess—are now making a mint helping the government fix things, the New York Times reports. A dozen former Countrywide executives, including President Stanford L. Kurland, have formed PennyMac, which buys up delinquent mortgages on the cheap and turns tidy profits on them. More»

Loophole lets Madoff types profit from bad advice, they say

(NEWSER) - Wall Street advisers and brokers are tussling over the details of a looming regulatory overhaul as Washington takes steps to prevent another Bernard Madoff scandal, Bloomberg reports. Advisers want brokers who counsel clients to be subject to the same oversight they’re under; currently, their brokerage counterparts can profit by swaying customers to buy their firm’s own financial offerings, even if they’re a bad risk. More»

Some worry Obama won't do enough to rein in derivatives market

(NEWSER) - After the economic meltdown of 2008, the coming year will see a battle over one of the most politically contentious issues in finance: the regulation of derivatives markets. Some who opposed government oversight before now acknowledge the need for tighter controls. But they face an uphill battle, reports Newsweek, against an Obama administration stacked with laissez-faire disciples of Alan Greenspan and Robert Rubin. More»