Felix Salmon

Bank debt-for-equity swaps: Where do you draw the line?

David Leonhardt seems to be on roughly the same page as me when it comes to debt-for-equity swaps at America’s banks:

Ken Lewis: Halfway out

I’m very glad that after the literally ridiculous performance he put on today, BofA’s Ken Lewis has been stripped of his job as chairman. Annual meetings are largely theatre, of course: the important votes have all been cast long before the meeting takes place. But with Lewis still saying with a straight face that the acquisitions of both Countrywide and Merrill Lynch were a really good idea, I can’t see how the principle of shareholders (as opposed to the CEO) electing the chairman could really survive Lewis’s re-election.

Eli Broad’s art model

I had a brief conversation with Eli Broad at the Milken Global Conference, and asked him about my idea that his foundation is well placed to be a home to many different art collections, not just his own.

The problems of financial illiteracy

I was keen to go to the panel on financial literacy, which was moderated by John Bryant, the founder of Operation HOPE and a member of the U.S. President’s Advisory Council on Financial Literacy. He’s clearly committed to this cause, and is doing a very good job of picking the low-hanging fruit: in some areas, for instance, only 25% of people eligible for the Earned Income Tax Credit actually claim it. Since it can be claimed going back three years, and since it can amount to $4,000 per year, families earning less than $40,000 a year can end up with a $12,000 windfall just as a result of some simple outreach and basic education. In many cases that’s “more money in many cases than they’ll ever see in their life,” said Bryant; “it’s transformational”.

Great Recession datapoint of the day

From this morning’s atrociously bad GDP report:

Exports collapsed 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter. The decline in exports knocked off a record 4.06 percentage points from GDP.

Risk management acronym of the day

From Mimi Swartz’s 9,700-word monster article on Sir Allen Stanford:

Stanford’s now demoralized compliance department—responsible for making sure the company followed the rules—coined a new term: FUMU, for “fuck up and move up.”

Tuesday links are likely to be disappointed

Frozen-out Stanford investors petition Congress: They were happy parking their money in an offshore bank when it offered too-good-to-be-true yields. But now that bank has imploded, they want onshore financial protections. Good luck with that.

Dog-cat arbitrage of the day

Marion Maneker, on the news that Sotheby’s is auctioning a Giacometti cat:

Le Chat is estimated between $16 and $24 million. One dealer remarked that the Giacometti dogs are $30 million and the cats are generally $10 million but splitting the difference won’t bridge the gap.

Chart of the day: Necessities

The Pew Research Center asked 1,003 Americans what they considered to be a necessity, as opposed to a luxury they could live without, and got these results: