Bailout

Howie Hubler?s second act

Posted on March 24, 2010
Loan Value Group has one of the best ideas I've seen in the housing crisis so far. It involves no legislation or government cash, it keeps homeowners in their home, it prevents distressed foreclosure sales, and it benefits both borrowers and lenders. In a world where the pervasive problem of negative equity is signally failing to turn up in significant principal reductions, LVG has come up with a clever way of doing something substantially similar, without lenders having to take the hits to their balance sheet which are necessary when they do an immediate principal write-down.

Blogonomics: The Gothamist sale

Posted on March 23, 2010
Gawker and Gothamist were both started in 2003, and both grew to become big blogs; it's interesting, now Gothamist is being sold to Rainbow Media, to see Gawker's Nick Denton's weird attempt to downplay the achievement of Jake Dobkin and Jen Chung.

Why I?m not worried about hyperinflation

Posted on March 23, 2010
The smartest reaction so far to the Kinsley-Krugman hyperinflation debate comes from Ryan Avent:

The FDIC: An IMterview with Heidi Moore

Posted on March 23, 2010
Heidi Moore has a good story today about the banks winning the FDIC lotto and being allowed to take over the assets and deposits of other, failing banks. But I was left wanting more, especially when it came to her conclusion, so I took to IM:

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A FAB idea?

Posted on March 23, 2010
Matthew Bishop has a short piece on a new campaign called FAB, for Financial Access at Birth: the idea is explained in more detail here.

Regulatory reform goes to the full Senate

Posted on March 23, 2010
Back on March 11, when Chris Dodd put financial reform on a forced short timetable, I said that "financial reform is not dead yet: we?ll have a much better idea at the end of next week what its real chances are". Well, that date has been and gone, and now a bill with no Republican support has been pushed through the Senate banking committee in a move that Bob Corker called "pretty unbelievable"...

Counterparties

Posted on March 22, 2010
The SEC: Still toothless -- Bond Girl

Gorton?s triple-A error

Posted on March 22, 2010
Beware of academics wielding exclamation marks!! Gary Gorton is a very highly respected professor in the fields of finance and economics, but that doesn't stop him throwing double-shrieks into his official paper for the US Financial Crisis Inquiry Commission...

Inside a not-bailed-out bank

Posted on March 22, 2010
People have many legitimate reasons to have a grievance against their bank. In fact, it's rare to find someone who hasn't been extremely angry at their bank at some point. But rarely is there a case as clear-cut as this one, from Aaron Elstein:

The connection between airport security and credit cards

Posted on March 21, 2010
While I was waiting in an interminable security line at America's friendliest airport today, a woman's voice came over the intercom and scolded us that it was basically our fault that the screening was taking so long, and proceeded in a mildly unintelligible voice (the intercom's fault, not her own) to go into great detail about exactly what had to be done with both small and large containers of liquids, gels, aerosols, and whatnot...

Counterparties

Posted on March 20, 2010
A very smart post by Avent: residents of dense neighborhoods fight development just as much as suburbanites -- The Bellows

The blameless Spotted Owl

Posted on March 20, 2010
There's a nice empirical post-script to the debate over the economic effects of classifying the Spotted Owl as an endangered species. Freakonomics cites a study putting the effect at $46 billion, but others, including John Berry, who wrote a story on the subject for the Washington Post, think it's much closer to zero.

Did Charlie Gasparino get Teri Buhl fired?

Posted on March 20, 2010
It's well known that Charlie Gasparino likes getting into mini-feuds with reporters who write about him, myself included. It's part of what makes him Charlie, and he's welcome to call me a twerpy nutjob as much as he likes. But he and former Trader Monthly publisher Randall Lane now seem to have gone far beyond name-calling on blogs: it looks as though they have gone so far as to get a full-time reporter fired from her job, in retaliation for her writing about them.

Was BofA pulling Lehman?s balance-sheet tricks?

Posted on March 19, 2010
John Hempton is the kind of guy who compares the numbers for quarter-by-quarter average assets in Bank of America's annual reports with the numbers for total quarter-end assets in its quarterly reports. And guess what -- if you look at the year 2006, BofA's total assets were always substantially lower at the end of the quarter than they were over the course of the quarter as a whole.

