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Veteran Wall Street enforcers are landing new roles in virtual currencies

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Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#81

Post by bduerst »

JumpCrisscross wrote: post #76
bduerst wrote: post #48

Earlier quoted context omitted.

Rather than link dump his blog (which I read) can you quote the specific sections? His weekly opinion posts cover a large variety of non-related topics and nobody knows which one you're referencing. There also isn't anything there about the subprime auto loans, which even the esteemed Matt Levine acknowledges are an issue: https://www.bloomberg.com/view/articles/2017-04-19/fraud-sat... > Here's a story about subprime…

> the lack of any major financial reform has left commercial banks open to continue making risky investments >>> Here's a story about subprime car loans Are the subprime auto loans being issued by commercial banks?

They are both separate examples of the problems persisting. 2008 financial crises was more than just the Glass Steagall reform. Read my comment above.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#82

Post by CryptoPunk »

nosuchthing wrote: post #17
CryptoPunk wrote: post #9

This is what fuels the revolving door. Regulations create a class of workers with previous experience in the regulatory and political system, that fetch an access premium. Another example of this is members of Congress who become lobbyists seeing an average increase of 1,500% in their salary upon the career change.

Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past. Mandate penalties if insiders are abusing their responsibilities and hold people accountable.

>>Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past.

There's a difference between lawlessness and not having regulations that limit the range of contracts people are allowed to enter into. I'm not suggesting we should get rid of laws prohibiting violence, fraud, etc. I'm suggesting we should never violate the freedom to contract.

>>Mandate penalties if insiders are abusing their responsibilities and hold people accountable.

Yes we need to create a new regulatory agency that enforces these mandates. But then those who have worked in that agency will fetch a high price in the private sector.

There is rampant exploitation of insider knowledge in Wall Street:

https://www.economist.com/news/finance-and-economics/2173656...

>>The paper examines conduct at 497 financial institutions between 2005 and 2011, paying particular attention to individuals who had previously worked in the federal government, in institutions including the Federal Reserve. In the two years prior to the TARP, these people’s trading gave no evidence of unusual insight. But in the nine months after the TARP was announced, they achieved particularly good results. The paper concludes that “politically connected insiders had a significant information advantage during the crisis and traded to exploit this advantage.”

There is no practical way to police this. The only solution is to avoid measures that centralize control of the economy, chief among them government intervention in the market place.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#83

Post by rayiner »

CryptoPunk wrote: post #80
rayiner wrote: post #18

Earlier quoted context omitted.

Consider a different example: someone participates in adding threading to the C++ standard. They then get hired at a development tools company to help implement the standard. Anything unseemly there? Your characterization rests on the premise that the regulations are a priori negative. If you start from the premise that the regulations are good things, then there isn’t necessarily anything wrong or inconsistent about…

>>Consider a different example: someone participates in adding threading to the C++ standard. They then get hired at a development tools company to help implement the standard. Anything unseemly there? Code is objective and apolitical. Regulatory enforcement is a people business, and having the right people on your team can affect how regulatory agencies treat you, irrespective of your actual conduct vis-à-vis the re…

> Code is objective and apolitical.

Hardly. Code can be intensely political (competing standards championed by competing companies, etc.).

> An open standard can also be studied by anyone. The secret rules and customs of regulatory agencies are only privy to those who worked in the agencies.

Regulatory agencies are for the most part incredibly transparent organizations. Nobody has any insight into what happens when a Google executive talks to an Apple executive about a web standard. But when an industry executive meets with a federal agency commissioner to discuss a new rule, a detailed notice and summary of the ex parte contact will be published. Agencies conduct their business in intensely public notice-and-comment procedures.

> I suspect that is not the main reason industry players support regulations. I think it's far more likely that their support is motivated by a desire to create regulatory moats to competition.

And your speculation is based on?

> This supports the 'lobbying for regulations as an anticompetitive measure' thesis.

A lot of regulation is bad. E.g. zoning regulations. But for the most part they're bad because regulators and constituents have bad ideas, not because there are shadowy cabals at work.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#84

Post by CryptoPunk »

rayiner wrote: post #83
CryptoPunk wrote: post #80

Earlier quoted context omitted.

>>Consider a different example: someone participates in adding threading to the C++ standard. They then get hired at a development tools company to help implement the standard. Anything unseemly there? Code is objective and apolitical. Regulatory enforcement is a people business, and having the right people on your team can affect how regulatory agencies treat you, irrespective of your actual conduct vis-à-vis the re…

> Code is objective and apolitical. Hardly. Code can be intensely political (competing standards championed by competing companies, etc.). > An open standard can also be studied by anyone. The secret rules and customs of regulatory agencies are only privy to those who worked in the agencies. Regulatory agencies are for the most part incredibly transparent organizations. Nobody has any insight into what happens when a…

>>Hardly. Code can be intensely political (competing standards championed by competing companies, etc.).

The decision to make a particular segment of code the standard can be political, but the effective utilization of that code within a project once it has become the standard, has no political element to it.

>>Regulatory agencies are for the most part incredibly transparent organizations.

That is not the impression I get from the many complaints I've seen from those trying to navigate the regulatory framework. Of course I haven't done a comprehensive/rigorous study of this topic so my impression may not be an accurate representation of reality.

I also find it hard to believe that a legalistic (as opposed to programmatic) domain like regulatory enforcement does not have a significant human element that cannot be fully articulated in formal notices and procedures.

>>And your speculation is based on?

