Reader Abdul sent me a piece that ran in the New York Post on simmering disputes between investment banks trying to unwind CDOs and monolines that provided credit enhancement. Yes, I know the Post isn’t the usual place to see what amounts to breaking financial news, but it was the first out with some stories […]
Read more...Willem Buiter decided to provide some further thoughts on regulatory reform over the holiday weekend. Given the nature of posting, and the difficulty of devising banking reforms, most proposals are going to fall short on detail. But this one falls a bit shorter than I’d like. For instance, Buiter clearly assumes international cooperation; these ideas […]
Read more...For those who remember the “monolines on the ropes” days, one of the big bones of contention between critics like Bill Ackman of Pershing Square and industry executives was how to account for the fact that the risks of default on the guarantees the companies had made had increased. Ackman used a conservative mark to […]
Read more...Reader Baruch sent us this tidbit from Reuters: Bank Hapoalim, the second largest bank in Israel, sold its entire portfolio of MBS to Pimco for 75 cents on an already-written-dollar (or in this case, shekel). Note that the previous writedowns were at least $90 million on an portfolio valued before the sale at $3.42 billion. […]
Read more...Ken Funnell at Bank Lawyer’s Blog tells us that Ohio is about to put legislation into effect that will kill payday lending: The new Ohio law would limit borrowers to four short-term loans a year and cap annual interest rates at 28 percent. The bill also would limit loan amounts to $500 per loan, or […]
Read more...Let me make a wee confession: I tend not to follow money supply figures closely, in part because I am not a fund manager (there are only so many things you can watch on the side) and in part because we are missing some key underpinnings that might help make it a useful metric. In […]
Read more...Just when the world at large has become inured to the stories of the role of rating agency incompetence and complicity in our credit mess comes a bit of news that catches the attention of even the jaded. Moody’s had a bug in a program used to rate complex debt securities (constant proportional debt obligations, […]
Read more...A story on Bloomberg this morning uncharacteristically lacks a news hook but gives a good deal of color on counterparty risk in the credit default swaps market. The story argues that the other shoe may finally drop in the $62 trillion CDS market due to rising junk bond defaults. We’ve long seen that market as […]
Read more...The stock market is up so far today on mixed readings of the tea leaves. The Conference Board’s index of leading indicators rose unexpectedly, which elicited some positive reports, but Reuters was not impressed, noting that the 0.1% rise showed weakness but not a formal recession. The Wall Street Journal attributed the rise to analyst […]
Read more...Conventional wisdom is that markets are the best place to get unbiased forecasts, but we see a sharp divergence of views between what TIPS buyers and Treasury traders in general anticipate inflation rates will be versus consumer expectations and the continued high inflows of new funds into commodities. We’ve seen this sort of divergence before. […]
Read more...There has been a raft of articles about the Federal Reserve’s new found interest in the question of asset bubbles, suggesting that the Fed might be ready to shift policy and exhibit more willingness to rein them in. Yesterday, a page one Wall Street Journal story discussed at length research central bank chairman Bernanke has […]
Read more...The ECB has uncovered gambling in Casablanca. The central bank is shocked to learn that banks appear to be originating crappy assets solely for the purpose of dumping them in a liquidity facility intended to help them through a rough patch, not to provide an ongoing subsidy. Regulators should know better. Indulgent parents generally wind […]
Read more...I’m sure readers know of other super turkeys, but Floyd Norris in the New York Times did find a prime example of crappy paper. Note that he limited himself to securities, so CDOs were not candidates for this Hall of Shame award. The Merrill deal was a pool of seconds (“piggybacks”). Moody’s noted that this […]
Read more...Blackstone President Tony James said it may be premature to label the credit crisis over, although he did point to improving conditions in the market for LBO-related debt. However, one also has to wonder whether this call is to lower expectations for Blackstone’s performance, given the firm’s dreadful first quarter results. Oddly, Bloomberg reports the […]
Read more...In keeping with Bernanke’s cautionary remarks about the unsettled state of the markets, some debt market participants worry that the recovery will prove short lived. While few are forecasting a return to the near paralysis of early in the year, the combination of continued caution among lenders and a deteriorating economy could make debt dearer […]
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