Category Archives: Banking industry

Looting and How It Came to Pass

One of the things that has intrigued me about the financial crisis is that it is pretty clear that looting took place at the high end of the financial services industry, yet few have called it by that name, in part because it has been difficult to identify the mechanisms by which it occurred. Looting, […]

Fed Setting Higher-Than-Stress-Test Bar for Exiting From TARP

Well, once in a while the authorities exceed my low expectations, and this is one of those instances. The Fed is insisting that the bank recipients of TARP fund meet a higher standard, in terms of balance sheet strength, than set in the stress tests. The banks are grumbling that this is not what they […]

Philly Fed’s Plosser Not Keen re PPIP, Fed’s Quasi-Fiscal Role

The Financial Times has a brief write up of an interview with the head of the Philadelphia Fed, Charles Plosser. His remarks seem more anodyne than they really are: The Federal Reserve should not be involved in financing toxic assets that date from the bubble era, Charles Plosser, president of the Philadelphia Fed, has told […]

Citibank Withholding Severance to Some Former Execs

Readers know well that I am of the view that more than a few senior people on Wall Street who should have gotten nothing, and in some cases, should have gone to jail, instead made off with princely sums. But Citi’s half-baked remedy, of withholding the payouts of a few recently departed top dogs, is […]

Part of Public Private Investment Partnership Plan Looks Dead on Arrival

As readers may recall, we had been skeptical (and critical) of the Public Private Investment Partnership from the outset. It was the third effort at a program that had failed twice under Hank Paulson, namely, to have banks get dud assets off their balance sheets by selling them to a sucker. That’s why this program […]

JP Morgan Says Losses on WaMu Credit Cards Could Reach 24%

Folks, 24% is a simply breathtaking number for credit card losses, and JP Morgan is saying that is what it may see on its WaMu portfolio. Even keeling-over-and-dying Advanta is up to only 20% losses. Jamie Dimon, JPMorgan Chase chief executive, warned on Wednesday that loss rates on the credit card loans of Washington Mutual, […]

Guest Post: FDIC Won’t Rule Out Banks as Buyers of Toxic Assets

Submitted by Rolfe Winkler, publisher OptionARMageddon During a press conference today, FDIC Chairwoman Sheila Bair was asked about the Journal’s report that banks are lobbying to buy assets under Geithner’s toxic asset plan, the PPIP. She says banks will not be able to bid on their own assets, but clearly leaves open the possibility that […]

Are Worries About Rising Federal Debt Misplaced?

To be perfectly clear (as one discredited President was fond of saying), It would appear that the Treasury has a pretty considerable supply problem that is starting to hit now. Longer dated bonds slid in a serious way late last week and had another bad day today (although the 2 year action went well). And […]

Fall in Libor May Overstate Improvement in Interbank Lending Market

An interesting piece in Bloomberg contends that the record low level of Libor, which would say that everything is hunky dory as far as banks lending to each other is concerned, is in fact giving a misleading picture. The spread among rates quoted is close to its highest level for the year, indicating some banks […]

Is The Bond Hangover Cure of Inflation Worse Than The Disease?

Uncharacteristically for an economist, Wolfgang Munchau questions the conventional remedy for the debt millstone: use inflation to trash its value in real terms. Bondholders so often get shafted that it’s a predictable outcome. But is it wise? Munchau argues that regardless, the piper must be paid. If the powers that be succeed in creating meaningful […]

Guest post: More thoughts on the fake recovery

Submitted by Edward Harrison of the site Credit Writedowns. A recent post I published on both Credit Writedowns and Naked Capitalism, “Both initial claims and continuing claims now pointing to recovery,” has left the impression that I am a wild-eyed bull – for which I have been duly smacked about the head. This is far […]

Is Treasury About to Give Banks Yet Another Subsidy By Letting Them Repay TARP Warrants Too Cheaply?

The very fact that it took such a long headline to explain the latest (possible) Treasury bouquet to the TARP recipients says the odds are high the troubling scenario will come to pass. With the Fed a combo hedge fund/SIV and the Treasury actively engaged in regulatory arbitrage (evading budgetary restrictions by making clever use […]

Martin Wolf on the Need to Rein in Finance

I always enjoy reading the Financial Times’ editor, Martin Wolf, but I sometime forget how refreshing and pointed he can be when he decides to let loose at a deserving target. Today’s lesson is the almost ludicrous efforts of the financial services industry to explain why the debacle that they just foisted on all of […]

Banks Foot Dragging on the PPIP

The notorious Public Private Investment Partnership, aka “Son of MLEC,” was supposed to be up and running as of early May but its debut has instead been pushed off to July. The need to sort out some details is the official reason for the delay, but the Financial Times’ Gillian Tett says that the banks […]

A Call For Greater Accountability For the Fed

It’s been obvious to anyone who bothered paying attention that the Fed is increasingly acting as an extension of the Administration, without the oversight and disclosure to which the Executive Branch is subject. For instance, only the Federal Reserve Board of Governors appears to be obligated to honor to Freedom of Information Act requests (the […]