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Banking Crisis, Globalization and Internet Poker

Daily Update

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Banking Crisis, Globalization and Internet Poker

Federal officials charge that a letter from Sen. Chuck Schumer sparked the run on deposits that triggered the second-largest bank collapse in U.S. history this week.

The World Trade Organization releases a major new report on globalization.

Poker players urge Congress to exempt “games of skill” from the federal ban on Internet gambling.

1. BUSINESS

Federal officials charge that a letter from Sen. Chuck Schumer sparked the run on deposits that triggered the second-largest bank collapse in U.S. history this week.

CEI Expert Available to Comment: Special Projects Counsel Hans Bader on the role that Schumer has played:

“Senator Charles Schumer (D-NY) recently triggered a massive bank failure by publicizing a letter claiming IndyMac Bank was on the verge of collapse. That caused a run on the bank by its panic-stricken depositors. (Taxpayers may end up paying up to $8 billion to bail out the bank). He’s been criticized for that by many, including the Wall Street Journal. Schumer is a legendary loudmouth with an ego to match. But what he really deserves criticism for is for undermining America’s banking system as a whole. He has long blocked reform at the government-sponsored mortgage giant Fannie Mae, a fraud-ridden institution that is now being bailed out at a cost of billions of dollars – and which purchased (and thus created a market for) risky mortgages issued by subprime lenders.”

 

2. TRADE

The World Trade Organization releases a major new report on globalization.

CEI Expert Available to Comment: Adjunct Fellow Fran Smith on what’s in the report:

“Not resorting to platitudes, the authors explore trade theory from Ricardo to the ‘new, new’ theories and apply these to results of empirical studies. Here are a few of the topics dealt with in the discussion relating to economic theory and trade: the traditional approach: gains from specialization; ‘new’ trade theory: gains from economies of scale; product variety and increased competition; recent developments: productivity gains; dynamic gains. From both a theoretical and practical perspective, the report also looks at constraints holding back some of the developing countries from benefiting from globalization and trade.”

 

3. LEGAL

Poker players urge Congress to exempt “games of skill” from the federal ban on Internet gambling.

CEI Expert Available to Comment: Adjunct Fellow Arin Greenwood on why we need better legislation:

“The U.S. Department of Justice recently has gone after Internet poker businesses with a vengeance—even though it may not have the authority to do so—driving many of them overseas. Now the House of Representatives is considering legislation to tell the Justice Department to leave Internet poker businesses alone. So would that constitute a needed clarification of jurisdictional authority? Sadly, no. The same statutory ambiguities that the Justice Department is now using to drive Internet poker out of America are in the proposed bill.”