The annual Jackson Hole Symposium is on this week.  It was here in 2005 that the Chicago economist, Raghuram Rajan presented his paper “Has Financial Development Made the World Riskier?" which was derided by Larry Summers and many others for its criticism of outgoing Fed Chairman, Alan Greenspan. In the paper he speaks of the difference in incentive compensation  between investment managers and bank managers.  He also notes the dramatic shift in the industry that attempted to shift risk off balance sheet, but actually had the opposite effect by shifting assets off balance sheet but retaining the risk.  Fast forward … Continue reading “Has Financial Development Made the World Riskier?” Rajan 2005 Jackson Hole

Scotiabank is acquiring ING Direct in Canada, and further to my earlier post about the culture aspects, they intend to operate as a wholly owned sub. Scotiabank Reaches Agreement to Acquire ING Bank of Canada and Announces Common Share Offering – Preserves ING Bank of Canada’s (ING DIRECT) unique and successful model that offers specific value for self-directed customers as a distinct, wholly-owned subsidiary – Provides continuity for more than 1,100 employees and 1.8 million customers backed by Scotiabank, a strong, stable Canadian shareholder – ING DIRECT customers will have the same experience online, through the award-winning contact centres, and … Continue reading Scotiabank Reaches Agreement to Acquire ING Bank of Canada | Marketwire

I am reading this post about Indian Internet service provider Tata Photon action with incredulity.  They are apparently blocking all WordPress blogs.  http://thenextweb.com/in/2012/08/25/indian-isp-blocks-wordpress/?utm_source=newsletter&utm_medium=email&utm_campaign=daily I will separately contact subscribers, but one way to ensure content from this small blog reaches you is to subscribe via email.  I hope those in charge of this ridiculous decision see the light and rescind asap. If you can add any local colour or up to date information, please add to the comments. Continue reading India ISP is apparently blocking all WordPress blogs which would include Bankwatch

The big news in Canadian Banking is the impending sale of ING Direct in Canada.  The news articles are few and far between reflecting the secrecy that surrounds such events.  Those that are out there focus on the financial value, although this at the Globe and Mail strays into more interesting territory by noting that the ING customers are there for a reason, and part of that is fees, something all the other banks like to charge. However this article at Mark’s Musings blog is refreshingly different and talks about culture and people.  My experience with ING people reflects a … Continue reading Culture as the differentiator and the challenge for the ING Canada sale

This is an important piece at the NYT. When the Network Effect goes into reverse | NYT James Stewart covers Facebook, as well as Yelp, Groupon, LivingSocial and Linkedin.  The title is somewhat provocative and the article notes that the network effect has not yet reversed.  But he makes two main points that are possibly related: Revenue growth is not as rapid as user growth Mobile usage is the most rapid growth, yet traditional advertising on mobile is not clear given the small screen size He also speaks about the FaceBook employee shares coming up for sale in November and … Continue reading FaceBook stock decline is a business model and management issue

This is a short succinct Ted talk by someone who truly understands payments. (HT BankInnovation)  The concept of sending and receiving money is redundant in the context of bits and bytes.  He further makes the point that of all the things that can be sent such as photos or other files, sending money should be the easiest, fastest and most secure.  Money is just a few bytes in a database, he points out, and I want to allocate from me to you. Enjoy. http://youtu.be/XnHkHL9ICSo Continue reading Ben Milne of Dwolla understands the problem with payments

Reading more about the Square/ Starbucks deal, this could be a bit of a payments game changer.  Here is why after the quote. Mobile innovators Square and Starbucks team up | finextra To bolster its commitment, Starbucks is investing $25 million in Square as part of a series d financing round widely tipped to value Dorsey’s firm at $3.25 billion. Starbucks chairman, president and CEO Howard Schultz will join Square’s board. Some reasons this is a game changer: Scale:  the fractured nature of new payments initiatives have been small, local and full of the payments industry preferences of one method … Continue reading Implications of the Square/ Starbucks arrangement for Banks

The real truth about LIBOR as I spoke about earlier is coming out now.  Here is a Yale Professor speaking articulately about the fallacy of LIBOR as a legitimate benchmark rate. Libor: Three Scandals in One | Foreign Affairs  [emphasis mine] The fundamental principle underlying floating rates is to allow the market to determine borrowing costs. Customers who borrow on a floating-rate basis, if they are sensible, and institutions that loan money on a floating-rate basis, if they are ethical, therefore expect two things from a benchmark interest rate. First, the benchmark should reflect actual conditions in the financial markets. … Continue reading More on the selective memory surrounding LIBOR

A telling comment from one of the original architects and promoters of the original financial services holding company that could only exist with the repeal of Glass-Steagall. Former Citigroup CEO Weill Says Banks Should Be Broken Up | Bloomberg “What we should probably do is go and split up investment banking from banking,” Weill, 79, said yesterday in a CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.” He goes on to say “We can have size and scale but it doesn’t have to be connected … Continue reading Weill says Glass-Steagall repeal was a mistake

Nice catch from Finextra on this new initiative from the UK Government to resolve the debacle that dates back to 2009 when the banks decided they would eliminate cheques.  The catch was that they forgot to develop an alternative. I have to admit I noted the original idea here in 2009, but naively assumed they knew what they were doing. What was I thinking?  Continue reading UK Payments Council to be stripped of powers as govt seeks ‘fresh start’ | finextra