Regulators have been making a concerted push for banks to hold more equity as a protection against loss and overly-optimistic valuation of trading assets. But the head of the Bank of International Settlements, Jamie Caruna, argued at a secret (not) central bankers’ conference in Sydney that banks also need to carry more in the way […]
Read more...By Edward Harrison of Credit Writedowns In the lead-up to the credit crisis, I really didn’t write a considerable amount about second mortgages despite my focus on credit writedowns. At that time, I was more focused on writedowns from securitized mortgage paper (and later construction loans and commercial real estate because of the stress these […]
Read more...We remarked last week that the FDIC had put forward a proposal for fixing the securitization market. To be a bit more precise, it was the FDIC’s plan, put forward for public comment, of the rules it wanted to have in place for banks to get “safe harbor”, meaning off balance sheet treatment, for their […]
Read more...The article tonight at Bloomberg, “No Job Growth for Small Business Spurs Recovery Doubt,” is a bit surprising, because so many of the people quoted in the article seem….surprised. It appears to have suddenly dawned on some economists and commentators that small concerns aren’t adding jobs, and that might have broader ramifications. What is peculiar […]
Read more...Boy, is this a down-market move for former Merrill CEO John Thain, both in terms of size of balance sheet and credit focus of the organization. CIT, which focuses on small and medium-sized business lending, had a roughly $70 billion balance sheet as of end of September, versus nearly $670 billion for Merrill as of […]
Read more...Two readers, Don B and Marshall Auerback, pointed to a Ambrose Evans-Pritchard story at the Telegraph which argues the the sovereign debt perturbations have the potential to have ramifications as serious as the subprime/Alt-A crisis. Now Evans-Pritchard has a tendency to the apocalyptic, but he also made some astute calls in 2007 and 2008 (as […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Gretchen Morgenson has a lengthy article tonight at the New York Times, “Testy Conflict With Goldman Helped Push A.I.G. to Edge.” While it provides some useful new tidbits, it peculiarly focuses on an aspect of Goldman’s dealings with AIG that, particularly with the […]
Read more...By Rolfe Winkler, a former hedge fund analyst Alexi Giannoulias — the whippersnapper IL State Treasurer and basketball buddy of the President — won the Democratic primary for Senate Tuesday night. Given Giannoulias’ troubling background, including ties to a bank that received a rebuke from FDIC just a week ago, how much political capital will […]
Read more...On the one hand, debating the merits of the Volcker Rule may seem a tad academic, given the rousing opposition it is encountering from Congress (and you have to love the world of politics: the biggest obstacle is, basically, “We sorta have a deal, you can’t retrade it!” Funny how banks and AIG get to […]
Read more...Let’s acknowledge the obvious: there are a lot of not trivial impediments to reining in the banking industry: the deregulation policies that put a comparatively small number of firms in charge of infrastructure critical to commerce; the fact that said firms have done a very good job at disguising the rents they collect; that those […]
Read more...After the months of buoyant markets, a return to crisis-type headlines seems troublingly familiar, even though the perturbations of the last day or so are a pale shadow of the worst months of the crisis. And some are making the bull case. For instance, a headline at Clusterstock trumpetss, “Yesterday’s Bloodshed Sent The VIX Soaring […]
Read more...Hhhm. Even though the UK 50% bonus “supertax” was deemed to be a bit of a failure (the banks just grossed up bonuses to compensate for the levy), Senators Barbara Boxer and James Webb have proposed a similar measure, and one wonders how it might fend off the sort of gaming that plagued the UK […]
Read more...Bloomberg has a useful but oddly-framed article up tonight: “Bank of America E-Mails Show Lehman Was Buy Target.” The story comes out of investigation by New York state attorney general Andrew Cuomo in Bank of America’s failure to disclose the deterioration in Merrill’s condition prior to the shareholder vote on the deal, but the bits […]
Read more...By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. There was a long period of time during which I believed that Mr. Bernanke should have resigned the Chairmanship […]
Read more...One of the impediments to getting to the bottom of the financial crisis is some of the most destructive behavior involved complex instruments like collateralized debt obligations and credit default swaps. It isn’t simply that these “innovations” had terms and features that differ from familiar investments like stocks and bonds, but the way those instruments […]
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