Former Fed Economist: Regulators May Be Aiding and Abetting Banks in Not Writing Down Their Bad Energy Loans

Former Dallas Federal Reserve Bank economist, Gerald O’Driscoll, writes in WSJ :

Pundits are focused on collapsing oil prices, which reflect the technological revolution in production among nimble private producers, combined with weakening global demand for their product. The result has been layoffs in the energy industry, and there will be more. Weak and highly leveraged energy firms have gone bankrupt and more will. But bankruptcy doesn’t necessarily mean that production will decline.

Creditors who lent to these energy producers will suffer losses on their loans, and they too might become financially impaired. If past is prologue, those lenders will be reluctant to fully realize their losses, and they will continue to view future energy prices through too-rosy glasses. Banks will be reluctant to mark down the value of nonperforming loans and book losses, or even set aside sufficient loan loss reserves. They will instead “extend and pretend”—i.e., extend maturities and pretend they expect the loans to be paid back. Will federal and state banking regulators aid and abet the process? They have in the past, and rumor is that they are already doing so today.

Source:

Why Big Banks are So Interested in the Blockchain Technolgy

It turns out that the blockchain technology (which drives Bitcoin) creates an environment that is easy for government to track transactions.

Blythe Masters, former major player at JPMorgan, left the bank to start the blockchain firm Digital Asset Holdings.

Masters during an interview with The Australian Financial Review explained bankster interest in the technology (my bold):

Our investors, some of whom are large investment and commercial banks, are making a major investment in Digital Asset to help us develop solutions that will address reducing risk, reducing cost, improving transparency and offering new sources of revenue…

Rregulators were understandably initially concerned about the potential for blockchain applications to bypass certain controls, their thinking has evolved…

They are learning that distributed-ledger technology brings many benefits and efficiencies to wholesale financial markets, including reduced cost, reduced counter-party risk, reduced latency, enhanced security, increased transparency, ease of reporting, and reduced errors.  These are all important to regulators.

This technology is offering regulators a bird’s-eye view into activity in certain markets that they never had before. As such, distributed-ledger technology is actually an enhancement to transparency, rather than a mechanism for bypassing it.

Bitcoin operates on an extremely dangerous platform for those seeking anonymity.

Source: EconomicPolicyJournal.com

Potential of Bitcoin Tech

By Nathaniel Popper.

A well-known former JPMorgan Chase executive, Blythe Masters, has raised $52 million from several big banks for a start-up built on the technology underlying the Bitcoin virtual currency.

The start-up Digital Asset Holdings, based in New York, said on Thursday afternoon that it had raised the money from 13 financial institutions, including Ms. Masters’s former employer, JPMorgan, as well as Citi, BNP Paribas and Santander.

At the same time, the company also announced that it had signed a deal with Australia’s primary stock exchange, ASX, to provide technology that would speed up the settlement and transfer of money after stock trades. ASX Limited is also making a big investment in Digital Asset Holdings.

Digital Asset Holdings has based its technology on the blockchain concept that was introduced by the virtual currency Bitcoin. Visit cryptosoft software to learn how to use this virtual currency to your advntage. The blockchain is the database in which all transactions on the Bitcoin network are recorded. Unlike typical databases, the blockchain is maintained by users in a decentralized fashion. That has led many in the financial industry to hail it as a faster — and more reliable — alternative to existing transaction systems. For more information click this link here now.

Many financial institutions have been looking at ways to use a blockchain to modernize financial transactions by cutting out various middlemen from the markets. One of the Best Crypto Signals on Telegram is that the Nasdaq stock exchange has already integrated blockchain technology to improve stock trading.

Ms. Masters gave the technology a big boost when she announced her involvement with Digital Asset Holdings in early 2015. She left JPMorgan the previous year after a career during which she became one of the best-known figures in the financial industry.

Big questions remain, however, about how blockchain technology can be used in the real world, and so far talk of its potential has raced ahead of real-world uses.

In recent months, this disparity has caused some concern about the companies that are trying to raise money to build start-ups on the blockchain concept, including Digital Asset Holdings.

Potential investors said that it took Ms. Masters longer than expected to pull together her funders — and that some big-name banks ultimately declined to participate.

But Ms. Masters ended up raising more money than the $35 million that had been previously discussed. This round of fund-raising values Digital Asset Holdings at $100 million.

The Australian exchange company said that Digital Asset Holdings would help it develop new technology for the processes that take place after a stock is actually traded.

“Distributed Ledger Technology could provide a once-in-a-generation opportunity to reduce cost, time and complexity in the post-trade environment of Australia’s equity market,” the chief executive of ASX, Elmer Funke Kupper, said in a statement.

The other investors include CME Ventures, ABN AMRO, Santander’s innovation arm, Deutsche Börse Group, Accenture, Broadridge Financial Solutions, the Depository Trust and Clearing Corporation, and PNC Financial Services.

Source: NYTIMES