Category Archives: Banking industry

So We Now Hear Renters Are Bad People (Own to Rent Edition)

Kevin Funnell at Bank Laywer’s Blog fulminates about an idea to deal with the burgeoning homeowner debt crisis, namely a proposal by House Representative Raúl M. Grijalva based on (but different in some key respects) from a Dean Baker proposal called “own to rent”. While there are problems with the idea, there is more than […]

Sale of Bank Hapoalim MBS Portfolio Says Prevailing Valuations Too High

Reader Baruch sent us this tidbit from Reuters: Bank Hapoalim, the second largest bank in Israel, sold its entire portfolio of MBS to Pimco for 75 cents on an already-written-dollar (or in this case, shekel). Note that the previous writedowns were at least $90 million on an portfolio valued before the sale at $3.42 billion. […]

Trichet Says Worst of Credit Crisis May Lie Ahead

The warning from the ECB’s chief Jean-Claude Trichet. that the worst of the credit crunch may lie ahead, deserves to be taken far more seriously than other cautionary warnings. First, he has a reasonably good reading on what is happening with European banks (and our sources with inside connections have maintained for some time that […]

Is the Noose Tightening Around Countrywide?

One of the reasons for Bank of America to walk from the Countrywide deal is the rising tide of legal costs and potential for sizeable damages. Admittedly, at this juncture the prevailing view is that the Charlotte bank would renegotiate the acquisition rather than abandon it (particularly since it should be able to limit liability […]

Some Informative Credit, Housing, and Mortgage Charts

Reader AK sent me a bit of Christmas in May: three hot-off-the presses reports, one from Morgan Stanley on the credit standing of US and European broker dealers, a Moody’s report on RMBS, and a UBS report on the subprime crisis. The Morgan Stanley report, although the shortest, was in some ways the most informative, […]

Jim Hamilton Scolds Bernanke for Regulatory Neglect

Jim Hamilton must feel like a Cassandra. Last August, he warned that the GSEs were in danger of having the ambiguous status of their implied guarantee tested. That came in January, and was finessed with various new Fed facilities. Hamilton has also warned repeatedly that the Fed needs to consider institutional reform, not merely bailing […]

The Case Against a Citi Breakup

Before readers start throwing brickbats, let me set forth some general views: 1. I have never thought the financial supermarket was a good idea and have said so for at least 15 years 2. I was opposed to the sale of Salomon to Travelers 3. I was opposed to the merger of Citibank and Travelers […]

How to Leash and Collar the Financiers? (Continued)

The fulminating over what to do about our miscreant socialized unrepentant and as yet unreconstituted financial services sector continues. Since massive subsidies have been extended in the form of help to the mortgage business and an alphabet soup of Federal Reserve facilities, with nary a demand made of the beneficiaries of this largess, it seems […]

"Investor says HSBC undervalued loss by $30bn"

The Times of London reports that activist investor Knight Vinke accused HSBC of failing to mark down its subprime assets (due to its ill-fated 2003 acquisition of Household Financial) adequately, leading to its greatly understating its first quarter losses. Vinke isn’t alone in being skeptical of HSBC’s latest earnings release. Amazingly, HSBC’s denial was weak, […]

Carlyle’s Rubenstein: Banks Still Have "Enormous" Unrecognized Losses

David Rubenstein of Carlyle Group doesn’t have anything to gain by saying bad things about banks, and he is well connected, so odds are good he is on to something (hat tip reader Abdul). He also repeated a theme that we’ve heard earlier: don’t count on sovereign fund rescues. While they were active buyers in […]

Citi Mulls Sale of $400 Billion of Assets

I’m in danger of sticking my neck out, but is it possible that Virkram Pandit, Citi’s CEO, is doing a good job? It’s way too early to make a call. The markets and stock watcher have the attention span of a fruit fly, when corporate successes are built slowly, and the less fanfare, the greater […]

"Seven habits finance regulators must acquire"

I get worried when the Financial Times’ Martin Wolf starts adopting Stephen Covey-esque sloganeering, particularly when he goes so far as to call his financial services reform proposal “the seven Cs.” Eeek. Earth to UK: one of the big hidden advantages you have is that the lingua franca is your language. That cloying business jargon […]

Will BofA-Countrywide Deal Get Done?

We’ve never been a fan of the pending acquisition of Countrywide by Bank of America. In fact, BofA’s apparent eagerness to buy a company clearly on the ropes seemed odd: why not wait until it went bankrupt, or at least was on the courthouse steps with a filing? We’re clearly old-fashioned, but in our day, […]

Is "The Credit Crunch is Over" Talk Premature?

Even though there has been a lot of whistling-in-the-dark talk that the credit crisis is past, the evidence is far from conclusive. On the one hand, BlackRock bought $15 billion of subprime debt at a mere 25% discount to face. In March, UBS was rumored to have sold $24 billion of Alt-A for 70 cents […]

"Credit crisis shows that banks need wise men not wide boys"

Although we have spoken from time to time about the managerial and cultural failings of the financial services industry, an article today in the Telegraph by Roger Bootle provides a nicely balanced, colorful, and deceptively insightful overview of the issue, while also giving a taste of how the British variant of the problem differs from […]