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Bankrupt Profits: The Credit Industry's Business Model for Postbankruptcy Lending.

By Katherine M. Porter . Consumer credit and consumer bankruptcy filings have grown rapidly over the last two decades, and several researchers have attempted to understand the relationship between these two intertwined features of the modern American economy. Teasing out causation is almost impossible, as consumer advocates lay blame on the industry and the industry responds by citing the same data to show consumer misbehavior. Using a novel vantage point, this analysis examines what the credit industry's behavior toward recently bankrupt families reveals about its internal profit models and the likely causes of consumer bankruptcy. The empirical evidence on postbankruptcy credit solicitation belies the industry's characterizations of bankrupt families as opportunistic or strategic actors. Original data from longitudinal interviews with consumer debtors show that many lenders target recent bankrupts, sending these families repeated offers for unsecured and secured loans. ---------------------------- The modern credit industry sees bankrupt families as lucrative targets for high-yield lending, a reality that has important implications for developing optimal consumer credit policy and bankruptcy law.

Princes of the Yen: A film on corporate capture in Japan and the postwar use of propaganda and the causes of the 1991 bubble..

Michael Oswald's film “Princes of the Yen: Central Banks and the Transformation of the Economy” 『円の支配者』reveals how Japanese society was transformed and manipulated to suit the ideological agenda and desires of powerful interest groups, and how citizens were kept entirely in the dark about this manufactured crisis which devastated the economy. Based on the book of the same title by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history. This film has huge lessons for Americans today. We must realize that much of what we take for granted has been fabricated, and the real story is quite different than what we're endlessly told in the corporate media. We live in a system that is much less of a democracy than what we think. The Cold war is no longer going on, its time for a fact based society. Governments do not have a god-given right to manipulate economies as they think, in order to effectuuate political hegemony. often with tragic effects on the citizenry. This especially applies to the banking system. Sign up to our newsletter and be the first to hear about upcoming releases​

The Global Financial Crisis And Government Support For Banks : What Role For The GATS?

This paper examines whether the GATS is a useful instrument to tackle government support that creates distortions of international competition in the banking sector. The GATS has no specific provisions on subsidies. However, general support schemes ‘as such’ or ‘as applied’ may violate Article XVII if they exclude foreign- owned banks with a commercial presence in the territory of the WTO Member that adopts the scheme. This depends on the specific commitments of the WTO Member and the limitations to this commitment. Moreover, it is required that the excluded banks are ‘like’ the domestic banks. A single application of a general scheme may violate Article VI:1 if solid evidence is available that this application is not reasonable, objective or impartial. Despite these possible violations, the great majority of measures will still be justified under the broad ‘prudential carve-out’. Only support measures that are not reasonably able to achieve the prudential goal will not be exempted. Hence, the GATS imposes only in very limited cases restraint on government support. The WTO Members should address the remaining uncertainties with regard to both the obligations and the exception. This would ensure that the GATS is able to prevent that government support distorts competition and would also alleviate concerns that the GATS constitutes a danger to financial stability.

Inside the Secretive World of Tax-Avoidance Experts (OffshoreAlert)

(Brooke Harrington) A behind-the-scenes, eye-witness account of the international wealth management profession from a sociologist who has spent the last eight years researching it, during which time she trained to become a wealth manager and visited 18 offshore jurisdictions.

Jane Kelsey: Secret talks bring threat of financial crises

"They also want to make light-handed regulation the global norm. A standstill rule aims to freeze the existing level of regulation as the new bottom line. What Wikileaks posted was the draft chapter on financial services. We can assume it will be very similar to the TPP's financial services chapter. This is especially scary, because it aims to extend the model of liberalised and deregulated financial markets that brought us the global financial crisis. The International Monetary Fund has criticised the US and EU for being in denial over the risks this model poses to themselves and the world. Yet they are pushing a more extreme version in Tisa, and, presumably, in the TPP. The Wikileaks expose caused a flurry across the Tasman. Journalists realised that Tisa could threaten the four pillars policy that prevents mergers and takeovers among the Australian banks, who own most of ours. Limiting competition means less reckless behaviour. Removing those restraints means pressure for even higher returns and temptations to play Russian roulette in the shadow banking system."

