Archive for January 15th, 2010

Concentration in baning sector increasing every decade

January 15, 2010

Silvio Contessi of St Louis Fed has a nice short research article on  size of the US banking sector.

Fundamental issues about bank size and the systemic risk implications of so-called too-big-to fail policies are heated topics of discussion for researchers, policymakers, and the press alike. However, significant changes in size distribution of banks have been occurring since at least the 1980s and 1990s, when the structure of the banking industry began to evolve following regulatory changes such as the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and and the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.

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A primer on measures of India’s inflation

January 15, 2010

Deepak Mohanty, ED, RBI in a recent speech provides a nice primer on India’s inflation and issues.

In my talk today, I will briefly review the various primary measures of inflation with a particular reference to the divergence between WPI and CPI.  I will also focus on different secondary (derived) measures of inflation, particularly core inflation, and end the discussion with some thoughts on the way forward.

Read the speech for details. Especially the various measures of core inflation.

I also remembered a speech from RBI ex-Governor YV Reddy on similar topic in 1999. It served as a useful way to understand India’s inflation and issues.  So, I just scanned through it. You will be surprised to see the similarity of the inflation issues then and now, especially the measurement issues.

More than ten years and we have not progressed at all as far as our statistical system is concerned.  RBI now Gov – Subbarao raised these concerns in his 2009 speech, I hope there is some action on it.

State of US Financial regulation gets only worse

January 15, 2010

It is amazing to see the struggle Obama and his team are having to rein in financial sector. Every quarter you see talk by Obama on Wall Street bonuses, profits, rent-seeking etc. The talk is followed by a promise to regulate financial sector and ensure taxpayers are not burdened further. However, now of the efforts are working.

Now, we have a new proposal called Financial Crisis Responsibility Fee which plans to put charge large banks a fee to payoff every penny of TARP money. It is estimated that cost of TARP would be around USD 117 billion. The fee would be charged on bank’s coverred liabilities per year. Here is a factsheet to show how it would work.

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