Mike Konczal
Mike Konczal (who has also blogged under the pseudonym Mike Rorty) is a financial engineer living in San Francisco. He blogs here and at the rortybomb blog. He can be contacted by email here.
Recently by Mike Konczal
Nov 17 2009, 12:35PM
Should You Trust Visa to Teach You About Credit Cards?
Visa has announced an ambitious plan for educating consumers in personal finance: a large, comprehensive webpage centered around a "Financial Football" video game. Their goal is to reach 20 million people worldwide in the next 5 years, and their webpage is top-notch. But should you trust Visa to teach you about credit cards when the company makes money from consumers who are in over their head?
Nov 5 2009, 9:00AM
Jones v. Harris And Mutual Fund Fees
On Monday, the Supreme Court heard arguments on the case of Harris Associates v. Jones. The plaintiffs are three shareholders in the Oakmark mutual fund family, while the defendant is Harris Associates LP, which manages the funds. The claim is that Oakmark charges excessive fees for its mutual fund -- individual investors are charged roughly twice as much as institutional investors -- and has violated the "fiduciary responsibility" set out for it by Congress.
As Simon Johnson and James Kwak point out, as the trial was working its way through the lower courts, a surprising argument broke out. Chief Judge Frank Easterbrook, siding with the mutual fund noted:
Oct 28 2009, 1:30PM
Consumer Financial Protection for Our Military
One of the most frequent things you hear in the debates over consumers' interactions with financial products is that we need better "financial literacy" to combat predatory lending practices. But what does it mean for a consumer to be financially literate? Is that enough? Especially at this historical moment, where financial expertise seems completely discredited, how do we go about educating consumers in financial literacy?
In 2005, The Department of Defense released their Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents (opens pdf). In this report, they defined what they considered Predatory Lending and how best to go about combating it. What did they find?
Oct 13 2009, 2:08PM
Bad Reasons to Oppose the Consumer Protection Agency
Have you heard the rumor that the Consumer Financial Protection Agency would jack up interest rates and put a stranglehold on job growth after the recession? If you did, you might be able to trace it back to David S. Evans, of the University of Chicago Law School, and Joshua D. Wright, of George Mason University School of Law, who wrote the study The Effect of the Consumer Financial Protection Agency Act of 2009 on Consumer Credit. (h/t Volokh Conspiracy.) In it, they make some pretty bold claims about the effect of the CFPA on the greater economy. But do the claims hold up to scrutiny? Let's take a look.
Oct 12 2009, 12:35PM
Student Loans are the New Indentured Servitude
The Wall Street Journal ran a post over the weekend about a new credit crunch among low income borrowers, noting it is now 'payback time.' What they didn't go into is that their primary interviewee is drowning not on expensive cars loans but student loans. This former student's debt is far from extraordinary. It is, in fact, tragically ordinary, as student loans have become the 21st century version of indentured servitude.
Sep 28 2009, 9:20AM
Scariest Chart of the Weekend, Labor Edition
If you want good news about the job market, don't read newspapers. It seems that every weekend gives us another visual way of displaying how bad the things have gotten for job seekers. Check out this graph by the New York Times:
Sep 21 2009, 11:45AM
Did Regulation Cause the Financial Crisis?
The role regulators played in the current financial crisis is a critical question as the Treasury Department gets set to take on bank regulation in the next few months. But standing in the way of the administration's reforms is a counter-intuitive argument that over-regulation, rather than under-regulation, caused the crisis. Specifically, this argument pinpoints blame on an 2001 banking regulation rule, which critics blame for loading the banks with toxic mortgage-backed securities. Is killing this rule the first step toward averting the next financial meltdown? Let's assess:
Sep 17 2009, 12:30PM
The Next Wave of Financial Innovation
There's a lot of debate on whether or not we will be able to remove the new moral hazard that has been introduced as a result of the bailouts. Can financial engineering help? From Nick Schulz, an AEI Shadow Financial Regulatory Committee panel came up with two financial instruments. Let's look at each of them.
Sep 15 2009, 11:57AM
The Failure of Bankruptcy Reform
The goals of the controversial 2005 Bankruptcy Reform were to both lower the number of those filing bankruptcy and also to increase the amount recovered post bankruptcy by forcing consumers into Chapter 13 bankruptcies. Seeing the latest data, it is clear that both of these goals have been failures - however the unique way in which they have failed is worth investigating.
Aug 27 2009, 4:10PM
How to Understand the Next Mortgage Crisis
Aug 10 2009, 9:55AM
Robots and the Future of Unemployment
As production in the United States evolves to include more machines, programming, and robots, will that have a negative long-term impact on unemployment? Economist Greg Clark says yes, and recent evidence suggests that it may already be happening.
Aug 4 2009, 2:00PM
Should Community Banks Support the Consumer Financial Protection Agency?
So I'm in favor of a Consumer Financial Protection Agency (CFPA). However I'm also of the opinion that our largest banks are too large and could stand to shrink. Are these in conflict? Our knee-jerk reaction should be that regulation functions as another barrier to entry, another fee that has to be paid, and can most easily be paid by the biggest players. However I think the advantages to clearing the playing field for the small versus the big player outweighs this problem.
Jul 29 2009, 4:39PM
How Health Care is Like Zombie Insurance
Jul 28 2009, 1:10PM
How to Understand High Frequency Trading
High Frequency Trading: You might not have heard of it now, but get ready, because it's going to be
everywhere in the next few weeks. After the New York Times' exposed how advanced Wall Street computers can execute impossibly complicated, and possibly unfair, stock trades, Sen. Chuck Schumer
(D-NY) asked the SEC to ban certain types of high frequency trading, or HFT. But what is HFT exactly, how does it work?
Jul 13 2009, 1:08PM
Shadow Banking: What It Is, How it Broke, and How to Fix It
We hear a lot of chatter about the shadow banking system and its crucial role in the financial crisis. But rarely do we find time to step back and ask the basic questions: What is shadow banking, where did it come from, how did it operate, what role did it play in this crisis and how do we deal with it going forward?
I hope this Q&A with a very smart professor and economist at Barnard College Professor Perry Mehrling provides answers to each of those questions.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.