Pot pourri December 18, 2012 at 6:16 pm
A mixture today:
From a Bloomberg story as part of their America’s Great Payroll Giveaway series:
“There’s a mythology promulgated by people in administration that you have to pay competitive salaries to attract the best people,” said Benjamin Ginsberg, political science professor at Baltimore-based Johns Hopkins University and author of a book detailing how universities are adding administrators even as state funding drops. “In point of fact, no one can show there is any relationship between what these people are paid and the quality of the work they do.”
From a story in the Securities Lending Times on CCP ownership:
Research firm Finadium interviewed major CCPs worldwide to find out how they view the role of collateral for both risk management and as a potential competitive lever in the marketplace.
Its subsequent report—CCPs and the Business of Collateral Management—was released on 15 November.
Stock, options and futures exchanges own 60 percent of recognised CCPs, said the report. “This ownership structure makes CCP activity part of the strategic direction of the exchange itself; decisions made at the exchange level trickle down as opposed to CCP decisions trickling up.”
Boards of industry representatives or outside parties run the remaining 40 percent.
“These ownership structures complicate the process of categorising the intentions of the CCP community; some CCPs operate truly as utilities for the benefit of their users while others are inclined towards market growth through acquisitions and new product development. Further, many exchanges including the CME, ICE and London Stock Exchange are competitive, publicly traded entities, putting their fully owned CCP functions in a competitive position as well.”
From Jesse Eisinger’s new article on US mortgage finance:
…with little planning and paltry public discussion, the government has almost completely taken over the American home mortgage market. Banks and other for-profit financial services companies lend money to homeowners, but without the guarantees and other support the government provides, the housing market would barely be functioning now.
Fannie Mae and Freddie Mac, the taxpayer-controlled housing giants, guaranteed 69 percent of new mortgages in the first nine months of the year, up from about 27 percent share in 2006, according to Inside Mortgage Finance. Meanwhile, the Federal Housing Authority and the Department of Veteran’s Affairs currently back another 21 percent of mortgages, up from just 2.8 percent in 2006. Altogether, 9 of every 10 new mortgages are backed by the U.S. taxpayer, up from three in 10 in 2006, when the government share hit a decade-low, according to the publication.
From a BIS working paper Global safe assets by Pierre-Olivier Gourinchas and Olivier Jeanne:
…a convincing link can be established between macroeconomic shortages of safe assets and some of the most disturbing features of our recent global financial history… a natural way to eliminate the financial instability arising from the asset scarcity consists in supplying public safe assets. In turn, the safety of public asset may require a monetary backstop. We show that this backstop can increase significantly the safety of public securities, with minimal or no consequences in terms of price stability.