On the fact that there is a very large rent-seeking opportunity in enacting regulatory barriers to entry, as demonstrated by the impact regulations have on income inequality (which is a consequence of economic rent accruing to those at the top of the industry ladder).

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#85

Post by yellowstuff »

bduerst wrote: post #48
yellowstuff wrote: post #40

Earlier quoted context omitted.

I don't have a ton of first hand knowledge on the risk appetite of banks or the effect of banking regulation. But I assert that Matt Levine is very knowledgeable about these things and he disagrees with you. His points are that multiple 10 figure fines, higher capital requirements, and a general culture shift have actually made banks less profitable and less risky, as was intended. EG: https://www.bloomberg.com/view/…

Rather than link dump his blog (which I read) can you quote the specific sections? His weekly opinion posts cover a large variety of non-related topics and nobody knows which one you're referencing. There also isn't anything there about the subprime auto loans, which even the esteemed Matt Levine acknowledges are an issue: https://www.bloomberg.com/view/articles/2017-04-19/fraud-sat... > Here's a story about subprime…

As I said I don't have a ton of first hand knowledge. The subprime auto loan story sounds bad, but I'm not in a great position to assess how bad it is, and the bank analysts I know don't seem that worked up about it. It could both be true that banks are systematically making bad subprime auto loans that will end poorly, and that banks are better capitalized, safer and more boring overall than they were pre-crisis.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#86

Post by rrcaptain »

Ntrails wrote: post #71
rrcaptain wrote: post #67

Earlier quoted context omitted.

Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housing market crash. Consider how many people got foreclosed upon improperly. The loss of quality of life (and actual life) due to Wall Street greed is unmeasurable, but surely more than 10 figures.

I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are to…

It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing.

There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them to foreclose on the bank.

In addition, many of the mortgages that were issued should never have been done so. They deliberately and knowingly issued mortgages that they knew were far more risky than they actually were.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#87

Post by rrcaptain »

yellowstuff wrote: post #79
rrcaptain wrote: post #67

Earlier quoted context omitted.

Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housing market crash. Consider how many people got foreclosed upon improperly. The loss of quality of life (and actual life) due to Wall Street greed is unmeasurable, but surely more than 10 figures.

This is definitely the conventional wisdom I see here and on Reddit, but I disagree. Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before. And I disagree with throwing people in prison for losing money and hurting the economy. I want people to go to prison because they have committed crimes. The government could certainly have been more aggressive about charging…

>Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before.

Banking has "changed" many times before. But these incidents keep happening. The dot-com bubble, the Great Depression, and currently the student loan crisis, municipal debt crisis and subprime auto loans.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#88

Post by Ntrails »

rrcaptain wrote: post #86
Ntrails wrote: post #71

Earlier quoted context omitted.

I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are to…

It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing. There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them…

105% mortgages were given out on homes that hadn't finished being built with no money down. The lending was idiotic - but so was the borrowing. There's a distinct implication that banks are entirely responsible for managing credit risk from repayment risk. That's explicitly false _and the whole point of backing the loan with assets_. Take away the right to foreclose and the banks will simply stop lending to basically everyone except those who can trivially afford the repayments.

I'd be surprised if the rate of genuinely illegal foreclosures was > 5%, maybe I'm wrong on that. In essence though I can't help but wonder when people will take responsibility for what they borrowed.

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#89

Post by victor22 »

bmelton wrote: post #46
DINKDINK wrote: post #12

>The drumbeat of hires crescendoed in November when Ripple, [...] added Ben Lawsky to its board. He earned a tough reputation as New York’s top financial watchdog by pushing banks to scrutinize client transactions for illicit dealings. >[...]Lawsky’s jump to Ripple was particularly notable because he helped pioneer regulation of cryptocurrencies. He introduced the BitLicense, a requirement for digital currency compan…

Agreed. There's a movie called "Banking on Bitcoin" currently on Netflix that I recently watched, and while it's got plenty of libertarian rhetoric, it showcases well the transition of "Bitcoin's going to fund terrorism" to "Hey, y'know those regulations I wrote to prevent Bitcoin terrorism? I'm the only one that knows them, so hire me for cryptocurrency regulatory guidance".

Can you believe Ripple actually hired Benjamin Lawsky? https://ripple.com/insights/ripple-welcomes-new-board-member...

Re: Veteran Wall Street enforcers are landing new roles in virtual currencies

#90

Post by DeeperSea »

Centralized solutions are currently much faster, but they may not be in the future. Also, other coins (that offer spare computing power) or commercial enterprises could act as a power nodes (sub-centralized solutions) in a decentralized network, to speed it up for a fee when needed. Decentralized peer2peer content delivery is currently owned by centralized players, like Akamai. I see no reason why it could not work when it is owned by its users. https://cryptonewstrends.com/

Because the software has to operate in a trustless environment, a lot of attention has to be spend in making these systems more secure. Security through obfuscation is not a fall-back anymore. If we had known that LastFM stored password hashes as unsalted MD5, would we have trusted it with our accounts? We will have fuzzing tools and static program analysis to help automate checking the security of a contract.

Forks can be dealt with in a decentralized manner: voting power being assigned by a provable amount of tokens you own. You can run an entire election in this manner, cryptographically voiding any "vote rigging" argument.

You may have so much freedom as to shoot yourself in the foot. Therefore, Cryptocurrency banks may provide support for payment solutions, insurance, lending, for people who don't want to store all their money under their flammable mattress.

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