Nassim Nicholas Taleb, of Black Swan fame, joins the chorus in attacking asymmetrical bonuses, the “head’s I win” if things go well, “tails you lose” syndrome. An oversight in this piece is that this approach nevertheless worked reasonably well in the old Wall Street. Why? The big reason was that you had owner/managers whose capital […]
Read more...To be honest, I’m not quite sure how to read this Wall Street Journal piece, since this is a spat between two parties, with a “he said, she said” quality to it. However, the title, “Citigroup Chafes Under U.S. Overseers:” suggests a bias in favor of Citigroup.”Overseers” is a weak word, suggesting Uncle Sam really […]
Read more...Guess the continuing deterioration in the stock market is beginning to capture the attention of the financial regulators. The Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement just after 4:00 PM (hat tip reader Steve). Some key bits (boldface ours); A strong, resilient financial system is necessary to facilitate a broad and […]
Read more...Let’s see. Citigroup has gotten $45 billion of TARP funds, and backstops on a net of roughly $250 billion of crappy loans after Ciit’s first loss and allowing for the split between Uncle Sam and Citi on the balance. And it is pretty unlikely that we have seen the end of Citi’s funding needs. GM […]
Read more...We have been skeptical that the pending Treasury stress tests on banks, designed to ascertain their state of health, were inadequately staffed and therefore could not do the job properly. Our big concerns were that they had too few bodies to test financial data versus underlying documentation adequately (usually done on a sampling basis) and […]
Read more...We are back to weekend melodrama, but this one is starting on Sunday night, not a Thursday or Friday. Not good. Citigroup is apparently throwing itself on the mercy of the court, um, taxpayers, once again, but even the bankster favoring Geithner/Summers team know that the public at large is losing patience with financial firm […]
Read more...In a post yesterday, some readers bandied about the idea of developing some reasonably thought out proposals for “nationalization” or “receivership” or “pre-privatization”, possibly on an open source model of some sort. (Aside: those who know how Linux was developed know that it wasn’t free form; Linus Torvalds exercised control, one might think of it […]
Read more...Some readers and fellow bloggers have been anticipating an over-the-weekend resolution of some sort for Citigroup and/or Bank of America, given the impressive fall (admittedly from already distressed levels) in their stock prices over the last ten days. I could well be proven wrong, but I didn’t expect it this weekend, and I don’t see […]
Read more...Dear readers, this is a bit of an experiment (think of it as the econblog analogy to open source). When Geithner presented his bank plan, such as it was, I was particularly disgusted by the “public/private partnership plan rubbish. It struck me as a costly way to paper over the irresolvable conundrum with Paulson’s two […]
Read more...Lordie, is this crowd in denial? From the Wall Street Journal (hat tip reader Dwight): Amid fears that Citigroup Inc. and Bank of America Corp. could be on the verge of being nationalized, the White House gave assurances that it prefers banks to remain out of the government’s hands. “This administration continues to strongly believe […]
Read more...You can’t blame all the pressure on Citi on evil short sellers and the credit default swaps market. From Dow Jones, via Clusterstock (hat tip reader Tim): Many bankers in the US believe nationalization of banks in general and Citi in particular is not on the agenda, but staffers in Asia, far away from the […]
Read more...I’ve been asserting for some time, based on the comments from mortgage counsellors, that mortgage mods that do not substantially reduce principal balances don’t make enough of a difference to the borrower to change outcomes. And with banks and servicers looking at 40%+ losses on many foreclosures, they can reduce principal a lot and still […]
Read more...The digging by the New York attorney general, Andrew Cuomo, into the bonuses paid by Merrill Lynch immediately prior to the closing of its acquisition by Bank of America, are starting to take an interesting turn. The proximate cause is that the bonuses were unseemly and unwarranted, which doesn’t form the basis for legal action., […]
Read more...Some readers may take issue with the headline, but bear me out. Within ten days of 1987 stock market crash, President Reagan established what was popularly called the Brady Commission to investigate the causes of the meltdown and recommend remedies. A little more than two months after it was created, the Commission submitted its report. […]
Read more...Greg Mankiw today addresses an issue which has been nagging at me, but I have neglected to address. I’ve gotten a fair number of comments along the lines of “I’m opposed to bank nationalization, but I agree we need to do something, so put them in bankruptcy.” Aargh. No one seems to have a problem […]
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