Felix Salmon and I see the contretemps between MBIA and the New York Times quite differently, as our posts (and e-mail exchanges) illustrate. I like Salmon, but ironically, the way we got to know each other was when he savaged a Gretchen Morgenson piece, and I took issue with some of his arguments, so this […]
Read more...Citigroup’s latest discussion of its business prospects belies the idea that the credit markets are on the mend. From MarketWatch: Citigroup Inc. Chief Financial Officer Gary Crittenden said Thursday that the bank faces continuing credit problems in the second quarter, with credit costs rising, provisions for bad consumer loans growing and “substantial” write-downs for subprime […]
Read more...Let’s start with some admissions: Gretchen Morgenson, one of two authors (the other is Vikas Bajaj) of a takedown piece on MBIA yesterday, has some detractors in the blogsphere because, frankly, her understanding of credit instruments leaves something to be desired. Her critics overlook her solid work on executive comp and corporate malfeasance. When she […]
Read more...Well, Ambac seems to be resorting to a strategy popular among those in denial:rather than admit you need to lose weight to stave off a heart attack, throw away the scale instead. Ambac has decided to fire Fitch as one of its rating agencies. And why is that? Well, Fitch had the bad taste to […]
Read more...John Paulson, of the eponymous hedge fund Paulson & Co., contends that the credit contraction has run only about 1/3 of its course as far as writedowns are concerned. He anticipates that the total credit losses will reach $1.3 trillion, which exceeds the IMF’s forecast of $845 billion. Paulson, who made a spectacularly successful bet […]
Read more...Let me tell you, if we have a revolution in the next decade, one of the triggers will have been the flagrant disregard shown by big players like MBIA for regulations, legal commitments, and fair dealing. I’m not surprised to see financially oriented sites calling for mass protests (but not yet against bond guarantors). The […]
Read more...I’ve had less cause of late to criticize the Wall Street Journal as the paper has made strides in its coverage of the credit markets. However, today’s paper has a story in which ideology appears to have compromised its reporting. Today Charlie McCreevy, EU internal markets commissioner, is to outline proposals for closer, tougher oversight […]
Read more...In a board meeting where it was believed that Martin Sullivan, AIG CEO, would resign, the expected took place. Robert Willmustad has been designated CEO of the insurer. From the Wall Street Journal: Robert Willumstad, a former Citigroup Inc. executive and chairman of the board of American International Group Inc., has been appointed chief executive […]
Read more...We’ve read from time to time that European banks have been launching deals, and not particularly good ones at that, solely for the purpose of using those securities as collateral for loans from the ECB. However, we hadn’t seen a longer-form treatment of that phenomenon. The Economist has decided to step into the breach. The […]
Read more...A solid column from Bloomberg’s Caroline Baum on what she sees as the market’s irrational expectations for the Fed. Key points: Investors focused on Bernanke’s remarks about inflation and the dollar, when he also stressed the less than robust growth outlook The last time the central banks said it saw inflationary risks predominating it wound […]
Read more...While this Bloomberg story notes that the bath Goldman took on a leveraged loan to Dutch TV producer Endermol was considerably below recent LBO loan haircuts (27.5% versus the typical
Read more...MBIA’s conduct continues to be shameful, yet the company is not getting the pillorying it deserves, at least from the media. Its latest bit of misbehavior: the company has reversed itself on its decision to remit $900 million of the proceeds of highly dilutive fundraisings to its insurance subsidiaries. Why might that be? Well, the […]
Read more...Do you remember the Ford Pinto? The 1970s car had a nasty tendency to explode into flames in rear end collisions. But the piece de resistance was when litigation exposed a Ford internal memo that showed the company was not only aware of the problem, but had run the math and concluded reinforcing the car […]
Read more...Moody’s reports that global junk bond defaults have doubled in the first five months of 2008 compared with their level at year end 2007 and forecasts that the default rate at the end of 2008 will be 5 times the level of year-end 2007. Those rates were 1.0% at year end 2007, rose to 2.0% […]
Read more...A piece by John Dizard in the Financial Times, “Get used to underwriting big lenders,” made me realize a bit of cognitive blindness. Central banks are committed to backstopping the credit default swaps market. Of course, that should be obvious. The Bank of England, ECB, Fed, and other central banks have intervened in various ways […]
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