by ilene - September 6th, 2010 3:49 pm
Followup on "After Avandia: Does the FDA Have a Drug Problem?" – Ilene
BY JASON DOUGLAS AND STEN STOVALL, WSJ
LONDON—The British Medical Journal on Monday said GlaxoSmithKline PLC’s diabetes drug Avandia should never have been licensed and should be withdrawn from sale, a claim the company rejected.
An investigation by the journal found the U.K. Commission on Human Medicines in July advised the country’s drugs regulator, the Medicines and Healthcare products Regulatory Agency, or MHRA, to withdraw Avandia from sale because its risks outweigh its benefits.
The probe also found members of a European panel that reviewed the drug prior to its European Union-wide approval in 2000 had concerns about the long-term risks and benefits of Avandia, also known as rosiglitazone. The journal raised concerns about the quality of the data GlaxoSmithKline used to show Avandia didn’t lead to increased heart problems compared with other diabetes drugs.
Avandia was once Glaxo’s second-biggest drug, raking in about $3 billion a year. But its sales have plunged since a U.S. study linked it to heart attacks in 2007, and second-quarter revenue was only £152 million ($235 million) as patients defected to alternatives, such as Takeda Pharmaceutical Co.’s Actos.
by ilene - August 21st, 2010 4:19 pm
Courtesy of Mish
The bell rings once again on "Foreclosure Friday". The toll this week is 8 banks. One of the banks, Shore Bank, has ties to the Obama administration, Goldman Sachs, and other notables.
Eight Banks Shuttered as 2010 Failures Reach 118
Bloomberg reports ShoreBank, Seven Others Shuttered as 2010 Failures Reach 118
ShoreBank Corp., the Chicago lender operating under a Federal Deposit Insurance Corp. cease-and- desist order for 13 months, and seven other banks were shut by regulators as 2010 bank failures climbed to 118.
Regulators also closed four banks in California, two in Florida and one in Virginia. All eight closures cost the FDIC’s deposit-insurance fund $473.5 million, the agency said yesterday. This year’s bank failures will surpass last year’s total of 140, FDIC Chairman Sheila Bair said last month in a Bloomberg Television interview.
Regulators Allow "Unusual Bid" for Shore Bank
The Wall Street Journal reports Regulators Seize ShoreBank; Management Takes Over
Regulators seized ShoreBank Corp. on Friday and agreed to sell assets to a team led by the community lender’s executives and backed by several large U.S. financial firms.
The bank closure, among the 118 failures in the U.S. this year, caps months of uncertainty for a $2.16 billion Chicago bank that had ties to the Obama administration and deep roots on Chicago’s South Side. The new institution will be known as Urban Partnership Bank and led by William Farrow, a former First Chicago Corp. executive who was ShoreBank’s president and chief operating officer at the time of its failure.
The decision to sell to management is a rare move by the Federal Deposit Insurance Corp., which generally bars investors who own more than 10% of the failed bank from bidding on its assets. The FDIC also typically wants to know if bidders have "ever been an officer or director of a failed institution" and "participated in a material way in one or more transactions that caused a substantial loss to any such failed institution," according to an FDIC document.
The structure of the deal "is unusual," said Atlanta banking attorney Chip MacDonald.
The holding company will remain intact, according to a person familiar with the deal. Urban Partnership is backed by a consortium of large U.S. financial institutions, including Bank
by ilene - July 21st, 2010 12:57 am
(Video’s back in working order.)
Courtesy of JESSE’S CAFÉ AMÉRICAIN
Organizations, whether it be a club or a profession or a department, too often over time develop a sort of intellectual inertia, a bureaucratic mindset that tends to perpetuate and validate a certain view of the world amongst its members, particularly if they share other elements in background and world view.
This works to its advantage when they are right, and when the scope of the tasks which they must address are limited to largely operational concerns, without significant risk in the classic sense of the term.
But when the situation becomes different, the environment changes, this organizational mindset not only stifles innovation and adaptation, it can literally reach out and strangle it, well beyond its members, using the entrenched power of its tenure. We see this tendency clearly in organizations that have enjoyed long periods of organizational growth under the leadership of strong personalities, such as the FBI under Hoover, and the Federal Reserve under Greenspan.
We can see this same tendency on a micro level in our daily life on chatboards, in clubs, in our company departments, in civic organizations. It is a tribalistic instinct, that urges the adoption of a consensus view, often influenced and promoted by articulate and single minded individuals, which then musters and focuses the energy and vitality of the group in the execution of its mission.
When it is right, it brings success. But when it goes wrong, when it feeds on itself, becomes defensive and inwardly focused, when perpetuation of the group view overtakes all other considerations, when tribal loyalty and sameness is valued over results, it leads to a cult like behaviour, inbred thinking, that may be inimical to the best intentions of the group, and the sort of behavioural anomalies which we have seen in the tragedies of Watergate, the latter stage Hoover FBI, and even Jonestown.
