Lunchtime Links 2-23

February 23, 2010

FDIC has $66 billion in cash (FDIC) The quarterly banking profile was released today. The headline in some press will be that the DIF’s net worth is -$20.9 billion, but that ignores $46 billion of new cash recorded as deferred revenue, along with FDIC’s contingent loss reserve. Still not enough to swallow a major bank, were one to fail. But FDIC has cash to deal with the problem bank list, which now stands at 702 institutions (up from 552 last quarter and 252 a year ago) and $403 billion of assets…

House prices up slightly in December — seasonally adjusted (Calculated Risk). This chart shows how the 20-city index has varied versus the previous month and the year ago month:

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Basically, it’s over (Munger, Slate) Buffett’s consigliere Charles Munger writes “a parable about how one nation came to financial ruin.” Great piece, though keep in mind that Buffett/Munger, each with substantial paper wealth, benefited as much as anyone from the bailouts. At the end of the day, the bailouts are essentially price supports to prop up the value of paper wealth…

Wall Street’s bailout hustle (Taibbi, Rolling Stone) Taibbi previously penned the article in Rolling Stone calling Goldman a “vampire squid” wrapped around the face of humanity. This is fun reading if only because Rolling Stone will let Taibbi use expletives where most biz press won’t.

Rakoff OKs “half-baked” SEC – BofA settlement (Stempel, Reuters) I highly recommend the judge’s 15-page order. The judge explains his thinking quite clearly. He has a nuanced view of the issue and was able to see through Bank of America’s absurd initial objections while also forcing the SEC to do a bit more legwork and come up with a better and larger settlement than the first one it proposed. He has set a high bar for the SEC and for judges approving future settlements. Well done.

Five former Treasury Secretaries: Congress should approve Volcker rule for banks (Blumenthal/Brady/O’Neill/Shultz/Snow, WSJ) Probably won’t happen. And that’s a shame.

Doomsday is here for Illinois (McKinney, Sun-Times) Besides tax increases and drastic budget cuts, a watchdog group says unions have to pay more towards their pension and medical benefits. Though those benefits threaten to bankrupt the state, unions are pushing back. Like basket case countries Greece, Ireland, Argentina and others, the U.S. is likely to see massive general strikes by public sector workers as state/local governments try to get spending in line with income. Collective bargaining is not a bad thing in and of itself, but unions have overplayed their hand. On a related note, the Rockefeller Institute reports a 5th consecutive quarterly drop in state tax collections.

Abrupt eviction, narrowly averted (Ruger, HeraldTribune)

The doomsday cycle (Boone/Johnson, VoxEU)

IMF changes its mind on capital controls (Economist)

4 trillion degrees Celsius creates quark soup (bnl.gov)

History in the remaking (Symmes, Newsweek) “A temple complex in Turkey that predates even the pyramids is rewriting the story of human evolution.”

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