Category Archives: Banking industry

2005 Bankruptcy Law Changes Have Worked to Detriment of Credit Card Companies

The irony is rich, even if the consequences to both credit card issuers and borrowers are painful. Many readers no doubt know that the October 2005 bankruptcy law changes were a long sought, hard lobbied for win for credit card companies. It considerably restricted access to Chapter 7 bankruptcies which allow borrowers discharge the debt […]

Merrill Writedowns: The Plot Thickens

An interesting tidbit in the Financial Times: Bank of America was not blindsided by the Merrill writedowns (although Ken Lewis no doubt still wanted to walk from the deal). Its CAO was deeply involved in making them (boldface ours): Bank of America was directly involved in markdowns that contributed to Merrill Lynch’s $15.3bn loss in […]

On the Fed’s "Shock and Awe"

When some deemed the Fed’s move today to expand its balance sheet by as much as a trillion dollars plus as “shock and awe”, I recalled that when that term was first used, at the beginning of the US invasion of Iraq. The notion was a display of superior force would lead to quick capitulation. […]

Guest Post: Charlotte Observer pitches softball, Ken Lewis hits homer

Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.comThe Charlotte Observer deserves a big fat Bronx Cheer for prostituting its pages. Today the paper published excerpts of an “interview” with hometown CEO Ken Lewis of BofA. The quotes read like the standard puffery one finds in corporate press releases. If the interviewers asked any tough questions, […]

Guest Post: It’s the writedowns, stupid

Submitted by Edward Harrison of the site Credit Writedowns Edward Harrison here. Today, I want to make the case for seeing writedowns as central to this global downturn. To do so, we need to rewind and compare what is going on today with what we have experienced in the past. Drawing on this comparison, I […]

US Deviating Considerably From Swedish Banking Crisis Best Practices

A good article in tonight’s Financial Times gives useful detail about the Swedish response to its early 1990s banking crisis. As readers may know, Sweden (along with the less touted Norway) is considered to have been particularly effective in mopping up a banking crisis. We and others have observed that the US is engaging in […]

Wall Street Firms Looking to Circumvent TARP Bonus Caps Via Salary Increases

I know one can maintain outrage for only so long, and I find it deeply disturbing to look at the inability to rein financial industry pay in despite horrific results. If these people are so valuable, let them go to boutiques and prove it, where you eat what you kill rather than feed off a […]

Now It’s Official: Public Private Partnership to Overpay for Toxic Bank Assets

We have been saying from the first time the idea that Team Obama floated the idea of having a “public private partnership” buy toxic bank assets, that it was merely a very costly way to disguise overpayment. Henry Paulson tried twice to find a way to hoover up bad bank assets, the first time via […]

Steve Waldman Believes Banking Industry Sick Since At Least the S&L Crisis

Steve Waldman makes some bold claims in tonight’s post: In two recent Surowiecki posts (here and here), Surowiecki points out that during the banking crises of the early eighties and early nineties, banks were arguably as insolvent as our banks are today, but hey, with a little time and without any radical changes, everything turned […]

McKinsey Forecasts Banking Industry as Unprofitable in 2009

So much for Ken Lewis’ cheery prediction that Bank of America would be profitable in 2009, although Bank of America could always be the exception. McKinsey is generally considered to have the best financial services practice among the major consulting firms, and being overly gloomy does not endear one to clients. The profit forecast is […]

Will Banks Start to Walk Their Talk? Don’t Hold Your Breath (Mark to Market Edition)

The new meme from big embattled banks, starting with Citigroup’s leaked Pandit memo yesterday and Bank of America CEO Ken Lewis’ declaration that the bank will be profitable in 2009, is that things will be OK and all this talk of nationalization is unwarranted. I’ll reserve judgement till the fat lady sings. The record of […]

Cuomo Asserts That Traders Looted Merrill

I must confess I skipped past the headlines on New York Attorney General Andrew Cuomo latest salvo at Bank of America and Merrill over the Merrill bonus payments in December. Recall that those bonuses were paid earlier than usual so as to occur before the closing of the Merrill sale. Merrill contends it informed the […]

A Belated Comment on Citi’s Lehman-esque Leak

Readers may recall that during Lehman’s demise, a pitched battle was underway between some short sellers, epitomized by David Einhorn of Greenlight Capital. Einhorn raised questions about Lehman’s financial statements, specifically, inconsistencies and rosy looking valuations. The struggle became weirdly peronalized, as Lehman sought to burnish the image of charmismatic CFO Erin Callen, as contrasted […]

Guest post: A few thoughts about the banking crisis response in the United States

Submitted by Edward Harrison of the site Credit Writedowns Edward Harrison here. I wanted to begin my series of posts here on naked capitalism with my thoughts regarding the policy response to the banking crisis in the United States. I believe Yves would agree that the response to date has lacked the necessary urgency to […]