Economics is in the grips of such a period in its development. One of the primary causes of this problem has been the rise of a few well funded think tanks, universities, and of course the Federal Reserve, that have become powerful influencers, and guardians, dogmatisers of the status quo. The petty sniping among the schools notwithstanding, the current debate of stimulus versus austerity serves to show how anemic, how self…
by ilene - June 22nd, 2010 2:46 pm
Courtesy of Tyler Durden
Watch the highly conflicted trading industry representatives, and the highly corrupt regulators try to convince each other that the May 6th events were totally unique, will never happen again, why there is no need to change anything, and why the joke of that is single stock circuit breakers (another reactive not proactive "solution") is all that is needed to return investor confidence. We wish them all the best as they continue to buy and sell stocks from each other, now that everyone else is out of the market permanently. Readers can watch the "Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues Meeting" here. (click here if stream does not show up).
by ilene - June 11th, 2010 11:48 am
Courtesy of TraderMark
Love or hate his politics, there is no doubt George Soros is one of the brightest investment minds of the past few generations. Hence when you have Soros on one side saying we have only begun the 2nd stage of the financial crisis, and on the other hand you have "Unicorns and Butterflies" Bernanke telling us all is well (kumbaya!) [and coming off one of the worst economic forecasting records the past half decade you could put together], you can guess which side one might be better off listening to.
“The collapse of the financial system as we know it is real, and the crisis is far from over,” Mr. Soros said at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
NYTimes DealBook has a full transcript of the speech Soros gave at the Institute of International Finance in Vienna here. Remember, you can choose to accept the red pill or the blue pill; if you choose the blue pill Ben Bernanke has solved all your ills… if you choose the red, please read on for some excerpts.
- Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.
by ilene - April 23rd, 2010 6:06 pm
SEC staff watched porn as economy crashed; Senate panel: Ratings agencies rolled over for Wall Street; SEC Ignored Stanford Ponzi Scheme For 12 Years
Courtesy of Mish
What was the SEC doing when Bernie Madoff was stealing billions and the economy crashed? Here are a few reports.
SEC staffers watched porn as economy crashed
CNN is reporting SEC staffers watched porn as economy crashed
"During the past five years, the SEC OIG (Office of Inspector General) substantiated that 33 SEC employees and or contractors violated Commission rules and policies, as well as the government-wide Standards of Ethical Conduct, by viewing pornographic, sexually explicit or sexually suggestive images using government computer resources and official time," said a summary of the investigation by the inspector general’s office.
More than half of the workers made between $99,000 and $223,000. All the cases took place over the past five years.
A regional office staff accountant tried to access pornographic websites nearly 1,800 times, using her SEC laptop during a two-week period. She also had about 600 pornographic images saved on her laptop hard drive.
Separately, a senior attorney at SEC headquarters admitted to downloading pornography up to eight hours a day, according to the investigation.
"In fact, this attorney downloaded so much pornography to his government computer that he exhausted the available space on the computer hard drive and downloaded pornography to CDs or DVDs that he accumulated in boxes in his office," the inspector general’s report said.
SEC Knew About and Ignored Stanford Ponzi Scheme
Please consider IG report: SEC knew of Stanford scheme since 1997.
The Securities and Exchange Commission knew since 1997 that R. Allen Stanford likely was operating a Ponzi scheme but waited 12 years to bring fraud charges against the billionaire, the agency inspector general said Friday.
An SEC enforcement official who helped quash investigations of Stanford’s business later legally represented him, according to a new report by the agency watchdog.
The SEC didn’t bring charges against Stanford until February 2009, when it alleged a $7 billion fraud. SEC Inspector General David Kotz said in the report that "institutional influence" in the enforcement division was a factor in the agency’s repeated decisions not to conduct a full investigation.
The IG’s office did find evidence, however, that "institutional influence" within the enforcement division contributed to the repeated decisions not to conduct a thorough investigation of
by ilene - April 21st, 2010 12:32 pm
Important (i.e. share it) article by Mish on William Black’s account of how Tim Geithner and the NY Fed covered up Lehman’s inflated asset values and lack of liquidity, long before the financial meltdown in 2008. – Ilene
Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman’s Bad Assets, by Senior Regulator During the S&L Crisis
Courtesy of Mish
Inquiring minds are digging into a 27 page statement made by William Black before the Financial Services committee. Black is an Associate Professor of Economics and Law, at the University of Missouri.
Professor Black’s statements regarding the collapse of Lehman and the role the Fed played in that collapse are refreshingly candid.
Please consider "Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner". Emphasis, highlighting, and subtitles are mine.
I begin with a short description of my background that is relevant to your questions. My primary appointment is in economics. I have a joint appointment in law. I am a white-collar criminologist. My research specialization is financial fraud by elites and financial regulation. I was a senior regulator during the S&L debacle (and had the honor of testifying many times before this Committee).
Valukas Report Documents Three Major Deficiencies In Lehman Governance
The [Valukas] Report documents at least three major deficiencies in Lehman’s corporate governance that need to be addressed globally. First, it points out that Lehman, and many other Delaware corporations, have eliminated the fiduciary duty of “care.”
