Submitted by Edward Harrison of the site Credit Writedowns We are a few weeks into earnings season and it should be abundantly clear that financial institutions are firing on all cylinders. In fact, financials are leading the broader market for the first time since 1993. Yet, loan losses have been absolutely enormous. What gives? The […]
Read more...Submitted by Tyler Durden, publisher of Zero Hedge Zero Hedge regularly gets visits from the SEC and FINRA, and we can only hope they are taking some of the troubling behavior we have identified seriously. Today’s case looks like a clear regulatory violation. A few weeks ago I noticed Merrill Lynch/Bank of America on an […]
Read more...Since the Associated Press has not yet had its position on fair use defeated in court, you’ll have to go visit them to read the text of their “exclusive” story. It is a doozy. But by any standards, the broad outlines confirm yet again that crony capitalism trumps taking the best course of action for […]
Read more...Checks and balances may not be completely dead in the US after all, but we need to see what transpires after the release of the report by Neil Barofsky, special inspector general for the TARP, which is out tomorrow. The New York Times appears to have gotten its hands on the whole report; the Financial […]
Read more...The move to clip the wings of TARP overseer Elizabeth Warren was predictiable. The fact that it took so long, and the angle is that she is anti industry (as opposed to anti industry bad behavior, a distinction that will hopefully be lost on the masses) and it took comparatively long to mount the salvo […]
Read more...As this blogger and others have noted, the bank rescue programs have been designed to work around constraints more than to fix the underlying problem, which is a lot of bad debt that needs to be restructured and renegotiated, including the debt of the banks themselves. Instead, the boundary conditions have included “No more Lehmans”, […]
Read more...The Administration is trying to look like it is not rolling over to banks’ demands on the issue of repayment of TARP money. But despite the tough-ish talk, the problem described by John Gapper remains. Whether the bank pay back the TARP or not, they and the wider world clearly know that they will not […]
Read more...James Kwak, discussing a recent Bernanke speech defending financial innovation and a Ryan Avent post parsing it, underscored Avent’s observation that Bernanke had trouble coming up with an example of the sort that the financial services had in mind these days (ie, novel products making use of derivatives and other risk slicing, dicing, and distribution […]
Read more...We’ve had plenty of company in voicing doubts about the Treasury’s so-called stress tests of the 19 biggest banks. To quickly recap the main issues: The bank will run the tests themselves, using the same risk models that caused the mess. With only ten examiners on average per bank, and most of the banks having […]
Read more...The qualiity of Citigroup’s $1.6 billion first quarter earnings was so lousy that even the mainstream media took notice. And the bank’s stock traded down 9%. To give the highlights: $2.5 billion of revenues came from lower market value of its debt thanks to a fall in credit quality. That was a common pattern of […]
Read more...Big name economists continue their attacks on the Obama bank rescue programs. Yesterday Willem Buiter, one of Europe’s most highly respected macroeconomists, continued his salvos, contending that the funding was woefully inadequate to recapitalize or otherwise prop up financial firms. The longer the US delays winding up sick banks, the more time wasted and good […]
Read more...Buiter, in a very good and lengthy post, addresses various issues related to banking, such as the question of “too big to fail” and the future, or more accurately, the lack thereof, of cross border banking. I recommend reading it in its entirety, and wanted to focus on his most controversial argument, but one where […]
Read more...John Gapper makes a fundamentally important point in his Financial Times comment today, that Goldman should not be permitted to wriggle free of TARP strictures by repaying the emergency backing of last November, at least not until Treasury has imposed structural reforms. Why? Whether Goldman formally has government funding or not, it has been designated […]
Read more...Now in fairness, the Administration is in uncharted waters in this economic crisis, and has launched a number of new programs to try to restore a measure of health. We’ve lambasted just about all the bank program as being based on the flawed premise that asset prices are temporarily distressed, rather than the recognition that […]
Read more...I suppose I should take anything said by Goldman in general, and its CFO David Viniar, with a fistful of salt. This is the man who during the October-November meltdown, attributed the poor performance to the fact that they were seeing “25 sigma events, several days in a row.” That show such manifest ignorance as […]
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