Before you get too excited, the current display of regulatory vigor is almost certainly motivated by a desire to protect turf rather than new-found solicitude for investors’ welfare. Bloomberg reports that the Financial Industry Regulator Authority will start on-site inspections of 40 brokerage firms regarding their participation in the auction rate securities meltdown. Wow! Action! […]
Read more...Stories by Bloomberg and Reuters on a talk by Kenneth Rogoff, former chief economist for the IMF and currently a Harvard professor, fail to mention perhaps his most relevant credential as far as opining on the US credit crunch is concerned. He and Carmen Reinhart of the University of Maryland have done an extensive study […]
Read more...According to reports in the New York Times and Wall Street Journal, Lehman is shopping its asset management business, which includes Neuberger Berman (purchased for $2.6 billion in 2003), its private client brokers, and Lehman Brothers Asset Management. Now look at the valuation of the asset management business versus Lehman as a whole. From the […]
Read more...A colleague, who is close to a number of fund manager talking heads, observed that there was an uncharacteristic, gaping disparity between what many of them are saying on TV (“it’ll be over in a quarter or two”) and their far more downbeat private views. He did not offer a reason for their lack of […]
Read more...Readers know that we have been suspicious of Lehman’s claims that they were on sounder footing that the market was giving them credit for and had put the worst of their financial woes behind them. Our doubts were fueled by the number of open questions surrounding their claims of deleveraging and their extremely aggressive spin […]
Read more...The problem with having narrow skills, like being able to structure CDOs, is that if you lose your job, your employment prospects are limited. Unless you have personal connections that are willing to give you a chance at something where your skills might be distantly relevant (say being the CFO of a small company), most […]
Read more...Bloomberg reports that Lehman is in talks with BlackRock to spruce up its balance sheet by disposing of a big chunk of its commercial real estate portfolio. The article indicates that the firm intends to sell slightly less than half of its $40 billion holdings. Ladenburg Thalmann’s analyst Richard Bove anticipates the losses (presumably from […]
Read more...Readers may remember that this blog broke the story, thanks to information provided by a former senior Lehman employee, that some of the asset sales in Lehman’s touted second quarter deleveraging were in fact to a newly formed hedge fund, R3 Capital, staffed by former Lehman MDs and employees, that not only has Lehman as […]
Read more...Readers may know I am a big fan of Kenneth Rogoff and Carmen Reinhart, his frequent research partner and co-author. One of my reasons is that he is much more empirically-oriented than most Serious Economists. One recent bit of Reinhart/Rogoff research that has gotten some attention (but in my mind, still not enough) is their […]
Read more...Merrill’s surprising, mere ten days after its last investor combo writedown/fundraising announcement still has financial analysts toting up the collateral damage. Remarkably, the US stock market staged a peppy rally, clearly choosing to ignore the implications. The cause for pause was the sale of $30.6 billion in face amount of super senior CDOs at a […]
Read more...When Merrill announced its surprise writedown of super senior CDOs yesterday, all eyes turned to Citigroup, another large holder. Analysts started sharpening their pencils and have offered updated estimates. From Bloomberg: Citigroup Inc. probably will write down the value of collateralized debt obligations by $8 billion in the third quarter based on Merrill Lynch & […]
Read more...Many readers over the weekend commented on National Australia Bank’s stunning writedown of A$830 in “super senior” CDOs, which resulting in a valuation of ten cents on the dollar, and speculated that this move had implications for US banks. Then Merrill announces a surprise writedown, out of sync with its reporting cycle. Could the two […]
Read more...Wow, Merrill is raising cash like there is no tomorrow. Which of course makes one wonder what they know that the rest of us don’t yet know. From Bloomberg: Merrill Lynch & Co. said it will record $5.7 billion of pretax writedowns in the third quarter because of additional losses on the sale of collateralized […]
Read more...The New York Times reports that New York city and state officials are worried about revenue losses due to pay cuts in the financial services industry, which they expect to be worse that the dotbomb/post 9/11 cutbacks. Frankly, that downturn was mild compared to 1990-1991, the early 1980s, or the particularly nasty 1973-1975 contraction. From […]
Read more...I must be missing something here. Not too long ago, Goldman was wiling to act as a principal in LBO financings for deals the firm did and would then syndicate the deal. Now admittedly that was the sign of a bull market peak, that an investment bank would take that sort of risk, but bear […]
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