From time to time, there are marked disparities in how events are reported in the Wall Street Journal and the Financial Times. In the overwhelming majority of times, it’s the Journal’s reporting that’s deficient. Today’s sighting fits the classic pattern. The difference in headlines says it all. The Journal’s is: “German Bank Blames UBS for […]
Read more...Standard Chartered abandoned plans to support its SIV, which is already in receivership. It is likely to default on its February 15 payment (it has three business days to cure the default). While this development is not expected to hurt either the bank or the marketplace, it’s another indicator that some institutions are less concerned […]
Read more...Readers may recall that a week or two ago, there was a good deal of chatter in the ether about reports issued by the Federal Reserve that showed that the banking system, for the first time ever recorded, showed negative net non borrowed reserves. Some commentators and analysts were alarmed; others regarded it as no […]
Read more...With conventional wisdom holding that private sector solutions are better than public stewardship, to have the government winding up owning a financial institution looks bad. It revives the memories of the regulatory failures that led the bank to be bailed out in the first place. Oddly, though, Northern Rock could have been allowed to collapse […]
Read more...Be careful what you wish for. New York insurance superintendent Eric Dinallo seems to be getting what he wants. FGIC, the number four bond insurer, was downgraded six grades by Moody’s on Thursday, from Aaa to A3, which meant it has lost its AAA rating from all agencies, and Moody’s warned it could be downgraded […]
Read more...If this microfinance venture by Grameen Bank is as successful as I hope it will be, it will be an indictment of US banks who provide only very high priced products to the lower income and poor, and then justify it by claiming that they offer a useful service. They of course prey on the […]
Read more...Alistair Darling, the UK’s Chancellor, criticized bonus payouts as too often not warranted by performance and called on boards to exercise more restraint. The attack came as a surprise, but the proximate cause seems to lavish pay for those in the City while their companies and the country as a whole is not doing all […]
Read more...Credit market troubles have the potential to cause considerably more damage to bank balance sheets. A UBS analyst tallies the possible hits as $203 billion, with fallout from the deterioration of bond insurer guarantees as the biggest source of risk. From Bloomberg: The world’s banks “remain at risk” of up to $203 billion in additional […]
Read more...In a sign of how dramatic the reversals of fortune have been on Wall Street, hedge funds, until recently considered the riskiest players in the financial services industry, are now questioning how safe it is to leave cash and securities with their prime brokers, the securities firms that provide credit, brokerage, clearing, and sometimes fund […]
Read more...January was a bad month for hedge funds. Depending what average you looked at (different services define strategies somewhat differently and have distinct comparison groups), a loss of 2% was a pretty typical figure, and I have heard rumors of quite a few funds, particularly quants, taking double-digit hits. The wounded are coming to light. […]
Read more...We’ve often observed that the reason to keep the banking industry (and Wall Street, now that some firms are too big to fail) on a short leash is that it plays with the public’s money: gains go to employees and shareholders but losses are socialized. We now see a bald-faced example of that problem in […]
Read more...We’re going to be a bit brief this evening. The Financial Times has a useful item in its Lex column which explains why leveraged loans, despite their seemingly rich pricing, are going begging: It has been a terrible period for leveraged loan prices – worse than for high-yield bonds despite the unsecured nature of the […]
Read more...The Hope Now Alliance, a plan brokered by Treasury Secretary Hank Paulson to get mortgage servicers to freeze introductory ARM rates for a narrowly-defined set of subprime borrowers, was roundly attacked by many borrower advocate groups. Their estimates of how many people it would help ranged from 15,000 to 145,00, and were attacked by the […]
Read more...The Financial Times has an interesting piece today by Chris Giles and Gillian Tett, “Lessons of the credit crunch.” The world’s top central bankers have learned that their traditional policy tools haven’t worked as well as they would have liked. So how to judge the job they have done? The FT story fails to address […]
Read more...One robin does not make a spring, but this front page Wall Street Journal article, “High-Interest Lenders Tap Elderly, Disabled,” is a real surprise. It’s not at all the sort of story one expects to see in the Journal, and comes one day after a very favorable piece on Michelle Obama. Is Murdoch having a […]
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