Category Archives: Banking industry

Now It’s Official: Treasury Can’t Influence How Banks Use Cash Infusion

Per Bloomberg, Treasury operatives have admitted, despite Henry Paulson’s protestations to the contrary, that the government can only hope for the best in how the nine banks given a collective $125 billion cash infusion early in the week make use of the loot: Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 […]

Paulson vs. Bank Execs: Who is Telling the Truth?

These statements occur within a mere six paragraphs of each other in a Wall Street Journal story, “Devil Is in Bailout’s Details‘: Upending the government’s relationship with the financial sector, the Bush administration outlined a plan Tuesday to prop up banks by injecting $250 billion into U.S. financial institutions…. The government is making clear it […]

Baltic Dry Index Falls Nearly 20% in Two Days

The Baltic Dry Index, which some use as a proxy for the outlook for global manufacturing, has been falling since late June, not long before the commodities bubble burst in July, and has been in retreat since then. What is particularly worrisome is its steep dive in the last two days, despite Herculean efforts to […]

Little Sign of Relief in Interbank Markets Despite Massive Intervention

Although the stock market has taken considerable cheer from the monumental action by central banks to try to restore interbank lending to something resembling normalcy, the results to date have been meager. However, hope remains that improvement will continue, albeit at a slow pace. From the Financial Times: The costs for banks to borrow money […]

Only One in Five Americans Trust Banks

Advertising Age discussed a Gallup poll of consumer attitudes towards banks, which found distrust at the highest level in decades. Consumers are also on the whole more concerned about big banks than their local brethren. From Advertising Age (hat tip reader Michael); Only 21% of consumers polled are confident in U.S. banks, according to a […]

Money Markets Still Stressed; Analyst Forecasts Only Small Decline in Three Month Euro Rates

This Bloomberg story tries to take an oddly cheery tone, when in fact, it reports in effect, than an analyst forecasts that the heroic measures taken to unfreeze interbank lending will not lead to much in the way of a rate reduction. However, if any lending were to take place at the three month tenor, […]

Charlie Munger: Leash and Collar Wall Street

The backlash is starting to get serious. It is one thing for the man on the street to fulminate about the excesses of financiers. And even those who try to harness that anger find themselves checked. John McCain, who has said that he is going to fix the economy by (among other things) going after […]

George Magnus on the Economic Outlook

George Magnus, a strategist for UBS, was one of the early popularizers of Hyman Minsky and was similarly one of the lonely few to worry about the financial and economic fallout of dealing with unsustainable levels of debt. His comment in today’s Financial Times, “Is there time to avert a Minsky meltdown?” is cautiously optimistic […]

Bloomberg: Treasury Forces Nine Banks to Sell Perpetual Preferred to TARP

Lordie, do we have any rule of law in this country? Presumably, the twisted logic of forcing money on to bank in return for taking perpetual preferred was that making the banks ask for it would create a taint. But even with the Treasury’s sweeping new powers under the $700 billion rescue package, one wonders […]

WSJ Provides Sneak Preview of Treasury Bank Salvage Operations

The Treasury Department is expected to announce its bank rescue program, which entails making use of its authority under the $700 billion Trouble Assets Repurchase Program to buy pretty much anything it wants to. The Wall Street Journal provides the latest reading on what the plan might entail:The initiatives will likely supersede many of the […]

Mitsubishi Agrees Revised Terms on $9 Billion Investment in Morgan Stanley

The revised terms are similar to those discussed last night, with the Japanese bank investing the same amount but receiving an increased ownership stake (21%) and receiving more in preferred stock. Note confusion in the Journal article: the news alert, says, “MUFG Closes Morgan Stanley Investment With Revised Terms” when the story itself says both […]

"Fed Leads Unprecedented Push by Central Banks to Flood Market With Dollars"

The reader/investor who sent the link to this Bloomberg story provided the comments below. Not he does not resort to capital letters casually: THIS IS HARD TO BELIEVE. THOSE CB’S DON’T HAVE UNLIMITED $’S, SO IF TRUE, THEY WILL BE BORROWING THEM FROM THE FED VIA AN EXTENSION OF FED SWAP LINES, THE FOMC HAS […]

Soros: "How to capitalise the banks and save finance"

One can disagree with the particulars of this comment by George Soros, but his main point is sound. The financier argues that the Treasury Department’s $700 billion Troubled Asset Repurchase Facility should be used to recapitalize banks. This blog and most economists have argued that restoring depleted bank equity is the top priority for shoring […]

Officialdom to Close the Leverage Gate Now That the Horse is in the Next County

Better late than never, I suppose. Finally the powers that be acknowledge the role of leverage in our financial crisis and vow to do better next time. From the Independent: The governments of the world’s largest economies have moved decisively to prevent any recurrence of the collapse of the global financial system. The Financial Stability […]

Mitsubishi and Morgan Stanley Renegotiating Mitsubishi Equity Purchase

Oh, just when it might be looking safe to go into the pool again, by virtue of the EU putting up a substantial enough plan to possibly start calming overfrayed nerves, another source of worry appears to be deteriorating, namely Morgan Stanley. Sports fans may recall that a badly-needed cash injection into the embattled investment […]