Category Archives: Regulations and regulators

The SIV Rescue Plan: Dissed Again by the Journal

Hank Paulson must be very unhappy with the Wall Street Journal. While the newspaper briefly fell into line and issued one story that reported that the his pet project, the structured investment vehicle rescue plan, was getting traction, pretty much all its news coverage coverage has been skeptical, and its editorial comments have been downright […]

More on Puzzling Out the SIV Bailout Proposal

I’m late to a very useful tidbit on the structured investment vehicle front, and will also provide an update on the continuing skepticism regarding the proposed rescue plan, the Master Liquidity Enhancement Conduit, the MLEC (aka The Entity). The Financial Times via its Alphville blog, provided a chart and some commentary on SIVs from the […]

Securitization Ain’t What It Used to Be

A wry and informative article, “Slicing and dicing risk rebounds on banks,” by John Dizard at the Financial Times tells us that newfangled investment vehicles considered to be a good thing because it moved risk assumption away from large banks (and therefore ultimately central banks) to the wealthy. But Dizard explains the rich were too […]

The Clear and Present Danger of Inflation

We’re a bit late to a very good comment in today’s Financial Times, “Interest rate cuts will not solve the crisis,” by Wolfgang Munchau. Munchau argues that despite inflation targeting, the potential to move into an inflationary cycle is greater than many analysts recognize, and that even a small increase in inflation at this juncture […]

G-7, IMF Meetings Unproductive and Divided

The Financial Times reports that the G-7 meetings this weekend did not even address one of the two main issues on the agenda, the dollar, and along with the concurrent IMF meetings, featured a good deal of acrimony and disarray. Exactly what you don’t need with a crisis looming. From the Financial Times: After Friday’s […]

Is Paulson’s Lobbying Working? Reports of SIV Bailout Progress Prove Premature

On Friday, a Reuters story reported, ultimately based on a statement by Treasury Secretary Henry Paulson, that bond giant Pimco has decided to join the SIV bailout plan. The news seemed odd at the time, since Pimco’s co-chief Bill Gross had labeled the plan as “lame” and Pimco has just about zero presence in the […]

IMF Meeting Focus: Food Inflation, Lax US Regulations, IMF Prescriptions

The International Herald Tribune gives a particularly interesting report on a semi-annual meeting hosted in Washington by the IMF and World Bank. It illustrates that the influence of the US and of US sponsored institutions is waning. One item mentioned in other reports on these meetings is the concern with the impact of food inflation […]

The SIV Bailout Plan: Does the Math Work Even for Citi? (Revised)

A reader question got me to work through a back of the envelope calculation of what the SIV rescue plan, the so-called Master Enhanced Liquidity Conduit, would buy for its chief beneficiary, Citigroup. What I came up with gives cause for pause. It’s one thing to know in a general way that a proposal is […]

SIV Rescue Plan: From Smoke and Mirrors to Jawboning

Last Sunday, we made this observation about the SIV rescue plan, the so-called Master Liquidity Enhancement Conduit (MLEC), sponsored by Citigroup, JP Morgan, and Bank of America: Yesterday, we voiced doubts that this program could get done. Now that we understand that the primary goals is legerdemain, we think that it is likely that some […]

Greenspan Gives Vote of No Confidence on SIV Bailout Plan

Greenspan has at points proven to be the bane of Bernanike’s existence. Now it appears Paulson is getting a dose of the same. A reader pointed us to this article in Emerging Markets, which features an exclusive interview with the former Fed chairman Alan Greenspan. The Maestro warned that the SIV rescue program, the so-called […]

Citi Secures Interim Funding as SIV Plan Gets Jeered

The Wall Street Journal and the New York Times report that Citigroup obtained funding through the end of the year for $80 billion of SIVs (for background, please see here and here). This development is newsworthy, since Citigroup had indicated it faced a crunch in November as commercial paper funding SIVs mature, yet the widely […]

Some Modest Suggestions for Rating Agency Reform

In the Financial Times, Avinash Persaud, an emeritus professor at Gresham College and a director of Global Association of Risk Professionals. offers some sensible recommendations for regulating rating agencies, first, standardizing their ratings definitions and second, changing the rating agencies’ incentives (although this idea is not spelled out in sufficient detail). What is perhaps most […]

A Rant About a Misguided Defense of Hedge Funds

Before we get to the fun stuff, in which I foam at the mouth, let me stress one thing: I am not opposed to hedge funds. I have both friends and clients who run hedge funds. And philosophically, a certain amount of speculative capital helps the economy run more smoothly. What I am opposed to […]

IMF and G-7 at Cross Purposes on the Dollar?

In an odd happenstance of timing, the IMF published a report on Wednesday that declared the dollar to be overvalued. As we have noted before, this isn’t the first time they’ve come to this conclusion (they issued a similar finding at the beginning of August). That view, by the way, isn’t one that has made […]

"The Financial Crisis – Why It May Last"

An excellent post by Angel Ubide, an economist for Tudor Investments as well as for the Center for European Policy Studies, at Vox EU (you need to click through to Telos to read the full text). He starts with a simple premise, that this crisis can’t be about liquidity because aggressive injections of liquidity haven’t […]