Category Archives: e-commerce

Email Trails Show Bankers Behaving Badly

The New York Times is running a pair of stories about U.S. financial institutions being investigated by the Federal government and courts for alleged systemic and illegal activities that helped bring about the housing crisis and collapse of the world economy in 2008. Emails produced during courtroom discovery reveal that insiders at JP Morgan Chase knew that the bundles of securities they were marketing to investors were rotten with bad loans. And emails show the credit rating agency Standard & Poor’s (a division of McGraw-Hill) was determined to stop losing deals to its competitors by being too tough on the banks whose products they were evaluating.

E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad

When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix.

Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors.

The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded. The documents reveal that JPMorgan, as well as two firms the bank acquired during the credit crisis, Washington Mutual and Bear Stearns, flouted quality controls and ignored problems, sometimes hiding them entirely, in a quest for profit.

The lawsuit, which was filed by Dexia, a Belgian-French bank, is being closely watched on Wall Street. After suffering significant losses, Dexia sued JPMorgan and its affiliates in 2012, claiming it had been duped into buying $1.6 billion of troubled mortgage-backed securities. The latest documents could provide a window into a $200 billion case that looms over the entire industry. In that lawsuit, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has accused 17 banks of selling dubious mortgage securities to the two housing giants. At least 20 of the securities are also highlighted in the Dexia case, according to an analysis of court records.

In court filings, JPMorgan has strongly denied wrongdoing and is contesting both cases in federal court. The bank declined to comment.

In Actions, S.&P. Risked Andersen’s Fate

They were the gatekeepers, with a clear conflict of interest — the people they were supposed to check up on were also the ones who hired and paid them. The need to protect their reputation was supposed to assure that the conflict would not lead to bad behavior. But it did not. Those within the firm who wanted to be tough found themselves outmaneuvered by those who wanted to make compromises to keep business that might otherwise be lost to competitors — competitors who were not above making compromises themselves. It was not that they wanted to act badly, only that they did not want to offend important customers.

They had no idea that the corners they were cutting would blow up into a scandal that would dominate the news, shock the nation and lead to the demise of the firm. That is a description of what happened to Arthur Andersen, the accounting firm, more than a decade ago. It may turn out to be a description of what will happen to Standard & Poor’s, the ratings agency, as a result of its behavior during the housing boom. The good news for S.& P. is that it faces only civil liability from the suit filed this week by the Justice Department. It was the criminal complaint against Andersen that sealed the firm’s fate.

But the allegations in the suit are reminiscent of what happened at Andersen, whose image had previously been of being the most independent, and most committed to quality accounting, of the major firms. Until now, the role of the credit ratings agencies in the financial crisis had seemed — to me, at least — to be defensible. They may have been foolish or even stupid, but they were not venal. They applied their models in good faith in rating mortgage-backed securities. Their models proved to be overly optimistic, but the housing collapse was an unprecedented event. Being wrong is not a crime.

The Justice Department suit offers a different sequence of events. As the housing bubble grew, and the revenue from rating the deals skyrocketed, S.& P. was determined to stay competitive with other agencies — Moody’s and Fitch — in getting the business. That led to tinkering with models and ignoring inconvenient evidence so as to produce the ratings that were desired by the banks putting together the deals. Even when it became clear that new deals did not deserve the ratings they were getting, S.& P. chose to issue high ratings.

Parcel Sensor Knows When Your Delivery Has Been Dropped

If you’re tired of finding that your stuff has been smashed during shipping after opening your package, this device is for you. Called DropTag, the gadget combines a battery, a low-energy Bluetooth transmitter, an accelerometer and a memory chip.

Stuck on a parcel as it leaves an e-commerce warehouse, it logs any g-forces above a set risky shock level that it experiences. The idea is that when the courier puts it in your hands, you turn on Bluetooth on a smartphone running a DropTag app and scan it before you sign for it.

Was it dead out of the factory gate? Or had the parcel suffered some physical abuse in transit? Now a British invention company called Cambridge Consultants has developed a sticky radio tag that will spill the beans on dodgy delivery firms.

Called DropTag, the gadget combines a battery, a low-energy Bluetooth transmitter, an accelerometer and a memory chip. Stuck on a parcel as it leaves an e-commerce warehouse, it logs any g-forces above a set risky shock level that it experiences. The idea is that when the courier puts it in your hands, you turn on Bluetooth on a smartphone running a DropTag app and scan it before you sign for it.

A readout then shows what’s happened to the parcel in transit, with the option of a graph that shows you if the box has been mistreated – and when. If it has clearly been beaten up, you don’t sign and refuse delivery. The $2 tag will run on a coin battery for “many weeks”, the inventors say, and there may be incentives for the parcel deliverer to reuse it after scanning. DropTag comes from Cambridge Consultants’ wireless group, which last year unveiled a Bluetooth-powered automatic gear changer for a bike.

At the moment DropTag is a solution in search of a user. British patents are already filed, but Cambridge Consultants hopes a major delivery chain or e-commerce firm will buy into the tech at the massive Hannover Messe tech fair in Germany in April.

Read more here

Things that will probably change after Google Instant

Google Instant is a radical change and will definitely modify the way we do online business and how people use search engines to get their content. Google usually makes several minor algorithm changes on weekly and sometimes daily basis, but this time the change was really dramatic.

Why do users need Google Instant?

This improvement was the next logical step after Google Suggest, the auto-completion feature on the search input field. Their explanation was that they needed to increase the speed of searching. The suggested results are probably cached, so it is easier for Google to provide search results for cached terms than the non-cached searches. From the monetary perspective, the new way to display the results will directly drive Google’s revenue. With the addition of Google Instant, the person searching is definitely exposed to many more sponsored listings than they were before, which is likely to give an uptick in ad click-through rate for the sponsored ads. Additionally, Google will need less publishers to serve ads since the ads will be served from the own ad stock; this could end up killing thousands of blogs.

The end of SEO?

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