… Alan Greenspan has admitted that he had a similar view and that events have falsified this naïve account. It is insane to withdraw accountability for negligence. Doing so encourages negligence. Congress should mandate that corporate officers and directors be subject to the fiduciary duties of care and loyalty. They will still, of course, have the very substantial protection of the business judgment rule.
Second, the same individual should not serve as the CEO and Chair of the Board of Directors of a large corporation. The imperial CEO is a consistent problem in this and prior crises.
Third, Lehman ignored its stated risk “limits” and simply increased its limits retroactively to accommodate its violations of its risk limits. In plain English, that means it had no meaningful limits. ….
I have a different view than Mr. Valukas about the overall state of Lehman’s
by ilene - April 13th, 2010 4:48 pm
Another excellent article by George Washington on regulatory capture and willful blindness displayed by the Fed on an ongoing basis. - Ilene
Courtesy of George Washington
Ben Bernanke, William Dudley and Donald L Kohn are on the Fed’s Open Market Committee (FOMC).
They are also on the board of directors of the Bank for International Settlements (BIS) – often called the "central banks’ central bank". And Kohn is an alternate director for BIS.
Alan Greenspan, of course, was a BIS director for many years.
So there is clearly quite a bit of overlap between the two groups.
In addition, BIS’ chief economist – William White – and others within BIS – repeatedly warned the Federal Reserve and other central banks that they were setting the world economy up for a fall by blowing bubbles and then using "using gimmicks and palliatives" which "will only make things worse".
As Spiegel wrote last July:
White and his team of experts observed the real estate bubble developing in the United States. They criticized the increasingly impenetrable securitization business, vehemently pointed out the perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their view, the reason for the lack of restraint in the financial markets was that there was simply too much cheap money available on the market…
As far back as 2003, White implored central bankers to rethink their strategies, noting that instability in the financial markets had triggered inflation, the "villain" in the global economy…
In the restrained world of central bankers, it would have been difficult for White to express himself more clearly…
It was probably the biggest failure of the world’s central bankers since the founding of the BIS in 1930. They knew everything and did nothing. Their gigantic machinery of analysis kept spitting out new scenarios of doom, but they might as well have been transmitted directly into space…
In their report, the BIS experts derisively described the techniques of rating agencies like Moody’s and Standard & Poor’s as "relatively crude" and noted that "some caution is in
by ilene - February 24th, 2010 12:07 pm
Courtesy of Simon Johnson at Baseline Scenario
Bloomberg reports this morning that Treasury is gently letting the Volcker Rule (limiting proprietary trading for big banks) slip — Secretary Geithner would grant greater discretion to regulators which, in today’s context, most likely means not make the restriction effective.
This step is consistent with the broader assessment of the Volcker Rules that Peter Boone and I have in The New Republic (print and on-line): the underlying principles are sound, but the Rules have not been well-designed, and top people in the administration show little sign of wanting to make them effective. This dimension of financial reform does not appear to be headed anywhere meaningful – and the main issues (bank size, capital, and derivatives) are not yet seriously on the table.
In the recent Senate Banking hearings on the Volcker Rules, John Reed – former head of Citibank – was adamant that the Volcker Rules made sense and could be made to work. His point is that the executives know who is taking risk with the bank’s balance sheet – it’s a well-defined group within any bank with its own (speculative) culture – and this should be discontinued for banks that are in any sense too big to fail.
You really do not want high octane speculators at the heart of this country’s largest banks. Make banking boring, Reed argues with conviction.
by ilene - January 23rd, 2010 8:52 pm
I will never let this go ever. The fact that both insolvent investment banks and foreign banks had the ability and the audacity to "make demands" of the New York Fed when settling up their damaged AIG-written swap agreements still turns the stomach 15 months later.
Gretchen Morgenson and Louise Story have the scoop, emphasis is mine:
Regulators had to contend with major banks that were A.I.G.’s trading partners and were unwilling to accept a discount from the government when closing out the contracts the banks had struck with the insurance giant.
Ultimately, the government decided to make the banks whole on the contracts, a decision that the documents say was approved by Timothy F. Geithner, the Treasury secretary who, at the time, was president of the Federal Reserve Bank of New York.
The Fed’s decision to pay A.I.G.’s trading partners in full on tens of billions of dollars in contracts has been controversial because many analysts say they believe the government could have negotiated a price for a fraction of that amount, reducing taxpayer funds used in the rescue. Similar contracts were being settled at heavy discounts in other deals where the government was not involved.
The above is from a New York Times article up today about the hundreds of thousands of documents that were turned over to the House Committee on Oversight and Government Reform in preparation for next week’s bludgeoning.
If I were Tim Geithner, I would resign ahead of time. He either knowingly made these counterparties whole with an eye toward future employment at Goldman or he just plain got taken advantage of in the heat of the moment. Either way, its completely unacceptable.