Before anyone gets hysterical, the focus of the efforts by Team Obama on financial services industry pay appears to be to force the industry to stop rewarding undue risk taking. As much as I have been critical of many Administration plans, this, at least in concept, is a good one. Why? Because I sincerely doubt […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns The first bank nationalization in German history is about to take place. At issue is Hypo Real Estate (HRE), a troubled Munich-based company that lends to commercial property developers and to build offices, hotels, roads, airports, you name it. This issue has been building for nearly […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns This is an updated version of a post that I wrote yesterday at Credit Writedowns. Today we are going to see whether shareholders are going to back Ken Lewis, the embattled CEO of Bank of America, and his board. I see this as a watershed event […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns I don’t much like Ken Lewis. It should be fairly obvious to everyone that he is a man who has only his own interests at heart. But, his revelation that BofA bought Merrill Lynch for the agreed-upon September price, despite Merrill’s having an additional $7 billion […]
Read more...One of the disturbing trends of the financial crisis hasn’t simply been the willy-nilly shifting of costs onto the taxpayer, even when there were investors in risk capital, aka bondholders and stockholders, who properly should take the hit first. As distressing is the repeated, flagrant disregard for the rule of law, starting with the Treasury […]
Read more...An interesting tidbit in the Financial Times: Bank of America was not blindsided by the Merrill writedowns (although Ken Lewis no doubt still wanted to walk from the deal). Its CAO was deeply involved in making them (boldface ours): Bank of America was directly involved in markdowns that contributed to Merrill Lynch’s $15.3bn loss in […]
Read more...Watch a bit of jousting during the hearings on AIG today: Now one can take the position that Grayson is merely trying to score points, but I don’t see it that way. Instead, he is trying to make a response to a basic and unanswered question: Who were these people who wrecked AIG and other […]
Read more...I know one can maintain outrage for only so long, and I find it deeply disturbing to look at the inability to rein financial industry pay in despite horrific results. If these people are so valuable, let them go to boutiques and prove it, where you eat what you kill rather than feed off a […]
Read more...The Jim Cramer chatter precipitated by his Daily Show appearance included some links to an infamous interview Cramer gave in 2007, where he discussed how he would, as a hedge fund manager, push the prices of stocks he was short down via the futures market. It was arguably a public admission of market manipulation. What […]
Read more...Got this via e-mail from a reader who has no axe to grind. Since it comes from a single source, it qualifies as a rumor, but knowing the ways of the big end of finance, I would be loath to dismiss it. Do any readers have any direct knowledge here? Thanks! Also, to be clear, […]
Read more...Nassim Nicholas Taleb, of Black Swan fame, joins the chorus in attacking asymmetrical bonuses, the “head’s I win” if things go well, “tails you lose” syndrome. An oversight in this piece is that this approach nevertheless worked reasonably well in the old Wall Street. Why? The big reason was that you had owner/managers whose capital […]
Read more...In case you think my headline is too harsh, consider the one at Bloomberg: “Obama to Work on Executive Pay Limits After Industry Complaints.” So in case you were laboring under the delusion that widespread managerial failure among the nations’ top banks, to the point of being dependent on taxpayer provided drip-feeds among the nation’s […]
Read more...Reader Russell had wondered whether the attorney general of North Carolina might go after Bank of America over the difficult-to-rationalize bonuses paid to Merrill staff, given that the Charlotte bank had signed off on them (failing to inform and obtain consent Bank of America would have been grounds for terminating the deal). I had thought […]
Read more...Lloyd Blankfein, in a Financial Times comment, offers some suggestions to policymakers and regulators on how to deal with the financial services industry. I’m sure most readers would like to see more sackcloth and hair shirt, less prescription. But setting the tone aside, I found one bit particularly interesting. Blankfein proposes that firms go back […]
Read more...I believe I am permitted to hyperventilate only once in an evening, so I’ll have to act with a modicum of restraint here. The Obama executive compensation restrictions for bailout fund recipients have been leaked, and may be long enough on appearances to appease an angry US electorate. But the shortcomings of the supposedly tough […]
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