One topic we’ve mentioned from time to time is the near disappearance of the debtor in possession financing market and why that is a more serious matter than its dry name might suggest. When large companies seek to use Chapter 11, typically they are broke (duh) as in out of cash. Chapter 11 takes time, […]
Read more...As correspondents and readers have pointed out, Fed chairman Ben Bernanke and the rest of DC is increasingly resorting to the playbook he suggested in various papers on Japan’s deflation. The Federal government has said that it is willing to lend or backstop up to $7.4 trillion to get the credit markets moving again. This […]
Read more...Oddly, I saw this comparatively late (about an hour), and no notice Bloomberg, which is perfectly willing to pick up news reports by competitors with attribution, and Asian markets ex Japan (closed today) were still in negative territory, although slightly less so. Note key element of the deal is that the Federal government will guarantee […]
Read more...Why are we in the mess we are in? There are lots of proximate causes: overleverage, global imbalances, bad financial technology that lead to widespread underestimation of risk. Readers can no doubt improve on that list. But these still are all symptoms. Until we isolate and tackle fundamental causes, we will fail to extirpate the […]
Read more...Well, this is starting to get the feel of a bad soap opera, which is not helpful to Citi (never a good sign when I leave my computer on a Sunday afternoon and find multiple news updates when I return. This may not be full crisis mode, but it is certainly not a good sign). […]
Read more...Meredith Whitney, the most accurate of the banking analysts (and even she has said she was too conservative on how bad the losses would be) has deemed Citi to be beyond redemption. From an interview in the New York Post (hat tip reader Dwight): “Pandit and his executives are completely naive if they think the […]
Read more...The New York Times has a solid bit of reporting tonight by Eric Dash and Julie Creshwell, “Citigroup Pays for a Rush to Risk,” that seeks to explain why the giant bank got itself in so much trouble. The piece points to the usual culprit, too much risk taking, but the particular Citi flavor was […]
Read more...Reader Dwight sent along this tidbit from OptionMONSTER ($) and I must confess it piqued my interest. As you will see, the trade described in this story makes sense only if you believe the acquisition of Merrill by Bank of America will not close, or will appear to be in serious doubt. That seems like […]
Read more...The market shrugged off the prospect of a Citigroup meltdown and focused instead on the leak that Timothy Geithner was Obama’s pick for Treasury Secretary. Citi fell another 20%, its shares dropping below $4. Have banking catastrophes become so routine that it is now assumed that the officialdom will clean up the broken china and […]
Read more...Citibgroup’s stock price fell another 26% today to $4.71, bringing the week’s decline to 50%. The Wall Street Journal reports that the sudden decay is driving management to consider a radical restructuring of the company or an outright sale, moves that were deemed by management to be off the table as of a mere week […]
Read more...Reap what you sow. Over the last 20 years, the ever-aggressive Wall Street culture has moved even further towards prizing, and paying for, individual performance. Even at the famously team oriented Goldman, after the trading side of the firm became the dominant profit engine, top executives would reportedly describe the investment banking side as “socialist” […]
Read more...Full disclosure: I normally do not take notice of insider trading suits, even when big names are involved. I long thought Martha Stewart made a huge tactical error in fighting the charges on ImClone. She could easily have said, “My broker called me about this, I was in a cab, between meetings, making calls, juggling […]
Read more...We had mentioned in Links a few weeks ago tax law change allowing banks acquiring other banks with crappy assets to use the tax losses (the net operating loss carryforward) of the acquired company: Major Tax Incentive For Bank Purchases: IRS Eliminates the Limitation on Banks’ Built-In Losses Post-Purchase Jones Day (hat tip reader Richard). […]
Read more...In the stone ages, when I worked for a short while at Goldman, it would have been unthinkable to trade openly against clients. But those proprieties were abandoned long ago. In 2007, the firm was unapologetic about its decision to short the subprime market (a big, perhaps the big reason for its departure from industry […]
Read more...Readers may know we have been concerned about the dramatic fall in shipments of basic materials, as reflected in the collapse of the Baltic Dry Index. This in turn, as we have also stressed, is in large measure to the difficulty of obtaining trade finance, in particular letters of credit. A very good post at […]
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