How Much Did Banks Pay to Become Too-Big-To-Fail and to Become Systemically
Important?
Julapa Jagtiani & Elijah Brewer
Federal Reserve Bank Working Paper, December 2009
Abstract: This paper estimates the value of the too-big-to-fail (TBTF) subsidy. Using
data from the merger boom of 1991-2004, we find that banking organizations were willing to pay an added premium for mergers that would put them over the asset sizes that are commonly viewed as the thresholds for being TBTF. We estimate at least $14 billion in added premiums for the eight merger deals that brought the organizations to over $100 billion in assets. In addition, we find that both the stock and bond markets reacted positively to these deals. Our estimated TBTF subsidy is large enough to create serious concern, since recent assisted mergers have allowed TBTF organizations to become even bigger and for nonbanks to become part of TBTF banking organizations, thus extending the TBTF subsidy beyond banking.
(Nod to Kevin L)
Wednesday, March 10, 2010
Sweet Strange Stories
What I like about these stories is not that they are so strange (though they are), but rather that they are so sweet.
Since he was reported to be 8 feet, 4 inches tall, everybody looked up to Al Tomaini – especially his wife, Jeanie, who measured 2 feet, 6 inches. She was born with no legs.
The Half Lady and The Giant met and fell in love in 1936 when their separate shows chanced upon each other in the same place. Six months later the couple eloped, believe it or not, in Ripley, N.Y. The Tomainis went on to work with Ringling Bros. and eventually ran their own sideshow.
In 1950, the couple settled in Gibsonton, Fla., where they raised a family and opened the Giant's Camp restaurant and fishing camp. Al also organized the town's first fire department and served as its chief.
The Giant passed away on Aug. 30, 1962. Jeanie continued to operate the Giant's Camp for decades, living there until she died on Aug. 10, 1999, just weeks before her 83rd birthday.
Their adopted daughter, Judy Rock, never thought there was anything unusual about her parents. "Our home life was wonderful," she remembered. "It was what everybody wishes theirs was: no talk of divorce, no big fights, no drinking, no smoking. Just a family."
(Nod to Angry Alex)
Since he was reported to be 8 feet, 4 inches tall, everybody looked up to Al Tomaini – especially his wife, Jeanie, who measured 2 feet, 6 inches. She was born with no legs.
The Half Lady and The Giant met and fell in love in 1936 when their separate shows chanced upon each other in the same place. Six months later the couple eloped, believe it or not, in Ripley, N.Y. The Tomainis went on to work with Ringling Bros. and eventually ran their own sideshow.
In 1950, the couple settled in Gibsonton, Fla., where they raised a family and opened the Giant's Camp restaurant and fishing camp. Al also organized the town's first fire department and served as its chief.
The Giant passed away on Aug. 30, 1962. Jeanie continued to operate the Giant's Camp for decades, living there until she died on Aug. 10, 1999, just weeks before her 83rd birthday.
Their adopted daughter, Judy Rock, never thought there was anything unusual about her parents. "Our home life was wonderful," she remembered. "It was what everybody wishes theirs was: no talk of divorce, no big fights, no drinking, no smoking. Just a family."
(Nod to Angry Alex)
Tuesday, March 09, 2010
Consensus, or Census-Con?
Remarkable. You can't make this stuff up....
A Georgia man accused of killing two people used an innovative legal strategy Monday in an attempt to get his murder charges dismissed. Call it the Census defense.
Floyd Wayne Williams Jr. wants the charges dropped — or at least his trial delayed — until the 2010 Census is done so that a jury more accurately reflecting the county's racial makeup can be chosen. Williams, who is black, is to be tried in the south Atlanta's Clayton County, which has seen a surge in African-American residents since the 2000 Census.
Jury pools in Clayton County, like many other jurisdictions, are drawn from voter registration lists, driver's license data and utility records. The list is then balanced by race and gender from the Census to reflect a cross-section of the population.
(nod to the LMM)
A Georgia man accused of killing two people used an innovative legal strategy Monday in an attempt to get his murder charges dismissed. Call it the Census defense.
Floyd Wayne Williams Jr. wants the charges dropped — or at least his trial delayed — until the 2010 Census is done so that a jury more accurately reflecting the county's racial makeup can be chosen. Williams, who is black, is to be tried in the south Atlanta's Clayton County, which has seen a surge in African-American residents since the 2000 Census.
Jury pools in Clayton County, like many other jurisdictions, are drawn from voter registration lists, driver's license data and utility records. The list is then balanced by race and gender from the Census to reflect a cross-section of the population.
(nod to the LMM)
Tracked it down....