Greenspan?s error

Posted on March 19, 2010
Sam Jones has the clearest, shortest rebuttal of Alan Greenspan's 66-page Brookings paper that I've yet seen. And most impressively, Sam wrote it more than a year ago. While Greenspan is becoming increasingly contrite about his failures of regulatory oversight, he still continues to say that his monetary policy was blameless in the crisis, since during his tenure short-term rates, which the Fed controls, ceased to have much if any effect on mortgage rates, which were the key driver of the global housing bubble.

Is there an alternative to exchange-traded CDS?

Posted on March 19, 2010
I just had an interesting conversation with a senior market participant about the optimal way to structure and regulate the CDS market, compared to the proposal which has now been put forward by Chris Dodd. Essentially, there are two options here: you can either consolidate all the different functions (trading, matching, confirmation, clearing, information warehousing) onto a handful of big global exchanges -- or you can disaggregate those functions and allow competition in each of them separately.

Counterparties

Posted on March 18, 2010
Please scientists: give up your faith in "statistical significance" (which you get wrong) and go back to replication -- Science News

The weak-small-bank meme

Posted on March 18, 2010
I'm not convinced about a the "too puny to succeed" meme, as evinced today by Binya Appelbaum and David Cho:

Financial innovation of the day: smaller fonts

Posted on March 18, 2010
Josh Reich explains how overdrafts work, in the real world:

Greek bailout chart of the day

Posted on March 18, 2010
Do you find the latest news from Greece a mite confusing? After saying that Greece "cannot sustain the deficit reduction that these hard measures aim to achieve" if its borrowing costs remain in the 6.3% range (which doesn't seem so high to me), Greece's prime minister went on to say that he had not asked for any money from the IMF or anybody else.

Advertising on the iPad

Posted on March 17, 2010
There was another panel today on the iPad and the future of magazines, this one featuring my friends Rachel Sklar and Jacob Lewis. Jacob was pretty downbeat about the ability of the iPad to rescue the economics of the magazine industry, for two reasons; one, I think, is much better than the other...

Climate Desk Bleg 2

Posted on March 17, 2010
Thanks partly to SXSW and partly to my own atrophied reporting muscles, my climate desk piece is going very slowly. And so I'm going to try another bleg here.

Repo 105: ?Like, whatever?

Posted on March 17, 2010
Max Abelson has talked to three former Lehman executives about the Valukas report, and you can see why they requested anonymity. Here are some of the gems from Senior Executive #2:

When mortgage companies give up money

Posted on March 16, 2010
The ultimatum game has shown repeatedly that people aren't profit maximizers if they think that the profit-maximizing outcome is fundamentally unfair. And it turns out that the same is true of mortgage companies. Here's Dean Jens, telling the story of a short sale of a house with two liens:

The economics of aggregation

Posted on March 16, 2010
How geektastic is Mark Thoma's economics of aggregation post? Here's the question he asks:

How the Fed slept through Lehman

Posted on March 16, 2010
Andrew Ross Sorkin today notes that the Fed and the SEC didn't do anything about Lehman Brothers, despite the fact that they knew full well that there were problems.

Will consumers be protected?

Posted on March 16, 2010
Color me happily surprised by the consumer-protection rhetoric yesterday of both Chris Dodd and Barack Obama. HuffPo has the best single overview of the bill, along with Dodd's reasonably compelling explanation of why housing the agency in the Fed doesn't mean it isn't independent -- and in fact helps to insulate it from the kind of regulatory capture which is endemic to regulators who are funded by those they regulate.

Magazines on the iPad

Posted on March 15, 2010
Wired's design director, Scott Dadich, unveiled what the magazine's iPad app is going to look like at a packed SXSW session this morning which was sold as an introduction to the "digital rebirth" of Wired in particular and of magazines in general.

The Big Short

Posted on March 15, 2010
After my review of Michael Lewis's new book was posted on Friday, Sandrew asked for a bit more detail on this bit, about the people who shorted the subprime mortgage market:

Personal finance online

Posted on March 14, 2010
I attended a predictably utopian Banking 2.0 panel at SXSW yesterday; is it normal that most interesting discussion at these events tends to take place in the Twitter backchannel? Still, two interesting questions did arise, around the cool'n'webby financial services companies like Smarty Pig and Mint and Credit Karma which were on the panel: are they basically engaging in regulatory arbitrage, and are they also helping to entrench the too-big-to-fail banks in their existing market positions?

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