Category Archives: Regulations and regulators

The New York Times Spreads Disinformation About the Paulson Plan

Vikas Bajaj of the New York Times is an able reporter and I have often enjoyed his work. I was therefore taken aback when I read his article, “Plan’s Basic Mystery: What’s All This Stuff Worth?” since it misleads readers as to the intent and thrust of the so-called Troubled Asset Relief Program. This is […]

Democrats Say "Breakthrough" Enables Them to Pass Bailout Bill Tomorrow

As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast. We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. […]

Credit Default Swaps Outstanding Shrinks as Dealers Tear Up Agreements

The International Swaps and Derivatives Association reported that the notional amount of credit default swaps outstanding fell from $62 trillion to a bit under $55 trillion as dealers worked to eliminate offsetting trades. This is a step forward, although it is hard to assess how significant it is. While the reduction in systemic risk is […]

Republican Congressmen Tell Paulson Ballout Won’t Pass

I would not get optimistic yet, since Our Fearless Feckless Leader is on prime time tonight, but Republican legislators are telling the Treasury secretary that trying to rush a skeletal bill through is not going to succeed, and they need time to craft something more fully fleshed out. From Bloomberg: House Republicans warned Treasury Secretary […]

Banking Expert: Bailout Not Necessary, Industry Can Take Losses

One of the premises of the bailout bill is that the banking industry must have government help to get back on its feet. A banking industry expert, Bert Ely, who has a stellar track record in predicting crises and calling false alarms says that the banking industry can handle this mess internally and does not […]

Guest Post: The Inside-the-Beltway Take on the Bailout Bill

Reader Lune, who has been a guest contributor on this blog and was once a Congressional aide (health care was his beat) took a gander through his HIll newspapers and was so kind as to write up what they were saying about the Paulson plan. Bottom line: whatever enthusiasm there was for it appears to […]

On the Dishonest Sale of the Bailout Bill

We received this via e-mail from reader Jonathan Bernstein. It makes a point that occurred to us in passing, and we’ve been hugely remiss in not pointing it out, namely, the near-meltdown of the financial system was averted. The urgency about passing a bailout bill is completely phony. Jonathan makes the case well: One of […]

$5 Trillion Needed to Stop Bank Crisis, Says Japanese Expert

Ken Ohmae, former head of McKinsey’s Tokyo office (disclosure: I have a passing acquaintence with him and he was enormously well regarded in his day despite being a tireless self-promoter) says that the Paulson program is grossly inadequate and the magnitude of the US crisis is so large that a $5 trillion international facility is […]

SEC’s Cox Calls for Authority to Regulate Credit Default Swaps

Nothing like a turf war to wake up a sleepy regulator. It seems rather telling that Cox has developed a sudden interest in the credit default swaps market a mere day after New York State announced that it will regulate the product (to the limited extent it can) starting January of next year. (Although the […]

Bernanke Tells Congress Economy Will Contract if Bailout Bill Not Passed (Updated)

It is becoming clear that Bernanke simply does not get it. Just as he once thought subprime was contained, and has continued to misread the nature and trajectory of the credit crisis, so too he has said that there is a way out of it that involves little or no cost in terms of growth. […]

Banks Take Bigger-Than-Estimated Hit on Freddie, Fannie Conservatorship

We have said more than once that a terribly misguided aspect of the Freddie and Fannie conservarorship was the elimination of dividends on the GSE’s preferred stock. Preferred was the best vehicle that struggling financial firms had for raising new capital. Eliminating the dividend lead to big losses in all financial preferred stocks, since investors […]

New York to Regulate Some Credit Default Swaps

I’m glad someone is trying to keep his eye on the ball. With serial bailouts artists Paulson and Bernanke working full bore on their showstopper, they’ve somehow managed to overlook the most obvious culprit for a systemic crisis, namely, the credit default swaps market (yes, rescuing AIG was an effort to keep that market from […]

Some (Sort of) Encouraging News on the Bailout Bill

Readers may recall I included an excerpt of an e-mail from a Congressional staffer in our weekend takedown of the bailout bill, which got pointed to widely, including on some political sites. This in turn has elicited more observations from insiders, this one a Congressional aide. Not only do the markets not like the bill, […]

Markets Vote Against Bailout Bill; Dodd Circulating Variant, Takes Equity for Dodgy Debt (Updated)

Aha, Congress isn’t being so supine after all. Christopher Dodd, who in his initial press comments seemed to be behind the Paulson bailout plan, instead appears to be supportive of the general concept of Doing Something, as opposed to the particular embodiment served up by the Administration. Dodd is circulating a draft bill of his […]

Morgan Stanley, Goldman to Become Banks

The latest “Let’s do something, anything” move to rescue the financial system is yet another example of expediency trumping sound long-term measures. The motivation for making Goldman and Morgan Stanley banks seems obvious: the powers that be seem determined to prevent either firm from going under. Being banks gives the firms access to a expanded […]