Agnes's Feed
Mar 27, 2012
via Breakingviews

Ally’s mortgage misery needs a clean ending

Photo

By Agnes T. Crane and Antony Currie
The authors are Reuters Breakingviews columnists. The opinions epxressed are their own.

Ally Financial finally seems to have woken up to the need to get rid of ResCap, its ailing mortgage unit. Once the jewel in the former GM finance unit’s crown, the home lending and servicing operation has been a prime candidate for the bankruptcy court for years. ResCap has been on U.S. taxpayer-funded life support since 2008 – sucking up most of the $17.2 billion in aid the U.S. Treasury funneled to Ally. Now a Chapter 11 restructuring may finally be on the cards. But Ally needs to ensure its mortgage misery comes to a clean ending.

Mar 16, 2012
via Breakingviews

Banks need to take the guesswork out of Libor

Photo

By Agnes T. Crane and Neil Unmack

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Sometimes the world of finance is based on guesswork. Investigations into the alleged manipulation of the London interbank offered rate – known as Libor – have laid bare a flaw in the benchmark interest rate: banks can essentially make it up. That’s unsettling, since their submissions help shape the value of some $360 trillion of loans and derivatives. A better approach would be to base Libor on real transactions.

Mar 15, 2012
via Breakingviews

U.S. market rumblings point to revved up growth

Photo

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.Rising oil prices and interest rates are election-year bait for U.S. politicians. But in reality – along with higher stock markets – they suggest a long-awaited strengthening of the economy. But sticker-shock at the pump and more expensive debt could yet knock confidence.

This week, even bearish bond traders seem to have conceded that growth prospects look brighter. U.S Treasury yields, which had been stuck in a narrow, low range since October, rose substantially, with the 10-year yield adding more than 0.3 percentage points to 2.35 percent before settling back a bit on Thursday. Stocks have been on a tear for more than five months, with the S&P 500 Index breaching 1,400 this week for the first time since 2008.

Mar 8, 2012
via Breakingviews

Just let housing regulator DeMarco do his job

Photo

By Agnes T. Crane and Daniel Indiviglio
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The knives are coming out for Edward DeMarco. The acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has been coming under increasing attack recently from Democratic lawmakers as well as housing lobby groups. His crime: he won’t cut principal on underwater home loans backed by Fannie and Freddie. But his critics should cut him some slack.

Principal reduction can have a role to play in helping out underwater homeowners. There is, after all, some $700 billion of negative equity in U.S. housing, according to CoreLogic. Providing some relief on the amount a borrower owes could make the difference between keeping up payments and lurching into default. DeMarco’s critics argue that such a strategy should be a no-brainer for such loans held by Fannie and Freddie. They argue that since taxpayers are already on the hook for mortgages guaranteed by the government, it’s better to take a modest hit to prevent a much bigger loss should a mortgage default.

Feb 27, 2012
via Breakingviews

Buffett’s “trust me” succession plan doesn’t fly

Photo

By Agnes Crane

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Warren Buffett says he has at last identified someone to replace him when he’s gone. Anointing a successor at Berkshire Hathaway is an important step in what will be one of the most significant corporate transitions since the torch was passed at Apple. Yet in his annual letter published on Saturday, Buffett demurred on saying exactly who. Given recent events, his “trust me” plan doesn’t fly.

Feb 27, 2012

BREAKINGVIEWS: Buffett’s “trust me” succession plan doesn’t fly

By Agnes T. Crane

NEW YORK (Reuters Breakingviews) – Warren Buffett says he has at last identified someone to replace him when he’s gone. Anointing a successor at Berkshire Hathaway is an important step in what will be one of the most significant corporate transitions since the torch was passed at Apple. Yet in his annual letter published on Saturday, Buffett demurred on saying exactly who. Given recent events, his “trust me” plan doesn’t fly.

Few industry titans want to be a lame duck. Buffett, even at 81, is no exception. Though he has hired two money managers, Todd Combs and Ted Weschler, to eventually take over the company’s $100 billion-plus investment portfolio, Buffett made clear neither man would be running Berkshire, saying they’d both report to the future mystery chief executive.

Feb 17, 2012
via Breakingviews

Citi, BofA prove too big to punish harshly

Photo

By Agnes T. Crane

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Sticking it to Uncle Sam should attract harsh punishment. But the fines Citigroup and Bank of America will pay – $158 million and $1 billion respectively – to settle claims they defrauded the U.S. government look easily handled. Citi has even admitted fraud in its dealings over home loan insurance. A ban from participating in the government’s mortgage insurance programs would be a better deterrent. But unfortunately, Washington needs big banks too much.

Feb 13, 2012
via Breakingviews

Empire State Building better to visit than buy

Photo

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.  

 

Investors might want to pause for breath before climbing onto the Empire State Building’s initial public offering. The iconic midtown edifice that King Kong climbed almost 80 years ago is the biggest revenue generator of the 12 buildings that make up Empire State Realty Trust – in large part thanks to income from tourism and broadcasting. But with a rising challenge downtown, fans may prefer scaling the tower to investing in the company that owns it.

Feb 8, 2012
via Breakingviews

Renters need to flex muscle in U.S. housing debate

Photo

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Though America’s mortgage system subsidizes homebuyers, its dysfunction has cost all taxpayers dearly. Few constituencies with much clout are pushing for change. But the nation’s 39 million rental households – often an afterthought in the housing debate – ought to be up in arms. They might find unlikely allies, too.

Jan 30, 2012

Too-big-to-fail U.S. banks collecting free money

(Refiles to correct word order in second paragraph. The author
is a Reuters Breakingviews columnist. The opinions expressed are
her own.)

By Agnes T. Crane

NEW YORK, Jan 30 (Reuters Breakingviews) – Complex
regulations make Jamie Dimon, JPMorgan’s (JPM.N: Quote, Profile, Research) chief
executive, bristle. They can add unnecessary extra costs. Yet
the U.S. Dodd-Frank Act, passed in 2010, also has its perks for
big banks. One is unlimited government backing of certain types
of bank deposits. At essentially no extra cost to banks, the
insurance covers interest-free accounts of the kind big clients
like institutional fund managers and corporate treasurers tend
to control. And it helps explain why JPMorgan and other
super-sized U.S. banks are awash in the cheapest funding around.