Martin Wolf’s current comment is great fun. He makes a recommendation which is logical and well argued but so contrary to the prevailing orthodoxy that it is sure to elicit a lot of ire. And I guarantee it will be misconstrued as well. Wolf notes that banks (and we can include investment banks) have succeeded […]
Read more...Never ones to miss an opportunity to lose money, the top Japanese banks, finally having recovered from lending against wildly overvalued collateral, and then suffering nearly two decades of working out zombie loans (or more accurately, being insolvent but being allowed to operate anyhow, since reviving the crappy banking sector one has is easier than […]
Read more...I call your attention to this Wall Street Journal story, “Countrywide Draws Ire of Judges,” for three reasons. First is Countrywide schadenfreude. I freely admit to having what may be called a bias. I have read and been told enough about Countrywide to be persuaded that it is a corrupt organization, even if it manages […]
Read more...In a front page story, the New York Times reports that state attorney general Andrew Cuomo has launched an investigation of whether “exception” mortgages, meaning ones that fell outside the lender’s guidelines but were nevertheless approved, were adequately disclosed when bundled into mortgage backed securities. Connecticut’s attorney general is working on a similar, cooperative review, […]
Read more...The Wall Street Journal reports that Prince Al-Waleed, who salvaged Citi in the early 1990s (its stock was at $9 on its way to zero) is expected to pump equity into the bank again. Note there are some disparities between the Journal’s story and the one in the Financial Times. For example, the Journal says […]
Read more...The Fortune article by Allan Sloan, “BofA’s awesome Countrywide tax break‘ was more blunt, pointing out that we taxpayers are helping subsidize Bank of America’s purchase and Mozilo’s payout. The tax savings are reported to be worth a half a billion over the first five years after the deal close, due to Bank of America […]
Read more...Forgive comparatively terse comments tonight. The Wall Street Journal reports that Citi and Merrill could have additional losses of up to $25 billion between them and are scrambling to secure foreign funding commitments of $3-$4 billion at Merrill and up to $10 billion at Citi While the article doesn’t say so clearly, the goal is […]
Read more...I wish I had written this piece by Stephen Roach, formerly one of Morgan Stanley’s economists (and noted bear), now head of Morgan Stanley Asia. Roach does an elegant job of drawing connections between some issues that other commentators have treated separately. Roach sees the oft-decried global imbalances (shorthand for countries like China, Japan and […]
Read more...I somehow missed this Bloomberg story last week, but it’s sufficiently important that I thought I should call it to your attention. Investors have decided that they are sick of being chumps and are now demanding newly-high financial concessions to change the terms of takeover-related debt. Bloomberg attributes the tough-mindedness to the losses investors have […]
Read more...jck at Alea pointed to this deceptively important Reuters story, “Ability to track risk has shrunk ‘forever’ -Moody’s,” which says that financial innovation has created information asymmetries that make it impossible for participants to understand their exposures fully. That position may cynically be seen as a defense of the rating agencies’ poor performance, but the […]
Read more...While this post from the reliable blog Credit Slips is mainly a long anecdote, it nevertheless contains an important message; benefit payments, which under the law are supposed to be protected from garnishment, on a practical level are not. Banks are supine when creditors show up with the appropriate paperwork. And as this example shows, […]
Read more...Bear with me on this post; it makes a more important point than you might anticipate. Reader Jim J sent this item from the Daily News, which tells of the indignities suffered by Citibank customers in New York City (including Jim himself) of having their ATM withdrawal limits reduced by half with no advance warning. […]
Read more...For those who may be too young to have been around in his heyday, Henry Kaufman, aka Dr. Doom, was one of the preeminent economists during the early to mid 1980s, when his firm, Salomon Brothers, ruled the bond markets. Kaufman had a particularly well honed ability to read interest rate trends, no mean skill […]
Read more...John Plender of the Financial Times warns us that the movement of assets from shaky players to the solvent has only just begun. Those who complain of crown jewels begin sold to foreigners had better get used to more of the same. Plender points out that investors are taking real risks, not merely that their […]
Read more...As the US government has sponsored various plans to forestall the recognition of real estate related losses, ranging from the failed SIV bailout program to New Hope Alliance subprime rate freeze program to proposals to raise Freddie Mac and Fannie Mae’s mortgage ceilings, it has begged comparison to Japan in the post-bubble years. Even though […]
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