A couple of interesting sightings that indicate how profitable credit cards by showing how much new entrants are willing to spend to enter the business (and obviously still believe they can generate a decent return). First, from Elizabeth Warner at Credit Slips: If you ever wondered just how profitable credit card lending can be, take […]
Read more...A colleague was so kind as to send me the text of a speech given at the Graham & Dodd breakfast a few weeks ago by David Einhorn, CEO of hedge fund Greenlight Capital. The speech has gotten play only in some personal-investment-oriented blogs like Seeking Alpha and Naked Shorts. Even though they are fine […]
Read more...Bloomberg reports today that a downgrade of the monoline bond insurers MBIA and Ambac, which had been the subject of concern for some time (see here and here), may cost investors as much as $200 billion. If they lose their AAA rating, then any securitized deals that relied on them for credit enhancement will be […]
Read more...A $5 billion General Electric institutional cash management fund is now offering investors only 96 cents on the dollar. Note, as discussed in the CNBC article below (hat tip pjfny), this was NOT a money market fund. However, this news, which appeared first on Barrons, was one of the reasons the stock market retreated into […]
Read more...Bloomberg reports that at a Merrill Lynch sponsored investor event, both BlackRock CEO Larry Fink and Goldman CEO Lloyd Blankfein gave negative readings for the credit market, particularly CDOs and subprimes. Goldman is putting its money where its mouth is and is short mortgage-related debt. BlackRock also said it was in contact with the Treasury […]
Read more...A reader pointed to a link that shows that an Ohio judge rejected the foreclosure on 14 properties by Deutsche Bank because they failed to establish that they had the right to foreclose. Before readers get too excited, remember this is only 14 mortgages and this sets a precedent only for Ohio (foreclosure is a […]
Read more...Monday, the Financial Times’ MergerMarket blog (hat tip Felix Salmon) gave a sighting of CDO market prices, and it wasn’t pretty: However, AAA rated subprime CDOs currently trade from the high single digits on junior tranches to 60% of face on super senior tranches, according to a sellsider and a buysider….. Merrill Lynch in the […]
Read more...This quote, from Countrywide’s CEO Angelo Mozilo, has the potential to be one of those career-death-wish utterances, in the same league as Citigroup ex-CEO Chuck Prince’s “We’re still dancing,” when asked in July if he saw any cause for pause in the recent wobbles in the credit markets. The worst is that Mozilo’s proclamation isn’t […]
Read more...We had noted earlier that one of the motivations for launching the SIV rescue plan sponsored by Citigroup, JP Morgan, and Bank of America wasn’t only to help save the banks who sponsored SIVs from having to tie up their balance sheets by extending funding to them, but also to save money market funds from […]
Read more...By coincidence of timing, two economists, Nouriel Roubini and Willem Buiter, who have sharply contrasting temperaments, writing styles, and analytical approaches, came out with posts that both argued that US growth prospects look weaker than mainstream forecasts suggest. Readers who follow economics blogs doubtless know full well that NYU economics professor Roubini is a very […]
Read more...Sometimes I feel like I am beating a dead horse, or in this case, an about-to-be-stillborn one. The leak over the weekend revealed that the sponsors of SIV salvage operation, the so-called Master Liquidity Enhancement Conduit, had come up with a deal structure. That’s an important hurdle, but it still puts the concept a long […]
Read more...Before I raise your expectations unduly, I am not saying that Ben Stein’s entire “Everybody’s Business” column today is intelligent. However, this week’s piece, “It’s Time to Act Like Grown-Ups,” had some sensible moments, and I want to give Stein his due on those infrequent occasions when it is merited. I am not parsing the […]
Read more...Eric Dash of the New York Times reports that the sponsors of the oft-criticized SIV rescue plan, the Master Liquidity Enhancement Conduit, have passed an important hurdle; they have agreed on a deal structure. As we have commented before. one of the things that has been perplexing from the outset was that the organizers, Citigroup, […]
Read more...The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of its subprime securities, largely “super senior” tranches of […]
Read more...The commercial paper market contracted $40 billion for the week ended yesterday. Not only did the asset backed commercial paper market continue to shrink, but other commercial paper outstandings fell as well. As we have noted before, the continued shrinkage of the CP market calls into question the strategy of using interest rate cuts to […]
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