Merrill’s surprising, mere ten days after its last investor combo writedown/fundraising announcement still has financial analysts toting up the collateral damage. Remarkably, the US stock market staged a peppy rally, clearly choosing to ignore the implications. The cause for pause was the sale of $30.6 billion in face amount of super senior CDOs at a […]
Read more...From the Times Online: Sir James Crosby, former chief executive of HBOS, who is carrying out a review for the Treasury, said that the “shortage of mortgage finance will persist throughout 2008, 2009 and 2010, and I suspect that current forecasts for new mortgage lending during this period will prove optimistic.” As expected, Sir James […]
Read more...When Merrill announced its surprise writedown of super senior CDOs yesterday, all eyes turned to Citigroup, another large holder. Analysts started sharpening their pencils and have offered updated estimates. From Bloomberg: Citigroup Inc. probably will write down the value of collateralized debt obligations by $8 billion in the third quarter based on Merrill Lynch & […]
Read more...This topic is and yet isn’t a bit afield from the normal beat of this blog. A reader sent links to some recent posts at Bronte Capital, a blog by John Hempton, which is reportedly read by top financial executives in Sweden and has a following among some of the more savvy analysts in London. […]
Read more...Even though the Fannie and Freddie near crisis, which produced a few days of panic in the credit markets, now seems to have abated, money market investors are still on edge. The Financial Times warns that various risk measures remain at elevated levels: Libor, the measure of inter-bank interest rates that is a key barometer […]
Read more...It no doubt seems absurd to question the idea that deleveraging in underway. We’ve had three heroic central bank interventions, starting in August 2007, to reverse seize-ups in the money markets. The asset backed commercial paper market has been almost in run-off mode. Leveraged buyout loans have been scarce to non-existent. Banks have cut home […]
Read more...There have been quite a few anecdotes about a new tough-mindedness among banks, and it is finally showing up in the data. From the New York Times: Two vital forms of credit used by companies — commercial and industrial loans from banks, and short-term “commercial paper” not backed by collateral — collectively dropped almost 3 […]
Read more...You simply cannot make this stuff up. Reader Steve pointed us to a HousingWire post, which says that mortgage servicers may too come knocking on the Fed’s window for financial support, thanks to the housing bill just passed by Congress. Now we’ve been told by mortgage counsellors involved in the Hope Now Alliance that servicers […]
Read more...Former regional Fed president William Poole argues forcefully in a New York Times op-ed today that Fannie Mae and Freddie Mac are not only unnecessary but also distort the financial markets and should be wound down. This program would also be consistent with a strategy of minimizing risk and cost to taxpayers. Probably due to […]
Read more...Tonight brings some useful commentary on the prospects and possible remedies for the banking industry. Roger Ehrenberg offers a good overview, highlighting an area that hasn’t gotten the attention it deserves, namely, proposals to change the Bank Holding Company Act to attract more investors. Reader Steve sent an e-mail that relates to some of the […]
Read more...Boy, what is the FDIC going to do come the fall? A summer Friday night is the perfect time to take over a bank, but the same action even on a Friday night in September will be noticed by a larger number of people. From a practical standpoint, this is really one bank failure, since […]
Read more...The possible downgrade of Fannie’s and Freddie’s subordinated debt involves only a small amount of the GSEs’ total debt, but the symbolism is more important than the dollar amounts. It validates some of the critics’ worries about Fannie and Freddie but also signals the possibility that not only shareowners could be wiped out, but even […]
Read more...When commentators as diverse as Willem Buiter, Marc Faber, and Joseph Stiglitz (to name a few) agree on something, whatever their shared opinion is probably merits consideration. In this case, it’s a cause near and dear to most readers’ hearts, namely, that the rescue efforts orchestrated by the officialdom are poorly designed. They treat taxpayers […]
Read more...JP Morgan looks again to be at the center of a plan to resolve, as one might put it politely, a troubled financial institution, in this case, the UK’s largest mortgage lender, HBOS. However, aside from the fact JP Morgan’s initiative, if successful, would represent the end of HBOS, the parallels to Bear Stearns diminish […]
Read more...Bond maven Bill Gross has raised his estimate of losses from the credit crunch to $1 trillion. One has to note that his firm is a large holder of Freddie and Fannie debt and he issued this pronouncement the day after the GSE rescue bill passed the House and looks certain to become law. Note […]
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