I have been told several times an anecdote about Marx despairing of ever seeing a revolution in Germany. He supposedly recalled an incident where German workers failed to attend a demonstration because they had trouble with their tickets.
The joke being, if you are going to start a revolution against capitalism, WE DON'T NEED NO STINKIN' TICKETS!
Well, I tracked down the reference. It was STALIN, not Marx, in an interview with an unctuous German writer in 1931. Here is the money quote:
Ludwig: Do you not think that among the Germans as a nation love of order is more highly developed than love of freedom?
Stalin: There was a time when people in Germany did indeed show great respect for the law. In 1907, when I happened to spend two or three months in Berlin, we Russian Bolsheviks often used to laugh at some of our German friends on account of their respect for the law. There was, for example, a story in circulation about an occasion when the Berlin Social-Democratic Executive fixed a definite day and hour for a demonstration that was to be attended by the members of all the suburban organizations. A group of about 200 from one of the suburbs arrived in the city punctually at the hour appointed, but failed to appear at the demonstration, the reason being that they had waited two hours on the station platform because the ticket collector at the exit had failed to make his appearance and there had been nobody to give their tickets to. It used to be said in jest that it took a Russian comrade to show the Germans a simple way out of their fix: to leave the platform without giving up their tickets.... But is there anything like that in Germany now? Is there respect for the law in Germany today? What about the National Socialists, who one would think ought to be the first to stand guard over bourgeois legality? Do they not break the law, wreck workers' clubs and assassinate workers with impunity? I make no mention of the workers, who, it seems to me, long ago lost all respect for bourgeois legality. Yes, the Germans have changed quite a bit lately.
Nic Tideman and I are working on our Public Choice paper, and are writing about meta-rules. And this passage is interesting, because it shows that the same group of people can be constrained, and not constrained. It's all about the meta-rules.
Old School Reference: J. V. Stalin, Talk With the German Author Emil Ludwig, December 13, 1931. First Published: Bolshevik, April 30, 1932, No. 8. Source: Works, J.V. Stalin, Foreign Languages Publishing House, Moscow, 1955, Volume 13, pp. 106-25.
The joke being, if you are going to start a revolution against capitalism, WE DON'T NEED NO STINKIN' TICKETS!
Well, I tracked down the reference. It was STALIN, not Marx, in an interview with an unctuous German writer in 1931. Here is the money quote:
Ludwig: Do you not think that among the Germans as a nation love of order is more highly developed than love of freedom?
Stalin: There was a time when people in Germany did indeed show great respect for the law. In 1907, when I happened to spend two or three months in Berlin, we Russian Bolsheviks often used to laugh at some of our German friends on account of their respect for the law. There was, for example, a story in circulation about an occasion when the Berlin Social-Democratic Executive fixed a definite day and hour for a demonstration that was to be attended by the members of all the suburban organizations. A group of about 200 from one of the suburbs arrived in the city punctually at the hour appointed, but failed to appear at the demonstration, the reason being that they had waited two hours on the station platform because the ticket collector at the exit had failed to make his appearance and there had been nobody to give their tickets to. It used to be said in jest that it took a Russian comrade to show the Germans a simple way out of their fix: to leave the platform without giving up their tickets.... But is there anything like that in Germany now? Is there respect for the law in Germany today? What about the National Socialists, who one would think ought to be the first to stand guard over bourgeois legality? Do they not break the law, wreck workers' clubs and assassinate workers with impunity? I make no mention of the workers, who, it seems to me, long ago lost all respect for bourgeois legality. Yes, the Germans have changed quite a bit lately.
Nic Tideman and I are working on our Public Choice paper, and are writing about meta-rules. And this passage is interesting, because it shows that the same group of people can be constrained, and not constrained. It's all about the meta-rules.
Old School Reference: J. V. Stalin, Talk With the German Author Emil Ludwig, December 13, 1931. First Published: Bolshevik, April 30, 1932, No. 8. Source: Works, J.V. Stalin, Foreign Languages Publishing House, Moscow, 1955, Volume 13, pp. 106-25.
Monday, March 08, 2010
Is the Census Mandatory? And is THAT constitutional?
A letter from a reader:
I've been getting a lot of questions on this subject from fellow students.
As both a Libertarian and a military veteran, I find the numerous, intrusive questions asked by the Census greatly disturbing. Are the questions, besides the ones directly related to the number of people in your household, unconstitutional? Personally, I believe that they are. If I refuse to answer questions other than those pertaining to the size of my household, what, if any, legal consequences could I face? I ask because I can't seem to find any concrete information on the subject. Also, if I may ask, how do you all plan on approaching the Census?
