The End of Banking: Money, Credit, and the Digital Revolution - "Unregulated banking with access to government guarantees is an enticing business model. It offers the profits of excessive risk-taking in good times, and allows passing on the inevitable losses to taxpayers in bad times." [more inside]
"We decided to go on an adventure through the financial statements of one bank [Wells Fargo], to explore exactly what they do and do not show, and to gauge whether it is possible to make informed judgments about the risks the bank may be carrying. We chose a bank that is thought to be a conservative financial institution, and an exemplar of what a large modern bank should be."
Interview with Gary Gorton (pdf) - Fascinating look at private institutional bank money creation (really) and subsequent run on the shadow banking system that hearkens back to the late-19th century banking crises with securitization playing the role of checking before the advent of deposit insurance. "Gorton is a lucid narrator of a complex tale." (via via)
Betting Against the American Dream. In 2005, just as Wall Street started to get cold feet about the housing market, the Magnetar hedge fund helped create a new wave of billion-dollar mortgage-backed securities, pushed bankers to include riskier sub-prime mortgages, and then shorted the securities, making millions when the bubble finally burst. Traders on both sides of the deals pocketed enormous fees even if their banks went under when the securities failed. Pulitzer Prize-winning ProPublica, This American Life, and NPR's Planet Money track down some of the big winners in the housing/financial crisis. No time to read or listen? It seemed so much like a scheme from The Producers, they even recorded a show tune to explain it all. (Previously, 2, 3)
Confused about the banking crisis? Confused by banks in general? This American Life's latest show Bad Bank (streaming, mp3) is a highly informative (and entertaining) overview of how banks work, and what problems they--and we all--face in this current crisis. Produced by another great NPR show, Planet Money.
Icelandic internet bank Icesave has closed its doors. The Icelandic government has told the UK chancellor that it cannot pay back the money of UK depositors. [more inside]