Bailout

Goldman?s collateral demands and the financial crisis

Posted on July 01, 2010
Daniel Indiviglio is coming over all faux-naive with respect to the FCIC's grilling of Goldman executives over its aggressive demands for collateral from AIG:

Adventures in financial literacy, Mint.com edition

Posted on July 01, 2010
Aaron Patzer, the founder of Mint.com is pretty economically illiterate, so maybe it's not so surprising that his site is running the headline "What Inflation? Products That Cost Less Today Than in 2000" over a chart of things which cost more today than in 2000...

The Dow yields more than 10-year Treasuries

Posted on July 01, 2010
Calculating the dividend yield on stock indices is more of an art than a science, since no one knows for sure exactly what dividend the stocks in any given index are going to pay over the next year. But one good estimate puts the dividend yield on the Dow at 3...

How the FCIC can help the regulation debate

Posted on July 01, 2010
Yesterday, Barbara Kiviat asked why we're even bothering with the Financial Crisis Inquiry Commission, given that the financial regulatory reform bill has been written and negotiated long before the FCIC has even finished its hearings. Her answer is a good one: reform isn't over yet, and there will be further bills and further iterations of the present bill in the years to come; the FCIC's report can and should inform all of that.

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The financial crisis as PR tool

Posted on July 01, 2010
My copy of The Zeroes, by Randall Lane, has a big white sticker on it: EMBARGOED, it says, until Tuesday June 29. It's all part of a big PR campaign by Lane and by his publisher, Portfolio / Penguin: the idea is that there is hot breaking news in the book, somewhere.

Why banks are self-defeating on housing

Posted on June 30, 2010
Why are banks so bad at short sales, even when such things are clearly in the banks' interest? Cynic has a spectacularly good comment which is worth elevating to a blog entry of its own:

Investing in loopholes, MLP ETF edition

Posted on June 30, 2010
Remember the Master Limited Partnership tax loophole? Well it turns out that a lot of investment companies seem to be trying to take full advantage of it. Tadas Viskanta notes that everybody and their mother seems to be trying to roll out stock-market-traded funds structured as MLPs, some with valuations north of $1 billion...

Cassano comes out swinging

Posted on June 30, 2010
AIG FP's Joe Cassano is coming out swinging in his testimony to the FCIC:

The inexplicable AIG waiver

Posted on June 30, 2010
Louise Story and Gretchen Morgenson have another huge AIG/Goldman story today, which centers on one new and interesting piece of information: when AIG paid off its bank creditors in full, with the help of that monster government bailout, it also signed a waiver forfeiting its right to sue those banks, including Goldman.

Counterparties

Posted on June 29, 2010
Find out the interchange fee on your credit card -- True Cost of Credit

Short-sale datapoint of the day

Posted on June 29, 2010
How long does it take to complete a short sale? If you have a prime loan from GMAC, it takes a full six months: painful. But what's much worse is that GMAC is by far the fastest mortgage servicer of the lot: prime loans from Countrywide take on average 13 months...

Finding the Journolist archive

Posted on June 29, 2010
There are non-trivial technical problems which would need to be overcome were anybody tempted to take Andrew Breitbart up on his offer to buy the Journolist archives for $100,000. Juli Weiner writes:

Will fiduciary responsibility be weakened?

Posted on June 29, 2010
One of the best pieces of news to come out of the financial regulatory reform bill (assuming it goes through) is that stockbrokers will finally have a fiduciary duty to their clients. It's long overdue -- but already, before the bill is even passed, brokers are trying to find ways to weaken it.

Financial regulatory reform: Not over yet

Posted on June 29, 2010
It seems that financial regulatory reform is not a done deal after all: Paul Kanjorski says that the reconciliation negotiations might be reopened, Chris Dodd is looking to possibly beef up the FDIC enormously, and Democrats are wondering whether they need to remove $19 billion in new bank taxes in order to pass Republican procedural hurdles in the Senate.

U.S. banks still very involved in money laundering

Posted on June 29, 2010
In the olden days, drug smugglers would launder their money the old-fashioned way: by starting up a bank. Today, it seems, they have no need to do so: they just use Wachovia and Bank of America instead. Michael Smith has the story, which includes the tale of money launderer Pedro Alatorre.

