Yet another sign of deplorable practice in action. Regulators are urging all banks to increase their capital bases. Bank of America bought Countrywide, which lost $2.33 billion last quarter, but management maintains will be profitable by year end (perhaps if they engage in the tactic forewarned by Institutional Risk Analytics, of putting Countrywide in Chapter […]
Read more...Readers may have seen that we cast aspersions on the CBO’s estimate that the Fannie and Freddie rescue program would “probably” cost taxpayers $25 billion. We had noted that the estimate was only through 2009 because that’s how far the authorization extends, but there is no way that Fannie and Freddie will ever be cut […]
Read more...One of the perverse side effects of the size and scale of the leading investment and universal banks is that it seems they are largely immune to the traditionally-crippling effects of a serious lawsuit or regulatory failing. Salomon Brothers, a Wall Street powerhouse in the 1980s was seriously wounded in its Treasury bond scandal and […]
Read more...And subprime was contained…… I am curious: what expertise does the CBO have in developing an independent view of the two GSE’s exposures? The CBO was no doubt dependent on the GSEs and/or the Treasury for key elements of the analysis. Moreover, if you connect the dots suggested in the Bloomberg story, the analysis was […]
Read more...The political theater continues. The New York Times reports in “Bush Prods Congress, as Financiers Are Inspected,” that the Fed and the OCC are giving Fannie and Freddie the once-over: Bank examiners from the Federal Reserve and the Comptroller of the Currency are inspecting the books of the nation’s two largest mortgage finance companies, Fannie […]
Read more...This item came from reader Chris, who passed along a tidbit from Wolfgang Munchau’s Eurointelligence daily newsletter. I can’t provide a link to the story itself; checking around the Eurointelligence site, it seems to be an e-mail only product, and the piece in question is based on a German news story. The proposal is odd. […]
Read more...Charles Wyplosz has a post up at VoxEU that is both clever and informative. He looks at the wisdom of having taxpayers shore up faltering banking systems, using the largely opposed viewpoints of two well-known economists as a point of departure: Larry Summers, former Treasury Secretary, who has argued that intervention is necessary to prevent […]
Read more...As he is often wont to do, Ambrose Evans-Pritchard worries, in dire terms, about the poor prospects for growth and stability, It would be easy to dismiss him as histrionic were it not for the fact that some commentators who have been right so far about the progress of the credit crunch, are also hyperventilating. […]
Read more...The last two days of the HBOS rights offering are Monday and Tuesday. Only 10% of the £4 billion offering have been placed, and the price as of Friday was hovering perilously close to the rights offering level. Underwriters Morgan Stanley and Dresdner, and if they have syndicated the deal, other underwriters, will try to […]
Read more...This program to assist overextended homeowners has only just begun, so it is way to early to say whether it will succeed, but it is an improved version of Dean Baker’s “own to rent” idea. Note that one of the elements, having a new bank buy the original lender out at the 70% of mortgage […]
Read more...Um, could someone explain to these folks that the monster rally in bank stocks was due to short covering? No. the bankers would rather live in the illusion that the dim outlook for their industry is due solely to the machinations of evil short sellers, not their mismanagement. Objectively speaking, the downside of a low […]
Read more...Jim Grant, who writes and publishes Grant’s Interest Rate Observer, is a rare figure on Wall Street: extraordinarily well versed in financial history, literate, possessed with a Victorian sensibility, which is very much on display here. His essay today in the Wall Street Journal is very much worth reading (and appears to be accessible without […]
Read more...When I read this Bloomberg story, “Blackstone Risks Hedge Funds’ Return as LBO Lending Evaporates,” my first reaction was “conflict of interest”. My second was “lawsuit”. Everyone casts a blind eye at arrangements like this until the returns falter. My third was that everyone interview seemed extremely reluctant to say anything critical of Blackstone. That […]
Read more...The results of the auction of the Cheyne SIV portfolio do not portend well for other SIV restructurings. From the Financial Times: A benchmark auction of distressed debt assets has given investors a gloomy guide to the prospects of recovering cash from the troubled structured investment vehicles that have been at the heart of the […]
Read more...It’s truly remarkable what a short squeeze and the threat of tighter governmental oversight can do. According to the Wall Street Journal, Freddie Mac is now considering raising $10 billion of equity to keep a government rescue at bay, or at least contained. But what are we to make of this attempt at stagecraft? The […]
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