Commentaries

Now raising intellectual capital

from Rolfe Winkler:

Lunchtime Links 12-21

Hedgie Tepper on pace to make $2.5 billion this year (WSJ) The moral hazard trade has a new face. Tepper bet big that government would rescue bank shareholders and creditors. He was right. Can we blame him? He didn't make the rules; he just played the game better than the rest once they were made.

Why can't Americans make things? Two words: Business school (Scheiber, New Republic) For 30 years we've been focused on teaching finance, not manufacturing...

At top subprime lender, policies were invitation to fraud (Heath, HuffPo)

Fannie/Freddie suspend foreclosures for holidays (AP) Citi, JP Morgan and BofA have followed suit.

Goldman threatens to move some London staff to Spain (Evans, Independent)

Citadel files for bankruptcy (Spector/McBride, WSJ) The syndicator of Don Imus' morning show is the latest radio company to struggle with debt. See also Clear Channel, Emmis and Regent....

from Rolfe Winkler:

BlogArt: Dubai’s Tower of Babel

(ht Reddit)

dubai

Plus it was built with slave laborers...

Update: Here's a view from a helicopter...

Burj Dubai

from Rolfe Winkler:

Deposit Insurance Fund, UNoffcially

I was heading out for Thanksgiving vacation when FDIC released the quarterly banking profile, so I wasn't able to update an important chart: Total Insured Deposits, Unofficially.....

FDIC Culp

(ht Stephen Culp)

When the world was falling apart, FDIC increased deposit insurance limits....to $250,000 for individual non-retirement accounts and unlimited for business transaction accounts. But those increases were treated as "temporary" and so left out of FDIC's total.

from Rolfe Winkler:

Tonight’s bank failures: $14.5 billion combined assets

Wow....huge night....$14.5 billion in combined assets from tonight's failures. The biggest fish is First Fed, with $6.1 billion of assets. First Fed was the last of the big option ARM lenders. Seems like FDIC wants to get a lot off its plate before the holidays...

#134

    Failed bank: Rockbridge Commercial Bank, Atlanta GA Acquiring bank: None Vitals: at 9/30 assets of $294m, deposits of $291.7m DIF damage estimate: $124m

A rare payout transaction. Actually the sixth so far this year. I spoke to FDIC's Greg Hernandez who gave me some interesting particulars on this bank regarding why it couldn't find a buyer.

from Rolfe Winkler:

Lunchtime Links 12-18

(Reader note: still working on

MUST READ -- Strict framework leaves room for maneuver (Masters/Jenkins, FT) While this subject may seem a little dry, it's the Basel Committee in Switzerland that will lead the way when it comes to how banks measure capital and how much they need to have. I'll offer more detailed thoughts on this later today.

Saab to be shuttered (Reuters wire) More creative destruction in the auto industry. In the end, the best Saab could do was sell the intellectual property for the 9-5 and 9-3 sedans...

from Rolfe Winkler:

McCain wants to resurrect Glass-Steagall

Did we elect the wrong guy? While Obama follows the Bernanke/Geithner/Summers line that banks be backstopped lest their failure cause economic Armageddon, John McCain has seized the moment with a proposal to resurrect Glass-Steagall.

To be sure, this proposal isn't going anywhere. Certainly not now. Neither the House nor the Senate reform bill proposes the sort of separation of commercial banking, investment banking and insurance that McCain is looking for.

from Rolfe Winkler:

Evening Links 12-16

Fed repeats "exceptionally low" for "an extended period" (Fed statement) The Fed maintains that it isn't raising rates for the foreseeable future, but repeated that it plans to end MBS asset purchases by April next year. Too bad we can't get a surprise rate hike in order to chase risk back out of credit markets...

Wells' CLO deal called "landmark" (Paulden, Bloomberg) The return of CLOs would be the latest sign that Wall Street is dancing again.

from Rolfe Winkler:

Sandy capital update (with chart)

A ruling by the IRS will allow Citi to dodge a direct hit to tangible common equity while saving money on taxes.

A WaPo story today notes that the government's promise to sell its stake in Citigroup's common shares would have qualified as an "ownership change," forcing the bank to reduce the value of its deferred tax assets.* But the IRS said not to worry about it...

from Rolfe Winkler:

The Norway trade

The most recent "Weekly Charts" report from Variant Perception (no link) included the following summary of budget balances as a percentage of GDP for the world's leading economies. Norway is notable as you can see in the chart....

norway budget

It reminded me of an e-mail Nick Gogerty sent me earlier this year, arguing that an investment in Norwegian Krone was a good "oblique position" and could be a winner. By "oblique position" he means one that "benefits from a macro event, but is a derivative or indirect recipient of that event." For instance, the gold trade is perhaps a too-popular way to short the dollar. Going long Norwegian Krone is much less obvious.

from Rolfe Winkler:

Big banks get reprieve from FDIC

Due to new accounting rules -- FAS 166 and 167 -- banks have to bring certain off balance sheet assets back onto their balance sheets starting next year. More assets, same capital = lower capital ratios. (More in this column about the individual impact on the large banks).

Anyway, the FDIC has agreed to give big banks a 6 month reprieve on raising new capital to buffer the new assets. From Ian Katz at Bloomberg:

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