Category Archives: Regulations and regulators

Banana Republic Watch: Rodgin Cohen a Candidate for Deputy Treasury Secratary

This tidbit comes in a Wall Street Journal story, “Top Treasury Candidates Pull Out“: Treasury has identified and is vetting other people for top slots, including H. Rodgin Cohen, chairman of top law firm Sullivan & Cromwell LLP and an adviser to virtually every firm on Wall Street, for the deputy secretary position, two people […]

Martin Wolf is Angry About Bank Bailouts

The British don’t do shrill, but Wolf today is as close as you will ever find on the pages of the Financial Times. And the telling sign that Wolf is borderline unhinged is (aside from mentioning his fury) that his article has less of a clear structure than his comments usually do. But he nevertheless […]

The Treasury Mortgage Mod Program: Should We Hope It Doesn’t Work?

The Treasury today announced its so-called “Making Homes Affordable Program”. I am clearly an old fart. The fact that the Treasury bothered to have a logo created for the program (do consumers and servicers really need brand imaging when having money shoved at them?) gives me more than a little pause. I will nevertheless try […]

FDIC Insurance Fund May Run Dry This Year

As dramatic as the supposed revelation that the FDIC may need to go hat in hand to Congress for more dough, this is hardly a surprise. The FDIC also needed to appeal for additional funds in the savings and loan crisis, and our current mess dwarfs that one. From Bloomberg: Federal Deposit Insurance Corp. Chairman […]

On the Need to Leash and Collar Effectively Nationalized Banks

One of the things I find truly remarkable is the degree to which Americans (or at least commentary in pretty much all American media) have bought into certain ideological constructs as if they were gospel truth. Now in fact, most of us operate from ideologies of various sorts. For instance, reasonable people can differ on […]

Does Creeping Nationalization Make Reprivatization Harder?

A New York Times article tonight, “U.S. Likely to Keep the Reins on Fannie and Freddie“, raises the specter that the mortgage giants may never return to private form. Frankly, we think that is not entirely a bad thing. Fannie and Freddie were originally agencies of the US government and were (sort of) spun out […]

"In Praise of More Primitive Finance"

Analysts, regulators, and politicians are beginning to recognize that most if not all of the widely touted benefits of modern finance redounded only to its purveyors. The decidedly retro Canadian banking system, with simple products, high equity requirements, and relatively modest securities operations that focus on domestic customers, is the soundest in the world. As […]

Jim Baker: First, Let’s Kill All the Zombies

A very good comment by former Treasury Secretary James Baker in the Financial Times, “How Washington can prevent ‘zombie banks’,” warns that the US is on its way to repeating the Japanese error of propping up dud banks and creating a moribund economy as a result. His program has the merit of being simple (at […]

US to Convert Preferred Shares in Citi to Common at 32% Premium to Market Price

Funny how a deal that is giving Citi a premium on its common shares that one typically sees in an M&A transaction (ie, the target is sought after) in the course of a salvage operation is being . Similarly, the bank is being asked to have its board members that are insiders resign those seats. […]

More on the Simply Dreadful Performance of CDOs

Apologies for the terse posts tonight; out of town, will be lighter than usual today and tomorrow. The Financial Times has been keeping tabs on the results, or perhaps more accurately, the lack thereof, of collateralized debt obligations. A couple of weeks ago, it highlighted research by Morgan Stanley and Wachovia that concluded that nearly […]

AIG Breakup LIkely

I wish I had the time to analyze this deal, but my travel schedule is cutting into blogging time, In addition, I don’t have a feel for whether the units mentioned in this article are merely suffering in accord with the crappy financial environment, or may have suffered additional, perhaps lasting damage. Two observations: First, […]

Some Slightly Good News: Feds Trying to Engage in More Serious Oversight of Citigroup

To be honest, I’m not quite sure how to read this Wall Street Journal piece, since this is a spat between two parties, with a “he said, she said” quality to it. However, the title, “Citigroup Chafes Under U.S. Overseers:” suggests a bias in favor of Citigroup.”Overseers” is a weak word, suggesting Uncle Sam really […]

From the Banking Officialdom: So This is Meant to Reassure?

Guess the continuing deterioration in the stock market is beginning to capture the attention of the financial regulators. The Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement just after 4:00 PM (hat tip reader Steve). Some key bits (boldface ours); A strong, resilient financial system is necessary to facilitate a broad and […]

Treasury Soliciting Bankruptcy Funding for GM, Chrysler

Let’s see. Citigroup has gotten $45 billion of TARP funds, and backstops on a net of roughly $250 billion of crappy loans after Ciit’s first loss and allowing for the split between Uncle Sam and Citi on the balance. And it is pretty unlikely that we have seen the end of Citi’s funding needs. GM […]

Now It’s Official: Stress Test Results Pre-Determined

We have been skeptical that the pending Treasury stress tests on banks, designed to ascertain their state of health, were inadequately staffed and therefore could not do the job properly. Our big concerns were that they had too few bodies to test financial data versus underlying documentation adequately (usually done on a sampling basis) and […]