many choices at grocery store

More choice is not always better

January 14, 2019

According to traditional economics, having more choice is better than having less choice. But that is often not the case in the real world. Behavioral economics professor and Nobel Laureate Richard Thaler shows us that sometimes we are better off when we limit our choices.

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Regrets of creator of collateralized mortgage obligation

September 7, 2018

Lew Ranieri regrets creating the CMO “‘I’m the guy who played a central role in this home thing and I regret it because…it got abused beyond everybody’s imagination, ‘” says Lewis Ranieri, creator of the collateralized mortgage obligation (CMO), according to the Wall Street Journal. Ranieri’s creation of the CMO was nifty financial engineering by a sophisticated Wall Street investment banker that revolutionized the home mortgage market. But the CMO ended up being a financial weapon of mass destruction that crashed the global economy in 2008. The CMO brought us the Great Recession, from which we are still recovering.

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digital coins

Bitcoin regulation across the globe

January 5, 2018

The Wall Street Journal has a nice little video discussing different government responses to bitcoin from China to Japan to USA. http://

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Misbehaving - how real human beings make decisions

Richard Thaler shows us how real human beings make decisions

December 15, 2017

Richard Thaler was awarded the Nobel Prize in Economics this month for his ground-breaking work on how real human beings make decisions. We need judges, legislators, regulators, and academics to take note and repair significantly flawed securities and banking laws.

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Grim reaper

Synthetic CDO is back – that is scary!

October 31, 2017

Citigroup is back on the road hawking synthetic CDOs – the  same kind of toxic derivatives that brought us the 2008 great recession. That is scary! CDOs, collateralized debt obligations, are complex derivatives that make big, leveraged bets — the kind of leveraged bets that nearly brought down the entire financial system in 2008. They were sold as diversified investment vehicles. They were not. Many investors were devastated by massive losses.

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Euros

What’s up with Wells Fargo foreign exchange?

October 23, 2017

Wells Fargo back in the headlines Wells Fargo fired four foreign exchange traders as it investigates “forex” trading by its investment banking arm. This is according to a story by Emily Glazer of The Wall Street Journal, available here.  https://www.wsj.com/articles/wells-fargo-fires-fx-bankers-investigates-foreign-exchange-business-1508518745

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Misbehaving - how real human beings make decisions

Behavioral economics gets why surge pricing can be disastrous

October 15, 2017

Behavioral economics explains why we don’t see more surge pricing. It seems like a no-brainer for Home Depot and other home improvement stores to double prices at stores in hurricane-ravaged areas. According to Economics 101, when demand goes up, prices should go up. But Home Depot does not raise its prices. As Neil Irwin writes in the New York Times, Home Depot’s response to a post-hurricane surge in demand is not only to keep prices steady, but to increase supply.

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Misbehaving - how real human beings make decisions

Behavioral economics improving practices at IRS

October 9, 2017

The Economics Nobel Prize was awarded to Richard Thaler of the University of Chicago Booth School of Business — my alma mater. Richard Thaler’s research has transformed the field of economics and public policy. Here is an example of one of the many ways that behavioral economics has changed our lives.

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digital coins

Bitcoin? The SciShow guys explain what it is

October 5, 2017

The SciShow guys made this great video explaining bitcoin. I could not have done it better. Even if you think you know how bitcoin works, you might learn something about this new-fangled “cryptocurrency.”

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Everything old is new again – bribery of Haitian officials

September 4, 2017

As an SEC enforcement attorney, I investigated the CEO and senior executives of American Rice for bribing Haitian customs officials. Under the Foreign Corrupt Practices Act (FCPA), it is illegal for US companies to pay bribes to foreign officials. In addition, when companies fail to identify those bribes in their financial statements they violate other federal securities laws requiring proper disclosures — when is the last time you saw a line item for “bribes.” These guys were flying suitcases of cash to Haiti to be secretly handed off to Haitian customs officials. As a result of investigations by the SEC and DOJ, American Rice’s CEO and another senior executive were convicted of criminal FCPA violations. https://www.sec.gov/litigation/litreleases/lr18925.htm An SEC Litigation Release concerning the filing of the SEC enforcement action against Douglas K. Murphy and is available here: https://www.sec.gov/litigation/litreleases/lr17651.htm Bribes paid to Haitian officials are back in the news. A retired U.S. Army colonel was charged with involvement in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti. According to a DOJ press release (available below along with an FCPA Blog post), Joseph Baptiste was arrested Tuesday morning on a criminal complaint filed in federal court in Boston. He was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and to launder money. Baptiste is alleged to have solicited bribes from undercover FBI agents in Boston, who posed as potential investors in a port project in Haiti. Baptiste allegedly told the agents in a recorded meeting that he would funnel payments to Haitian officials through a Maryland non-profit he controlled. The complaint alleges that Baptiste took $50,000 from the undercover agents that was wired to the non-profit. Although Baptiste used that money for personal expenses, the DOJ said, “he intended to seek additional money from the undercover agents to use for future bribe payments in connection with the port project.” Things in Haiti have not changed much in the past 15 years. As sad as things are in Haiti, it has not always been like that. Here is a link to a “Crash Course” by John Green – an interesting video on the Haitian Revolution. https://www.justice.gov/opa/pr/retired-us-army-colonel-charged-conspiring-bribe-senior-officials-republic-haiti http://www.fcpablog.com/blog/2017/8/29/retired-us-army-colonel-charged-with-fcpa-conspiracy.html

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