Commentaries
Now raising intellectual capital
from Rolfe Winkler:
New off-balance sheet rule: Little impact on Wells
The new accounting standard requiring banks to bring assets back on balance sheet had a negligible impact on Wells Fargo. Despite having over $2.0 trillion of off-balance sheet assets, Wells consolidated just $10 billion of risk-weighted assets when the new standard took effect January 1. (See slide 17 in the bank's supplemental earnings release)
The idea behind the new accounting standard is to bring hidden assets back into the light of day so that regulators can insure proper levels of capital are held against them. With Wells, this appears not to be happening.
Last summer, the bank estimated the new standard would raise risk-weighted assets by $46 billion.* In its last quarterly filing, it revised the estimate down to $25 billion.** When the standard finally went into effect, the figure was just $10 billion.
Total off balance sheet assets, meanwhile, were over $2.0 trillion at the end of September. (see page 31)
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:
Evening Links 12-10
Loopholes lurk in bank bill (Paletta/Enrich, WSJ) Companies with connections get to buy exemptions...
Treasury yield curve widens to most since 1992 (Walker, Bloomberg)
Dems want to raise debt ceiling a whopping $1.8 trillion (Rogers, Politico) So they don't have to revisit the issue before the 2010 midterm elections...
from Rolfe Winkler:
Buffett’s Betrayal
When I was 14, Warren Buffett wrote me a letter.
It was a response to one I'd sent him, pitching an investment idea. For a kid interested in learning stocks, Buffett was a great role model. His investing style -- diligent security analysis, finding competent management, patience -- was immediately appealing.
Buffett was kind enough to respond to my letter, thanking me for it and inviting me to his company's annual meeting. I was hooked. Today, Buffett remains famous for investing The Right Way. He even has a television cartoon in the works, which will groom the next generation of acolytes.
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The Wall
