from Counterparties:

BofA: Too big to fail a math test

By Ben Walsh
April 29, 2014

Bank of America has joined Citi in the dubious group of banks who have failed the Fed’s stress test twice. The Federal Reserve announced yesterday that the bank would have to resubmit its capital plan due to incorrectly reported data.

from Counterparties:

Square’s dance

By Ben Walsh
April 21, 2014

Five months ago, Square was talking to Goldman Sachs and Morgan Stanley about a 2014 IPO. Now the payments company is trying to sell itself before it runs out of cash. The WSJ reports that Google discussed purchasing the company, whose card reader plugs directly into mobile phones. Google’s interest in buying Square was reported earlier this month by Jessica Lessin. Apple and PayPal are also potential acquirers, according the WSJ and confirmed by Forbes.

from Counterparties:

Ex-ecutive pay

By Ben Walsh
April 17, 2014

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In January, fifteen months after he joined Yahoo, chief operating officer Henrique de Castro was firedSEC filings show that the company paid him $58 million to walk out the door, or around $130,000 per day of service, weekends included.

from Counterparties:

Chart of the day: Goldman’s shrinking FICC

By Ben Walsh
April 17, 2014

Goldman Sachs released its first-quarter earnings this morning. Reuters' Lauren LaCapra reports that profit was down 11% compared to last year and revenue from fixed income, currency, and commodities (FICC) was down 11% compared to last year. LaCapra writes that "since 2009 - when markets flourished briefly in the aftermath of the financial crisis," Goldman's FICC business has been declining steadily as a portion of its overall revenue.

from Counterparties:

The housing density is too damn low

April 16, 2014

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Your rent really is too damn high.

Kim-Mai Cutler has a long, detailed explainer on San Francisco’s real estate crisis inTechCrunch. To begin with, she says, there’s just not enough supply: “San Francisco has a roughly 35% homeownership rate. Then 172,000 units of the city’s 376,940 housing units are under rent control”, a number equal to a remarkable 75% of the city’s rental units. That doesn’t leave much for the rental market. As a result, any rents which can rise, will rise. (Marc Andreessen notes that tech has been driving up prices in the area for at least 30 years, and population boom cycles have been part of the city’s history since the Gold Rush.)

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Explanatory journalism

By Ben Walsh
April 11, 2014

Something troubling is happening in the stock market. Not only are markets are down – the Nasdaq and the S&P 500 are down 3.1% and 2.6%, respectively, this week – but no one has come up with a convenient, compelling (and misleading) reason why. Never mind, says Matthew Klein, that US stocks are up 30% since the start of 2013. We need to know why they are down this week, as Barry Ritholz writes, because we crave meaning in a random world.

from Counterparties:

Capital raise

By Ben Walsh
April 9, 2014

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US banks need $95 billion more capital by 2018. A new federal rule will raise the leverage ratio – a bank’s capital versus its total assets – to a minimum of 5%, while all FDIC-insured banks will see their ratio rise to 6%.

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Euro we go again

By Ben Walsh
April 7, 2014

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The bond markets finally have something nice to say about Greece and Spain. Or at least Greece and Spain are reaping the benefit of ECB president Mario Draghi’s recent comments. Last week, Greek bond yields fell to pre-bailout levels, and the Spanish government sold $7 billion of debt at the lowest rates since the crisis -- lower, in nominal terms, than the US government is paying to issue Treasury notes.

from Counterparties:

Environmental balance sheet

By Ben Walsh
April 4, 2014

Want to sign up for the Counterparties email? Click here. Climate change, the latest UN report finds, is very bad already – and it’s getting worse.

The NYT condenses the study’s gloomy findings: ice caps and sea ice are melting; droughts, heatwaves, and heavy rainstorms are intensifying; the ocean is acidifying; “fish and many other creatures are migrating toward the poles or in some cases going extinct”. The Economist says climate change can no longer be seen as a stand-alone risk. Instead, it is already interacting with social, political, and economic risks. All of which means, Philip Bump writes, “more violence, less food”.

from Counterparties:

Watching for bubbles like a hawk

By Ben Walsh
April 3, 2014

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Fed governor Jeremy Stein, the central bank’s resident bubble cop, is resigning effective May 28. He will return to Harvard’s economics department, which he left in 2012.