Dear Reader: Yes, I happen to know the answer to that.
The American Community Survey is conducted under the authority of Title 13, United States Code, Sections 141 and 193, and response is mandatory. According to Section 221, persons who do not respond shall be fined not more than $100. Title 18 U.S.C. Section 3571 and Section 3559, in effect amends Title 13 U.S.C. Section 221 by changing the fine for anyone over 18 years old who refuses or willfully neglects to complete the questionnaire or answer questions posed by census takers from a fine of not more than $100 to not more than $5,000. The U.S. Census Bureau may use this information only for statistical purposes. We can assure you that your confidentiality is protected. Title 13 requires the Census Bureau to keep all information about you and all other respondents strictly confidential. Any Census Bureau employee who violates these provisions is subject to a fine of up to $250,000 or a prison sentence of up to five years, or both.
Here is the reference for Title 13, if you want to read it
Now, you asked if the law making responses mandatory is constitutional. You could mean, "where is it in the Constitution?" The fact is that there is SOMETHING there, about the Census, but of course not the intrusive questions. But Article I, Section 2, Clause 3 does have a provision that a counting be done, "in such manner as [Congress] may direct."
Or you could mean, "What Supreme Court case contains the decision that justifies the law?" In that case, here is a legal history
I've been getting a lot of questions on this subject from fellow students.
As both a Libertarian and a military veteran, I find the numerous, intrusive questions asked by the Census greatly disturbing. Are the questions, besides the ones directly related to the number of people in your household, unconstitutional? Personally, I believe that they are. If I refuse to answer questions other than those pertaining to the size of my household, what, if any, legal consequences could I face? I ask because I can't seem to find any concrete information on the subject. Also, if I may ask, how do you all plan on approaching the Census?
Dear Reader: Yes, I happen to know the answer to that.
The American Community Survey is conducted under the authority of Title 13, United States Code, Sections 141 and 193, and response is mandatory. According to Section 221, persons who do not respond shall be fined not more than $100. Title 18 U.S.C. Section 3571 and Section 3559, in effect amends Title 13 U.S.C. Section 221 by changing the fine for anyone over 18 years old who refuses or willfully neglects to complete the questionnaire or answer questions posed by census takers from a fine of not more than $100 to not more than $5,000. The U.S. Census Bureau may use this information only for statistical purposes. We can assure you that your confidentiality is protected. Title 13 requires the Census Bureau to keep all information about you and all other respondents strictly confidential. Any Census Bureau employee who violates these provisions is subject to a fine of up to $250,000 or a prison sentence of up to five years, or both.
Here is the reference for Title 13, if you want to read it
Now, you asked if the law making responses mandatory is constitutional. You could mean, "where is it in the Constitution?" The fact is that there is SOMETHING there, about the Census, but of course not the intrusive questions. But Article I, Section 2, Clause 3 does have a provision that a counting be done, "in such manner as [Congress] may direct."
Or you could mean, "What Supreme Court case contains the decision that justifies the law?" In that case, here is a legal history
Hons Dons and Two MA Smoking Oxons
"Oh, KerEIST! This is a PhD in Political Science! How am I ever going to fence that!"
Virginia is NOT for Lovers
Virginia is only for STRAIGHT lovers, it appears.
(Nod to Ed Cone As Ed notes, "Old times there are not forgotten." Old times like Leviticus....Leviticus 18:6 reads: "You shall not lie with a male as one lies with a female. It is an abomination." A similar verse occurs two chapters later, in Leviticus 20:13: "A man who sleeps with another man is an abomination and should be executed." Of course there is also DEUTERONOMY 22:13-21--"If it is discovered that a bride is not a virgin, then she must be executed by stoning immediately." I think perhaps we SHOULD forget old times.)
(Nod to Ed Cone As Ed notes, "Old times there are not forgotten." Old times like Leviticus....Leviticus 18:6 reads: "You shall not lie with a male as one lies with a female. It is an abomination." A similar verse occurs two chapters later, in Leviticus 20:13: "A man who sleeps with another man is an abomination and should be executed." Of course there is also DEUTERONOMY 22:13-21--"If it is discovered that a bride is not a virgin, then she must be executed by stoning immediately." I think perhaps we SHOULD forget old times.)
Nemo to world: Greece WILL default
"The only questions are (a) when and (b) who will be left holding the bag."
"On the bright side, this is just entertainment; the entire Greek economy is a rounding error. The real show begins in a few years when major countries face the same problem."
In a great post on the blog "Self Evident", Nemo breaks down Greece and their crisis.
Highly recommended.
Here is the ending:
Yikes!
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