The term bad bank seems like an oxymoron, but in practice, the concept has been actualized in a few countries to address the problem of bad debt. The National Asset Reconstruction Company, supported by the India Debt Resolution Company, is India’s attempt to absorb and rehabilitate the nonperforming assets plaguing its banking system.
As environmental, social, and governance (ESG) issues receive more mainstream attention, banks are continuing to find themselves in the crosshairs. From NGOs and investors to regulators and customers – banks are continuously being pressured to do a better job on ESG.
Panic buying is as much a reality on stock exchanges as panic selling, especially when investors short sell stocks that have experienced unexpected supply squeezes and price jumps. Porsche’s 2008 takeover of VW’s stock is a case in point, causing distress to investors and backlash against the German regulators that allowed it to happen.
October 19, 1987, will go down in infamy as Black Monday, the day Wall Street unexpectedly set new records for losses. In most cases of stock market collapse, definite causes can be easily identified, but in this instance, a consensus has not yet been reached. What triggered this crash, and what corrective measures were taken in response?
The model looks sound on the surface: offer mortgages to borrowers with poorer credit ratings at higher rates. But as the US subprime mortgage crisis of 2007-08 proved, the risks associated with this strategy may override the benefits. This mortgage crisis sparked a chain of events that shook the world and ended in a global meltdown.
Most are familiar with the term Ponzi scheme but may not know the story of Charles Ponzi, whose illicit financial activities in the early 20th century inspired the name. Although not the first to engage in the practice at the heart of the fraud, whereby later investors pay the profits of earlier ones, he is certainly the most notorious.
One thing leads to another, as was true of the San Francisco earthquake of 1906, the Panic of 1907 and the creation of the U.S. Federal Reserve System in 1913. A series of bank runs threatened to hurl numerous firms into insolvency, but unified efforts in the fall of 1907 stemmed the tide, bringing stability and trust back to the sector.
Historic crises are consummate teachers, and this is particularly true in the finance industry, in which failures are all too often duplicated with often devastating consequences. International Banker has compiled a series of articles focused on several of the most impactful financial calamities, frauds and scandals of the 20th and 21st centuries, most of them originating in the United States but often spreading to the rest of the world
Enron Corp., once a top American energy-trading company, became a case study in corporate-accounting chicanery and filed for bankruptcy in 2001. The corporation’s troubles started with the introduction of mark-to-market accounting practices, leading to inflated valuations that could be hidden from investors and regulators for only so long.
The 1990s decade is known for many achievements, but possibly the most tectonic was the advent of the internet and, along with it, numerous web-based tech companies. In a short space of time, the IPOs of these emerging companies soared on the NASDAQ Composite Index, only to crash equally spectacularly during the year 2000. What happened?