If a terrorist were to blow up Moodys, S&P, and Fitch, it would have a devastating impact on the financial markets. Rating agencies play a indispensable role in the debt arena. Many investors are required to consider bond ratings in their investment decision making process. Insurance companies, for example, are required to hold either all […]
Read more...One of the issues facing any regulator is how to balance the interests of its various constituencies. Over the last twenty years, the pendulum has swung away from protecting consumers to promoting business interests. On some fronts, we are seeing pressures to move in the other direction. For example, the Vioxx case, which highlighted the […]
Read more...It’s curious, and telling, that this story, “Union in move to halt Blackstone IPO,” appears as a headline story at this hour for the Financial Times (meaning it will probably be featured in the news summary in the print edition) yet has no counterpart at the Wall Street Journal or New York Times websites. The […]
Read more...The Financial Times on Monday had two stories on inflation, one a lengthy story, the other a a comment, “The problem with inflation indices,” by Gideon Munchau, triggered by the fact that the Bank of England missed its inflation targets of 2% by over a percentage point (their Consumer Price Index increased at an annualized […]
Read more...This headline isn’t much of an exaggeration, as we learn from a front-page Wall Street Journal story, “Profit as We Know It Could Be Lost With New Accounting Statements.” The proposed changes (in the early stages of formulation and subject to quite a few approvals before it would take effect) would totally revamp income statements […]
Read more...I happened to meet an official in the Fed’s Banking Supervision and Regulation division at a cocktail party this evening and chatted him up. He helped brief Roger Cole before met with the Senate Banking Committee last month to defend the Fed’s conduct regarding subprimes, so he is up to speed on this topic. Readers […]
Read more...The Wall Street Journal’s Deal Journal tells us that former Comptroller of the Currency and later Bankers Trust Vice Chairman Eugene Ludwig is forming a (target size) $1 billion private equity fund to acquire banks. Now the bit the WSJ doesn’t seem to know is that Ludwig has been looking to form a fund in […]
Read more...Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and of itself is a danger sign. The Fed’s […]
Read more...Larry Summers, in a Financial Times comment “We need to bring climate idealism down to earth“, takes up “the best is the enemy of the good” theme as it applies to global warming. He argues that the Kyoto accords haven’t accomplished much because neither the targets nor the penalties are binding, that carbon markets run […]
Read more...Thanks to Tanta at Calculated Risk, we have a rush transcript from a presentation by Lew Ranieri at the Milken Institute conference on financial innovation. Ranieri is credited with creating the mortgage backed securities business, has continued to be active in the industry, and has sounded warnings on subprimes. I found three points to be […]
Read more...While most US readers believe that the Journal’s ideological bias is limited to its editorial pages, we have repeatedly seen (and commented on) skewed reporting as well. Specifically, the Journal tends to put a positive spin on economic (as opposed to company-specific) reporting. Today’s object lesson is the Bank of England’s latest edition of its […]
Read more...Microsoft’s bad behavior may finally catch up with it. The EU is now threatening new sorts of punishment for Microsoft’s intransigence and bad faith dealings in what in the US would be called the remedy phase of its antitrust case. To recap the story: in December 2004, Microsoft lost its final appeal on an EU […]
Read more...It’s one thing when people who have little to no experience in the financial markets worry about the risks posed by derivatives and other innovative financial products. It’s quite another when a concerned individual also happens to have been deeply involved in risk management at major Wall Street firms. The financial markets insider is Richard […]
Read more...Calculated Risk has a great post today, “‘Bailouts for UnterNerds: The Freddie Mac Story,” that says, in essence, that the “bailout” or “stabilization” for subprime mortgages announced by Freddie Mac today is much less significant and much less helpful to borrowers than it might seem. Freddie Mac stated that it will be purchase $20 billion […]
Read more...One can debate whether and how much aid subprime borrowers deserve, but a pair of articles Wednesday illustrates how difficult it will be to come up with any form of relief. In an underreported story, the FDIC hosted a session that included banking and mortgage industry leaders, legislators, investment bankers, and representatives from the SEC, […]
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