Category Archives: Regulations and regulators

Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits?

The reporting on the main elements of the Freddie and Fannie rescue plan is converging as the content of official briefings leaks out. The stunner, which contradicts preliminary reports, is that the preferred shareholders in the GSEs will take losses. The Wall Street Journal reports that dividends on common will be eliminated and those on […]

Trichet: "Reasonable Conjecture" That Investors Distorted Commodity Markets

Now it’s semi-official. A respected financial figure, no less a central bank chief with his reputation still intact, has said in bureaucrat-speak that speculation may indeed have had something to do with recent oil price moves. That view was nearly heretical until the rapid fall in oil prices began in July. From the Financial Times: […]

NY Times: Freddie Overstated Its Capital

The New York Times, in “Loan Giant Overstated Its Capital Base,” sets forth an interesting bill of particulars as to where Freddie deviated from what one might consider a full and fair statement of its financial condition. Indeed, the article says that the widely-expected Sunday intervention was triggered by the GSE’s regulator determining that the […]

Two Surprisingly Costly Bank Failures in Two Weeks

Reader Steve A has been on the Friday night FDIC bank euthanasia watch, and in the last two weeks, he has discerned a disturbing trend. If this pattern persists, it seems a sign that things in bank-land may be much worse than is widely acknowledged. From last week’s post, “This Week’s Bank Failure Surprisingly Costly,” […]

NY Times: Fannie, Freddie Nationalization (aka Conservatorship) Imminent

Guess the powers that be were unwilling to risk playing chicken with the markets and losing. So much for the theory espoused by some that the government couldn’t put the GSEs into custodianship absent a breaching of statutory minimums (technically, by being insolvent under the “fair asset” valuation method, Freddie is already on plenty thin […]

Euro Banks Tank as ECB Tightens Rules on Liquidity Facilities

The ECB, like the Federal Reserve, implemented bank liquidity facilities which (in oversimplified terms) allow them to pledge collateral in exchange for cash. The ECB has been more liberal in the types of collateral that it accepts, which has led to some pretty blatant gaming of the system (and God only knows how much slippery […]

Bill Gross Says Nothing is Going Up, So Treasury Must Intervene

Bill Gross of Pimco’s monthly newsletter, “There’s a Bull Market Somewhere?” is out and making the rounds. The title refers to a Jim Cramer dictum. The bond chief uses it to argue that asset prices are declining on all fronts, which he then contends that the US government must reverse (boldface his): because in a […]

CFTC Investigating Whether Big Traders Lied About Oil Inventories

Wow, what happened? The CFTC went from being a lapdog to developing teeth. A little late, now that oil prices are on a forced march downward, but the commission could have backed off as oil became less of a front-burner issue. (Of course, your cynical blogger wonders if there was a risk that this story […]

Setser: "If trends continue…..Agencies won’t be able to rollover their debt"

Brad Setser is thoughtful and data driven, but he also isn’t shy about saying what numbers portend, even if he runs the risk of sounding a tad alarmist. We’ve had so much complacency, followed by concerted efforts to keep asset values and confidence aloft that an unvarnished presentation can come off as a dousing of […]

UBS: UK Banks May Have Used £200 Billion in Emergency Funds

UBS analyst Alistair Ryan has taken a stab at the level of use by British banks of the governments’ emergency facilities. His estimate, that it may total £200 billion or perhaps even higher. To put it in context: the UK’s GDP is roughly $2.8 trillion. The US economy is a bit under $14 trillion, or […]

Troubling Signs From Fed’s Jackson Hole Conference

It’s hard to discern what took place in a closed-door session at a remove, but some of the tidbits coming from last weekend’s Federal Reserve conference at Jackson Hole were worrisome. Note I didn’t have this sense about last year’s meetings, based on a reading of Jim Hamilton’s commentary (which may simply mean Hamilton was […]

Why No Questions About Special NYMEX Trading Session?

Reader Paul e-mailed about the special, early opening of the NYMEX to permit pre-Gustav trading. As he correctly noted: I have NEVER heard of a US market opening early due to macro events; the usual move is to CLOSE during exceptional circumstances. Neither have I. This looks pretty suspicious. Did some influential parties need to […]

This Week’s Bank Failure Surprisingly Costly

Some of the usual suspects have dutifully noted the closure of $1.1 billion in assets Integrity Bank of Alpharetta, Georgia (weirdly, the links at the Wall Street Journal to two stories lead only to “Page Not Available”). The plot is already familiar: the Friday night, FDIC prepack, in this case, with Birmingham, Alabama-based Regions bank […]

Regulators Putting More Banks on a Short Leash

As the Wall Street Journal tells us, the Fed and the Office of the Comptroller of the Currency are issuing more “memorandums of understanding”. The MOUs not only put the bank on notice that its finances or controls aren’t up to snuff, but also call for specific remedies, such as cutting dividends, raising capital, or […]

"The subprime turmoil: What’s old, what’s new, and what’s next"

When you think you’ve read everything worth considering on a given topic, once in a while something comes along to prove you wrong. A case in point is this post by Charles Calomiris at VoxEu on the subprime mess. It is longer than the standard VoxEU offering, but well worth your attention. Calomiris not only […]