Commentaries

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from Rolfe Winkler:

Gerry Levin’s mea culpa

Finally got around to watching this video. Kudos to Gerry Levin for taking responsibility for the worst merger in history. His comments about banks being malls instead of supermarkets is very true, but it's not his, it's Chris Whalen's, who provided a helpful counterpoint in NYT's non-mea-culpa from Sandy Weill. Their point is that the synergy Sandy Weill claimed for Citigroup -- combining insurance with commercial banking with investing banking with retail brokerage, etc. -- was bogus from the start.

Of course Sandy doesn't have it in him to admit he was wrong. Instead he blames his successor Chuck Prince. Another CEO who got away with blowing up a company was Merrill's Stan O'Neal. John Thain has taken heat for his time there, much of it he probably deserves for his ridiculous office redesign and for extracting bailout money to fund Merrill's bonus pool. But O'Neal is the guy that deserves the blame for Merrill's collapse. He got his golden parachute and disappeared.

from Rolfe Winkler:

Buffett: Shareholder activist

Shareholder activism is a tactic typical of Carl Icahn, not the Oracle of Omaha. Yet Warren Buffett has issued a press release asking other Kraft shareholders to reject Kraft's proposal to use up to 370 million shares of stock to buy Cadbury.

To state the matter simply, a shareholder voting "yes" today is authorizing a huge transaction without knowing its cost or the means of payment.

from Rolfe Winkler:

Afternoon Links 1-4

Living on nothing but food stamps (Deparle/Gebeloff, NYT) The safety net of last resort: 2% of U.S. households report zero income other than a food stamp card.

Twenty years on Japan is still paying its bubble era bills (Economist) Heard on the Street also writes today that Japan is looking at its third consecutive lost decade. Copious amounts of deficit spending and money printing hasn't worked for Japan. It won't work for us.

from Rolfe Winkler:

TARP deadbeats, update

Last month Treasury released the latest data on banks that missed their payment obligations under TARP. The number increased to 56 in November from 33 in August. Here's a chart summarizing the problem:

TARP deadbeats update

And that's just for banks. AIG -- recipient of $69.8 billion of TARP money -- has also failed to make its contractual payments to taxpayers.

from Rolfe Winkler:

The Swiss banking whistleblower

This feels like a report that deserves a full hour. Who are some of the tax cheats that have been uncovered? Who are the UBS executives that knew about and condoned the illegal behavior? Interesting nonetheless.

See also the web extras.

from Rolfe Winkler:

BlogArt: Maxing out deposit insurance

Two weeks without any bank failures so I thought folks might be interested in some deposit insurance trivia.

How much more than $250,000 can be insured in a single bank? For a husband and wife with kids, a lot more...

from Rolfe Winkler:

Unemployed Japanese living in 30sqft “capsules”

Sad/fascinating piece from Hiroko Tabuchi in NYT: For some in Japan, Home is a tiny plastic bunk

For Atsushi Nakanishi, jobless since Christmas, home is a cubicle barely bigger than a coffin — one of dozens of berths stacked two units high in one of central Tokyo’s decrepit “capsule” hotels....

from Rolfe Winkler:

Lunchtime Links 12-31

Bankers get $4 trillion gift from Barney Frank (Reilly, Bloomberg) David pours over HR 4173, all 1,279 pages of it. He finds some interesting nuggets. One of the bigger problems I see is the proposed insurance fund that would pay for resolving systemically dangerous banks. Talk about moral hazard!

Show some balls (Saletan, Slate) A colorful take on new TSA security procedures.

from Rolfe Winkler:

2010: Walking away will gain cachet

Why bother? That’s the question more underwater Americans are asking themselves about their mortgage.

Trapped in the abyss of negative equity, more will decide to quit paying. As they should.

from Rolfe Winkler:

Move your money

Arianna Huffington and Rob Johnson are organizing a big bank boycott. They want depositors to take their money out of Too-Big-To-Fail banks and put them in smaller, high quality banks.

They've launched a new website and have teamed up with Chris Whalen to give folks other options. Whalen's firm, Institutional Risk Analytics, has a proprietary system that grades banks using FDIC data. Enter your zip code and Whalen provides a list of high quality banks in your area.

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