Protecting Financial Stability: Lessons from the Coronavirus Pandemic

Jackson, Howell Edmunds and Schwarcz, Steven L., Protecting Financial Stability: Lessons from the Coronavirus Pandemic (June 30, 2020). Duke Law School Public Law & Legal Theory Series No. 2020-39, Harvard Business Law Review, Available at SSRN: or Note: Its stunning how many legal changes have been made in the financial sphere "because of the coronavirus epidemic"

review of: This Time Is Different: Eight Centuries of Financial Folly

"Building on a historical narrative that uses an extensive data set of their construction, Reinhart and Rogoff (hereafter R&R) show that periods of excessive public debt accumulation generally do not end well. Over time, many countries have defaulted on their debt (including restructuring) for a variety of reasons and by a variety of methods (inflating away the real value of the debt has been very popular). These defaults, they show, can produce detrimental spillover effects. Recent defaults by Russia (1998) and Argentina (2001) come to mind, and the possibility of a future restructuring by Greece looms large for its foreign creditors (for example, European banks)—and for European policymakers. One drawback of R&R’s analysis, which they readily admit, is that it focuses almost entirely on debt issued by governments, or sovereigns, rather than by the private sector. In the financial crisis of 2007-09, which they term the “Second Great Contraction,” the accumulation of private debt (chiefly mortgage debt of the dodgy variety) and the collapse in nominal house prices eventually helped trigger a banking and financial crisis of immense proportions and a collapse in economic activity. In response, federal government outlays in the United States and other advanced economies rose enormously, which resulted in huge budget deficits that have significantly boosted debt-to-GDP levels. Since emerging and developing countries tend to rely heavily on foreign creditors such as large multinational banks, sharply higher debt-to-GDP ratios in the context of weakening economic fundamentals can lead to “sudden stops”—that is, credit is withdrawn abruptly, leading to a cascade of defaults. In advanced economies, which have better credit and inflation histories, and thus sharply lower probabilities of default, rising debt-to-GDP ratios tend to weaken economic growth."

Private Firms Working in the Public Interest-Is the Financial Statement Audit Broken? Abigail Bugbee Brown

2007 - "The Big Four accounting firms have become the object of much scrutiny following the string of financial statement fraud scandals at the beginning of this century. The apparent involvement of the large auditing firms in the accounting misdeeds comes as a surprise, since the academic literature on auditor incentives predicts that large, reputable firms will not engage in collusion with their clients. The lace of a consensus economic framework to understand the incentives facing the audit firms that reflects the historical reality has hindered consensus building in the policy response to the scandals. This dissertation develops a principal-auditor-agent model that suggests there may well be socially sub-optimal levels of audit intensity, even among the best audit firms. It explores archival historical evidence to identify examples of how these incentives have shaped the profession and develops a more nuanced reading of the root causes of the recent scandals. This work also identifies the gaps in our understanding of the cost and occurrence of fraud that hinders a proper cost-benefit analysis of policy options designed to improve the quality of information available to the market."

Who’s Fighting The War Against Cash?

Mastercard, Visa, and Bill Gates are all pushing for polices to make it harder to use cash, hoping to keep closer tabs on the population through the trail of electronic transactions. Here Norbert Haring speaks with Real News about the implications to the world and our future of the mostly US's combatants' war on cash, including the so called "Better Than Cash Alliance" including their involvement with India's demonetization.

Department of Consumer and Worker Protection Releases Updated Report: 1.04 Million Households in NYC are Unbanked or Underbanked

NEW YORK, NY – Department of Consumer and Worker Protection (DCWP) today released a research brief illustrating the updated number of unbanked and underbanked households in NYC and where they live. The brief shows that 354,100 households (11.2 percent) have no bank account (unbanked) and another 689,000 households (21.8 percent) have a bank account but use alternative financial products for some banking needs (underbanked). The estimated number of unbanked and underbanked households are disproportionately in neighborhoods that have higher rates of vulnerable residents and residents struggling in other areas of financial health.

The Interaction between European and International Liberalisation of International Trade in Banking Services

by Bart De Meester - This is a doctoral thesis, a quite substantial tome, written like a textbook, on banking and the WTO, its particularly useful it seems because the areas I am interested in have gotten examination in the European context - here in the US where the GATS is not well known to put it mildly, perhaps not so much, at least I have not found much. Plus I cant afford to go out buying books on the subject, as they are expensive, really expensive. Anyway, this looks very informative and its quite understandable as these kinds of books go. I'm sure Mr. De Meester will do very well. Thank you!

“That’s All They’ve Got?” (PCGTW 2010) "What Latest WTO Secretariat Paper on Financial Crisis Does and Does Not Say About GATS Disciplines on Financial Regulation"

March 15, 2010 by Todd Tucker and Public Citizen Global Trade Watch: "On February 3, the WTO issued a document that many in Geneva call the “non-response” to over a year of growing questions from WTO member countries and others about the connection between the rules of the General Agreement on Trade in Services (GATS) on financial services and the global economic crisis. 1 Indeed, this was the Secretariat’s first major study 2 in nearly 12 years about the WTO’s financial service rules. 3 The new paper is a disappointment to anyone hoping for a convincing rebuttal to charges that the WTO’s General Agreement on Trade in Services (GATS) promotes financial services deregulation...