Volatility on no news

Posted on June 29, 2010
What do you call a market which rises on bad news and panics -- as it's doing today -- on no news at all? The 10-year Treasury is now yielding less than 3%, the Dow's back below 10,000, the VIX is over 30, and the Nasdaq is down 2.4% in a matter of minutes; French stocks have fallen more than 3% today, and in general the global risk-aversion trade seems to be back on.

Counterparties

Posted on June 28, 2010
Scott Brown may kill Fin Reg bill -- Reuters

The double-edged sword of low mortgage rates

Posted on June 28, 2010
Long-term interest rates are tumbling further today: 10-year Treasury yields are now a hair's breadth away from breaking the 3% barrier. And where long-term interest rates go, mortgage rates are bound to follow. So it's easy to see why the purple line is falling on this chart, which comes from Barry Ritholtz and which is doing the rounds today:

Holding corporate tweets to a higher standard

Posted on June 28, 2010
"NO", shouts Joe Weisenthal today at Clusterstock, "The Supreme Court Did Not Just Strike Down Sarbanes-Oxley". Well, of course it didn't: it's just an obscure auditing board which was deemed unconstitutional. So why would anybody think otherwise? Maybe because of this:

The G20 tees up another crisis

Posted on June 28, 2010
I've rarely seen as much unanimity regarding an important communiqué as I have around this one -- an interminable 27-page effort from the G20 which only serves to underscore the fact that when they can't agree on what to say, bureaucrats are very good at making up for it with astonishing quantities of sheer blather:

Counterparties

Posted on June 26, 2010
Three takes on David Weigel -- Ross Douthat, Foster Kamer, me

The regulatory fight moves from Washington to Basel

Posted on June 25, 2010
It's a great day: financial regulatory reform is done, and not a day too soon. The Consumer Financial Protection Bureau is coming -- Ron Lieber has a great overview of how that will change the regulatory landscape -- and while banks won't have to sell their swaps desks entirely, they will need to spin them off into separately-capitalized, small-enough-to-fail subsidiaries which deal mainly on public exchanges...

Counterparties

Posted on June 25, 2010
Lenders won't be happy until borrowers are living on <$400/month, after mortgage payments -- Rortybomb

The holy grail of high growth with low spending

Posted on June 25, 2010
In the ongoing debate over whether or not this is the right time for fiscal austerity, everybody seems to be able to agree on one thing: the holy grail is to be able to have your cake and eat it, by reducing deficits while at the same time accelerating economic growth...

The good and the bad of Basel III

Posted on June 25, 2010
It's looking as though the FT was, thankfully, a little over-hasty when it led today with a big story saying that the banks have won the Basel battle over liquidity requirements. A BIS spokesman (the BIS is the organization hosting the Basel III negotiations) says that weakening liquidity requirements hasn't even been discussed, let alone agreed to...

The limits of systemic risk regulators

Posted on June 25, 2010
What kind of information will a systemic risk regulator need from banks? Sifma has just commissioned an 86-page study on this question from Deloitte, and the conclusion, though predictable, is sobering:

Counterparties

Posted on June 24, 2010
Germany's finance minister defends its spending cuts -- FT

God and RenTech?s black box

Posted on June 24, 2010
Does Renaissance Technologies -- arguably the most successful hedge fund in the history of the world -- know why it makes as much money as it does? A couple of weeks ago, I thought that it did, after reading a piece about RenTech's Robert Frey in the FT...

Short-seller demonization watch, Tom Matzzie edition

Posted on June 24, 2010
Tom Matzzie, for reasons which are very unclear, has decided that he's going to wage a media campaign against Steve Eisman -- and, by implication, in favor of the predatory higher-education scam artists that Eisman is looking to cut down to size. Matzzie is a credible left-wing campaigner, which makes his current bedfellows very odd ones: he's essentially defending companies which take billions of dollars from the government and put the onus to repay that money onto "students" who are very unlikely to even graduate, let alone get the kind of job which will let them repay the loan...

The next Icelandic banking crisis

Posted on June 24, 2010
How many times can Iceland's banks fail? More than once, it would seem, in the wake of an important ruling by Iceland's Supreme Court. It regards loans which were disbursed in Icelandic kronur but linked to either Swiss francs or the Japanese yen; the court has now ruled that the indexing is illegal, and that the borrowers need only to repay the loans at their initial interest rate in kronur.

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