Finance

Could Deutsche Bank Fine Spark a New Crisis?

Headquarters of Deutsche Bank in Frankfurt, Germany Deutsche Bank is facing a possible $14-billion fine from U.S. regulators for its alleged role in propping up the housing market in the lead-up to the Great Recession, igniting some fears that the unprecedented sanction poses a new set of risks for the Frankfurt-based bank and the global financial system. "Brace yourselves. Sooner or later, history repeats itself, and the banks will fail again," Smith School professor Peter Morici says. Read more...

The Science of Contracts Behind the 2016 Economics Nobel

Contracts help human beings do what at times seems impossible. They help us cooperate and trust each other. It’s not that we fundamentally don’t trust one another. It’s just that trust is a freer-flowing currency when agreements are backed by a contract. And that’s why contract theory became the premise for the 2016 Nobel prize for economics on Monday. Smith School professors Kislaya Prasad and Michael Faulkender help explain why the theory is so important. Read more...

Bettors Put Their Money on Clinton

Smith School finance David Kass follows the money in gauging the U.S. presidential outcome. He says bettors give Democratic nominee Hillary Clinton the edge heading into her second debate with Republican nominee Donald Trump. “PredictWise, a prediction market aggregator, shows that people with money on the line are betting that Clinton will win with a probability of 80 percent,” Kass says. Read more...

How a Sputtering IPO Market Could Spawn a New Breed of Banker

A nighttime view on Wall Street. There's a sort of perfect storm that's battering initial public offerings this year, with cheap debt, market volatility, alternative capital providers and a more "millennial" entrepreneur all dampening the market for stock debuts. 

U.S. companies completed just 68 IPOs this year, as of mid-September, compared to 135 by the same point in 2015 and well behind 2014’s pace and total of 263.  Read more...

How Dodd-Frank Is Squeezing the Middle Class

Dodd-Frank has had an impact on middle-class home buyers.The 2010 Dodd-Frank regulatory overhaul was supposed to create a level playing field among home buyers. But a new study from researchers at the Smith School of Business shows the sweep of new rules actually squeezed middle-class home buyers, while giving a boost to wealthy borrowers. Professors Francesco D’Acunto and Alberto Rossi find that financial institutions reduced their lending on medium-sized mortgages 15% in 2014, even while piling on 21% more of its so-called jumbo mortgage offerings. Read more...

Yellen’s Moves Are Policy, Not Politics

Fed Chair Janet YellenIn the first presidential debate, Republican nominee Donald Trump accused Federal Reserve chair Janet Yellen of “doing political things” by keeping interest rates low, writes finance professor Elinda Kiss. He said the Fed "is being more political than Secretary Clinton.” (Democratic nominee Hillary Clinton previously has stated that it is inappropriate for presidential candidates to comment on Federal Reserve Actions.) Read more...

How Wells Fargo Betrayed Its Customers

Smith School finance professor Clifford Rossi says fraud allegations against Wells Fargo represent a failure across the board to identify and address a culture that emboldened "employees to elevate wrongdoing and risky activities without fear of retribution." Rather than facing discipline, some employees received bonuses after inflating sales numbers by secretly opening millions of fake accounts for customers without their permission. Read more...

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