It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership. And it fleeces the taxpayer a second way: the public has spent enough […]
Read more...When AIG first went to the government for rescue funding, the insurer had said it would pay the proceeds of the emergency loans from the sale of assets, meaning some of its subsidiary businesses. As we now know, that effort did not bear fruit. One unit that was a candidate for sale, AIG’s aircraft lease […]
Read more...There have been plenty of takedowns on the plan (Leo provides a good recap in an earlier post tonight). Nevertheless, I thought I’d add a few further thoughts Aside from being busy, I didn’t weigh in because I don’t see that much has changed (obviously, Mr. Stock Market disagrees vehemently, but bonds didn’t move much […]
Read more...The Washington Post reports that Treasury will seek the power to take over insurers, hedge funds, and investment firms. Given the Treasury’s reluctance to assume control over clearly insolvent banks (Citi assuredly, probably Bank of America), it seems curious indeed that it is asking to extend authority that it is patently reluctant to exercise. Moreover, […]
Read more...The Wall Street Journal tonight, in “As It Starts Programs, Fed Weighs How to Stop Them,” broaches the touchy subject of how Federal Reserve unwinds all the “support lending” initiatives it has underway and is on the verge of launching. In general, this piece is more wary of party line than the typical WSJ offering, […]
Read more...Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.com According to the NYT, the administration is considering all kinds of new rules in the wake of the AIG bonus scandal. These include tougher rules for mortgage lenders, new oversight powers for the Fed, and a new exchange/clearinghouse for derivatives trading. Most interesting in terms of intra-governmental […]
Read more...Hoisted from comments: Say I am SAC Capital. I get to be one of the bidders on bank assets covered by the program Citi holds $100mm of face-value securities, carried at $80mm. The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm. I bid Citi […]
Read more...The New York Times seems to have the inside skinny on the emerging private public partnership abortion program. And it appears to be consistent with (low) expectations: a lot of bells and whistles to finesse the fact that the government will wind up paying well above market for crappy paper. Key points: The three-pronged approach […]
Read more...Full disclosure: I am normally a fan of the Financial Times’ Gillian Tett, but her latest piece reveals she has been co-opted by the industry she covers. While there are matters of substance I take issue with (we’ll get to those soon), the whopper is the positioning. How can Tett possibly depict Gordon Gekko as […]
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...The Wall Street Journal tells us tonight something that is pretty obvious: hedge funds were often buyers of AIG credit default swaps, either directly, or indirectly, by purchasing structured products that had AIG guarantees, such as collateralized debt obligations. While this report falls in the camp of peeling away yet another layer of AIG’s practices, […]
Read more...We have been saying from the first time the idea that Team Obama floated the idea of having a “public private partnership” buy toxic bank assets, that it was merely a very costly way to disguise overpayment. Henry Paulson tried twice to find a way to hoover up bad bank assets, the first time via […]
Read more...William Black, now a professor of economics and law at the University of Missouri (Kansas City) was a senior bank regulator during the savings loan crisis (his claim to fame was his pursuit of Charles Keating of Lincoln Savings, in which he was removed from the initiative and more management friendly investigators were assigned, and […]
Read more...As foretold, Goldman tops the list. From the Financial Times (hat tip reader Dwight): AIG paid out $22.4bn of collateral related to credit default swaps, $27.1bn to help cancel swaps and another $43.7bn to satisfy the obligations of its securities lending operation. The payments were made between September 16 and the end of last year. […]
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 […]
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