The Financial Times reports that despite the snappy rally in bank stocks in the US, which may have been partly fueled by short covering, money market traders expect banks to face rough sailing till the end of 2010. From the Financial Times: Traders are betting that the credit crunch will still be hurting banks at […]
Read more...I got this far in the Wall Street Journal article, “Capitol Hill Storm Envelops Fannie-Freddie Rescue” and started seeing red: The Congressional Budget Office is expected to estimate the cost of Treasury’s proposals to the federal government to be in the tens of billions of dollars, according to people familiar with the matter. That estimate […]
Read more...Ambrose Evans-Pritchard appears to be trying to corner the market in apocalyptic financial news. But his sources aren’t evangelicals, survivalists, or even goldbugs. The experts he cites are with respected financial firms, meaning they don’t sound alarms casually. Even more significant, the terms they are using to describe what might be coming are uncharacteristically dire. […]
Read more...The link is here. Main elements: Common and preferred equity wiped out Subordinated debt swapped for equity warrants Current senior unsecured debtholders get per each dollar of face 90 cents face amount of new debt and 10 cents face amount of new equity Equity holders can put common to Feds at face value for first […]
Read more...So much for the notion that the not-quite-a-rescue-plan for Fannie and Freddie would calm troubled markets. Equities gave a raspberry yesterday and overnight, the TED spread widened 11 basis points to 133 basis points (a sign interbank funding trouble may be nigh) and today the currency markets, which initially seemed to take the news in […]
Read more...The time has come to announce the formation of the Banana Republic Club. Membership is open, with the sole requirement being that nominees correctly discern behaviors in advanced economies that resemble those of corrupt developing countries, which for sake of convenience are referred to as banana republics. Members are eligible to receive a Carmen Miranda […]
Read more...The FDIC announced earlier that it will halt foreclosures in IndyMac’s $15 billion loan portfolio. But I found this bit of the Wall Street Journal’s article “IndyMac Reopens, Halts Foreclosures on Its Loans“: In its effort to halt foreclosures, the FDIC has much more flexibility to intervene with the roughly $15 billion of loans that […]
Read more...As both cynics and boosters anticipated, the Freddie Mac $3 billion sale of short term debt went off well this morning. As of this hours, the stocks of the GSEs have fared less well, as the Wall Street Journal notes: Shares of Freddie were up about 20% soon after the market opened Monday but reversed […]
Read more...It seems so long ago that the Treasury’s failed effort to organize an SIV bail-out entity, the MLEC, was regular front page news in the financial press. Citigroup was to be the biggest beneficiary of this operation. Well, the MLEC never came to be, and Citi still has those pesky off balance sheet assets to […]
Read more...I must admit to being hopelessly naive. The Fed opens its discount window to Freddie and Fannie, which is an admission that there is a problem but not much of a solution, since the GSEs are certain not to use it (accessing the discount window is a kiss of death, seen an admission that a […]
Read more...I received an e-mail that contains the text of a letter allegedly sent to Freddie Mac employees this evening (hat tip reader Jeff). On the one hand, I cannot verify its authenticity. On the other hand, it reads like the real deal. Note particularly the claim that the measures proposed by the Treasury are merely […]
Read more...For those looking for some concrete action (which was what many market participants hoped for), Paulson issued a statement that amounts to hand waving. Full text from Bloomberg: Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. […]
Read more...So much for merely making reassuring noises, as the Wall Street Journal reported an hour or so ago. Unless the authorities can call in favors and get a strong show of buyer interest at the Fannie sale of $3 billion sale of short-term debt tomorrow, it’s hard to imagine the markets will take well to […]
Read more...Various sightings of motion, but none yet of resolution on the Freddie and Fannie fronts, although there are now indications that an announcement of some sort will come soon. Note that the updated story from the Wall Street Journal suggest a rescue is not in the offing, merely a willingness to rescue. If the powers […]
Read more...With the financial system on the exam table, it has been more than a bit troubling, that certain questions are neglected in serious academic/policy debates. The discussion of possible remedies focuses on regulatory solutions, everything from requiring mortgage brokers to be licensed to increasing financial institution capital requirements and having much greater harmonisation, as the […]
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