Now raising intellectual capital

from Rolfe Winkler:

Lunchtime Links 1-14

Obama to unveil plan on bank taxes (WSJ) Surprisingly this doesn't look dead on arrival in Congress, maybe because banks know that the tax -- spread over 10 years -- isn't likely to hurt very much. It's a missed opportunity to shrink big bank balance sheets.

The advanced technology trade deficit (Mandel, ht NG)

Sheila Bair testimony before FCIC ( Bair was the highlight of the morning's hearing and the headline from her testimony is that it's the Fed's fault. Had Alan Greenspan taken Edward Gramlich's advice to regulate subprime, perhaps many of the excesses of the bubble could have been avoided. In other news, the commission is unhappy with Attorney General Eric Holder b/c the Dept of Justice isn't sharing as much information as the commission would like.

The rise of the permanent temporary workforce (Coy/Conlin/Herbst, BW) More evidence we're becoming Japan.

T Boone Pickens cuts order for wind turbines by over 50% (Souder, Dallas News) He's still a big fan of natural gas...

from Rolfe Winkler:

Afternoon links 1-13

Must Read -- Kyle Bass: Testimony before the FCIC ( Bass is a hedgefunder that made big profits betting against subprime. His testimony has many fascinating facts and figures. [The pie charts on page 9 look familiar.]

Obama to push tax on too-big-to-fail banks (Nasiripour) Not a lot of details: "the planned tax would be imposed in a way that targets firms' riskiest activities, such as proprietary trading. It would be crafted in a way that doesn't affect a financial company's retail banking, so that the cost theoretically would not be passed on to retail customers -- but it wasn't clear exactly how that would work." And will it tax other TBTF firms besides banks? What about insurers? What about GE? Update: WSJ says the tax will target bank liabilities.

from Rolfe Winkler:

Crisis inquiry commission hearings today

UPDATE: Wow, if the questioning by Phil Angelides of Lloyd Blankfein is any indication of how these hearings are going to play out, they will be much fun to watch. He really pressed Blankfein and the two got combative. Too bad he didn't have more time...

UPDATE 2: False start, the other commissioners are mostly asking softball general questions. Angelides is the only one hitting hard.

from Rolfe Winkler:

SEC shifts focus, but new complaint again fails Rakoff test

After Judge Jed Rakoff threw out its original $33 million settlement with Bank of America, the SEC shifted the focus of its case. In its new complaint filed today, the SEC still accuses BofA of misleading shareholders for failing to disclose material information. But the issue this time isn't bonuses, it's Merrill's fourth quarter losses.

Yet the complaint still names no names and again asks BofA shareholders to pay for themselves being misled. In other words, Judge Rakoff's beef with the original complaint would seem to apply to this one as well.

from Rolfe Winkler:

Of penny stocks and buried treasure

Last Friday bulletin-board traded Marine Exploration announced that it had discovered a shipwreck from 1690 off the coast of the Dominican Republic (ht Ari Weinberg). The company issued a press release trumpeting a "great discovery" and its stock popped 50%. But the release smells fishy...

"The most important find in Dominican waters since the discovery of Captain Kidd's ship Quedagh Merchant in 2007," states Wilfredo Feliz, Director of the Dominican Republic Ministry of Culture Sub-aquatic Patrimony Office...

from Rolfe Winkler:

Lunchtime Links 1-12

China surprises with bank reserve hike (Xin/Rabinovith, Reuters) The Fed could learn something from the PBOC. This sudden move to tighten bank lending maintains the PBOC's reputation for acting without warning. If the Fed had a similar rep, U.S. lenders wouldn't be so cavalier taking interest rate risk.

Special bankruptcy court for banks mulled in Senate (Younglai, Reuters) Interesting proposal for Dodd's Senate financial reform bill. Can't really comment until details are made available.

from Rolfe Winkler:

Yield curve can’t drive profits if banks won’t lend

A steep yield curve should mean fat profits for banks. It hasn’t.

Unable to find qualified borrowers and worried that interest rates have nowhere to go but up, banks are stockpiling cash and securities while letting loans dwindle. It turns out banks won’t lend till rates rise. The trouble is, if rates rise their capital will take another hit, leaving them little to support new lending.

The yield curve is a proxy for the difference between short-term rates at which banks borrow and long-term rates at which they lend. In theory, a "steeper" curve means a wider profit margin.

from Rolfe Winkler:

Lunchtime Links 1-11

Shoddy tayloring (George Cooper) The author of my favorite book on the financial crisis now has a blog. His first post tears down Bernanke's recent speech absolving his/Greenspan's easy money policies for inflating housing bubble. It's a bit technical, but very good.

Venezuelan devaluation helps Chavez, for others it's unclear (Molinski/Crowe, DJN) Speaking to economist Steve Hanke last month about North Korea's devaluation, he predicted that Venezuela would be next. His thoughts today: "Venezuela is in a death spiral. There will be more bad news."

from Rolfe Winkler:

CFPA can’t arrive fast enough for the elderly

Odd that AARP is only just now throwing its support behind the proposed Consumer Financial Protection Agency, after the House watered down many key provisions in its reform bill. WSJ's Michael Crittenden reports that the lobby group for retirees wrote a letter to Senators Dodd and Shelby of the Senate Banking Committee which said:

When seniors are defrauded or otherwise taken advantage of, the results are particularly devastating since they gernerally are beyond or near the end of their earning years. (no link)

from Rolfe Winkler:

Bank failure Friday

Only one failure last night (the first of the new year and the first since the week before Christmas).


    Failed bank: Horizon Bank, Bellingham WA Acquiring bank: Washington Federal S&L, Seattle WA Vitals: assets of $1.3 billion, deposits of $1.1 billion Estimated DIF damage: $539m (loss rate 41% of assets)