Nomi Prins

Nomi Prins is a journalist and a senior fellow at Demos. Her books include It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street and Other People's Money.

Recent Articles

Shadow Banking

Reforms pending in Congress would not touch the abuses of hedge funds and private equity.

Despite all the noise about financial reform, the shadow banking system that helped create the financial crisis would remain fundamentally unaltered by the legislation now pending in Congress. Indeed, leveraged entities such as private-equity, venture-capital, and hedge funds get only minor regulatory attention. These barely regulated, nontransparent bastions of speculation propagated systemic risks beyond any that could be created by the banks themselves. Whether housed at banks, created by banks, or freestanding, they exist to enable speculative risk-taking hidden from either regulatory or market scrutiny while camouflaging layers of debt and enabling the complex-securitization deals that caused the financial collapse. Yet, neither the House bill passed last December nor the most recent Senate bill submitted by Sen. Chris Dodd does more than impose marginal adjustments on the shadow banking system. Even those measures contain loopholes so inviting that JPMorgan Chase, the largest...

Risk Is Best Managed From the Bottom Up

We need regulations to address risk in every layer of the system, from the loan or bond, to the bank, to the very structure of the global financial industry.

From Five Ways of Looking at Risk . Federal Reserve Chair Ben Bernanke stated the obvious during his March 10 speech at the Council on Foreign Relations in Washington: The global financial system contains too much risk and too little regulation. As the central figure in a multitrillion-dollar bailout exercise that has done little to contain, let alone reverse, the current economic crisis, Bernanke then strained to make some risk-fighting suggestions for future stabilization. First, he recommended regulating "the financial system as a whole … not just its individual components." Second, he warned that classifying any firm as "too big to fail" only "encourages excessive risk-taking by the firm." Third, he stressed the need to help credit flow by adopting "new policies to limit the incidence and impact of systemic risk." All of these are efforts to contain risk from the top and to spot big bubbles before they get out of control. The problem is that they overlook all the layers of...

Paulson's Deregulation Mission

Last May, when Henry Paulson was nominated by President Bush to be treasury secretary, the Goldman Sachs chairman declared, "We must take steps to maintain our competitive edge in the world." Five months later, Paulson warmly embraced a private-sector Committee on Capital Markets Regulation, ostensibly to preserve America's role as the world's largest international capital market. In November, the 22-member committee -- self-described as independent, bipartisan, and consisting of America's corporate and financial leaders -- issued its first interim report. Co-chaired by another Goldman Sachs alum (under Paulson), John Thornton, the committee warned that U.S. regulations were scaring away capital. New stock issues were increasingly being listed on European or Asian exchanges. Foreign companies were raising capital via private offerings instead of public exchanges, to avoid the disclosure requirements of the Sarbanes-Oxley Act of 2002 and the liability provisions of the 1933 and '34...