A draft of a paper, “Innovations in Credit Risk Transfer: Implications for Financial Stability,” by Stanford’s Darrell Duffie, investigates ” the design, prevalence, and effectiveness of credit risk transfer,” with an eye to implications for the financial system. The paper is worth reading for those seriously interested in the CDO/CLO markets, and sets forth a […]
Read more...Yesterday, we commented critically on a remark by JP Morgan CEO Jamie Dimon in an interview on LBO lending published by Bloomberg, and a reader was kind enough to point us to another Dimon interview, this time in Der Spiegel. “Keeping the Hedge Funds in Check.” It’s a refreshing read, if for no other reason […]
Read more...Although I haven’t followed the debate over New York-London market competitiveness that closely, it was clear when the study on the US’s standing was commissioned, the sponsors already knew what answers they wanted to report, and emasculating Sarbanes-Oxley (Sarbox or SOX) was an idee fixe. It didn’t seem to occur to people like Hank Paulson […]
Read more...I am at a loss as to which allusion better characterizes rating agency behavior: ostriches, as per the headline, or monkeys, as in “See no evil, hear no evil, speak no evil.” But in each case, I think I am being unfair to the animals. I happened to miss skip past an article in Friday’s […]
Read more...This post is mainly for those who like data. The Financial Times, citing the Bank of International Settlements, reports that worldwide sales of collateralized debt obligations were $251 billion in the first quarter of 2007, and synthetic CDO sales were $121 billion, both record levels. To give a sense of magnitude, total US rated subprime […]
Read more...One of the themes du jour is the overrated reporting that goes on in the Wall Street Journal (and we’ve waxed eloquent on this subject many times before, as the posts tagged ‘Media Watch” will attest). While the Journal’s coverage of company news is generally good to very good, it appears that they put their […]
Read more...A Fed and Treasury official both said they don’t see the downgrade of some subprime related debt leading to a broader meltdown, but instead see the repricing of credit working itself through in an orderly fashion. The fact that they felt the need to issue the reassurance in and of itself isn’t a good sign, […]
Read more...Hhhm, “orderly” seems to be the favorite word from the finance officialdom today, and we see yet another reference to systemic risk (in this case, that the SEC remains vigilant on that front). But as regards the Bear situation, the comment from the SEC isn’t much in the way of news (however, “now orderly” would […]
Read more...Readers of this blog know that I have been concerned about the state of the credit markets for some time. We’ve had (until the last month or so), rampant liquidity feeding asset bubbles in virtually every asset class except the dollar and the yen, tight risk spreads (that means inadequate compensation for risk assumption), lax […]
Read more...The Journal has a not-too-bad page one story on Australia’s drought and the government efforts to address it, but it’s wrong enough so as to merit comment. I lived in Australia for a couple of years not too long ago and have met Malcolm Turnbull, who is now the environmental minister for Australia. The story […]
Read more...Today’s Wall Street Journal describes how the Office of Thrift Supervision is weighing new rules that would bar the banks it supervises from engaging in “unfair and deceptive” practices, a response to widespread claims of “predatory lending” in the subprime mortgage market. This effort, if it comes to fruition, is less and more than it […]
Read more...Bloomberg reports that Moody’s has dropped its ratings on 399 subprime related bonds and is reviewing ratings on another 32. Standard & Poors had announced earlier in the day that it is preparing to cut ratings on 2.1% of the bonds that have subprime exposure, or roughly $12 billion out of a universe of $565 […]
Read more...Apologies for the reliance on the Financial Times today, but it happened to have a lot of good material. The CEO of Harvard Management, Mohamed El-Erian, writes the occasional opinion piece, usually for the Financial Times, and I’ve always featured them because they are consistently thoughtful and well-argued. I’m highlighting his latest FT piece, “How […]
Read more...Readers may think we are being unfair in picking on Verizon. After all, the name of the game in business is to try to create barriers to entry, or failing that, establish some form of product differentiation that makes your offerings more attractive to some, hopefully many, customers, enabling you to charge more (the generic […]
Read more...I really didn’t expect “rogue agent” to become a mini-theme, but a mere two days apart, we have stories in the Wall Street Journal and the New York Times on rogue agents ripping off the unwary and the unsophisticated. However, as we discussed, the Journal story about rogue mortgage brokers made it sound as if […]
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