Whistleblowing in a Foreign Key: The Consistency of Ethics Regulation Under Sarbanes-Oxley with the WTO Gats Provisions

By Stewart M. Young - United States Attorney's Office - District of Utah Abstract This Article discusses the consistency of the legal regime established by the Sarbanes-Oxley Act, and the ethical regulations proposed by the SEC, in relation to the legal services portion of the World Trade Organization's (WTO) General Agreement on Trades in Services (GATS). It discusses the GATS and its effect on the legal services market in general. It then examines how the ethics commitments in the United States Schedule of Commitments to GATS are treated. It examines the new ethical responsibility requirements imposed by the Sarbanes-Oxley Act and the subsequent proposals by the SEC. It concludes by demonstrating that the ethical requirements imposed by the Sarbanes-Oxley Act and the SEC are not consistent with the United States' obligations under GATS regarding legal services. This Article also discusses possible approaches to reconciling the proposed rules with GATS and action that might be taken by WTO member countries, including under the dispute resolution provisions of the WTO agreements. The ultimate conclusion of this Article is that the SEC-proposed standards as applied to nondomestic law firms are potentially irreconcilable with GATS, and likely to create friction between the United States and a number of our trading partners. The most important purpose of this Article is to analyze the inconsistency of the Sarbanes-Oxley Act and the proposed SEC rules with GATS. Second, this Article can be read as a case study for the domestic imposition of ethical standards on the trade in services and legal services field in general. Third, this Article will potentially add fuel to the fire for implementing international ethical standards in certain global service industries, including the legal services field in particular. Keywords: Sarbanes-Oxley, SEC, World Trade Organization, WTO, General Agreement on Trade in Services, GATS, ethics regulation

Odious Debt (IMF)

"Similarly, Anastasio Somoza was reported to have looted $100-500 million from Nicaragua by the time he was overthrown in 1979. Sandinista leader Daniel Ortega told the United Nations General Assembly that his government would repudiate Somoza's debt, but reconsidered when his country's allies in Cuba advised him that doing so would unwisely alienate Nicaragua from Western capitalist countries. Some countries have attempted to confiscate and restitute funds that an ex-ruler salted away abroad, but with mixed results. For example, Nigeria recently recouped money from Sani Abacha's family, but the Philippines has little to show for its protracted campaign to repatriate Ferdinand Marcos's fortune. Moreover, any money that has been squandered is gone forever."

Can’t Pay Back, Won’t Pay Back: Iceland’s Loud No

Silla Sigurgeirsdóttir and Robert H Wade – Le Monde Diplomatique The people of Iceland have now twice voted not to repay international debts incurred by banks, and bankers, for which the whole island is being held responsible. With the present turmoil in European capitals, could this be the way forward for other economies? The small island of Iceland has lessons for the world. It held a referendum in April to decide, more or less, whether ordinary people should pay for the folly of the bankers (and by extension, could governments control the corporate sector if they depended on it for finance). Sixty per cent of the population rejected an agreement negotiated between Iceland, the Netherlands and the UK to pay back the British and Dutch governments for the money they spent to recompense savers with the failed bank Icesave. That was less resistance than the first referendum last spring, when 93% voted no.

LOOTING:The Economic Underworld of Bankruptcy for Profit.

NBER Working Paper No. R1869 During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds. Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.

WTO - legal texts - Understanding on Commitments in Financial Services

"As of 2009, the 33 countries whose current schedules reference the Understanding include: Australia, Austria, Bulgaria, Canada, Czech Republic, Finland, Hungary, Iceland, Japan, Liechtenstein, New Zealand, Norway, Slovak Republic, Sweden, Switzerland, and the United States, as well as the European Communities members as of 1994 (Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United Kingdom.) The only developing nations that utilized the Understanding were Aruba, Netherland Antilles, Nigeria, Sri Lanka (for banking not insurance), and Turkey. Additionally, eight countries (Cyprus, Estonia, Latvia, Lithuania, Malta, Poland, Romania, and Slovenia) were in the process of revising their commitments to match the EC schedule" (from the commentary by Jane Kelsey on TISA Financial Services text) -- This document regulates government regulation of financial services like banking and insurance, including health insurance, greatly limiting what we can do. In particular it is thought to freeze new financial services regulations after its signing date, unless they were enumerated then. In the case of the US that date is February 26, 1998. If challenged in a WTO dispute proceeding a country that has violated a "standstill" may have to roll back its regulatory state to the level of regulation in effect on that date. A related concept, "ratchet" is also said to apply in WTO law - it denotes a one way capture of all deregulation in a committed sector making it a violation to re-regulate. See the definitions of "standstill", "rollback" and "ratchet" in trade parlance.

Lori Wallach discusses 'standstill' in this short video on Democracy Now

Note: THIS ALSO APPLIES TO TODAY'S US HEALTH INSURANCE, because it is a financial service, and Please also read the glossary entry for "negative list" because the two are functionallly the same, a freeze on any new regulation. So blocking any new public services and locking in any and all privatization, etc, of existing ones. TISA will do that and its standstill dates will go back to tthe 1990s, so its ceiling will likely leave new regulations like the ACA, out. The status quo for health insurance in 1998 was very bad.